2011 IEEE PES Innovative Smart Grid Technologies India
Transmission Tariff Allocation Using Combined
MW-Mile & Postage Stamp Methods Babasaheb Kharbas, Manoj Fozdar Member IEEE, Harpal Tiwari Member IEEE Department of Electrical Engineering Malaviya National Institute of Technology Jaipur, India bckharbas2001@yahoo.co.in, manojfozdar@rediff.mail.com
Abstractthe transmission tariff function will facilitate competitive electricity market by impartially providing energy transportation services to all energy buyers and sellers, while fairly recovering the cost of providing those services. Transmission tariff is more fairly and transparently allocated in order to get full recovery of ARR of transmission facilities by using combination of MW-Mile and Postage stamp method. There are number of variants of MW-Mile method i.e. absolute, dominant and reverse are combined with postage stamp method to allocate the transmission tariff. In this paper a six bus network is used for simulation purpose with two cases of demand variation. It is assumed in this problem the load customer pays the 100% cost of transmission services to the transmission utility. Simulation and results are obtained by using Matlab. Transmission tariff for each load bus is evaluated in all three combinations of MW-mile with postage stamp for each case of demand variation. Keywords Transmission tariff; MW-Mile Method; Postage Stamp Method; Residual Transmission Charges; Demand variation) I. INTRODUCTION The transmission tariff is defined as The function will facilitate competitive electricity market by impartially providing energy transportation services to all energy buyers and sellers, while fairly recovering the cost of providing those services[1]. The objectives and major components of transmission tariff are explained in details [2]. Transmission pricing paradigm is the overall processes of translating transmission costs into overall transmission charges [3].These paradigms rolled-in transmission pricing, incremental transmission pricing and composite embedded incremental transmission pricing are briefly described [4]. As per the discussion based on transmission pricing paradigm the transmission pricing methods are distinguished into two main categories rolled in (embedded) pricing method and incremental pricing method [2]. The combine evaluation of power flow based MW-Mile approaches with postage stamp method for transmission pricing are discussed [5]. MW-Mile Method having the number of variants, absolute, dominant and reverse are discussed and used to determine the cost of each circuit [5-6]. The study based on evaluation of transmission
978-1-4673-0315-6/11/$26.002011 IEEE pricing methods shows that the power flow based MW mile method is more reflective as it usage actual power transmitted in allocating the transmission costs. It offers several benefits that are, practicality and fairness to all parties and ease of measuring electricity loss and protecting stockholders from free riders. The simulation and results are obtained on typical six bus system by using combined evaluation of power flow based MW-Mile variants and postage stamp method. The power flow analysis at different load conditions in two different cases of demand variations for each circuit i, of the network are obtained by using matlab simulation. The cost parameters, MW-Mile tariff, postage stamp tariff and payment cost to each demand customers are evaluated. The most economical approach among the three variants of power flow based MW-Mile method with postage stamp method is reverse MW-Mile variant which helps in reducing overloading of line and reliving transmission congestion. This is giving fair and more transparent economic signal in transmission pricing to design tariff. The comparison of tariff is shown at end of results. After giving introduction in this section, the paper presents discussion on MW-Mile approaches in section II, followed by discussion on postage stamp method in section III, Combined evaluation method is explained in section IV, a six bus test network is used for simulation discussed in section V, Results obtained and discussion on results are mentioned in section VI and finally concluding remarks are mentioned in section VII. II. MW-MILE APPROCH The power-flow-based MW-mile method is more widely used because it has been shown to be more reflective of actual usage of the transmission system in allocating the transmission costs [6]. This paper presents power flow based MW-Mile method of transmission tariff allocation in combination with postage stamp method. Under power flow based MW-Mile method there is having a number of variants like absolute, dominant and reverse. These variants are discussed in relation with how the cost of each circuit is allocated to the various users of the network [5]. With the enactment of Electricity Acts, lay down, the guide lines towards the transmission tariff are sensitive to distance, direction and quantum of power flow. 2011 IEEE PES Innovative Smart Grid Technologies India
The power flow based MW -Mile method is one of embedded cost pricing methodology. In general, under embedded cost pricing methodology, all the fixed or sunk costs of the transmission system are allocated to existing users of the transmission system [7]. Thus, under the power flow based MW -Mile method, the fixed or Sunk costs are allocated to reflect the level of power being transmitted as well as the distance that power being transmitted to the users [6]. In the power flow based MW-Mile method, there are three different approaches in relation to how the cost of each circuit is being allocated to the various users of a circuit. These three different approaches are absolute power flow based MW-Mile approach, reverse power flow based MW-Mile approach and dominant power flow based MW-Mile approach. Depending on MW-Mile Method the cost allocated to each individual user, is evaluated [8]. The power flow based MW- Mile method, the cost allocation to each individual user, C k , is calculated by using,
= = N 1 i i k i i i k P P . F . L C (1) Where, C k : Transmission cost allocated to each individual user k, L i : Length of circuit i, F i
: Predetermined unit cost reflecting the cost per km of circuit i, in Rs (million) / Km,
Pi : Capacity rating of circuit i, P i k : Power flow imposed on the circuit i, by the user k, N : Numbers of transactions or user demands, i : Total number of circuits in the system. The Basic difference in the three approaches of power flow based MW-Mile method is based on the treatment of the power flow, imposed on the circuit by the user. A. Absolute Power Flow Based MW-Mile Approach The absolute power flow based MW-Mile approach calculates the charges based on the magnitude of the MW- Miles of network used by ignoring the direction of the power flow imposed on the circuit by the user [6]. Power flow imposed on the circuit i, by the user k, P i k is treated based on the following condition, P i k = |P i k | for direct and reverse power flows. B. Dominant Power Flow Based MW-Mile Approach The dominant power flow based MW -Mile approach can be considered as a hybrid of the absolute and reverse approaches. In this approach, network users are only charged on the basis of direct power flow impose on each line. Reverse power flows are not counted so users responsible for the reverse power flows do not receive any credit like reverse MW-Mile approach and do not pay any charge like the absolute MW Mile approach. In the dominant MW-Mile approach, power flow imposed on the circuit i, by the user k, is treated based on the following condition [6], P i k = |P i k |for direct power flows or P i k = 0 for reverse power flows C. Reverse Power Flow Based MW-Mile Approach The reverse power flow based MW-Mile approach takes into account of the power flows that are in reverse direction and the charge for each line is based on the net flows. The reason is that the reverse power flows reduce the burden on the line and reliefs congestion [22]. Power flow imposed on the circuit i, by the user k, P i k ,
is treated based on the following condition, P i k = Positive (+) for direct power flows, & P i k = Negative (-) for reverse power flows. III. POSTAGE STAMP METHOD A postage stamp rate of transmission service may calculated by summing up all transmission cost and divide it by system peak demand thus producing flat amount per MW[2]. In this problem after allocating the costs to all the users using the above approaches of power flow based MW-Mile method, the total transmission costs will not be fully recovered. The reason behind is that the lines will not be utilized up to their capacities. In addressing the residual cost in this problem an approach can be utilized namely the postage stamp approach or method [6]. Using the postage stamp approaches, the residual costs will be apportioned to each user based on its load level [6], [7]. The residue to each individual user k, is calculated by using
P P TC. R LT LK k = (2) Where,
R k : Residue to each individual user k, P LK : Load of user k, TC: Difference or total unremunerated charges, P LT : Total load of all users. IV. COMBINED EVALUATION METHOD The total cost allotted to load bus or each individual user k, TC k, is calculated by using TC k = C k + R k . (3) The methodology used in the allocation of transmission tariff or use of system charge to the users of the transmission network are discussed in this section. The tariff algorithm flow chart is explained in fig.1.There are four main steps 2011 IEEE PES Innovative Smart Grid Technologies India
involved in combined evaluation of three different approaches of power flow based MW-Mile with postage stamp method. The MW-Mile method is insufficient to recover the total revenue as defined by ARR for the transmission network.
Figure1. Algorithm Flow Chart A. DC Power Flow Analysis DC power flow analysis is done using the Matlab simulation in Mat power, by considering the system at peak load condition. The output will be the base case power flow. The impact of each demand customer on the system is obtained by setting zero value for the demand at each bus, in simulation for each new condition. In each case the line flow is determined subjected to fulfillment of the constraint generation equal to demand. This is achieved by assuming that all generators are decreased on a prorata basis to match the new demand and maintaining the minimum generation level of those generators which are non swing generators for economically optimal generation to reduce the cost of generation. The power flow imposed by each demand on a specific circuit i, is calculated by the difference between the base case power flow and the flow in the new condition. B. Determine Cost per Km of Each Circuit Fixed annual Revenue requirement is allocated to individual circuit on the network. For recent cost per km for each individual circuit is calculated. C. Calculate Tariff to Each Demand Customer Transmission costs to each demand customer are determined using Matlab simulation, for the three power flow based MW-Mile approaches. Transmission residual charges are determined by postage stamp method. D. Determination Payment Cost & Average Tariff Cost per unit to each demand customers in the network is determined by summation of energy charges and residual charges as determined in step c. Payment costs annually for each load bus is determined. Average tariff is calculated for each combination which is being helpful in determination of transmission tariff for more complicated network with multiple zones each with multiple numbers of transmission lines. V. SIX BUS SYSTEM The system used is shown in Fig.2 [10]. The maximum generation capacity is 530MW and the peak Demand is 477 MW.
Figure 2. Six Bus Network Test System
Table 1and 2 shows the line data and bus data respectively for 6 bus system .Buses 1, 2 and 3 are generator buses showing power injected in MW. Power is being extracted at load buses 4, 5, and 6 by users k 1 , k 2 , k 3 respectively. Table 3, shows total system capital cost including maintenance and operational charges is Rs 14,100 million. ARR of transmission facility is obtained Rs 2299.24 million. G3 BUS 3 BUS 6 L3 BUS 5 L2 BUS 4 L1 BUS 1 G1 BUS 2 G2 DC Power Flow Analysis Identify Cost of Each Circuit Transmission Tariff Algorithm Evaluation of Charges MW-Mile Approach Evaluation of Charges Postage Stamp Method Evaluation of Transmission Tariff Evaluation Payment cost & Average Tariff 2011 IEEE PES Innovative Smart Grid Technologies India
TABLE I. LINE DATA TABLE II. BUS DATA TABLE III. LINE LENGTH, LINE CAP. & CAPITAL COST VI. RESULTS AND DISCUSSION Two cases of demand variation simulated and studied. Results obtained and discussion is made for these two loading cases on a six bus system. Power flow P i k MW, imposed on circuit i, by user, due to its demand at bus k is calculated by the difference between the base case power flow and the flow in the new condition. ARR of circuit i, predetermined unit cost F i (reflecting the cost per km length of circuit i, in Rs million /km) determined from table III. The results obtained are displayed for each case of demand. Buses 1, 2 and 3 are having, no transmission charges applied as it is assumed that the load customer pays the 100% cost of transmission to the transmission utility. The postage stamp tariff is developed in order to get complete recovery of ARR for each case. The transmission tariff to each individual user also determined. A. Case1(Demand 240 MW) TABLE IV. DEMAND 240 MW Bus No. Generation MW Demand MW Q MVAR Voltage KV 1 90 0 0 220 2 70 0 0 220 3 80 0 0 220 4 0 95 0 220 5 0 65 0 220 6 0 80 0 220 Total 240 240 0 - TABLE V. MW-MILE CHARGES (RS MILLION/MW/YEAR) Bus No Load MW Absolute Approach Dominant Approach Reverse Approach 1 0 0 0 0 2 0 0 0 0 3 0 0 0 0 4 95 5.027566 5.0275662 5.027566 5 65 4.978850 4.7040996 4.429349 6 80 4.906268 4.5278178 4.149367 TABLE VI. POSTAGE STAMP CHARGES (RS MILLION/MW/YEAR) Bus No Load MW Absolute Approach Dominant Approach Reverse Approach 1 0 0 0 0 2 0 0 0 0 3 0 0 0 0 4 95 4.6062271 4.8067888 5.0073506 5 65 4.6062271 4.8067888 5.0073506 6 80 4.6062271 4.8067888 5.0073506 TABLE VII. TRANSMISSION TARIFF (RS MILLION/MW/YEAR) Bus No Absolute Approach Dominant Approach Reverse Approach 1 0 0 0 2 0 0 0 3 0 0 0 4 9.633793235 9.834354973 10.03491671 5 9.585077068 9.510888459 9.436699849 6 9.512495416 9.334606598 9.156717780 TABLE VIII. REVENUE RECONCILIATION (RS MILLION /YEAR) Bus No Absolute Approach Dominant Approach Reverse Approach 1 0 0 0 2 0 0 0 3 0 0 0 4 915.2103573 934.2637224 953.3170875 5 623.0300094 618.2077498 613.3854902 6 760.9996332 746.7685278 732.5374224 Total 2299.240000 2299.240000 2299.240000 Sr. No. Circuit i R X from Bus to Bus 1 1 2 0.1000 0.2000 2 1 4 0.0500 0.2000 3 1 5 0.0800 0.3000 4 2 3 0.0500 0.2500 5 2 4 0.0500 0.1000 6 2 5 0.1000 0.3000 7 2 6 0.0700 0.2000 8 3 5 0.1200 0.2600 9 3 6 0.0200 0.1000 10 4 5 0.2000 0.4000 11 5 6 0.1000 0.3000 Bus No. Generation MW Peak Demand MW Q MVAR Voltage KV 1 147 0 0 220 2 150 0 0 220 3 180 0 0 220 4 0 174 0 220 5 0 130 0 220 6 0 173 0 220 Total 477 477 0 - Bra nch Circuit Description Li km Line Cap MW Circuit cost Rs million. i from Bus to Bus 1 1 2 100 120 1500 2 1 4 50 120 750 3 1 5 80 120 1200 4 2 3 50 120 750 5 2 4 50 120 750 6 2 5 100 120 1500 7 2 6 70 120 1050 8 3 5 120 120 1800 9 3 6 20 120 300 10 4 5 200 120 3000 11 5 6 100 120 1500 2011 IEEE PES Innovative Smart Grid Technologies India
Postage stamp tariff for each load is obtained, which is fixed for a particular methodology used i.e. absolute, dominant and reverse MW-Mile method. The un-remunerated cost for various Mw-Mile approaches is unequal. In common evaluation postage stamp tariff is unequal for its different MW-Mile combinations. Total payment made by each user in Rs million /year for this modified approach in order to revenue reconciliation is determined and shown in the result table. The average transmission tariff to each individual user (Rs (million) /MW/year) is also determined if needed. Comparison of Tariff in combined evaluation approach is shown in fig. 3and fig.4, with bar charts which clears that the tariff for combination of absolute power flow based MW Mile method with postage stamp is highest and the tariff for combination of reverse power flow based MW-Mile method with postage stamp is lowest. 7.5 8 8.5 9 9.5 10 Bus 4 Bus 5 Bus 6 A C1 D C1 R C1 A C2 D C2 R C2
Figure3. Comparison of Tariff (Rs million/MW/year)
Figure 4. Average Tariff (Rs million/MW/year) 2011 IEEE PES Innovative Smart Grid Technologies India
VII. CONCLUSION Among the combinations of three approaches of MW-Mile methods, absolute MW-Mile approach is the most popular as there is some certainty that it will provide sufficient revenue to the transmission owner. The results of the above analysis reveal that, any one among the three charging schemes of the MW-Mile method is not sufficient to recover the total transmission system cost. To cover the total transmission system cost, it is necessary to share among the users the cost associated with unused capacity is considered as a combined approach of transmission tariff evaluation. In this the postage stamp coverage is used to distribute this unremunerated cost among the users in sharing with each MW-Mile Approach. These analyses proved that the proposed transmission tariff allocation using combined approach is simple and practicable to be implemented on different percentage allocation transmission cost of services among the different transmission facility users. The approach with reverse MW-Mile variant with postage stamp combination is providing strong economic signal as far as fair and transparent transmission tariff is concern. REFERENCES [1] Loi Lei Lai, Power System Restructuring and Deregulation, Trading, Performance and Information Technology, John Willey & Sons Ltd 2001. [2] Thilo Krause, Evaluation of Transmission Pricing Methods for Liberalized Markets- a Literature survey, Internal Report, EEH_PSL_2003_001, July 7, 2003, pp. 1-22. [3] M.Y.Hassan, M.S. Majid, F. Hussin, H.A. Rahmanland K.L.Lo, Certain Considerations in Pricing Unbundled Transmission Services, First International Power and Energy Conference PECon 2006 November 28-29, 2006, Putrajaya, Malaysia, pp.272-275.
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