Transaction charges allocation using sensitivity factor methodology

Deregulation of the electricity industry aims for creating a competitive market to trade electricity, which generates a host of new technical challenges among market participants and power system researchers. One of the major challenges is to establish a cost for system services on a non-discriminatory basis. In this paper, the evaluation of transmission cost is proposed based on sensitivity factor method like AC Power Transfer Distribution Factor (ACPTDF) method for bilateral and multilateral transactions. The transacted power is estimated by ACPTDF method for each transaction. The advantages of the proposed methodology are demonstrated on a sample 6 bus, IEEE 30 bus and Indian Utility 69 bus systems. The solution provides a better pricing approach that can impact a more reasonable economic indicator for transmission cost.