Security and revenue reconciliation in optimal transmission pricing

Methodologies for optimal transmission pricing deal with the optimal use of the transmission network with capital. and operational costs minimised. An alternative method is presented which includes transmission security in the pricing mechanism. The main feature of this method is that system security can be separated from the capacity cost and the cost of transmission losses in the final transmission price, thereby helping the network operator or planner to identify those areas requiring attention. To ensure sufficient revenue is recovered to enable the transmission system to make a return on assets and to operate and maintain the system, a new way of achieving revenue reconciliation is proposed. This technique allows the rerouting of power flows with adjusted price while recovering the required revenue. These novel extensions to the optimal transmission pricing problem are applied to a 24-node network for illustrative purposes. (author)