A Proposal for Transmission Pricing Methodology in Thailand Based on Exact Loss Contribution and Long-Run Average Incremental Cost

W. Ongsakul, C. Adsoongnoen


In this paper, the transmission pricing methodology for bilateral transaction based on theexact loss contribution and long run average incremental cost (LRAIC) methodology in a NewElectricity Supply Arrangement (NESA) of Thailand is proposed. The transmission pricing comprisesthe connection charges, the common service charge and the transmission use of system (TUOS)charges. The connection charges are intended to recover the costs of providing and maintainingconnection assets by using capital recovery factor. The common service charge is charged for theapproximation of metering costs such as billing and collection. The TUOS charges, based on LRAICcalculation for each voltage level, are used to recover all of transmission network expansion costsincluding the operational costs of using the grid and costs of losses.

The calculation of transmission loss for each voltage level could be obtained by multiplyingthe fixed percentage loss for each voltage level with the amount of energy transferred through thetransmission system. For the TUOS charges, the users will be charged for the amounts of energytransferred including losses for each voltage level, which may not be fair to all users. Therefore, theexact energy and loss allocation for each transaction is proposed instead of using the fixedpercentage loss methodology. To demonstrate its effectiveness, the transmission pricing methodologyis applied to three simultaneous bilateral transactions located in different areas of the 424-bus Thaipower system. Test results indicate that the proposed methodology can promote efficient utilizationof the system, raise enough revenue for network expansion, and transparent to all users.

Full Text: