Performance Evaluation of Embedded Transmission Tariff Models for Deregulated Electricity Market

Chiedozie Francis Paulinus-Nwammuo; Damian Obioma Dike; Moses Izuchukwu Adinfono; George Ogu

doi:doi:10.11648/j.epes.20170603.11

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Performance Evaluation of Embedded Transmission Tariff Models for Deregulated Electricity Market

Chiedozie Francis Paulinus-Nwammuo, Damian Obioma Dike, Moses Izuchukwu Adinfono, George Ogu

Published in American Journal of Electrical Power and Energy Systems (Volume 6, Issue 3)

Received: 16 March 2017 Accepted: 13 April 2017 Published: 1 June 2017

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Abstract

During the regulated power system era, the three major components of the power system are treated as a single entity and managed by same firm. Electricity was then treated more as a welfare commodity based on political patronage. With the wide adoption of deregulation, which resulted in the wholesome privatization and commercialization of the generation and distribution components, the transmission facility was left in the hands of the Government. Considering that this is a sure link between the other two, there is greater need to develop a mechanism for its appropriate tariff determination in order to ensure fairness to all its users. A significant deficiency in its pricing is the non-inclusion of the reactive power component, which is seriously needed to ensure system stability. This work involved the performance evaluation of four embedded transmission pricing models. Based on the need to build-in payment for reactive power which is necessary to ensure system stability, further presents an improved postage stamp transmission tariff-pricing model that incorporates both real and reactive component of power. The Postage stamp method calculates all the network costs and divides it by the overall power transmitted through it. This single rate is charged to users irrespective of the source and destination of power transactions. This is a simpler, fairer and easier to implement approach for computation using Matlab and Excel Software packages. The proposed method gave average price of 29.48$/hr as against $27.75/hr when reactive power was not included for the South African 18-Bus System. This showed slight improvement when compared to the conventional approach where reactive power was not included in the power transaction. It may be applied in developing countries like Nigeria where Government is gradually pulling out of full funding of the power sector, and seeking for technically sound and financially buoyant local and foreign firms to take over significant part of the sector. The distance flow based and cost flow based methods showed very higher costs which may not be suitable for developing countries at their present stage of deregulation due to very low income per capita and low level of industrialization.

Published in	American Journal of Electrical Power and Energy Systems (Volume 6, Issue 3)
DOI	10.11648/j.epes.20170603.11
Page(s)	16-26
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Deregulated Environment, Postage Stamp Method, Reactive Power, Real Power and Transmission Pricing

References

[1]	M. Murali, M. S. Kumari & M. Sydulu,“A comparison of fixed cost based transmission pricing methods”, Journal of electrical and electronic engineering, Scientific and Academic Publishing Vol. 1, Issue 1, 2011, pp. 33-41.
[2]	R. Abhyankar, S. A. Soman, S. A. Khaparde, “Optimization approach to real power tracing: an application to transmission fixed cost allocation”, IEEE Trans. on Power Systems, Vol. 21, Issue 3, 2006, pp. 1350-1361.
[3]	O. Pop, M. Nemeş, “Power transmission allocation with network matrices”, The 7th International Power Systems Conference, Timişoara, Romania, 2007, pp. 527-534.
[4]	T. Krause, “Evaluation of transmission pricing methods for liberalized markets: A literature survey”, Internal report from ETH Zurich, 2003, pp. 1-24.
[5]	S. Matetic, “Intelligent trading agent for power trading through tariff market”, M. Sc Thesis, University of Zagreb, 2013, pp. 19-22.
[6]	L. Similia, G. Koreneff & V. Kekkonen, “Network tariff structures in smart grid environment”, VTT Technical Report, Finland, 2011.
[7]	A. T. Haral & M. F. Aslam, “Analysis of spot prices Arrangements in deregulated electricity”, International Conference on Electrical Engineering, ICEE’07, 1, 2007, pp. 1-6.
[8]	A. K. Singh, C. Singh, S. Kumar, & Y. R Sood, “Electricity pricing in deregulated power sector”, International Journal of Advanced Research in Electrical Electronic and Instrumentation Engineering, Vol. 3, Issue 5, 2014, pp. 9333-9339.
[9]	M. Shalini, & K. V. Kishore, “Comparison of embedded type transmission cost allocation methods”, International Journal of Scientific Engineering and Technology Research, Vol. 3, Issue. 37, 2014, pp. 7526-7529.
[10]	D. Shirmohammadi, X. Vieira, B. Gorenstin, M. V. P Pereira, “Some fundamental technical concepts about cost based transmission pricing”, IEEE Trans. on Power Systems. Vol. 11, Issue 2, 1996.
[11]	I. Leevongwat, & P. Rostgoufard, “Forecasting locational marginal pricing in deregulated power markets”, Power Systems Conference and Exposition, PSCE ’09. IEEE/PES, Vol. 1, 2009, pp. 1-9.
[12]	B. J. Ring, “Dispatch based pricing in decentralized power systems”, Doctoral Dissertation, University of Canterbury, Christchurch, New Zealand, 1995, pp. 15.
[13]	M. Sahni, R. Jones & Y. Cheng, “Locational marginal price forecasting and predictive operations in U. S. power markets”, IEEE Power & Energy Magazine, 2012, pp. 35-37.
[14]	A. Bansal, C. Srivastava & A. Saini, “Transmission cost allocation of bilateral transaction in deregulated power system”, International Journal of Electrical and Electronics Engineering, Vol. 4, Issue 10, 2013, pp. 10303-10310.
[15]	Manitoba HVDC Research Centre, PSCAD: IEEE 30 bus System, 2014 [online] available https://hvdc.ca> knowledge_base>ieee_30_bus_technical_note.pdf. Accessed 10-09-2016.
[16]	R. Gnanadass & N. P Padhy, “A new approach for transmission embedded cost allocation in restructured power market”, Journal of Energy and Environment, Vol. 1, Issue 4, 2005, pp. 37-47.
[17]	H. Saadat, Power System Analysis, (WCB/Mc-Graw Hill Publishers, 1999, pp. 224-227.
[18]	R. Rajathy, “Investigations on power system operation and management in restructured market” A Ph. D Thesis Submitted to the Pondicherry University, India, 2011, pp. 130-131.

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Chiedozie Francis Paulinus-Nwammuo, Damian Obioma Dike, Moses Izuchukwu Adinfono, George Ogu. (2017). Performance Evaluation of Embedded Transmission Tariff Models for Deregulated Electricity Market. American Journal of Electrical Power and Energy Systems, 6(3), 16-26. https://doi.org/10.11648/j.epes.20170603.11

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ACS Style

Chiedozie Francis Paulinus-Nwammuo; Damian Obioma Dike; Moses Izuchukwu Adinfono; George Ogu. Performance Evaluation of Embedded Transmission Tariff Models for Deregulated Electricity Market. Am. J. Electr. Power Energy Syst. 2017, 6(3), 16-26. doi: 10.11648/j.epes.20170603.11

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AMA Style

Chiedozie Francis Paulinus-Nwammuo, Damian Obioma Dike, Moses Izuchukwu Adinfono, George Ogu. Performance Evaluation of Embedded Transmission Tariff Models for Deregulated Electricity Market. Am J Electr Power Energy Syst. 2017;6(3):16-26. doi: 10.11648/j.epes.20170603.11

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@article{10.11648/j.epes.20170603.11,
  author = {Chiedozie Francis Paulinus-Nwammuo and Damian Obioma Dike and Moses Izuchukwu Adinfono and George Ogu},
  title = {Performance Evaluation of Embedded Transmission Tariff Models for Deregulated Electricity Market},
  journal = {American Journal of Electrical Power and Energy Systems},
  volume = {6},
  number = {3},
  pages = {16-26},
  doi = {10.11648/j.epes.20170603.11},
  url = {https://doi.org/10.11648/j.epes.20170603.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.epes.20170603.11},
  abstract = {During the regulated power system era, the three major components of the power system are treated as a single entity and managed by same firm. Electricity was then treated more as a welfare commodity based on political patronage. With the wide adoption of deregulation, which resulted in the wholesome privatization and commercialization of the generation and distribution components, the transmission facility was left in the hands of the Government. Considering that this is a sure link between the other two, there is greater need to develop a mechanism for its appropriate tariff determination in order to ensure fairness to all its users. A significant deficiency in its pricing is the non-inclusion of the reactive power component, which is seriously needed to ensure system stability. This work involved the performance evaluation of four embedded transmission pricing models. Based on the need to build-in payment for reactive power which is necessary to ensure system stability, further presents an improved postage stamp transmission tariff-pricing model that incorporates both real and reactive component of power. The Postage stamp method calculates all the network costs and divides it by the overall power transmitted through it. This single rate is charged to users irrespective of the source and destination of power transactions. This is a simpler, fairer and easier to implement approach for computation using Matlab and Excel Software packages. The proposed method gave average price of 29.48$/hr as against $27.75/hr when reactive power was not included for the South African 18-Bus System. This showed slight improvement when compared to the conventional approach where reactive power was not included in the power transaction. It may be applied in developing countries like Nigeria where Government is gradually pulling out of full funding of the power sector, and seeking for technically sound and financially buoyant local and foreign firms to take over significant part of the sector. The distance flow based and cost flow based methods showed very higher costs which may not be suitable for developing countries at their present stage of deregulation due to very low income per capita and low level of industrialization.},
 year = {2017}
}

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TY  - JOUR
T1  - Performance Evaluation of Embedded Transmission Tariff Models for Deregulated Electricity Market
AU  - Chiedozie Francis Paulinus-Nwammuo
AU  - Damian Obioma Dike
AU  - Moses Izuchukwu Adinfono
AU  - George Ogu
Y1  - 2017/06/01
PY  - 2017
N1  - https://doi.org/10.11648/j.epes.20170603.11
DO  - 10.11648/j.epes.20170603.11
T2  - American Journal of Electrical Power and Energy Systems
JF  - American Journal of Electrical Power and Energy Systems
JO  - American Journal of Electrical Power and Energy Systems
SP  - 16
EP  - 26
PB  - Science Publishing Group
SN  - 2326-9200
UR  - https://doi.org/10.11648/j.epes.20170603.11
AB  - During the regulated power system era, the three major components of the power system are treated as a single entity and managed by same firm. Electricity was then treated more as a welfare commodity based on political patronage. With the wide adoption of deregulation, which resulted in the wholesome privatization and commercialization of the generation and distribution components, the transmission facility was left in the hands of the Government. Considering that this is a sure link between the other two, there is greater need to develop a mechanism for its appropriate tariff determination in order to ensure fairness to all its users. A significant deficiency in its pricing is the non-inclusion of the reactive power component, which is seriously needed to ensure system stability. This work involved the performance evaluation of four embedded transmission pricing models. Based on the need to build-in payment for reactive power which is necessary to ensure system stability, further presents an improved postage stamp transmission tariff-pricing model that incorporates both real and reactive component of power. The Postage stamp method calculates all the network costs and divides it by the overall power transmitted through it. This single rate is charged to users irrespective of the source and destination of power transactions. This is a simpler, fairer and easier to implement approach for computation using Matlab and Excel Software packages. The proposed method gave average price of 29.48$/hr as against $27.75/hr when reactive power was not included for the South African 18-Bus System. This showed slight improvement when compared to the conventional approach where reactive power was not included in the power transaction. It may be applied in developing countries like Nigeria where Government is gradually pulling out of full funding of the power sector, and seeking for technically sound and financially buoyant local and foreign firms to take over significant part of the sector. The distance flow based and cost flow based methods showed very higher costs which may not be suitable for developing countries at their present stage of deregulation due to very low income per capita and low level of industrialization.
VL  - 6
IS  - 3
ER  -

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Author Information

Chiedozie Francis Paulinus-Nwammuo

Department of Electrical Electronic Engineering, Federal University of Technology, Owerri, Nigeria
Damian Obioma Dike

Department of Electrical Electronic Engineering, Federal University of Technology, Owerri, Nigeria
Moses Izuchukwu Adinfono

Department of Electrical Electronic Engineering, Federal University of Technology, Owerri, Nigeria
George Ogu

Department of Electrical Electronic Engineering, Federal University of Technology, Owerri, Nigeria

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APA Style

Chiedozie Francis Paulinus-Nwammuo, Damian Obioma Dike, Moses Izuchukwu Adinfono, George Ogu. (2017). Performance Evaluation of Embedded Transmission Tariff Models for Deregulated Electricity Market. American Journal of Electrical Power and Energy Systems, 6(3), 16-26. https://doi.org/10.11648/j.epes.20170603.11

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ACS Style

Chiedozie Francis Paulinus-Nwammuo; Damian Obioma Dike; Moses Izuchukwu Adinfono; George Ogu. Performance Evaluation of Embedded Transmission Tariff Models for Deregulated Electricity Market. Am. J. Electr. Power Energy Syst. 2017, 6(3), 16-26. doi: 10.11648/j.epes.20170603.11

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AMA Style

Chiedozie Francis Paulinus-Nwammuo, Damian Obioma Dike, Moses Izuchukwu Adinfono, George Ogu. Performance Evaluation of Embedded Transmission Tariff Models for Deregulated Electricity Market. Am J Electr Power Energy Syst. 2017;6(3):16-26. doi: 10.11648/j.epes.20170603.11

Copy | Download

@article{10.11648/j.epes.20170603.11,
  author = {Chiedozie Francis Paulinus-Nwammuo and Damian Obioma Dike and Moses Izuchukwu Adinfono and George Ogu},
  title = {Performance Evaluation of Embedded Transmission Tariff Models for Deregulated Electricity Market},
  journal = {American Journal of Electrical Power and Energy Systems},
  volume = {6},
  number = {3},
  pages = {16-26},
  doi = {10.11648/j.epes.20170603.11},
  url = {https://doi.org/10.11648/j.epes.20170603.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.epes.20170603.11},
  abstract = {During the regulated power system era, the three major components of the power system are treated as a single entity and managed by same firm. Electricity was then treated more as a welfare commodity based on political patronage. With the wide adoption of deregulation, which resulted in the wholesome privatization and commercialization of the generation and distribution components, the transmission facility was left in the hands of the Government. Considering that this is a sure link between the other two, there is greater need to develop a mechanism for its appropriate tariff determination in order to ensure fairness to all its users. A significant deficiency in its pricing is the non-inclusion of the reactive power component, which is seriously needed to ensure system stability. This work involved the performance evaluation of four embedded transmission pricing models. Based on the need to build-in payment for reactive power which is necessary to ensure system stability, further presents an improved postage stamp transmission tariff-pricing model that incorporates both real and reactive component of power. The Postage stamp method calculates all the network costs and divides it by the overall power transmitted through it. This single rate is charged to users irrespective of the source and destination of power transactions. This is a simpler, fairer and easier to implement approach for computation using Matlab and Excel Software packages. The proposed method gave average price of 29.48$/hr as against $27.75/hr when reactive power was not included for the South African 18-Bus System. This showed slight improvement when compared to the conventional approach where reactive power was not included in the power transaction. It may be applied in developing countries like Nigeria where Government is gradually pulling out of full funding of the power sector, and seeking for technically sound and financially buoyant local and foreign firms to take over significant part of the sector. The distance flow based and cost flow based methods showed very higher costs which may not be suitable for developing countries at their present stage of deregulation due to very low income per capita and low level of industrialization.},
 year = {2017}
}

Copy | Download

TY  - JOUR
T1  - Performance Evaluation of Embedded Transmission Tariff Models for Deregulated Electricity Market
AU  - Chiedozie Francis Paulinus-Nwammuo
AU  - Damian Obioma Dike
AU  - Moses Izuchukwu Adinfono
AU  - George Ogu
Y1  - 2017/06/01
PY  - 2017
N1  - https://doi.org/10.11648/j.epes.20170603.11
DO  - 10.11648/j.epes.20170603.11
T2  - American Journal of Electrical Power and Energy Systems
JF  - American Journal of Electrical Power and Energy Systems
JO  - American Journal of Electrical Power and Energy Systems
SP  - 16
EP  - 26
PB  - Science Publishing Group
SN  - 2326-9200
UR  - https://doi.org/10.11648/j.epes.20170603.11
AB  - During the regulated power system era, the three major components of the power system are treated as a single entity and managed by same firm. Electricity was then treated more as a welfare commodity based on political patronage. With the wide adoption of deregulation, which resulted in the wholesome privatization and commercialization of the generation and distribution components, the transmission facility was left in the hands of the Government. Considering that this is a sure link between the other two, there is greater need to develop a mechanism for its appropriate tariff determination in order to ensure fairness to all its users. A significant deficiency in its pricing is the non-inclusion of the reactive power component, which is seriously needed to ensure system stability. This work involved the performance evaluation of four embedded transmission pricing models. Based on the need to build-in payment for reactive power which is necessary to ensure system stability, further presents an improved postage stamp transmission tariff-pricing model that incorporates both real and reactive component of power. The Postage stamp method calculates all the network costs and divides it by the overall power transmitted through it. This single rate is charged to users irrespective of the source and destination of power transactions. This is a simpler, fairer and easier to implement approach for computation using Matlab and Excel Software packages. The proposed method gave average price of 29.48$/hr as against $27.75/hr when reactive power was not included for the South African 18-Bus System. This showed slight improvement when compared to the conventional approach where reactive power was not included in the power transaction. It may be applied in developing countries like Nigeria where Government is gradually pulling out of full funding of the power sector, and seeking for technically sound and financially buoyant local and foreign firms to take over significant part of the sector. The distance flow based and cost flow based methods showed very higher costs which may not be suitable for developing countries at their present stage of deregulation due to very low income per capita and low level of industrialization.
VL  - 6
IS  - 3
ER  -

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