Abstract: In the present open access deregulated power system market, it is necessary to develop an appropriate pricing scheme that can provide the useful economic information to market participants, such as generation, transmission companies and customers. However, accurately estimating and allocating the transmission cost in the transmission pricing scheme is a challenging task although many methods have been proposed. The objective of this thesis is to introduce a simple transmission pricing scheme using a power flow tracing method, in which transmission service cost, congestion cost and loss cost are considered. Numerical example using a test power system is presented to illustrate the effectiveness of the studied method. Electricity tracing can assess the particular impact of a generator or demand on the power system [1]. For each generator, the technique can determine the demands they supply, and likewise, for each demand, the technique can determine the generators who provide physical supply. In addition, the proportion of the total electricity flow in each individual transmission asset can be attributed to either the generators or demands that use the asset. A tracing algorithm has been developed and applied to historic market load flow solutions for each half–hour during the ten year time period, 1999–2008. Results are presented illustrating flow patterns from generators to demand and patterns of transmission asset usage. Continuing trend towards deregulation and unbundling of transmission services has resulted in the need to assess what the impact of a particular generator or load is on the power system. Anew method of tracing the flow of electricity in meshed electrical networks is proposed which may be applied to both real and reactive power flow. The method allows assessment of how much of the real and reactive power output of a particular station goes to a particular load. It also allows the assessment of the contribution of individual generators to individual line flows. The method can be useful in providing additional insight into power system operation and can be used to modify existing tariffs of charging for transmission loss, reactive power and transmission services.

Keywords: Proportional sharing, LMPs, service cost, congestion cost, loss cost.