Marginal pricing and supplement cost allocation in transmission open access

Abstract

The application of marginal costing to transmission pricing in open access schemes requires the collection of a supplement to finance the transmission systems. The paper describes the application of marginal cost based pricing in the Chilean power system and the difficulties faced in allocating the supplement among parties involved. Alternative methods for defining the allocation are formulated. Generalized generation and load distribution factors for cost allocation are formulated and implemented. The methods are applied to allocate payments for transmission services provided by the transmission network and by a distribution company.<>