Implementation and analysis of transmission services marginal pricing in a multi-area interconnected power system

In the electric supply industry there are different types of wheeling depending on the relationship between the wheeling utility and the other parties. Wheeling can occur between individual buses or between areas and they can be categorized as follows: (1) Inter-area, area to area; (2) Inter-area, area to bus; (3) Inter-area, bus to area; (4) Inter-area, bus to bus; (5) Intra-area, bus to bus. Marginal wheeling cost is defined as the change in an area's cost due to a unit change in the real/reactive power exchange between two other entities in the power system. The marginal wheeling costs are evaluated for each wheeling area on the basis of the optimum generation dispatch using the full AC multi-area optimum power flow model. Using the sensitivities of the generation cost of each area with respect to the bus power demand and interchange power derived from the sensitivity analysis, the marginal wheeling costs for different types of power transactions can be computed. The implementation and analysis are demonstrated using a case study of a system with 16-bus and four interconnected areas. The effects of changes in load levels and the levels of interchange power on the marginal wheeling rates are also illustrated.