Transmission loss allocation: Part II - Multiple interconnected energy markets

This paper presents a new methodology based on the incremental transmission loss concept for allocating electric losses to generators and loads, participating in multiple interconnected energy markets. The main objective is to generalize the formulation proposed in the companion paper, Part I, in order to identify through a decomposition technique, the amount of losses that each participant in the market causes on all system areas. The concept of interchange losses is introduced: the total amount of losses that occurs outside a given market whose agents are responsible for causing them. Some criteria to share these losses among the market agents are presented and discussed. The IEEE Reliability Test System is used to illustrate the proposed methodology.