Evaluation of Transmission Losses and Penalty Factors for Marginal Cost Pricing

Abstract A centralized pool dispatch center is being established to coordinate the operation of the different utilities providing generation to the Chilean national electrical power system. A new price system based on marginal costs is being applied to the sales among generating utilities and to all the distributing companies in the system. The paper reports on a thorough search of adequate methods to calculate transmission losses and penalty factors to be used in the predispatch optimization of the Chilean network and in the marginal pricing of energy at different nodes in the network. Comparative studies are made of various methods, assessing their difficulties and limitations. Three versions of the B coefficient formulas are compared with a DC load flow algorithm. A jacobian based penalty factor calculation is also considered. Studies are based on the Chilean power system modelled through 84 busbars, 124 branches and 12 generating stations.