A new transmission pricing approach for the electricity cross‐border trade in the ASEAN Power Grid

The electricity cross-border trade is presently introduced among the member countries of the Association of South East Asian Nations (ASEAN). The ASEAN Power Grid (APG) is a plan to interconnect transmission networks among the ASEAN countries to optimize the use of energy resources; to operate the power network in an efficient, economical, and reliable manner; and to provide a close relation among the member countries by electric power interconnection. Transmission pricing is one of the controversial tasks to achieve the APG objectives. In this paper, a transmission pricing method for the electricity cross-border trade based on a combination of postage stamp method and sensitivity indices is proposed. The postage stamp pricing is a uniform tariff expected to recover the project investments, and the operation and maintenance costs. With the combination of the postage stamp method and sensitivity indices, the proposed pricing method sends proper incentive signals to power traders, which are based on system usage and congestion management. To demonstrate its effectiveness, the proposed method is applied to a 12-bus test system. The nodal tariffs at the particular injecting points, payments of the users, and revenues of transmission owners are computed. The simulation results indicate that the proposed method ensures a recovery of the investment costs and the concurrent costs of operation and maintenance in an efficient, fair, and simple manner. Copyright © 2006 John Wiley & Sons, Ltd.