Comparative Analysis of Distribution Network Cost Allocation Alternatives

Rodrigo Delfim Guarizi, Roberto C. Lotero, João Bosco A. London Jr.


This paper presents a comparative study among methods of allocation of fixed costs in Distribution Networks (DNs). The application of these methods allows obtaining distribution use-of-system charges. Three pricing mechanisms composed of two part tariffs are evaluated. In the three mechanisms, the first part is obtained by the Long Run Incremental Cost (LRIC) method. The second one is determined by the following methods: Postage Stamp (PS), MW-Mile (MWM) or Ramsey-Boiteux (RB). The characterization and comparison of each method are performed from the point of view of regulatory principles that define guidelines on network pricing. The results allow identifying the adherence of the methods in compliance with the regulatory principles. Conflicting character between different principles is observed. The methods are tested and validated in the IEEE13-node distribution network. A study along these lines points to the proposition of new alternatives in pricing the use of DNs in the face of the growth of Distributed Energy Resources.


allocation of fixed costs; distribution use-of-system charges; regulatory principles; network pricing

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