ABSTRACT: Fair transmission cost allocation, among network users, is very important in restructured power system. On the other hand, transmission pricing is the basis issues for transmission cost allocation. In this paper, a fair method for specifying transmission tariffs especially for wheeling contracts during peak and offpeak periods is proposed. Calculating congestion cost, when the wheeling contract leads to transmission congestion, is the main objective of our proposed method. In this method, the congestion cost is allocated to all users whose transactions contribute in congestion. The cost is allocated according to their contribution in network congestion. The method utilizes power transfer distribution factors. Then, Fairness of the method is analyzed. The proposed method has been implemented on 9-bus IEEE test system. Simulation results confirm the advantages of the method. The results also show that by using the method, the cost related to congestion will completely be recovered.

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