| Summary: | In the earlier vertically integrated power system, the mechanism of competitive transmission pricing did not exist because of circumscribed utilization of power within a territory. But in the present deregulated environment, generation and transmission businesses have been separated and bilateral power contracts between them become a major outlay. Transmission pricing based on least and fair loss allocation predominates in fixing the power contracts. This paper proposes a new loss allocation formula based on actual physical flow of active power drawn by the different loads in a system. It is applied to a referred six-bus system to prove its fairness over two widely used methods such as proportional ratio (pro-rata) and incremental transmission loss (ITL). It is proved that generation scheduling based on RED produces least loss in the system. Using the proposed formula along with RED concept, the least loss contracts for IEEE-14 and IEEE-30 bus systems have been worked out. To demonstrate the least loss contract, three cases of generation scheduling have been taken; out of which generation scheduling based on RED is taken as desired generation scheduling due to its minimum loss production and two other cases are randomly selected. It is found that, in comparison to standard case, the total transmission charges is reduced to 28% in the case of IEEE-14 bus system and 28.4% in the case of IEEE-30 bus system while considering the RED based generation scheduling. The detail transmission charges for individual loads along with the comparison figures of whole system have been properly evaluated and presented for two system cases to justify the feasibility of least loss contract using RED concept. Keyword: Transmission charge, MW-MILE, Loss allocation, Transmission cost matrix, Least loss contract
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