2011 International Conference on Recent Advancements in Electrical, Electronics and Control Engineering
A New Transmission Pricing Methodology for Indian
Restructured Market Using PSS/E Software
S.CHARLES RAJA, , R.ELAKKIA,
Department of Electrical & Department of Electrical &
Electronics Engineering, Electronics Engineering,
Thiagarajar College of Engineering, Karpagam University,
Madurai, India Coimbatore, India
Email-id: charlesrajas@tce.edu Emailid:elakkia.rajavelu@gmail.com
Abstract-Power industry is moving rapidly from regulated
conventional setup to a deregulated environment. Deregulation is
a new paradigm in the electric power industry. In deregulated
environment, the pricing of the use of transmission system, which
is satisfactorily allocated among the involved parties, has become
one of the major issues. Transmission pricing must be non-
discriminatory, transparent, economically efficient, and allow full
recovery of costs. In this paper, the Marginal Participation (MP)
method is proposed to calculate transmission price for the
transacted power using PSS/E and MATLAB environment and
the results are compared with the MW-Mile method. Based on
the review of Indian system, MP method defines usage of each
network branch in terms of the increment in power flows on that
network branch if the generation / demand were to marginally
increase. Transmission charges determined using MP method is
found to be most appropriate since it directly computes the
relative use of each network branch. The methods discussed have
been successfully tested on sample 6 bus, IEEE 30 bus and TNEB
69 bus systems using MATLAB and PSS/E.
Keywords— Deregulation, Transmission Pricing, Marginal
Participation method, MW-Mile method.
I. INTRODUCTION
The electrical supply industry around the world has
experienced a period of rapid and irreversible change in terms
of structure, ownership, operation and management. Various
nations have considered or are considering the restructuring of
their electricity power supply sector, so as to introduce
competition among power producers and to offer more choice
to customers. These changes are frequently termed as de-
regulation or restructuring. Restructuring plays a vital role in
transmission pricing. The objective of any transmission
pricing scheme is to allocate all or part of the existing and new
cost of transmission system to users. Efficient transmission
pricing is necessary to assure economic dispatch of existing
generation capacity delivery of electricity to consumers at its
minimum cost, including both generation and transmission
costs [1-2]. Based on the review of the Indian system, the MP
method has been found to be most appropriate. MP method
defines the usage of each network branch by an agent in terms
of the marginal benefit of that branch to the agent. The
marginal benefit of a network branch is computed in terms of
the increment in flows on that network branch if the
generation/demand by that agent were to marginally increase
978-1-4577-2149-6/11/$26.00 © 2011 IEEE
488
P.VENKATESH,
Department of Electrical &
Electronics Engineering,
Thiagarajar College of Engineering,
Madurai, India,
Email-id:pveee@tce.edu
[3]. Cost allocation is a major issue in transmission access
pricing and has given rise to a lot of methodologies. Under
MW-Mile method there are a number of variants i.e. absolute,
dominant and reverses in relation to how the cost of each
circuit is allocated to the various users of the circuit. In India
the transmission tariff sensitive to distance, direction and
quantum of power flow [4].
Allocation of transmission costs involves both
technical and regulatory issues, and as a result, the methods
available in the literature differ in their definition and measure
of the “extent of use” of transmission resources. The primary
objective of cost allocation is to provide a summary of recent
techniques used for designing fair and equitable access fees
for the recovery of fixed transmission costs. A properly
established cost provides economical signals for short-term
and long-term recovery current expenses and for a fair cost
allocation for participants. The method of the AC power flow
based distribution factors is presented to calculate the power
transmission costs, which are charged to the market
participants [5].
In this paper various existing transmission pricing
methodologies are discussed. Marginal Participation (MP)
method of Dominant and Reverse approach are proposed for
Indian restructured market and it is compared with the existing
MW-mile method. The proposed method is tested in sample 6
bus IEEE 30 bus and TNEB 69 bus systems using MATLAB
and PSS/E. The results obtained by MP method are most
appropriate since it computes the relative use of each network
branch.
II. EXISTING PRICING METHODS
The existing transmission pricing methods are
discussed below. In this section, there are four important
pricing methods are discussed.
A. Postage stamp method
This transmission pricing method allocates
transmission charges based on the magnitude of the transacted
power. The magnitude of the transacted power for a particular
wheeling transaction is usually measured at the time of system
peak. This method has the advantage of simplicity; however it
ignores the actual system power flow.
B. Contract Path method Pijk = Pijk for direct flows
In this method, a specific path between the points of = - Pijk for reverse flows (3)
delivery and receipt is artificially selected for a wheeling
transaction. Without performing a load flow, the “contract III. PROPOSED METHOD
path” is selected to identify the transmission facilities that are This method is based on the load flow studies
actually involved in a transaction. A portion or all charges indicating the use of the system. Transmission charges
associated with transmission a facility along the contract path determined using this method is found to have better
is then allocated to the wheeling participant. economic and technical properties as compared to other
methods.
C. Line by Line method

A. MARGINAL PARTICIPATION METHOD

The Line-By-Line method, in determining the cost of
wheeling, consider changes in MW flows due to the wheel in
all transmission lines of the wheeling company, and the line
lengths in miles. Two power flows executed successively,
with and without the wheel, yield the changes in MW flows in
all transmission lines.
D. MW-Mile Method
The power flow based MW-mile method allocates the
charges for each wheeling participant based on the extent use
of transmission facilities by this transaction. This method can
overcome some of the aforementioned limitations inherent in
other embedded cost methods. However, this requires to run a
set of load flow analysis associated with each wheeling
transaction when multiple wheeling transactions are
considered. Three approaches of MW-mile methods are
discussed.
The transmission charges for the transacted power k
is calculated using the formula
k
n Lij Fij Pij
TC k = ∑ max
(1)
i −1 Pij
Where,
TCK is Transmission pricing for the transaction k
This method analyses how the flows in the grid are
modified when minor changes are introduced in the buyer m
and seller n, with the relationship of the flow through line i-j.
This method computes the relative use of each network branch
by buyer m and seller n. The Steps for the calculation of
transmission price using the proposed method is:
1) Assume length and cost of each line.
2) Calculate the line flows for base case using Newton
Raphson load flow method.
3) Consider a transaction with tk MW between GENCO
m to DISCO n and then calculate line flows using
Newton raphson load flow studies.
4) Calculate difference in line power flows:
ΔPij ,mn = ( Pij , mn − P 0 ij )
(4)
Where,
ΔPij ,mn – Difference in line power flows
Pij, mn - Loading of line i-j due to tk MW transaction
Pij0 - Loading of line i-j under base case.
5) Compute the total change in line flows i.e., multiply
change in line flows with total MW injected
ΔPg (ij,mn) = (Pij,mn − P0ij ) * Pn (5)

Lij is Length of the line i-j Where,

Pn is power generation at bus m under transaction case
Fij is Cost of power in the line i-j
6) The change in line power flows based on transaction k
Pijk is Power flow in line i-j due to the transaction k is considered by the following approaches:
max A. Dominant MP Approach
Pij is Thermal limit of line i-j
Pijk = |Pijk| for direct flows and 0 for reverse flows
The change in line power flows based on transaction k is B. Reverse MP Approach
considered by the following approaches:
Pijk = Pijk for direct flows and - Pijk for reverse

A .Dominant MW-Mile Approach flows

Pijk = |Pijk| for direct flows 7) Find Marginal Participation Factor of generation /
demand at each bus.
=0 for reverse flows (2)
B. Reverse MW-Mile Approach

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 Δ P g ( ij , mn )
MP Factor = (6)
∑ ΔP
ij
g ( ij , mn )

8) Compute transmission charges at each node and then

compute overall cost for transaction.
L ij C ij Δ P g ( ij , mn )
TC = (7)
∑
mn
Δ P g ( ij , mn )
ij
Where,
TCmn is Transmission pricing between buying bus m
and selling bus n
Lij is length of line i-j
Cj is cost of power in the line i-j

ΔPij ,mn is power flow due to line i-j due to transaction m,n

IV. PSS/E INTERFACE WITH PYTHON Figure 1: Interfacing of PSS/E with PYTHON

PSS/E software is used to simulate and study power
systems, which stands as Power System Simulator for
Engineers. The main functions of this PSS/E are:
• Power flow and related network analysis functions.
• Balanced and unbalanced fault analysis.
• Network equivalent construction.
• Dynamic simulation.
V. RESULTS AND DISCUSSION
In this paper, the new Transmission Pricing
methodology is formulated and verified with the existing
method. The proposed Marginal Participation (MP) method
and the existing method are coded in MATLAB 7.0 and
PSS/E for sample six bus system, IEEE 30 bus system and
TNEB 69 Bus sytems.

In this work, power flow and network analysis functions A. Transmission Pricing For Sample Six Bus System
are simulated using PSS/E software. There are six automation
processors in PSS/E. PSS/E contains an embedded python In six bus system [8], there are three generator buses and
interpreter. PSS/E allows to execute Python files and three load buses with the total demand of 210 MW. The length
commands. When the PSS/E GUI is started, it initializes the of each line is shown in Figure 2.
Python interpreter and executes a few initial commands.
Python is an OSI certified freely available, object-oriented, 1 50MW
interpreted programming language [6-7]. 2 60MW 3
50 miles 40 miles
The bus data and line data values of standard system are
entered in PSS/E. The Python scripts are written in a notepad
to execute load flow program and the cost of transacted power 80 miles 70 miles

is calculated. Interfacing of PSS/E with Python is done since 30 miles 60 miles

40 miles
PSS/E displays only the final result and the intermediate 70 miles
values in all iterations can only be known with the help of 80 miles
python. Psspy module is used for interface of PSS/E with
Python. 40 miles 50 miles

Power flow is obtained from PSS/E by entering the bus

data, load data, branch data. PSS/E does not support for the 5 6
calculation of transmission pricing, so PSS/E is interfaced 4
with Python. For interfacing I/O control option is used. I/O 70MW 70MW 70MW
control option will link the obtained power flow in PSS/E to
Python. Using Power flow in Python, the Python code is
Figure 2: Sample Six Bus system
written to calculate the transmission price. The figure 1 shows
There are four transactions carried out as T1, T2, T3 and
the interfacing of PSS/E with Python.
T4. Transaction T1 is due to the injection of 10MW at bus 2
(Seller Bus) and removal at bus 4 (Buyer Bus). Transaction T2

490
is carried out by the injection of 10MW at bus 2 (Seller bus)
and removal at bus 5 (Buyer bus). Transaction T3 is by the
injection of 10MW at bus 3 (Seller bus) and removal at bus 4
(Buyer bus). Transaction T4 is due to the injection of 10MW
at bus 3 (Seller bus) and removal at bus 5 (Buyer bus).
The transmission prices of six bus system for the above
transactions are calculated using MP method and MW-Mile
method. The transmission cost for transaction T1 using
Dominant MP Method is 1.8515$/MWhr, whereas
2.3241$/MWhr in Dominant MW-Mile method. The results
for other transactions are given in Table 1. Based on the
Table1: Transmission Cost of Sample Six bus system
results, Reverse MW-Mile and Reverse marginal participation
method takes into account the reverse flows, transmission
price is lowest so it is pessimistic. The transmission pricing
obtained using marginal participation method is less compared
to MW-mile method. For Dominant Mw-Mile and Dominant
marginal participation method transmission price is charged
only for direct flows so it is an exact method. The
transmission pricing obtained using marginal participation
method is less compared to MW-mile method and the
transmission pricing obtained by MP method is less compared
to the existing method.

Transmission Price using MATLAB ($/MW-hr) Transmission Price using PSS/E ($/MW-hr)
MW-mile Method MP Method MW-mile Method MP method
Dominant Dominant Dominant
Reverse MW- Dominant MP Reverse MP
Transaction MW-mile MW -mile MP
mile Method Method Method
Method Method Method
T1 2.3241 1.5785 1.8515 0.5425 2.2129 1.8215
T2 3.5022 2.7217 3.0661 2.3964 3.4533 3.0028
T3 3.0503 0.2467 2.0786 -3.6626 2.9868 1.8830
T4 3.5071 1.3847 2.8370 1.8466 2.8876 2.6007

B. Transmission Pricing For IEEE 30 Bus System
There are six generators and twenty four loads with
the total demand of 283.4 MW in thirty bus system[9]. The
length and cost of the transacted power is assumed as 100
miles and 1000 $/MW-hr-mile-annum respectively. There are
four transactions are considered as T1, T2, T3 and T4. 10MW
transaction between bus 2 and bus 28, bus 5 and bus 23, bus 5
and bus 7, and bus 8 and bus 28 are considered as transaction
T1, T2, T3 and T4 respectively. The dominant MW-Mile
approach and MP approach can be considered as a hybrid of
the absolute and reverse approaches. In this approach, network
users are only charged on the basis of direct power flow
imposed on each line. For the transaction T2, the transmission
pricing obtained by Dominant MW-Mile method using
MATLAB is 6.1708 $/MW-hr, whereas using PSS/E the price
is 5.5925 $/MW-hr. For Dominant MP Method the
transmission price obtained using MATLAB is 4.3955 $/MW-
hr whereas in PSS/E the price is 3.8971 $/MW-hr. The
transactions T3 and T4 the reverse MW-mile method create
many counter flows across the transmission network so these
transactions are unable to recover much revenue return. The
results obtained using MATLAB method is closer to the
PSS/E. The same patterns of results are obtained for other
transactions also and they are given in Table 6.2.

Table 2: Transmission Price of IEEE 30 bus system

Transmission Price using MATLAB ($/MW-hr) Transmission Price using PSS/E ($/MW-hr)

MW-mile Method MP Method MW-mile method MP method

Dominant Dominant
Dominant MW- Reverse MW- Dominant MP Reverse MP
Transaction MW-mile MP
mile Method mile Method Method Method
Method Method

T1 4.5547 4.1510 4.1961 4.0861 4.5203 4.0395

T2 6.1708 4.3612 4.3955 4.1234 5.5925 3.8971
T3 5.7874 2.2925 4.4283 3.2645 5.1265 4.2858
T4 3.2774 2.8776 3.2451 4.9519 2.9494 2.5519

C. Transmission Pricing For TNEB 69 Bus System
Tamilnadu is one of the southern states of India and
this system is under the control of Tamilnadu Electricity Board,
a state government owned Power Corporation. In TNEB 69 bus
system, there are thirteen generators and fifty five loads with
the total demand of 1402MW. The length and cost of the
transacted power is assumed as 100 miles and 1000 $/MW-hr-
mile-annum respectively. There are three transactions are
considered as T1, T2 and T3. Transaction T1 is due to the

491
injection of 10MW at bus 1 (Seller bus) and removal of 10MW
at bus 10 (Buyer bus). Transaction T2 is carried out by the
injection of 10MW at bus 13 (Seller bus) and removal of
10MW at bus 26 (Buyer bus). Transaction T3 is carried out by
the injection of 10MW at bus 31 (Seller bus) and removal of
10MW at bus 44 (Buyer bus). Similar to the steps followed in
sample six bus systems, the transmission pricing for TNEB 69
bus system is calculated for both the methods. The calculated
transmission price for T1 using Dominant MP Method is
14.2243 $/MW-hr, whereas 16.1936 $/MW-hr in Dominant
MW-mile method. The results obtained using MATLAB is
closer to the PSS/E. The same patterns of results are obtained
for other transactions also and they are given in Figure 3 and
Figure 4.
16
TRANSMISSION PRICE
benefit of that branch to the agent. The marginal benefit of a
network branch is computed in terms of the increment in flows
on that network branch if the generation and demand were to
marginally increase. MP method directly computes the relative
use of each network branch by generators and customers. Due
to higher transmission pricing in MW-mile method so the
Marginal Participation method is the best method.
ACKNOWLEDGEMENT
This work is supported in part of UGC-Major
Research Project scheme of Government of India (UGC–F.
No. 38-244/2009 (SR) dated. 24-12-2009). Authors gratefully
acknowledge the work by UGC project associate Ms. Anitha.
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Figure 3 Transmission Pricing Using PSS/E
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VI. CONCLUSION
The MW-mile method allocates the charges for each
wheeling participant based on the extent of use of transmission
facilities by the transaction. Dominant MW-mile method and
Dominant Marginal participation method calculates the
transmission pricing based on direct flows. Transmission
pricing for marginal participation method is less compared to
MW-mile method. Based on the review of Indian system, the
MP method is most appropriate. MP method defines the usage
of each network branch by an agent in terms of the marginal

492