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Cost and usage based cross-border TSO tariffication with power flow decomposition models

Cross-border flows of electricity and the related cost recovery mechanisms have been discussed extensively within the TSO community as power markets have increasingly been integrated and the subsequent exchanges of electricity have increase considerably. Simple tariffication schemes typically fail to explain all effects of mutual usage between market participants such as generators and loads in interconnected horizontally meshed power systems in diverse ownership. In this paper, the effects of the implementation of cost and usage-based tariffication schemes on the settlement issues in a cross-border tariffication scheme are discussed. It is shown that power flow decomposition (PFD) models are suited to explain many of the most debated effects of mutual usage between control zones and lead to concise explanations for usage-based fair cost distributions. It is also shown that some of the effects readily identified by such models can lead to interpretive difficulties due to the potential complexity of the power flow situations and the related financial effects. A PFD model taken from the related literature is applied to a simple test network for illustration.