Short Term Use of the System Tariffs - The Substitution Method Revisited

P.M. De Oliveira-De Jesus and M.T. Ponce de Leão (Portugal)


Loss allocation, substitution method, marginal, loss pric ing, access pricing


The substitution method is a simply procedure widely ap plied for loss pricing in real distribution systems with dis tributed generation. Some drawbacks have been pointed out about the consistency and appropriateness of this method and new and more complex procedures based upon cost-causality approach have been introduced in the liter ature. In this work, the substitution method is revisited and reformulated including a new performance index with the aim of produce an equitable sharing of the benefits or added costs introduced by distributed generators. Under certain assumptions, the proposal can emulate the solution provided by a marginal or incremental approach fulfilling some requirements for an effective loss allocation policy as facility to understand and apply, ensure recovery of losses and send out economical signals to agents. This proposal represents an practical alternative for access pricing in dis tribution networks with high penetration of distributed gen eration.

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