Time based pricing model for distribution utilities in Sri Lanka

Abstract

Cost causation based allocation of infrastructure cost is a quite difficult thing in distribution networks. Thus in practice, majority of distribution tariffs in the world price electricity through traditional averaging. This is because of the difficulties in implementation of advanced pricing strategies mainly complexity, caused by high density of nodes compared to transmission networks and lack of advanced metering infrastructure. This thesis analyzes the question of allocating infrastructure of fixed cost, leading to a more absolute solution. It proposes a time based pricing model (TBPM) which can be easily adopted in distribution networks and transmission networks. Further this study also includes the recovery of cost of losses which is more in line with proposed costing of infrastructure. The proposed TBPM is cost causation based and suitable for distribution networks. TBPM recovers the costs by allocating to either active energy or both active and orreactive energies. It works out a price in a particular time interval basis such ashourly basis etc. It comprises of two components • A time based pricing per energy to allocate fixed cost which is derived from incremental fixed cost per energy unit. • Allocation of cost of losses pertaining to the network at the time of delivery per energy. Requirements for TBPM are simple and straightforward such that it can be easily implemented in distribution networks like in Sri Lanka. A TBPM calculation was done for an 11 kV network spread over 37 km2 for its actual load patterns. The results verify the cost reflectivity of TBPM by recovering of cost as per the exact burden. The strategy can also be applied to transmission networks.