Cost allocation using intelligent agents for new transmission investment under electricity deregulation

Due to electrical power restructuring a dramatic change has been made to the generation and transmission sectors of the power industry. Rules and legislation are continuously changing. The gap between the transmission expansion need and the proposed construction of transmission is widening. The new paradigm for cost allocation suggests that parties who have the need and/or benefit from the new transmission investment should pay the costs. The socialization methods of the past have been shown to be unfair to some market and network participants. The decentralization of the cost allocation must be considered. To promote more competition, transmission has to be expanded or upgraded to remove congestion and market power. The cost allocation of new investment in transmission has to be recalculated. The locational marginal price is used to indicate the benefit for each player. The proposed method is based on agent-based game theory and is compared with traditional cost allocation methods. A real option analysis is applied to deal with future uncertainty factors --Abstract, page iii