Comparative analysis of using MW-Mile methods in transmission cost allocation for the Malaysia power system

One of key issues of electricity supply industry restructuring and deregulation is transmission access pricing. Transmission access pricing must be non-discriminatory, transparent, economically efficient, and allow full recovery of costs. In the case of electricity transmission system, economic efficiency implies promoting an optimal utilisation of existing network, efficient siting of new generations and loads and promoting transmission investments. These characteristics require that the transmission circuits that pertain to each transaction must be identified and their costs properly allocated among users. Therefore, cost allocation is a major issue in transmission access pricing and has given rise to a lot. of methodologies. This paper presents an overview of MW-Mile method of transmission cost allocation. Under MW-Mile method there are a number of variants in relation to how the cost of each circuit is allocated to the various users of the circuit. All these various allocations of costs under MW-Mile method categorized as absolute, reverse, dominant and extended methods are tested, compared and analysed using the Malaysian power system in order to assess their impact on the long-term transmission planning. Focus is given to observe which cost allocation method that can provide strong siting signals.