Modification in existing two part tariff structure incorporating the effect of locational marginal pricing for Indian utility system

This paper proposes an approach for the modification in existing Two Part Tariff (TPT) structure incorporating the effect of Locational Marginal Pricing (LMP). LMP can represent economic signal for instant to instant variation of generation, transmission and load scenarios. Conventionally TPT consists of fixed and operating prices, obtained on annual basis. In this paper, it has been proposed to replace the operating price of TPT by LMP. LMP at various buses which represents the actual price of power delivery, can be obtained from the solution of AC optimal power flow. LMP value at any bus is added to fixed price to obtain the modified TPT structure at that bus. The load payments are obtained by utilizing modified TPT for an Indian utility 62-bus system, and the results are compared with and without considering loading and considering the effect of energy conservation. The simulated results show that huge benefit is obtained by modified TPT structure as compared to existing TPT structure in case when line loading and energy conservation are considered. Moreover with modified TPT structure costumers will be able to respond more accurately according to the prevailing electricity market scenarios.