Preliminary findings on usage allocation and loss allocation of electricity in a deregulated market

Deregulation has been one of the most intriguing issues in the electricity market for the past decade. It has transformed many aspects of the market, including electricity pricing. Prior to deregulation, generators and transmission lines operated as one entity. Therefore it seemed reasonable to allocate approximately 2% to 5% of generation as power loss. In light of deregulation, it is important that usage allocation and loss allocation are determined so that the market operates fairly and transparently. The preliminary findings that will be discussed in this paper include deregulation in Australia, nodal pricing globally, existing allocation methods and some findings from initial investigations into the methods.