An approximate version of nodal pricing has been adopted for the start of the NEM. This approximate method involves the calculation of marginal loss factors to reflect the marginal cost of network losses. Regions have been defined between which the inter-regional loss factors vary from one dispatch interval to the next, as would be the case if nodal pricing was employed. Within each region static marginal loss factors are calculated that approximately represent the impact of marginal network losses on nodal prices at the transmission network connection points at which generators and loads are located.
The document "Treatment of Loss Factors in the National Electricity Market" details the theory supporting the adoption of marginal pricing in the NEM. The approximations adopted for the start of the NEM are discussed including the processes NEMMCO has used to calculate loss factors. An approximate method is also outlined that could be used to assess the range of loss factors that might result from a generator or load augmentations. The document also considers the impact of loss factors on central dispatch and settlements.
The purpose of this document is to provide some assistance and guidance to Participants and intending Participants on how loss factors have been treated in the NEM.
For further information on this document, please contact: InfoCentre.
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Treatment of Loss Factors - 25 Nov 1999 filename: 172-0006.pdf |