RESEARCH ARTICLE Tracing and prediction of losses for deregulated operation of power systems Perumal Nallagownden 1 , Ravindra N. Mukerjee 2 * and Syafrudin Masri 3 1 Electrical & Electronic Engineering, Universiti Teknologi PETRONAS, 31750 Perak, Malaysia 2 Department of Energy Technology, Aalborg University, 9220 Aalborg, Denmark 3 Universiti Sains Malaysia, 14300 Penang, Malaysia ABSTRACT To facilitate both generation and retailing to have an open access to the transmission grid for trading electricity, a real time procedure is proposed. The line flows for an operation are assumed to be available from PMU and WAM validated state estimation. Power tracing determines different transactions to supply a retailer’s demand, losses related to each transaction, extent of use each transaction makes of a transmission circuit and its associated losses. A generalized quadratic form learns relationships between a retailer’s demand and, (i) a generation’s contribution to it at a point of receipt, (ii) losses in a transaction, (iii) share of a transaction in a line, (iv) its associated losses, through learning coefficients. The procedure then predicts a generator’s contribution to a retailer’s demand at the point of receipt, power loss for the transaction, share of transactions in a line at the retail end and its associated line losses, for an oncoming operating scenario. Copyright # 2010 John Wiley & Sons, Ltd. KEYWORDS deregulation; power transaction losses; learning coefficients; loss allocation; open access of transmission service *Correspondence Ravindra N. Mukerjee, Department of Energy Technology, Aalborg University, 9220 Aalborg, Denmark. E-mail: rnmukerjee@gmail.com 1. INTRODUCTION Restructuring and liberalization of electricity market for promoting increasing competitiveness through unbundling of generation, transmission, and privatization of distri- bution or retailing functions has been an ongoing process for quite some time. The deregulated electricity market is being perceived as a conglomeration of generation providers comprising of independent power producers (IPP) or non-utility generators (NUGs) as well as utility generators, transmission service operators (TSOs) and distribution service providers (DSPs) or retailers, wherein both generation and retailing may have open access to the transmission grid for negotiated power transfer and thus electricity, a commodity may be traded (Figure 1). The coordination between the generation providers, TSOs’ and retailers for technical operation of these sub-entities and the commercial arbitration among them may be carried out by an independent system operator (ISO) for effecting power wheeling through agreed upon contract paths, while addressing vital attributes such as system security, voltage profile, losses, and VAr reserves. The major issues a deregulated power environment may keep on encountering are (i) stability and viability crisis related issues leading to the need of congestion manage- ment, (ii) pricing together with methodology of locating and sharing investments on both real and reactive power operating reserves, assuring reliability as well as power quality, (iii) appropriate loss allocation and revenue reconciliation adjustment methodologies associated with power wheeling, ensuring appropriate return on invest- ments to the provider, (iv) devising an open access charging system, recovering common costs in a fair manner and (v) logical development of metering, monitoring and protection system in line with the system expansion and deregulated operation needs. To create open access conditions in interconnected systems, different approaches have been witnessed [1]. In one, known as wheeling, two generators or one generator and a consumer or a retailer use the transmission system of a third party. This requires impact and the cost of the transaction to be determined. A quantum of power agreed to be supplied by a generation provider to a retailer is termed a transaction. In another approach, independently EUROPEAN TRANSACTIONS ON ELECTRICAL POWER Euro. Trans. Electr. Power 2011; 21:223–238 Published online 26 April 2010 in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/etep.433 Copyright ß 2010 John Wiley & Sons, Ltd. 223