A novel hierarchical contribution factor based model for distribution use-of-system charges

Due to the limited visibility at low voltage (LV) networks, existing Distribution Use-of-System (DUoS) charging methodologies assume that all the network users use the network in proportion to their peak flows. This naive supposition fails to reflect the contribution of network users to network peak flows, which actually is the driver for network reinforcement. This can send an inadvertent signal to customers, leading to aggravated network pressure. This paper for the first time, brings the new dimension into the design of DUoS charging methodology by considering the true contribution of customer class's load on network peak flows. It proposes a novel Hierarchical Contribution Factor based Model (HCM), recognizing the contributions of differing customer classes to the network reinforcement of upstream asset. Such contribution will be further propagated to network assets at higher voltage level, forming a Hierarchical CF model and reflecting the true individual class contribution to the whole-system reinforcement. Benefit of the proposed model on investment deferral is assessed by determining annuitized present value (PV) of future investments, and consequences are assessed on a 22-bus practical Indian reference network. The approach helps customers as a class to reduce their network usage charges by minimizing their energy usage contribution during distribution network peaks, eventually reducing distribution network investment and energy transfer costs.