Public Utilities Reports

PUR Guide 2012 Fully Updated Version

Available NOW!
PUR Guide

This comprehensive self-study certification course is designed to teach the novice or pro everything they need to understand and succeed in every phase of the public utilities business.

Order Now

Loss Modeling in T&D Systems: Is $25 Billion Worth Losing?

Energy players can lose a lot more than their shirt if they fail to model transmission losses properly.
Fortnightly Magazine - August 2002

in the United States (155,000 of those miles being transmission lines of 230 kV and above). The remaining one-third of loss occurs in transformers. The losses in the transmission and distribution system as a whole account for about eight percent to 10 percent of the total net generation, with 55 percent occurring in the distribution system, and the remainder in the high voltage transmission system.

The difference between the net generation and sales is often used as an indicator of the losses (or efficiency) of the delivery system for the electric power: using this definition, the losses in the U.S. transmission and distribution system amount to about 379 billion kilowatt-hours annually, or 10 percent of the net generation.

The 8.5 percent to 10.5 percent loss figure includes the real physical losses in the transmission and distribution systems, as well as non-sampling errors and data collection frame differences. The actual physical losses associated with wires and equipment in the transmission and distribution systems are therefore somewhat smaller. Figures typically quoted for the physical losses in the transmission and distribution systems are 7.5 percent to eight percent of the total net generation from power plants.

System losses normally are classified into two categories: load losses and no-load losses. The no-load losses are incurred 24 hours a day, while the load losses vary with the time of day. 1

Strategies for Accounting for Wires Losses

To account for losses accurately, we will first look at how front office systems need to model and track losses during deal ticket entry and eTag generation. Then we will examine how back office systems need to account for and settle losses.

In terms of front office systems like those of energy traders, the two main systems that must model losses accurately are: a) the deal capture system-in other words, the physical, bilateral transaction management system; and b) any programmatic market communication and bidding system that communicates with central market entities such as Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs). The front office systems are the first point of entry for a deal, transaction, or any market bid submitted to the central exchange. It is very important that the trader, market participant, or scheduling coordinator have all costs pertaining to losses available while making that transaction. This way there are no hidden loss costs that the organization later incurs during the monthly invoice process.

Also, monitor the tariff: call the ISO, Control Area, or OASIS operator and identify the sections within the relevant market rules and procedures document(s) that deal with transmission and distribution losses. Some control areas model losses as a static percentage that is applicable for the entire control area. Others run periodic AC power flows and come up with seasonal loss percentages. Still other central markets offer different loss percentages for different tie-lines. If that is the case, energy traders need to monitor Web sites of the central exchange to make sure they are working with the latest loss percentage.

Modeling the different varieties of losses in a trading operation's deal capture system also can