Min-Max Fairness Criteria for Transmission Fixed Cost Allocation

Conventionally, transmission fixed cost allocation is carried out on postage stamp basis. Amongst various other ways of solving the problem, the cost allocation under the "usage-based" domain has also been suggested, namely, based on proportionate tracing and recently, by optimization based real power tracing. Changing the cost allocation regime from postage stamp basis to usage-based methods, though technically sound, can pose fairness issue. The fairness criteria in its simplest form would allocate cost in equitable manner on per unit basis while meeting the constraints. The optimization-based tracing provides room for defining an objective, leading to tracing compliant postage stamp method, that strikes a balance in allocation between conventional postage stamp and proportionate tracing-based methods. In this paper, we address this complex cost sharing problem by suggesting a min-max fairness algorithm, using optimization-based real power tracing. The min-max algorithm achieves fairness by equalizing allocations within constrained space and reaching an equilibrium where further balancing cannot be achieved. We show that computing min-max fair solution simply corresponds to solving a sequence of sparse LP problems for real power tracing. The algorithm satisfies the property of aggregate invariancy. Results on actual data of central transmission utility of Western Regional Grid of India, as well as IEEE 30-bus system, validate the claims. The results are compared with the tracing compliant postage stamp method.