Loss allocation in energy transmission networks

Abstract

In this paper we study a cost allocation problem that is inherent to most energy networks: the allocation of losses. In particular, we study how to allocate gas losses between haulers in gas transmission networks. We discuss four allocation rules, two of them have already been in place in real networks and two others that are defined for the first time in this paper. We then present a comparative analysis of the different rules by studying their behavior with respect to a set of principles set forth by the European Union. This analysis also includes axiomatic characterizations of two of the rules. Finally, as an illustration, we apply them to the Spanish gas transmission network.