Transferring transmission pricing principles from electricity to natural gas

Abstract

This paper discusses the application of several electricity transmission cost allocation methods to compute natural gas transmission tariffs. Cost allocation methods that have been implemented include four of the most relevant transmission cost allocation methods that have been considered in the electricity sector. These are analyzed both qualitatively and quantitatively. In order to do this, equations modeling the flow of gas in transmission networks have been formulated and solved. Cost allocation principles applied are the same used in electricity. Numerical results corresponding to a 12-node gas network are presented and discussed. Based on this analysis, the paper concludes that transferring some of the methodologies applied in electricity transmission to gas leads to satisfactory results.