Description:DESCRIPTION OF THE PREVIOUS METHODOLOGY:
In the literature, many techniques have been described to allocate transmission-embedded costs to bilateral transactions. Simple techniques include contract path and postage stamps. But the limitation of these two methods is the non-requirement of system analysis. Therefore, the impact of actual loading on the transmission system as a result of transactions is not taken into account by these methods. The boundary flow method and the MW mile method require power flow execution as part of their methodologies but they have their limitations because reactive power changes in the transmission facilities caused by the transaction have not been considered in these methods. Similar types of problems exist in some other methods available in literature. The above problems are not present in the MVA mile method. However, there are significant drawbacks to the MVA mile method, which are discussed in the detailed description section.

SUMMARY OF THE INVENTION:
This work proposes a novel method for allocating the embedded cost of the transmission system to the pool and simultaneous transactions. It is very much clear that the newly suggested method is the more accurate, transparent, fair, and logical of all the existing methods as it is able to overcome all shortfalls of existing methods. It can be applied to a deregulated power system with accuracy and convenience.

DETAILED DESCRIPTION:
The transfer of electricity in a deregulated power system is determined every hour (or sometimes just every half hour). In this work, one hour period of electricity market is considered. Thus, each transaction's cost allocation needs to be determined in dollars per hour (or rupees per hour). In the deregulated power market, many techniques have been employed to allocate transmission costs to concurrent bilateral transactions. Techniques like contract path and postal stamp are really basic. However, the lack of a requirement for system analysis is a severe shortcoming of these two methodologies. The power flow execution required by the Boundary Flow and MW-Mile embedded cost approaches is part of their methodology; as such, they have the potential to overcome the shortcomings of the previous two methods. However, because reactive power changes in the transmission facilities brought about by the transaction have not been taken into account, So this is a major limitation of these methods. Enhancements to these techniques have also been proposed, including the most recent and effective technique known as MVA-mile.
Throughout the utility industry sector, embedded cost methodologies are used to assign the yearly operation and maintenance expenses of existing assets, as well as the embedded capital costs, to a specific transaction. These facilities—which we will now refer to as transmission facilities include substations with transformers, transmission lines and FACTS devices.
The transmission facility cost (TFCf) of each facility f is computed for the study year based on the cost data provided by the Transmission Company. For the current year, the annual fixed charged rate (AFCRf) for facility f is determined by adding up the costs associated with each unit, accounting for maintenance, taxes, insurance, inflation, administrative, and general expenses.
The annual cost of all facilities of the transmission network to be recovered (ACRf) or assigned to each transmission system user (pool and transactions), is provided by:
?ACR?_f= ?AFCR?_f × ?TFC?_f (1)
So total annual cost to be recovered (TACR) is given below
TACR= ?_f¦?ACR?_f (2)
The length of each facility is multiplied by the change in MVA flow in that facility caused by a transaction in the MVA mile technique. That means a transmission line with a longer transmission length will carry more weight than a line with a shorter length when it comes to the same amount of power transmission. There isn't a problem if every line has the same rating. However, even when two transmission lines are the same length, their ratings and costs could differ, therefore when it comes to embedded cost allocation, they should be given different weights. Moreover, these facilities also feature transformer-equipped sub-stations, and as part of a contemporary power system, they also feature a variety of FACTS devices, including TCSC, UPFC, and others. These pieces of equipment are expensive but have practically zero length. So they are not included in the cost contribution of the transmission system. Therefore, the accuracy of the MVA mile approaches is typically compromised in these situations since approximations are involved. Therefore, the new method suggests multiplying the facility's MVA flow changes by its annual cost to be recovered (ACRf) rather than by the facility's length. This will fully resolve the issue that was raised above. This new proposed method may be called as YRA-MVA-ACR method. There is one more improvement in the proposed method as explained below.
In previous methods, two power flows executed successively with and without the transaction T under consideration, yield the change in MVA flows in all transmission facilities for determining the embedded cost allocation to transaction T. So these changes have influence of all other transactions, which is not fair for embedded cost allocation to transaction T. So in the proposed method one power flow is executed with only pool and second power flow is executed with pool and transaction T and these two power flow yield changes in MVA flow in the proposed method. So these changes in MVA flow are without the influence of other transactions.
The following formulas provide the transaction cost ? C?_(T_i ), which is $/h for a transaction Ti. The annual embedded cost allocated to transaction Ti is converted to $/h by dividing the annual embedded cost by hours in a year (i.e. 8760)
? C?_(T_i )= (TACR ?_f^nf¦???(?MVA?_f)?_(T_i ) ?ACR?_f ?)/(8760?_T^nT¦?(?_f^nf¦???(?MVA?_f)?_(T_i ) A?CR?_f)??) (3)
??MVA?_f= |M?VA?_f (with pool and T_i)|- |M?VA?_f (only pool)| (4)
Where,
C_(T_i ) = Embedded cost to be allocated for transaction Ti in $/h for the hour under consideration.
nT = Total number of transactions including pool as one of multilateral transaction.
nf = Total number of facilities.
TACR = Total annual cost to be recovered.
ACRf = Annual cost to be recovered for facility f.
??(?MVA?_f)?_(T_i ) = Change in MVA flow in facility f due to transaction Ti. for the hour under consideration.

In the proposed method embedded cost is allocated not only to bilateral transactions but also to multilateral transactions. The pool is also considered a large multilateral transaction. So the TACR is allocated to all its users i.e. all transactions and pool.

Three sub-methods of the proposed method can be distinguished based on the direction of power flow:
1) YRA-MVA-ACR-net
From the positive ?MVA line flow changes negative ?MVA flow line changes whose line loading decreases due to the transaction are subtracted. The transaction costs are corresponding lowered or even reversed in sign which may lead to negative charges.

2) YRA-MVA-ACR-pos
When calculating the sum of the changes in equation (4), only positive changes in ?MVA facility flow are taken into account; negative changes in ?MVA facility flow are disregarded. Transactions that relieve overloaded transmission facilities are thus disregarded.

3) YRA-MVA-ACR-gross
Both positive and negative changes in MVA facilities flows are translated to absolute values and contribute equally to positive transaction costs. As a result, even if the transmission facility is relieved by a transaction, the transaction party still has to pay a fee.
, Claims:We claim the following in respect of the innovation presented in the application for the grant of the patent that

1. Allocating embedded costs across different power transmission users is a crucial responsibility in the deregulated electricity market. There are a few approaches in the literature that address this issue, but regrettably, none of them logically support such an allocation; in other words, there are some shortcomings in every approach.

2. The MVA mile strategy is the most effective approach among those found in the literature. However, this MVA mile approach also has major shortcomings as explained below:
In the MVA mile method the changes in MVA in each facility, due to a transaction are multiplied by the length of each facility. It implies that a transmission line with a longer length will be given greater weightage than a line with a shorter length for the same amount of power transmission. There is no issue if every line has the same rating. However, two transmission lines of the same length could have different embedded costs due to different ratings; hence, the embedded costs of the two lines should be allocated differently in terms of weightage. Furthermore, transformers and FACTS devices are a part of modern power systems. These equipment’s are expensive but have practically zero length. So they are not included in the cost contribution of the transmission system. Therefore, the accuracy of the MVA mile approaches is typically compromised in these situations.

3. The suggested new approach for allocating the embedded cost need of power transmission in a deregulated power system has made modifications to address the above-mentioned drawbacks. As a result, the suggested method is a great improvement over all current approaches.

4. There is one more improvement in the proposed method as explained below: In previous methods, two power flows executed successively with and without the transaction T under consideration, yield the change in MVA flows in all transmission facilities for determining the embedded cost allocation to transaction T. So these changes has influence of all other transactions, which is not fair for embedded cost allocation to transaction T. So in the proposed method one power flow is executed with only pool and second power flow is executed with pool and transaction T and these two power flow yield changes in MVA flow in the proposed method. So these changes in MVA flow are without the influence of other transactions.

5. The new mathematical model and software developed in the above method.