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This paper presents a new method for estimating avoided transmission and distribution costs associated with small load reductions, named the one-year deferral method. It is established on the basis of the system planner's actual response to a small reduction in the forecast annual peak load. This paper has also explored the noninteger deferral time (i.e., a fraction of a year) in the present worth method, which is seemingly inconsistent with the system planning practice. In addition, as allowed by the new method, the effect of the size and type (shape) of a load reduction stream (i.e., a series of reductions in the forecast annual peak loads) on avoided costs is studied, which is important for determining generic avoided cost values intended for various applications. Index Terms--Avoided cost, marginal cost, power system, transmission and distribution (T&D).

This paper presents a new method for estimating avoided transmission and distribution costs associated with small load reductions, named the one-year deferral method. It is established on the basis of the system planner's actual response to a small reduction in the forecast annual peak load. This paper has also explored the noninteger deferral time (i.e., a fraction of a year) in the present worth method, which is seemingly inconsistent with the system planning practice. In addition, as allowed by the new method, the effect of the size and type (shape) of a load reduction stream (i.e., a series of reductions in the forecast annual peak loads) on avoided costs is studied, which is important for determining generic avoided cost values intended for various applications. [ABSTRACT FROM AUTHOR]