This paper describes a practical approach to identify nodal price compensation payment for nodal consumers willing to reduce their energy consumption (consumers' demand response). The implementation of a nodal reliability service pricing is based on contingency assessment of N -2 order for transmission lines. A representative annualized demand curve is used to reflect the system's operation condition by seasons. Such curve is used to access the nodal reliability impact trough a whole year in order to determine back-payments (incentive payment) to users for service interruption. The IEEE_RTS 24 nodes system is used to implement the proposed approach.
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