The two-part transmission pricing mechanism is suggested for trans-provincial transmission projects orientating for network interconnection and power transmission

so as to promote the healthy and sustainable development of trans-provincial transmission trading. In implementing a two-part transmission pricing mechanism

how to appropriately determine the capacity charging ratio is an issue not well solved

while in the existing two-part mechanisms

the capacity charging ratios are mostly designated by the decision-maker’s preference without solid theoretical justification

and uncertainties associated with actual transmission trading electric quantity are seldom taken into consideration. Given this background

a conditional value at risk(CVaR) based negotiation model is developed for a transmission company and a power purchaser under incomplete information for achieving an agreeable capacity charging ratio. First

the annual allowed income for a trans-provincial transmission project is determined using the well-established operation period method

and then the expected profit and risk loss measured by CVaR under different capacity charging ratios are analyzed considering the uncertainty of actual transmission trading electric quantity. Then

a CVaR-based negotiation model is presented under incomplete information

the objective for each side of the two negotiators is to minimize its risk loss under a given lowest expected profit constraint and the estimations of the opponent’s risk tolerance ability and negotiation strategy

and then to determine an optimal offer. Finally

the west-to-east power transmission project in the southern region of China is employed to demonstrate the basic characteristics of the proposed model. This work is jointly supported by National Basic Research Program of China (973 Program) (No. 2013CB228202) and a project from Electric Power Research Institute of China Southern Power Grid (No. K-KY2012-015).