The objective of compensation metering is to determine unmetered losses which occur between the billing and metering points, and then record the losses on a loss meter or combine the losses with the metered portion of the load on a single meter. The common practice is to combine the losses with the metered portion which duplicates values which the meter would have recorded had it been located at the billing point.

Energy dissipated between the billing and metering points cannot be measured directly. The losses are calculated indirectly using transformer theory, circuit theory, and currents and voltages at the meter test switch or meter socket.

Commercially available compensation meters operate with formulas approved by meter engineers and regulatory agencies. These formulas add or subtract simulated losses to the metered load and record compensated meter readings, or uncompensated readings with simulated losses directed to a separate loss meter.

Losses in the transformer are caused by hysteresis, eddy currents, and load currents. Hysteresis losses are derived from energy expended as the magnetic field within the transformer continually changes intensity and direction. Hysteresis losses are a function of the metallurgical properties of the core material. Eddy current losses are caused by energy expended by current, induced by the magnetic field, and circulating within the transformer core.

Eddy current losses are minimized by building the transformer core from electrically resistive steel formed into thin, insulated laminations. Load losses, or I2R losses, are caused by current passing through the transformer windings and the resistance of those windings. Transformer losses are either no-load losses, also called core losses or iron losses, and load losses, also called copper losses.

Lines are considered to be resistive and have I2R losses. The lengths, spacings, and configurations of lines are usually such that inductive and capacitive effects can be ignored.

Bus losses are treated the same as line losses. If line and bus losses are to be compensated, they are included as part of the transformer load losses. Most solid-state meters can compensate for both resistive and reactive losses.

Electromechanical Transformer-Loss Meters
The basic measurement requirements for transformer losses call for a meter having one voltage-squared stator and one or more current-squared stators, depending on the number of metering current circuits. All stators are combined on the same shaft which drives a register of proper ratio to record the losses in kilowatthours or kiloVARhours.

The E2 stator consists of a standard watthour meter voltage coil and a low-current (possibly 50 mA) winding, which is connected in series with an adjustable resistor that serves as a core-loss adjustment. Registration is proportional to E2. An I2 stator consists of a standard current coil and a low-voltage voltage coil connected across the current coil and a series resistor in the current circuit. Registration, therefore, is proportional to I2.

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