optimal allocation of primary reserve services in energy markets this paper presents an optimization algorithm which provides generation economic dispatch minimizing simultaneously the cost of primary reserve services while ensuring the secure operation of the power system in the presence of disturbances the algorithm takes into consideration security constraints which are extracted from the chain rules provided by decision trees the proposed method is easy to implement in day ahead and real time balancing markets and is characterized from accuracy versatility and flexibility examples demonstrating application of the method on an actual power system model are presented and discussed

determination of network rental components in a competitive electricity market the locational marginal pricing lmp based settlement results in a surplus collected by the system operator from the consumers the nonlinear transmission losses and the constrained operation of the power system due to operating limits such as power flow limits on transmission lines cause the accumulation of this surplus this accumulated revenue referred to as the network rental in this paper has two main components loss rental and constraint rental this paper develops a method to calculate these different rental components paid by each consumer by combining the power flow tracing and kkt optimality conditions this yields quantitative determination of how each consumer has overpaid in the form of loss rental and constraint rental which in turn can be used to get a better insight of how the rental is accumulated simple three and four bus systems are used to demonstrate the proposed method

a review of renewable investment and power system operational issues in bangladesh generation investments especially large scale variable renewable energy requires careful scrutiny of the state of the power system power system planning and operations in a developing country like bangladesh can often achieve significant improvements in economics and security of supply through modest and prudent investments a review of the bangladesh power sector is presented in this paper that highlights a changes to dispatch protocols to undertake fuel constrained dispatch optimization and ancillary services co optimization and pricing b issues related to the allocation of natural gas between sectors and c a technology neutral investment framework the study uses an hourly dispatch and ancillary services co optimization model that also optimizes short to medium term investment decisions the results demonstrate bangladesh can a reduce its production costs by 63 through more efficient dispatch b reduce production costs by 77 by using an additional natural gas quota of 212 mmcfd or a 23 increase and c should have invested in power import and baseload gas coal rather than expensive solar pv projects proposed in 2011 at substantially higher cost at the time when a carbon price is imposed in the model the implied break even cost to justify the solar program is very high in excess of 150 tonne

capacity controlled demand side management a stochastic pricing analysis we consider a novel paradigm for demand side management assuming that an aggregator communicates with a household only at the meter imposing a capacity constraint i e a restriction on the total power consumption level within a given time frame consumers are then responsible to adjust the set points of the individual household devices accordingly to meet the imposed constraint we formulate the problem as a stochastic household energy management program with stochasticity arising due to local photovoltaic generation we show how a demand bidding curve for capacity increments can be constructed as a by product of the developed problem and provide a rigorous pricing analysis that results in a probabilistic shadow price envelope to evaluate the efficacy of the proposed approach we compare it with an idealized real time market price set up and show how our analysis can provide guidelines to consumers when selecting a service contract for load curtailment

market clearing with stochastic security part i formulation the first of this two paper series formulates a stochastic security constrained multi period electricity market clearing problem with unit commitment the stochastic security criterion accounts for a pre selected set of random generator and line outages with known historical failure rates and involuntary load shedding as optimization variables unlike the classical deterministic reserve constrained unit commitment here the reserve services are determined by economically penalizing the operation of the market by the expected load not served the proposed formulation is a stochastic programming problem that optimizes concurrently with the pre contingency social welfare the expected operating costs associated with the deployment of the reserves following the contingencies this stochastic programming formulation is solved in the second companion paper using mixed integer linear programming methods two cases are presented a small transmission constrained three bus network scheduled over a horizon of four hours and the ieee reliability test system scheduled over 24 h the impact on the resulting generation and reserve schedules of transmission constraints and generation ramp limits of demand side reserve of the value of load not served and of the constitution of the pre selected set of contingencies are assessed

marginal pricing and supplement cost allocation in transmission open access the application of marginal costing to transmission pricing in open access schemes requires the collection of a supplement to finance the transmission systems the paper describes the application of marginal cost based pricing in the chilean power system and the difficulties faced in allocating the supplement among parties involved alternative methods for defining the allocation are formulated generalized generation and load distribution factors for cost allocation are formulated and implemented the methods are applied to allocate payments for transmission services provided by the transmission network and by a distribution company

ordered logit model for residential electricity demand in korea abstract in this study we apply the ordered logit model to estimate the individual household electricity demand in korea using the energy census data conducted by korea energy economics institute in 1990 our analysis is based on the disaggregate micro data while most of the other studies on residential electricity demand use aggregate data we extract the representative household behaviour for electricity demand we propose how to aggregate the residential electricity demand from this disaggregate analysis by applying the probability model this method provides us reasonably accurate values comparing with the actual ones

efficient use of generator resources in emerging electricity markets in the emerging electricity market generators sell ancillary services as well as energy to the system operator pricing of ancillary services makes the scheduling of units more difficult due to the resulting unit cost curves the new climate will encourage generators to exploit the flexibility of their units in terms of operating modes this paper uses the augmented hopfield neural network to deal with ancillary service prices specifically reserve and ramping prices submitted by generators and to schedule units with a choice of operating modes

marginal loss modeling in lmp calculation this paper discusses the pricing of marginal transmission network losses in the locational marginal pricing approach recently deployed in the iso new england iso ne standard market design smd project implemented by alstom s t d energy automation and information eai business the traditional loss model is studied and a new model is proposed the new model achieves more defendable and predictable market clearing results by introducing loss distribution factors to explicitly balance the consumed losses in the lossless dc power system model the distributed market slack reference is also introduced and discussed the lmp components produced by the two models are studied and compared under changes in slack reference numerical examples are presented to further compare the two models

strategic self dispatch considering ramping costs in deregulated power markets ramp rates of generators are generally specified within elastic range of the strength of the shaft to safeguard the rotor from fatigue these limits can however be exceeded albeit at the risk of reducing the rotor life such effects on the rotor life can be compensated by incorporating appropriate ramping costs power demand and power price in deregulated power markets have shown a tendency of sudden wide excursions over short intervals of time the ability to respond to such fast change in demand and price can be quite rewarding this provides the motivation to utilize the ramping rates beyond traditional elastic limits this paper studies the strategic use of ramping rates beyond elastic limits in a power producer s self dispatch in a power market with price and demand volatility a set of ramping processes has been developed from ramping cost versus ramping time relationships to derive the total operation cost including ramping costs for various levels of ramping rates exceeding elastic limits a thorough theoretical analysis has been conducted for the selection of the optimal ramping process under different conditions a numerical example is presented to highlight the potential benefits from the optimal use of these ramping processes it is seen that the benefit from the strategic use of ramp rates beyond elastic limits not only depends on the high price in the power market but also on the initial loading of the generator which limits the capacity available for dispatch

market clearing with stochastic security part ii case studies this paper analyzes the market clearing formulation with stochastic security developed in its companion paper through two case studies solved using mixed integer linear programming techniques the generation and reserve schedules as well as the nodal prices of energy and security are assessed under various conditions such as a line flow limits b when nonspinning reserve is excluded from the formulation c demand side valuation of energy not served d generator ramping limits and e the set of pre selected contingencies

an iterative lmp calculation method considering loss distributions generally the locational marginal price lmp is obtained by solving a linear programming formulation network losses are considered through the preset loss factors based on historical operation information this usually brings errors in the calculated loss under different new scenarios further the congestion component of an lmp is dependent on the choice of the reference bus in this paper a new iterative lmp calculation method is proposed to overcome the aforementioned two drawbacks associated with the traditional lmp calculations at each iteration a linear programming problem for market clearing is solved first losses on branches are considered as fictitious nodal demands at their terminal buses secondly the ac power flow is calculated according to the dispatch results loss factors and fictitious nodal demands are then updated according to the ac power flow solution thus removing the need and dependence on presetting loss factors another important merit is that lmp and its congestion component obtained from the proposed iterative lmp calculation method are independent of choice of the reference bus the effectiveness of the proposed method is illustrated on two benchmark systems the importance of obtaining accurate losses and lmps is also demonstrated

dynamic demand for residential electricity in taiwan under seasonality and increasing block pricing abstract this paper studies the dynamic demand for residential electricity in taiwan employing a monthly panel data set composed of 19 counties and spanning the period from 2007 01 to 2013 12 the partial adjustment model used addresses the endogeneity of the electricity price that results from the increasing block pricing the estimated results show that there is a significant seasonal difference in the demand for electricity between the summer and non summer periods both the adjustment speed and own price elasticity during the summer months are found to be lower than those in the non summer months due to the hot weather in summer it is easier for consumers to adjust their electricity consumption in response to the changes in electricity pricing during the non summer time the estimated inelastic short run and long run income effects show that electricity is a necessity for consumers moreover the controversial electricity conservation policies are found to be ineffective measures for reducing electricity consumption in taiwan

matching users rights to available groundwater abstract the amount of available groundwater in a catchment changes quickly and the amount of water that users can take sustainably depends on where and when it is taken however rights to water tend to be fixed and obtaining rights to water incurs high transaction costs as a result water catchments are over allocated worldwide in this paper i show how a catchment manager could match users rights to the available water in near real time despite uncertain future inflows while making effective use of all available hydrological data the solution uses the framework of a smart market a smart market is a periodic auction cleared with the help of an optimization model in addition to market clearing this model allows a convenient means to adjust initial rights and the auction revenue reflects the available water relative to users rights when the auction is revenue neutral the catchment may be viewed as allocated perfectly i suggest several ways in which a catchment manager can find this revenue neutral allocation assuming the manager has authority to adjust initial rights

two stage stochastic programming model for market clearing with contingencies planning for contingencies typically results in the use of more expensive facilities before disruptions it leads to different prices and energy availability at various network locations depending on how the contingency analysis is performed in this paper we present a two stage stochastic programming model for incorporating contingencies the model is computationally demanding and made tractable by using an interior point log barrier method coupled with benders decomposition the second stage optimal recourse function rf defines the most economically efficient actions in the post contingency state for returning the system back to normal operating conditions the approach is illustrated with for two examples small with 8 buses 11 branches and ieee medium scale with 300 buses 411 branches

a comprehensive assessment of the evolution of financial transmission rights financial transmission rights ftrs are complementary to the locational marginal pricing of energy the basic aim of the ftr mechanism is to guard forward contracts from uncertain congestion charges ftrs are also useful to individual generators and loads for selling and buying power respectively at the prices of other locations the concept has evolved encompassing many features such as a simultaneous feasibility test various ways to conduct auctions and allocations and secondary trading ftrs also have a close relation to market power and transmission investment this paper reviews most of the landmark research papers on the evolution of the ftr concept it reports a comprehensive assessment of various facets of ftrs and allied issues financial transmission rights and flowgate rights fgrs are compared the concept of long term ftrs is discussed the paper also touches upon future proposals in this area

evolution toward standardized market design the evolution toward the standardized market design smd is presented in this paper with references to the market developments in new zealand australia pjm iso ne and ercot in the development of market designs two main objectives market liquidity facilitating bilateral trading and pricing efficiency facilitating congestion management have been pursued the efforts to balance the seemingly conflicting objectives led to most markets designed with a uniform or zonal pricing model introduction of locational marginal pricing and evolution of transmission rights from physical to financial form made it possible to harmonize the potentially conflicting goals in a market design the close coupling between energy and ancillary services requires that markets for these commodities be carefully coordinated different operational practices and reliability standard requirements have led to major differences in ancillary service market designs

calculating short run marginal costs of active and reactive power production proper pricing of active and reactive power is an important issue for economic and secure operations of power systems in an open transmission access ota environment this paper presents a flexible formulation for this purpose the proposed formulation identifies an important price component for reactive power which is fundamentally different from those existing in the literature this makes the pricing of reactive power more understandable the proposed approach is efficient for real time application and allows for carrying out active and reactive power pricing simultaneously or independently through the use of the decoupled optimal power flow formulation price signals derived from this approach are quite meaningful from an engineering point of view in addition the proposed approach can be easily extended to evaluate nugs and wheeling transactions the paper includes test results on the 30 and 118 bus ieee standard systems

replacement or additional purchase the impact of energy efficient appliances on household electricity saving under public pressures abstract this study examined the influence of additional and replacement purchases of energy efficient air conditioners on power savings we used a questionnaire survey and measured electricity use data from 339 japanese households collected from two city areas with different level of government requested electricity saving rates namely osaka 10 and matsuyama 5 the main findings of our study are as follows 1 households that purchased energy efficient air conditioners saved more electricity than those that did not 2 additional purchase households showed significant energy savings whereas replacement households did not the rebound effect may negate the energy saving effects of a new air conditioner 3 altruistic attitude is associated with more active participation in power saving 4 households in osaka saved more electricity than those in matsuyama probably because the government call to save electricity was more forceful

determinants of residential space heating expenditures in germany abstract we first examine the determinants of household expenditures on space heating and hot water supply in germany a number of socio economic characteristics of households are included along with building characteristics our analysis covers information on more than 12 000 households in germany for the years 1998 and 2003 the analysis continues by investigating whether different kinds of households are affected differently by increases in energy prices households in owner occupied properties are less affected compared to those in rented accommodation this could be because owners are more likely to have installed energy efficient heating and hot water supply systems and landlords have less of an incentive to improve the conditions of their rented accommodations an energy policy targeting especially the latter group might benefit not only households in rented accommodation but might also increase energy efficiency and reduce greenhouse gas emissions as well

an ordinal optimization based bidding strategy for electric power suppliers in the daily energy market the deregulation and reconstruction of the electric power industry worldwide raises many challenging issues related to the economic and reliable operation of electric power systems traditional unit commitment or hydrothermal scheduling problems have been integrated with generation resource bidding but the development of optimization based bidding strategies is only at a very preliminary stage this paper presents a bidding strategy based on the theory of ordinal optimization that the ordinal comparisons of performance measures are robust with respect to noise and modeling error and the problems become much easier if the optimization goal is softened from asking for the best to good enough solution the basic idea is to use an approximate model that describes the influence of bidding strategies on the market clearing prices mcp a nominal bid curve is obtained by solving optimal power generation for a given set of mcps via lagrangian relaxation then n bids are generated by perturbing the nominal bid curve the ordinal optimization method is applied to isolate a good enough set s that contains some good bids with high probability by performing rough evaluation the best bid is then selected by solving full hydrothermal scheduling or unit commitment problems for each of the bids in s using ordinal optimization approach we are able to obtain a good enough bidding strategy with reasonable computational effort numerical results using historical mcps from the california market and a generation company with 10 units show that the ordinal optimization based method is efficient

congestion driven transmission expansion in competitive power markets a framework for transmission planning in a deregulated power market environment is discussed the level of congestion in the network is utilized as the driving signal for the need of network expansion a compromise between the congestion cost and the investment cost is used to determine the optimal expansion scheme the long term network expansion problem is formed as the decoupled combination of 1 the master problem minimization of investment costs subject to investment constraints and the benders cuts generated by the operational problem power pool and 2 the operational problem whose solution provides congestion details and associated multipliers a proper power pool model is developed and solved for congestion cost congestion revenue and transmission shadow prices linear programming is utilized to solve the investment subproblem while the quadratic programming technique has been used to solve the operational problem the algorithm has been developed for the complete planning process which provides the expansion schemes for the planning horizon the technique has been applied to illustrate the network planning study for a modified ieee 24 bus test system

iso net surplus collection and allocation in wholesale power markets under lmp this study uses five bus and 30 bus test cases to explore iso net surplus congestion rent collections and allocations in wholesale power markets with grid congestion managed by locational marginal prices lmps price sensitivity of demand and generator learning capabilities are taken as experimental treatment factors a key finding is that conditions resulting in greater generator capacity withholding hence higher and more volatile lmps also result in greater iso net surplus collections that can be substantial in size a key conclusion is that iso net surplus collections should be used pro actively to mitigate the conditions encouraging generator capacity withholding and hence high and volatile lmps rather than to provide ex post support for lmp payment offsets and lmp volatility risk hedging as is currently the norm

dcopf based marginal loss pricing with enhanced power flow accuracy by using matrix loss distribution on current days many of the power markets are adopting the practice of marginal loss pricing the dc optimal power flow dcopf model is still mostly used for the purpose of market clearing owing to its simplicity robustness and higher speed of convergence within the dcopf framework transmission line losses are represented as additional external loads on the system in the classical dcopf model of marginal loss pricing as implemented in the new england market the aggregated network loss is distributed over the system nodes in a fixed ratio to gain more design flexibility in the distribution of system losses a matrix loss distribution mld framework is developed in this paper maintaining compatibility with financial transmission rights in mld each individual line is considered separately for the purpose of loss distribution the ratio in which the power loss in a certain line is distributed can be different from that in which the power loss in another line is distributed the additional design flexibility thus obtained assists in making a more accurate representation of the power flow the benefit of mld is illustrated through a case study an energy reference independent application of mld is also suggested

locational marginal price sensitivities within an optimal power flow market clearing framework this paper provides expressions to compute the sensitivities of locational marginal prices with respect to power demands sensitivities with respect to other parameters can also be obtained an example and a case study are used to illustrate the expressions derived

optimal electricity supply bidding by markov decision process the bidding decision making problem is studied from a supplier s viewpoint in a spot market environment the decision making problem is formulated as a markov decision process a discrete stochastic optimization method all other suppliers are modeled by their bidding parameters with corresponding probabilities a systematic method is developed to calculate transition probabilities and rewards a simplified market clearing system is also included in the implementation a risk neutral decision maker is assumed the optimal strategy is calculated to maximize the expected reward over a planning horizon simulation cases are used to illustrate the proposed method

elasticities of electricity demand in urban indian households abstract in the past several electricity demand studies have been published for india based on aggregate macro data at the country or sub national state level since the underlying theory of consumer demand is based on the behaviour of individual agents the use of micro data which reflects individual and household behaviour more closely can shed greater light on the nature of consumer responses in this paper seasonal price and income elasticities of electricity demand in the residential sector of all urban areas of india are estimated for the first time using disaggregate level survey data for about 30 000 households three electricity demand functions have been econometrically estimated using monthly data for the winter monsoon and summer season in order to understand the extent to which factors like income prices household size and other household specific characteristics influence variations observed in individual households electricity demand the results show electricity demand is income and price inelastic in all three seasons and that household demographic and geographical variables are significant in determining electricity demand

optimal lmp decomposition for the acopf calculation the objective of this work is to design a suitable rule for the energy reference selection in the ac optimal power flow acopf based locational marginal price lmp calculation in the case of the acopf model the congestion component of the lmp vector exhibits strong dependence on the energy reference this in turn makes the hourly values of financial transmission rights ftrs to be reference dependent and thus is a source of dispute in order to resolve this dispute a direct optimization framework is developed in this work exploring the interrelationship between the congestion components of locational marginal prices at individual buses the objective function and the constraints of this optimization model are carefully designed looking at the true motive of the lmp decomposition at the same time necessary attention is paid so as to ensure revenue adequacy in the ftr settlement the optimization problem that is ultimately to be solved is a simple quadratic programming problem with only one variable and two constraints the effectiveness of the proposed methodology is verified through a case study on a modified ieee 30 bus system the framework developed also unveils several interesting features of the lmp components that were under cover until now

continuous locational marginal pricing clmp this paper proposes a solution to eliminate the step change in the curve of location marginal price lmp with respect to load variation the new solution is named continuous locational marginal pricing continuous lmp or clmp because it is a continuous function with respect to load the present lmp methodology leads to a step change when a new constraint either transmission or generation becomes binding as load increases similarly there is also a step change of lmp if an existing constraint is no longer binding when load decreases the proposed clmp methodology smooths the step changes in the price curve and introduces a fourth component future limit risk flr price in addition to the present three lmp components energy price congestion price and loss price also flr is an indication of how close the present system state moves to the next constraint an algorithm is proposed in this paper to give a technically efficient method to calculate clmp and flr price two case studies are presented to demonstrate the proposed clmp methodology

components of nodal prices for electric power systems a method is presented to provide a detailed description of each nodal price for electric power systems by breaking down each nodal price into a variety of parts corresponding to the concerned factors such as generations transmission congestion voltage limitations and other constraints or elements this complete information for nodal prices can be used not only to improve the efficient usage of power grid and congestion management but also to design a reasonable pricing structure of power systems or to provide economic signals for generation or transmission investment several numerical examples demonstrate this approach

convexity of the set of feasible injections and revenue adequacy in ftr markets the feasible set of power injections for the constrained power flow equations is nonconvex when practical transmission capacity and bus voltage limits are imposed the projection onto the space of active power injections may be close to convex but this is not sufficient to guarantee revenue adequacy for the settlement of financial transmission rights

a security constrained bid clearing system for the new zealand wholesale electricity market this paper reports upon the mathematical models and implementation of the scheduling pricing and dispatch spd application for the new zealand electricity market nzem spd analyzes bids for energy offers reserve offers and energy demands and recognizes explicitly the effects on bid clearing due to transmission congestion network losses reserve requirements and ramp rate limits advanced lp solution methods are utilized to solve the large scale constrained optimization problem results on a 67 bus test system and the nzem are included

electricity retail contracting under risk aversion abstract risk has always been a dominant part of financial decision making in any industry recently models tools and computational techniques have been developed so that we can effectively incorporate risk in optimal decision policies the focus of this paper is on electricity markets where much of the inherent risk falls on the retail sector we introduce a three stage model of an electricity market where firms can choose to enter the retail market then enter into retail contracts and finally purchase electricity in a wholesale market to satisfy their contracts we explicitly assume that firms are risk averse in this model we demonstrate how the behaviour of firms change with risk aversion and use the example of an asset swap policy over a transmission network to demonstrate the importance of modeling risk aversion in determining policy outcomes

energy and reserve pricing in security and network constrained electricity markets this paper analyzes some unresolved pricing issues in security constrained electricity markets subject to transmission flow limits although the notion of separate reserve types as proposed by ferc can be precisely and unambiguously defined when transmission constraints are active the very existence of separate reserve prices and markets is open to question when the prices are based on marginal costs instead we submit here that the only products whose marginal costs can be separately and uniquely defined and calculated are those of energy and security at each node thus under marginal pricing at any given network bus all scheduled reserve types should be priced not at separate rates but at a common rate equal to the marginal cost of security at that bus furthermore we argue that nodal or area reserves cannot be prespecified but must be obtained as by products of the market clearing process simulations back up these conclusions

continuous time marginal pricing of electricity the current practice of discrete time electricity pricing starts to fall short in providing an accurate economic signal reflecting the continuous time variations of load and generation schedule in power systems this paper introduces the fundamental mathematical theory of continuous time marginal electricity pricing we first formulate the continuous time unit commitment problem as a constrained variational problem and subsequently define the continuous time economic dispatch ed problem where the binary commitment variables are fixed to their optimal values we then prove that the continuous time marginal electricity price equals to the lagrange multiplier of the variational power balance constraint in the continuous time ed problem the proposed continuous time marginal price is not only dependent to the incremental generation cost rate but also to the incremental ramping cost rate of the units thus embedding the ramping costs in calculation of the marginal electricity price the numerical results demonstrate that the continuous time marginal price manifests the behavior of the constantly varying load and generation schedule in power systems

where does all the money go measuring effects of agricultural policy transfers on farm income discussion written and thought provoking the article by alston is intriguing in framing agricultural re search as one of a menu of policy options for transferring income to farmers underin vestment in agricultural research which is all but impossible to explain on social welfare grounds becomes easier to explain once it is viewed in these political economy terms as alston notes there is significant uncer tainty about whether the beneficiaries of agri cultural research will be producers consumers or both if producers as a whole benefit who among them will be beneficiaries when will they benefit and by how much one sug gestion for future research is to empirically examine whether these factors can explain differences in agricultural research spending across commodities other things equal al ston s framework suggests that agricultural commodities with a more stable set of produc ers over time and commodities where there is less heterogeneity among producers should be less likely to experience underinvestment in research the article by thompson mishra and dew bre is a valuable contribution to the literature

risk based locational marginal pricing and congestion management this paper develops a new electricity market clearing mechanism called risk based locational marginal pricing rlmp the rlmp is derived from the risk based security constrained economic dispatch model where risk is modeled to capture the system s overall security level compared to the traditional locational marginal pricing lmp which is composed of three components energy congestion and loss the rlmp consists of an additional risk component the risk component is a price signal to reflect the system s overall security level this paper discusses the features of rlmp and analyzes its benefits over traditional lmps the proposed concept and method are illustrated on a six bus system and the wecc 240 bus system

a security constrained energy and spinning reserve markets clearing system using an interior point method a model and solution approach to a daily energy and spinning reserve electricity markets clearing system is presented in this paper the model considers offers for energy supply and spinning reserve bids for demand of energy and re schedulable bilateral contracts system security is taken into account by using a direct current model the model represents the clearing system used by an iso in charge of both the market and system security the clearing system is formulated as an optimization problem which is solved using an interior point method ipm taking advantage of the problem s special structure

an energy reference bus independent lmp decomposition algorithm the volatility of the price of electricity in a locational marginal price lmp market makes it necessary to introduce financial price risk hedging instruments the congestion related and marginal loss related revenue surpluses collected by the regional transmission operator rto are proposed to be redistributed to market players it is important to be able to correctly decompose the lmp into its congestion and marginal loss components which are critical for the valuation and settlement of these financial instruments a new energy reference bus independent lmp decomposition model using an ac optimal power flow opf model is presented to overcome the reference bus dependency disadvantage of the conventional approach the marginal effect of the generators output variation with respect to load variation are used as the basis of this decomposition model the theoretical derivation and a proof are given the new model achieves a set of reference bus independent results an example is presented comparing the new model with the conventional model

marginal pricing of transmission services an analysis of cost recovery this paper presents an in depth analysis of network revenues computed with marginal pricing and in particular it investigates the reasons why marginal prices fail to recover the total incurred network costs in actual power systems the basic theoretical results are presented and the major causes of the mismatch between network costs and marginal revenues are identified and illustrated with numerical examples some tutorial and others of realistic size the regulatory implications of marginal network pricing in the context of competitive electricity markets are analyzed and suggestions are provided for the meaningful allocation of the costs of the network among its users

transmission management for congested power system a review of concepts technical challenges and development of a new methodology transmission networks have some constraints that should be addressed in order to ensure sufficient control to maintain the security level of a power system while maximising market efficiency the most obvious drawback of transmission constraints is a congestion problem that becomes an obstacle to perfect competition among the market participants since it can influence spot market pricing as the power flow violates transmission constraints redispatching generating units is required and this will cause the price at every node to vary this manuscript presents concepts technical challenges and methodology for investigating an alternative solution to the redispatch mechanism and then formulates lmp scheme using an optimisation technique that may well control congestion as the main issue the lmp scheme are varied and improved to take into account the energy price congestion revenue cost of losses as well as the transmission usage tariff by utilising shift factor based optimal power flow sf opf which is derived from the well known dc optimal power flow dc opf model

are government transfers efficient an alternative test of the efficient redistribution hypothesis the efficient redistribution hypothesis says that no available government policies are pareto superior to observed government policies efficient redistribution from government policy is a central tenet of much recent theoretical and applied political economy literature in this paper limitations of previous attempts to test the efficient redistribution hypothesis are discussed and an alternative test of the efficient redistribution hypothesis that uses vector optimization theory and bootstrap methodology is presented

introduction to loss hedging financial transmission rights in order to guard forward contracts from the locational marginal price lmp volatility financial transmission rights ftrs are issued in the centralized power markets however the current ftr system can provide hedge only against the congestion components of lmp differentials consequently the loss components remain unhedged to bridge the gap a framework is developed in this paper to implement an ftr system that will provide hedge against the loss prices the availability of loss hedging ftrs in addition to the congestion hedging ftrs further reduces the exposure of the forward market participants to the lmp volatility the loss hedging framework developed is carefully designed to fit the practical environment all the primary issues for the implementation of loss hedging ftrs such as the revenue adequacy test auction and auction revenue rights are carefully addressed revenue adequacy of loss hedging ftrs can be ensured by means of a test called as the offset capacity test some efficient policies are also designed for the successful functioning of loss hedging ftrs at the end of the paper a case study is carried out to assess the effectiveness of the methodology developed

inversion of real time spot prices in the direction of real power flow in a transmission line an increasing number of electricity markets employing some form of spot pricing however limited experience of the behavior of spot prices exists this paper introduces and investigates one particular aspect of pricing behavior observed in the new zealand spot market known as price inversion spot prices are generally calculated using some form of opf or power flow software the phenomena of price inversion is investigated using the dc power flow implemented in the new zealand spot market and using a full ac power flow price inversion is shown to be dependent on the physical characteristics of the power system the economic implications of price inversion are also discussed

an individual welfare maximization algorithm for electricity markets an algorithm that allows a market participant to maximize its individual welfare in electricity spot markets is presented the use of the algorithm in determining market equilibrium points called nash equilibria is demonstrated the start of the algorithm is a spot market model that uses the optimal power flow opf with a full representation of the transmission system and inclusion of consumer bidding the algorithm utilizes price and dispatch sensitivities available from the hessian matrix and gradient of the opf to help determine an optimal change in an individual s bid the algorithm is shown to be successful in determining local welfare maxima and the prospects for scaling the algorithm up to realistically sized systems are very good nash equilibria are investigated assuming all participants attempt to maximize their individual welfare this is done by iteratively solving the individual welfare maximization algorithm until all individuals stop modifying their bids

optimization based bidding strategies in the deregulated market with the deregulation of electric power systems market participants are facing an important task of bidding energy to an independent system operator iso this paper presents a model and a method for optimization based bidding and self scheduling where a utility bids part of its energy and self schedules the rest as in new england the model considers iso bid selections and uncertain bidding information of other market participants with appropriately simplified bidding and iso models closed form iso solutions are first obtained these solutions are then plugged into the utility s bidding and self scheduling model which is solved by using lagrangian relaxation testing results show that the method effectively solves the problem with reasonable amount of cpu time

nodal uniform or zonal pricing distribution of economic surplus competitive markets for electricity determine either a uniform marginal price ump a set of nodal marginal prices nmps or a smaller set of zonal marginal prices zmps in theory the nmp system is best as it correctly accounts for transmission constraints and losses in some versions but critics allege that the large number of prices is confusing since the ump or zmp solution must be adjusted to account for transmission constraints and losses it is reasonable to consider a market design in which actual dispatch corresponds to an nmp model that accounts for losses and if a ump or zmp model is used at all it is only to compute prices for settlements and compensation for constrained on or off generation or load we prove that if used in this way the ump or zmp models a do not affect the total economic surplus b redistribute the surplus among generators and loads at the different nodes and c give perverse incentives for generation expansion we illustrate on a realistic system

a scenario simulation approach for market power analysis in hydrothermal systems this paper focuses on markets based on physical bilateral contracts combined with a power exchange px the main feature to be analyzed is the behavior of the hydrothermal system where one or more companies have a big reservoir with capacity for inter annual regulation in this work inter annual regulation means the ability of a reservoir to allocate water from consecutive years the use of the reservoirs in a context of a power exchange market with competition is the main objective of this study results on the chilean central interconnected system using stochastic dynamic programming are presented and discussed

energy and reserve dispatch in a multi zone electricity market competitive bidding for ancillary services a s in addition to bidding for energy is increasingly recognized as an important part of electricity markets in this paper an lp based approach is presented for solving the multi product i e energy and a s products multi zone area physical market dispatch problem the approach can explicitly represent various constraints such as reserve requirement constraints network security limits and sharing of constrained resource capacity e g maximum unit generation between energy and reserve the joint dispatch method which dispatches energy and reserve market concurrently is extended to allow inter zonal reserve trading in a multi zone competitive pool numerical examples are included to demonstrate the salient characteristics of the joint dispatch solution

offer stack optimization in electricity pool markets we consider a generator making offers of energy into an electricity pool market for a given time period it must submit an offer stack consisting of a fixed number of quantities of energy and prices at which it wants these quantities dispatched we assume that the generator cannot offer enough power to substantially affect the market price so the optimal response would be to offer energy at marginal cost however the market rules do not permit an arbitrary function so the problem is to find an offer stack approximating marginal cost in a way that maximizes its profit we give optimality conditions for this problem and derive an optimization procedure based on dynamic programming this procedure is illustrated by applying it to several examples with different costs of production

evaluation of wheeling and nonutility generation nug options using optimal power flows the application of optimal power flow for the evaluation of wheeling and nonutility generation nug related options is presented both wheeling and nug options affect vital attributes such as system security voltage profile losses and var reserves these options put a strain on the existing transmission system and may restrict economic utility dispatching optimal power flows may be used to determine the best control settings to accommodate wheeling or nug options so as to maintain system security while minimizing losses or production cost short term marginal wheeling costs may be derived using optimal power flows case studies involving the northeast utilities and ieee test systems are presented these cases show that optimal power flows can be used effectively to address a broad range of wheeling or nug related planning issues

decomposition model and interior point methods for optimal spot pricing of electricity in deregulation environments in this paper an integrated optimal spot pricing model is presented first the proposed model includes the detailed derivation of optimal nodal specific real time prices for active and reactive powers and the method to decompose them into different components corresponding to generation loss and many selected ancillary services such as spinning reserve voltage control and security control the features of the proposed model are discussed in relationship to existing pricing models and classical economic dispatch the model is then implemented by modifying existing newton opf methods through interior point algorithms which can effectively avoid go no go gauge i e highly volatile in the calculation of spot prices case studies on 5 bus and ieee 30 bus systems are reported to illustrate the proposed method

risk assessment in energy trading this paper provides a state of the art summary of risk assessment in energy trading techniques from financial engineering are needed by electric energy companies to manage price risk these tools are needed by suppliers distributors and traders in a competitive electric power marketplace tools that have been adapted to the specific environment of the electric power system include portfolio analysis and hedging instruments this paper provides a comprehensive critical literature survey of what has been applied to date in the power markets and which areas continue to need additional research one example market scenario is used throughout the paper to demonstrate the usefulness of the risk assessment methods

implementation of lmp ftr mechanism in an ac dc system this paper analyzes the implementability of locational marginal price lmp and financial transmission right ftr mechanisms in the presence of high voltage dc hvdc lines in the regulated i e under the control of system operator network the established framework of lmp ftr mechanism assumes that the system under regulation is fully ac unregulated or private hvdc lines are taken into account within this framework through proxy transaction bids from the line owners however as the flow over a regulated hvdc line has to be controlled by the system operator himself the existing lmp ftr framework becomes insufficient if the system contains or is expanded with regulated hvdc lines the augmentation that should be made to the existing framework to include regulated hvdc lines is explained in this paper it is shown that the flow over a regulated hvdc line can be modeled as a non chargeable bilateral transaction without causing any threat of negative congestion surplus for this power dispatch model revenue adequacy of ftrs can be still ensured by means of the conventional simultaneous feasibility test sft model by utilizing the capacities of dc lines a more general sft model is further developed the modified auction problem is discussed and tested for the non negativity of net auction collection the process of revenue adequate issuance of auction revenue rights is explained finally the relative merit of a regulated hvdc line over a private hvdc line is discussed through a case study

an oligopolistic power market model with tradable no sub x permits models formulated as complementarity problems have been applied previously to assess the potential for market power in transmission constrained electricity markets here we use the complementarity approach to simulate the interaction of pollution permit markets with electricity markets considering forward contracts and the operating reserve market because some power producers are relatively large consumers of permits there could be interaction between market power in the permits and energy markets market power in the energy market is modeled using a cournot game while a conjectured price response model is used in the permits market an illustrative application is made to pennsylvania new jersey maryland interconnection pjm which we represent by a 14 node dc load flow model and the usepa ozone transport commission no sub x budget program the results show that forward contracts effectively mitigate market power in pjm energy market and both simulated solutions of perfect and cournot oligopoly competition are a good approximation to actual prices in 2000 except that the cournot model yielded higher peak prices the no sub x market influences the cournot energy market in several ways one is that cournot competition lowers the price of no sub x permits which in turn affects on low and high emission producers differently in general because pollution permits are an important cost high concentration in the market for such permits can exacerbate the effects of market power in energy markets

a general formulation for lmp evaluation the evaluation of locational marginal prices or lmps which constitute the basis of the new generation of market design in the u s is a critical need in the side by side operation of electricity markets and power systems their use in various applications such as congestion management and hedging requires specific lmp components in the computations we provide a general formulation for the evaluation of the lmp components by making explicit use of the important role played by the nodes with generators with free capacity on the other hand the lmps of the nodes without generation or with the generators at their limits are a function of the lmps at the marginal nodes and the impacts of the network constraints including the losses in the network in the formulation we pay special attention to the importance of the assumptions and specifications the so called policy specification in the determination of the components we obtain a very general formulation that brings under a single framework the different decomposition approaches that exist the formulation s comprehensiveness brings numerous insights into the various decompositions provides a platform for their comparative analysis and allows us to understand the direct implications and the role of the policy specified moreover the formulation reveals the limitations of any decomposition into the components due to the underlying structural interdependencies among them which is clearly shown in this paper we provide an example to illustrate the capabilities and the insights obtainable with the use of this formulation

a joint energy and transmission rights auction proposal and properties an auction based process is proposed that allows power market participants to acquire and reconfigure financial transmission rights the process simultaneously accommodates flowgate and point to point options and obligations along with energy production and consumption futures a sequence of auctions is held during which participants can buy and sell rights which are then settled in a day ahead or real time auction at which time all rights are cashed out by allowing flowgate and point to point obligations and options to be reconfigured and exchanged the market can decide what combination of financial rights are most useful to power generators consumers and traders rights can be specified not only for capacity of individual flowgates but also for more complex transmission constraints such as nomograms under certain conditions we prove that the auction is revenue adequate for the market operator in that payments to rights holders cannot exceed congestion revenues we present a linearized dc auction along with a numerical illustration

incorporating post zonal reserve deployment transmission constraints into energy and ancillary service co optimization this paper presents a new approach implemented in miso day ahead and real time energy and ancillary service market clearing processes to address the reserve deliverability issue in this approach miso enhanced the co optimization process to incorporate post zonal reserve deployment transmission constraints reserves are procured within the co optimization to meet both market wide reserve requirements and ensure their deliverability on a zonal basis as a result zonal market clearing prices mcps for reserves can properly reflect the effects of zonal reserve deployment on transmission constraints under consideration

a probability model for the electricity price duration curve under an oligopoly market in this paper we propose a new formulation for the price duration curve pdc using probability considerations and provide a procedure for constructing it this curve is expected to be useful in the long term prediction of market prices and is similar in spirit to the load duration curve it shows the proportion of time over a given time horizon during which the real time market price of electricity is expected to exceed specified dollar amounts the price over a long term is a stochastic quantity that depends on physical factors such as production cost load generation availability unit commitment and transmission constraints it also depends on economic factors such as strategic bidding and load elasticity we illustrate a procedure for constructing a stochastic system based model for the pdc taking into account the randomness associated with load and generator outages the effects of unit commitment transmission congestion and transmission outages are not considered we use two economic models one is due to bertrand and represents perfect competition the other model is due to rudkevich et al who have given a closed form expression for the market clearing price in an oligopoly consisting of several identical firms

using a system model to decompose the effects of influential factors on locational marginal prices locational marginal prices lmps are influenced by various factors such as load uncertainty thermal limit capacity reserve and market power we build a system model to quantitatively analyze the effects of these individual factors and their interactions on the mean and standard deviation of the lmps assuming that the factors are either active or inactive according to the sensitivity analysis results from convex quadratic programming lmps are piecewise linear functions of demand variation which is a key property used in the computation this paper attempts to answer the following types of questions 1 to what extent does market power raise the lmps above the marginal cost 2 what effects will generation or transmission capacity expansion have on relieving high lmps under high demand scenarios an ieee 30 bus test system is used as an example to demonstrate our approach

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

stochastic multiobjective market clearing of joint energy and reserves auctions ensuring power system security in this paper a stochastic multiobjective framework is proposed for day ahead joint market clearing the proposed multiobjective framework can concurrently optimize competing objective functions including augmented generation offer cost and security indices overload index voltage drop index and voltage stability margin besides system uncertainties including generating units and branches contingencies and load uncertainty are explicitly considered in the stochastic market clearing scheme the solution methodology consists of two stages which firstly employs roulette wheel mechanism and monte carlo simulation mcs for random adaptive 24 h scenario generation wherein the stochastic multiobjective market clearing procedure is converted into its respective deterministic equivalents scenarios in the second stage for each deterministic scenario a multiobjective mathematical programming mmp formulation based on the epsiv constrained approach is implemented for provision of spinning reserve sr and nonspinning reserve nsr as well as energy the mmp formulation of the market clearing process is optimized while meeting ac power flow constraints and expected interruption cost eic the ieee 24 bus reliability test system rts 24 bus is used to demonstrate the performance of the proposed method

framework for the design and analysis of congestion revenue rights the capability to deal effectively with the uncertainty associated with locational marginal prices lmps in congestion management schemes requires the development of appropriate financial tools congestion revenue rights crr are hedging tools that provide the holder reimbursement of the congestion charges in the day ahead market and thereby provide transmission service customers with price certainty in this paper we construct a framework for the design and analysis of the crr by marrying finance theory notions with salient characteristics of electric power systems and electricity markets the framework consists of three interconnected layers with one layer each to represent the models of the transmission network the commodity markets and the crr financial markets the interaction between the layers is represented as information flows the framework has sufficient scope to allow the analysis of a broad range of problems associated with ensuring price certainty for transmission services the structural modularity of the framework provides the flexibility to analyze issues and design structures for the provision of transmission services in the competitive environment we introduce a new notion of crr payoff parity and a practical pricing scheme which are used as the basis for the design of more liquid crr markets the application of the framework is further illustrated by the analysis of the conditions that guarantee the revenue adequacy for the crr issuer

reactive power constrained opf scheduling with 2 d locational marginal pricing the objective of this paper is to suggest a robust optimal power flow opf framework to perform locational marginal pricing under the scarcity of reactive power the classical opf models employed for market clearing either assume infinite reactive power support or make a fully independent representation of the reactive power load in contrast a potentially more accurate power flow model is adopted in this paper recognizing the dependence of the level of reactive power consumption on the level of active power consumption the relationship is primarily modeled by employing the concept of power factor in addition there can be load requests with different power factors from the same location the corresponding locational marginal prices lmps are found to vary not only spatially but also according to power factors thus a two dimensional lmp variation is finally obtained a consistent definition of financial transmission rights is also provided and the associated lmp decomposition scheme is described the model proposed is studied on the ieee 30 bus system and its distinctive features are noted down and discussed

a physical flow based approach to allocating transmission losses in a transaction framework a physical flow based approach to allocating transmission losses in a multiple transaction system is presented the allocation scheme is developed using a framework in which the transactions are explicitly represented the proposed scheme is based on expressing losses explicitly in terms of all the transactions in the system an important property of the allocation scheme is its effective capability to deal with counter flows that result in the presence of specific transactions extensive numerical testing indicates that the allocation scheme produces loss allocations that are appropriate and that behave in a physically reasonable manner test results on several systems are presented

market based price differentials in zonal and lmp market designs the california iso is redesigning procedures for scheduling dispatch and congestion management which are critical to reliable nondiscriminatory transmission service the redesign implements security constrained unit commitment and locational marginal pricing to reflect actual costs of delivering energy using an accurate network model to price both congestion and losses caiso simulations of the market redesign are a unique opportunity to compare a estimated lmps if the redesign were in place during recent historical periods with b actual conditions as logged in operating records the study uses market schedules and bids in an alternating current optimal power flow simulation resulting lmps are similar within current congestion zones but price differences occur during high loads reflecting actual changes in system conditions the frequency and magnitude of lmp differences are consistent with the current market suggesting that the increased market transparency will produce stable predictable prices case studies demonstrate that optimization using scuc and sced coupled with the state estimator allows more appropriate responses to system conditions improved utilization of transmission capacity reduction in congestion costs and enhanced system reliability

pseudo tie generator model implementation for california iso operations and lmp markets a pseudo tie resource model is a means by which a resource i e generation unit or load is operationally transferred from one balancing authority ba area in which the resource is physically located i e native ba to another i e attaining ba area the attaining ba has responsibility for operational control of the pseudo tie resource for both system reliability and electricity market purposes by implementing a pseudo tie the california in dependent system operator corporation iso ba is able to attain control of resources physically located external to its jurisdiction for its ba area services this paper discusses the implementation of a pseudo tie generator ptg with primary focus on its modeling in the iso full network model fnm and participation in the nodal based lmp electricity markets namely the integrated forward market ifm and real time market rtm the ptg has also been discussed in the context of system reliability and market operational principles resource scheduling and bidding outage reporting 5 min real time economic dispatch and pricing furthermore the paper highlights some of the key operational characteristics and differences between pseudo tie and conventional dynamically scheduled resources

strategic bidding in an energy brokerage this focus of this paper is to present a framework in which strategies may developed for the individual participants in an energy brokerage such a framework is expected to be important with the increasing interest in electricity market structures such as the energy brokerage that deregulation has produced to illustrate the process of strategic bidding a simple suboptimal bidding strategy is presented with the aid of a numerical example the bidding strategy must be suboptimal because of the amount of unknown information about the other bidders further tuning of this strategy will be required before application to realistic scenarios

locational marginal price calculations using the distributed slack power flow formulation in practice locational marginal prices lmps are usually calculated by assembling their three components the reference price the congestion price and the loss price explicit formulas for calculating the three components based on the single slack power flow formulation can be found in the literature this letter presents the formulas for calculating the three components based on a distributed slack power flow formulation

a novel policy for lmp calculation in distribution networks based on loss and emission reduction allocation using nucleolus theory this paper proposes a new policy to calculate the locational marginal price lmp in the distribution networks containing distributed generation dg the proposed policy is based on remunerating the dg units to reduce the loss and emission of the network lmp at each dg bus is calculated according to the contribution of the dg to the reduced amount of loss and emission an iterative algorithm which is based on the nucleolus theory is proposed to allocate the loss and emission reduction the proposed algorithm will provide a robust state estimation tool for distribution companies discos in the next step of operation the state estimation tool provides the decision maker with the ability to exert its control over private dg units when the loss and emission are minimized also the proposed pricing policy requires decision maker to simply apply its best response strategy to the lmp based on the priority of loss emission and disco s extra benefit the proposed methodology is applied to two realistic distribution networks and efficiency and accuracy of the method are verified