an analysis of interfirm cooperation theory and evidence from electric power pools this paper develops and tests a model for analyzing the extent to which an individual utility participates in a power pool it incorporates the benefits and costs of pool membership in a profit maximization model of an individual utility the study finds that coordination reflects the benefits and costs the degree to which other utilities are committed to the pool and the utility s behavior toward other utilities the results show that large firms are reluctant to pool with small firms and the us pools tend to be loosely coordinated policy implications are that regulatory commissions can be instrumental in coordination efforts and that interstate cooperation among regulatory authorities is needed to encourage pooling and obtain regional solutions to regional problems it is also important to reduce the transactional costs of pooling wherever possible 37 references 3 figures 1 table

the efficiency of electric power pools evidence from firing unit data 1986 the efficiency of electric power pools evidence from firing unit data applied economics vol 18 no 12 pp 1323 1334

transmission system management and pricing new paradigms and international comparisons the transmission system once the necessary but nearly invisible component of the electric power system is now the focus of physical electrical and financial attention of the utility and more significantly their potential suppliers customers this paper has three primary objectives the first is to present a discussion of a new paradigm for the electric power industry the second is to review transmission pricing options specifically those utilizing either long run lrmc or short run srmc marginal cost based approaches the third is to provide a review of innovative approaches to transmission asset management and finance as seen from international experience

interpreting an error correction model partial adjustment forward looking behaviour and dynamic international money demand an error correction model is derived from a stochastic dynamic programming problem incorporating rational expectations a parametric restriction is derived that allows a test for the theoretical proposition that the optimal strategy behind the error correction from entails the failure to asymptotically close the gap between the choice variable and the growing target this is accomplished by nesting a partial adjustment model with forward looking expectations within the error correction paradigm the counterintuitive behaviour embodied in the error correction model is not supported by the data in the context of a cross country comparison of cash balances relationships

liberalisation and r d in network industries the case of the electricity industry abstract electricity sector liberalisation has coincided with a significant decline in r d spending this paper reviews the industrial organisation literature on r d and innovation to explore the likely causes of the decline in r d spending in the electricity sector meanwhile r d productivity and innovative outputs in utilities and equipment suppliers appear to have improved however a lasting decline in r d expenditure can have a negative long term effect on technological progress and innovation in the sector we conclude that the decline in r d could have been predicted from the literature we also discuss the need to reorient the post liberalisation technology policy

longitude matters time zones and the location of foreign direct investment abstract using bilateral foreign direct investment fdi data we find that differences in time zones have a negative and significant effect on the location of fdi we show that this finding is robust across different specifications estimation methods and proxies for time zone differences time zones also have a negative effect on trade but this effect is smaller than that on fdi finally the impact of the time zone effect has increased over time suggesting that it is not likely to vanish with the introduction of new information technologies

optimal pricing in electrical networks over space and time an electrical system is modelled with a transmission network customers central generators and independent generators the system is subject to stochastic failures and stochastic demand parameters optimal spot prices are derived for the system they vary stochastically with space and time and depend on electrical load flow patterns the price difference between two locations or two voltage levels and the wheeling charge between them will change magnitude and sometimes sign over time as a function of events throughout the network current spatial pricing methods are significantly different from the spot price based methods derived here

intelligent agents for negotiations in market games 2 application for part i see ibid vol 13 no 5 p 1103 8 1998 in competitive markets human decision makers need assistance to determine potential coalitions that they can be part of note that such coalitions are legal provided market power is not monopolized we present an approach for designing specialized intelligent software agents that perform negotiations on behalf of their human counterparts and then suggest market strategies that the human can adopt our negotiation protocol is derived from cooperative game theory however it differs from the game theory literature in requiring virtually no trustworthy information exchange between the potential coalition partners in the part i we presented the negotiation model in this paper we apply it to power markets

alternative models of spatial competition the concept of a spatial price equilibrium underlies most studies of spatial movement and competition however this concept is based upon a notion of perfectly competitive markets that is often unrealistic for many markets such as the markets for oil and coal and ignores the existence of local spatial monopolies this paper presents alternative economic models of spatial competition and shows how all of these models can be solved with essentially the same solution algorithm specifically after reformulating the classical spatial price equilibrium model and two extensions of takayama and judge s monopoly model we state and analyze a cournot nash model and discuss solution algorithms we then generalize these models and algorithms to multiple commodities and networks with transshipment nodes we conclude with a brief discussion of possible extensions of this class of models and associated algorithms

application of games with incomplete information for pricing electricity in deregulated power pools the authors present a game theory approach to the problem of pricing electricity in deregulated marketplaces they assume that an independent operator receives bids by pool participants and defines transactions among participants by looking for the minimum price that satisfies the demand in the pool the competition among pool participants is modeled as a noncooperative game with incomplete information they assume that each pool participant knows its own operation costs but does not know his opponents operation costs the game with incomplete information is transformed into a game with complete but imperfect information and solved using the nash equilibrium idea the approach presented in this paper is geared towards providing support for pricing electricity in deregulated pools

vertical economies in electric power evidence on integration and its alternatives abstract the restructuring of the electric power industry raises questions about the possible sacrifice of economies previously secured by integrating generation with downstream transmission and distribution this study utilizes a data set of u s electric utilities that differ widely in their degree of vertical integration in order to model estimate and measure such economies cost savings from vertical integration are found to be quite substantial for all but the smallest utilities and are largest for those that are nearly fully integrated the study goes on to investigate alternatives to sources of and determinants of vertical integration among other findings it appears that some holding companies achieve economies comparable to those from vertical integration

allocation of unit start up costs using cooperative game theory this paper discusses a three part generation offer strategy that enables generators to put in unbundled variable operating costs and fixed start up no load costs we then propose methods based on cost sharing axioms to allocate fixed start up no load costs among electricity consumers load retailers that take into account equity and rationality considerations we focus on the single period cost allocation first we apply three well known game theoretic axioms the core the nucleolus and the shapley value we discuss the relative merits and demerits of each criterion and also explore certain theoretical conditions for the existence of the core and the shapley value lying inside the core finally the multiperiod start up cost allocation problem is studied allocations based on individual periods vis a spl grave vis composite allocation for all periods are compared and contrasted numerical examples are used to illustrate all theoretical concepts

the organizational economics of power brokers and centrally dispatched power pools introduction economic and the political or normative components of pool structure power pools are partnerships among corporately unaffiliated electric utility compansubsidy free cost allocation ies formed to realize cost savings through mutual cooperation there are many ways in solutions to the first organizational probwhich cooperation can reduce the collective lem are described as tight or loose fedcosts of the utilities in a region including joint eral energy regulatory commission 1981 system planning and emergency energy excramer and tschirhart 1983 in some rechange but one aspect of cooperation is comgions of the united states particularly in the mon to all power pools within a geographinortheast individual firms have yielded subcal region and at any given time some utilities stantial amounts of authority over their own typically experience higher short run margeneration facilities establishing computerginal costs than others owing to differences of controlled dispatching of the region s plants plant mix or instantaneous loads when the regardless of ownership to realize the greatest firms with low marginal costs increase their reduction in energy costs in other regions production and sell this economy energy to notably florida utilities have chosen to retain the higher cost firms the poolwide cost of their autonomy and institute an information generation is decreased ertclearinghouse or energy broker to facilitate owing to this opportunity for cost savings short run power transactions that reduce the the firms in a region are confronted with an pool s energy costs cohen 1982 no matter organizational problem having two compowhat organizational form is used a pool must nents 1 what should the firms do to realize also agree on a method to allocate the costs of the opportunity for savings and 2 how pooled production and experience has should the savings be allocated among the shown that the matter of determining an pool members the first question is technical equitable allocation of system costs can be solved by accounting for the costs of producone of the principal impediments to the fortion and the costs of transaction under altermation and maintenance of power pooling native organizational arrangements cramer agreements uri 1976 federal energy reguand tschirhart 1983 gegax and tschirhart latory commission 1981 1984 the second is normative and must be recently economists have taken an interanswered in terms of the notions of justice or est in the equity properties of alternative cost fairness held in common by pool members allocation mechanisms the equity concept the solution of the organizational problem employed in most studies is the notion of therefore requires a political economy subsidy freedom faulhaber 1975 taken framework for organizational analysis zald from cooperative game theory an allocation 1970 in which attention is given to both the of a power pool s generation costs is subsidy free if no individual or subgroup of pool mem

measures of fit for rational expectations models this survey provides a detailed description of some of the recent theoretical and empirical literature on rational expectations econometrics the survey pays special attention to non stationarity of the data and to the various methods for evaluating rational expectations models that have been developed as alternatives to the classical statistical approach of testing overidentifying restrictions these methods have become very popular and widely used in empirical research we provide an illustration using danish stock market data and we summarize the many results obtained recently using these measures in areas as diverse as stock prices the term structure of interest rates exchange rates consumption and saving the balance of payments tax smoothing hyperinflation and linear quadratic adjustment cost models for inventories labour demand and money demand

nash equilibrium bidding strategies in a bilateral electricity market this paper examines bidding strategies in a bilateral market in which generating companies submit bids to loads a load accepts electricity delivery from the generator with the lowest bid at its bid price as long as this price is not higher than the load s willingness to pay necessary and sufficient conditions of nash equilibrium ne bidding strategy are derived based on a generic generating cost matrix and the loads willingness to pay vector the study shows that in any ne efficient allocation is achieved furthermore all nash equilibria are revenue equivalent for the generators based on the necessary and sufficient conditions this problem is formulated as an optimal assignment problem network optimization techniques are applied to calculate ne bid prices for the generators

the behaviour of u k export prices of manufactured goods 1970 1983 this paper examines the importance of expectations in the determination of u k export prices export prices are found to depend upon expectations of total domestic unit costs and foreign prices the non linear restrictions implied by the forward looking model are found to hold and it performs adequately relative to a backward looking error feedback model the law of one price is rejected and the evidence is consistent with imperfect competition in export markets

scale economies and capacity utilization the importance of relative fuel prices abstract several authors have directed attention to the importance of capacity utilization as an explanation for technical scale economies in the production of electricity we analyse 1981 us firing unit data for electric generating companies to determine the relationship between capacity utilization and scale economies we show that capacity utilization rates are functions of relative fuel prices and the mix of technology available to the company this suggests that the results of capacity utilization studies will be dependent on the relative fuel prices in the year s from which the data come even if the capital stock is exactly the same as a result ex ante companies do not have much flexibility in choosing an expected utilization rate associated with scale

using game theory to analyze electric transmission pricing policies in the united states abstract us public policy towards the private electric power industry is moving away from restrictive regulation and towards promotion of competition alternative policies concerning access to and pricing of transmission are now being discussed similar issues may arise in europe as trade barriers fall our purpose is to show how game theory can help illuminate that debate and identify desirable policies game theory models are used to estimate the possible effects of various policies upon productive efficiency and the distribution of gains among sellers transmitters and buyers of power static cooperative models are used to calculate the possible outcomes of short run transmission games long run games in which the amount of transmission capacity is a decisition variable are modeled as dynamic noncooperative stackelberg games one conclusion is that under some conditions price regulation and mandatory access could hurt power buyers by removing incentives for building transmission capacity another conclusion is that under a system of voluntary access and price regulation it may be better to allow wheeling prices to exceed the marginal cost of transport rather than to risk losing the benefits of cooperation

multilateral resistance to migration the rate of migration observed between two countries does not depend solely on their relative attractiveness but also on the one of alternative destinations following the trade literature we term the influence exerted by other destinations on bilateral flows as multilateral resistance to migration and we show how it can be accounted for when estimating the determinants of migration rates in the context of a general individual random utility maximization model we propose the use of the common correlated effects estimator pesaran 2006 and apply it to high frequency data on the spanish immigration boom between 1997 and 2009 compared to more restrictive estimation strategies developed in the literature the bias goes in the expected direction we find a smaller effect of gdp per capita and a larger effect of migration policies on bilateral rates

the determinants of cross border equity flows abstract we explore a new panel data set on bilateral gross cross border equity flows between 14 countries 1989 1996 we show that a gravity model explains international transactions in financial assets at least as well as goods trade transactions gross transaction flows depend on market size in source and destination country as well as trading costs in which both information and the transaction technology play a role distance proxies some information costs and other variables explicitly represent information transmission an information asymmetry between domestic and foreign investors and the efficiency of transactions the geography of information is the main determinant of the pattern of international transactions while there is weak support in our data for the diversification motive once we control for the informational friction we broaden the scope of our results by presenting some evidence linking the results on equity transactions to equity holdings

the measurement of vertical economies and the efficient structure of the electric utility industry in this article the concept of multiproduct cost economies is modified to the case of production at vertically related stages to derive an explicit and general measure of economies of vertical integration the utility of this measure is then demonstrated by estimating the vertical cost structure of the electric utility industry and by carrying out the calculations necessary to determine the magnitude of vertical economies in this industry the results provide empirical evidence of the existence of significant economies of vertical integration between the generation and transmission distribution stages of electricity supply copyright 1991 by blackwell publishing ltd

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

international dynamic risk sharing in this paper we examine the implications of international risk sharing among a set of countries in the presence of market frictions which complicate the instantaneous adjustment to the first order conditions we suggest approximating the consumption streams of countries belonging to the risk sharing coalition in terms of a disequilibrium dynamic model embodying forward looking adjustment econometric methods for estimating and testing the model are discussed empirical analysis of a set of core european countries suggests that once preference parameters are allowed to vary across countries we are able to identify a group of nations that share risks against idiosyncratic permanent income shocks the equilibrium position however is reached after a long adjustment period copyright 2008 john wiley sons ltd

interrelated factor demands from dynamic cost functions an application to the non energy business sector of the uk economy in this paper we propose a dynamic cost function which allows us consistently to derive a set of dynamic interrelated factor demand equations in the general error correction form introduced by anderson and blundell 1982 this paper expands results recently published in urga 1996 it shows that the derivation of an effective underlying cost function allows us to identify the full set of parameters of the underlying process this does not happen in the standard anderson blundell formulation we report an empirical exercise used to model the so called supply side of the london busines school large scale economic model where we estimate both the set of factor demands and the underlying dynamic cost function for the non energy business sector of the uk economy

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

barter contracts in intertemporal energy exchange abstract we consider intertemporal energy exchange between independent power companies the incentive for the exchange comes from the diversity in the time variation of the marginal production costs so that there are differences in the relative marginal production costs between the companies the exchange is accomplished through a barter contract we present a model for the energy exchange and use a game theoretic approach to solve the bargaining problem between the power companies possible fairness properties of the cost allocation are discussed we present examples of barter contracts that are based on the nash bargaining solution

incentive contracts and competitive bidding an increasing segment of economic activity is taking place in nonmarket situations in which economic agents act outside the traditional markets or create markets to deal with specific resource allocation problems one such problem involves the selection by a buyer of a contractor using a competitive bidding process competitive bidding is used extensively by the government for the selection of suppliers of goods and services and for the sale of resources such as offshore oil leases firms may use competitive bidding for the selection of certain suppliers of factor inputs and may attempt to sell certain products in markets in which competitive price quoting is the established market mechanism this paper is concerned with a bidding process in which a firm has an opportunity to bid on a project under the terms of an incentive contract incentive contracts

behavior of the firm under regulatory constraint a recent article by akira takayama discusses an earlier paper by harvey averch and leland l johnson on fair rate of return regulation of public utilities although takayama p 255 agrees with averch and johnson s general conclusions that a firm will tend to increase its investment with the introduction of an active constraint on its rate of return he criticizes the a j argument as being confusing ambiguous and in error takayama then attempts a clarification and presents a new formulation which leads to the a j result quoted above this comment will discuss several of takayama s criticisms in addition to showing that the so called a j effect cannot be derived from the basic assumptions made by both averch and johnson and takayama 1 we will show that the very assumptions used to prove the a j effect by defining the region of x require an assumption that the a j effect exists in the first place

a practitioners guide to gravity models of international migration the use of bilateral data for the analysis of international migration is at the same time a blessing and a curse it is a blessing because the dyadic dimension of the data allows researchers to address a number of previously unanswered questions but it is also a curse for the various analytical challenges it gives rise to this paper presents the theoretical foundations of the estimation of gravity models of international migration and the main difficulties that have to be tackled in the econometric analysis such as the nature of migration data how to account for multilateral resistance to migration or endogeneity we also review some empirical evidence that has considered these issues

a new approach for estimating and testing the linear quadratic adjustment cost model under rational expectations and i 1 variables abstract in this paper we propose a simple method for estimating and testing the linear quadratic adjustment cost lqac model in the presence of i 1 processes we specify the lqac model as an exact rational expectations model and we assume that the dgp for the observable variables belongs to the class of cointegrated error correction ecm models by deriving the restrictions implied by the lqac model on the parameters of the ecm we propose an alternative econometric technique for the lqac model in contrast to existing procedures we explicitly account for situations where the cointegration rank of the ecm is greater than the number of control variables i e one the method is applied to the demand for labor in denmark

the linear quadratic adjustment cost model and the demand for labour in this paper we demonstrate a new way of testing the linear quadratic adjustment cost lqac model under rational expectations we illustrate how the parameter restrictions arising from this model can be formally specified and we use these restrictions to extent the technique of campbell and shiller 1987 to a wider class of models based on present value relations potentially the demand for labour is an area in which the lqac model can find applicability in practice and subsequently we analyse sectoral labour demand in danish manufacturing we find however that for our data set the quadratic adjustment cost model under rational expectations can be rejected

a gravity model of immigration this paper develops a gravity model of immigration tests of the model using panel data for 16 oecd countries for 1991 2000 confirm the model s high explanatory power and examples illustrate its usefulness for testing other hypothesized determinants of immigration

the demand for money a dynamic rational expectations model macroeconomic modelling generally has widely adopted the use of forwardlooking variables in behavioural relationships studies of the demand for money being something of an exception the aim of this paper is to provide preliminary empirical results of a model which explicitly incorporates expectations of the future into the demand function for narrow money the approach adopted is the modelling of the demand for money within a multi period costs of adjustment framework under the assumption of rational expectations agents are assumed to pursue a target or long run level of money balances which is itself a function of prices income and interest rates this results in an empirical specification which consists of both backwardlooking and forward looking components the model is estimated using uk data for the period i963i i983iii the remainder of the paper is divided into four sections in section i we outline the framework in which our model is derived in the following section we discuss the econometric techniques used and in section iii we present our empirical results a final section concludes

determinants of international student migration this paper considers what factors determine the migration of overseas students when students cross borders for higher education we utilise a gravity model for international student mobility and derive estimates for a sample of 18 countries of destination and 38 countries of origin over the period 2005 11 our results confirm that geographical distance and the presence of a common language are powerful in explaining bilateral student flows our most interesting finding is that time zone differences have a statistically significant and economically large effect in determining international student flows

the expectations hypothesis of the term structure the uk interbank market using a high quality weekly data set the author provides several tests of the expectations hypothesis using the vector autoregression and cointegration methodologies for several maturities between one week and twelve months for the u k interbank market on the basis of the johansen cointegration analysis there appears to be a break in the term structure when both the six month and twelve month maturities are included as a pair the latter may be due to either the presence of liquidity constraints or market segmentation or a time varying term premium all of which would invalidate the assumptions underlying the expectations hypothesis the author provides some tentative explanations of these diverse results copyright 1996 by royal economic society

transaction analysis in deregulated power systems using game theory the electric power industry is in transition to a deregulated marketplace for power transactions in this environment all power transactions are made based on price rather than cost a regional power pool is noted as the most straightforward path to a deregulated electricity marketplace however many questions remain unanswered regarding the economics of power pool participation in a deregulated energy marketplace participants are interested in maximizing their own profits regardless of the system wide profits it is perceived that competition will reduce the price of electricity for retail customers however the key issue for participants is related with the price definition to remain competitive in this paper the authors use game theory to simulate the decision making process for defining offered prices in a deregulated environment the outcome of this study may be used by power pool coordinators to discourage unfair coalitions a modified ieee 30 bus power system is used as a deregulated power pool to illustrate the main features of the proposed method

estimating long run economic equilibria with stochastic trends an asymptotic theory is provided to analyze a menu of currently existing estimators of cointegrated systems we study in detail the single equation ecm seecm approach of hendry our theoretical results lead to prescriptions for empirical work such as specifying seecm s nonlinearly and including lagged equilibrium relationships rather than lagged differences of the dependent variable as covariates simulations support these prescriptions and point to problems of overfitting not encountered in the semiparametric approach of phillips and hansen 1990

a note on purchased power adjustment clauses a recent series of papers has examined some of the economic effects of automatic fuel adjustment clauses on the behavior of the regulated firm see baron and debondt 1979 gallop and karlson 1978 cowing and stevenson 1979 atkinson and halvorsen 1980 isaac 1982 kaserman and tepel 1982 for the most part these papers have analyzed the implications of profit maximization under two alternative regulatory regimes one in which the firm s output price is determined by the terms of an adjustment clause formula and one in which it is not 1 today virtually all electric utilities are subject to some sort of fuel cost adjustment mechanism 2 since the specific formulas embodied in these mechanisms exhibit considerable variation across regulatory virtually all electric utilities are subject to some sort of fuel cost adjustment mechanism one way in which these formulas differ is in their treatment of purchased power this paper examines the effect that alternative treatments of purchased power have on the incentive of the regulated firm to minimize short run costs through its choice of purchased versus owngenerated power the theoretical model indicates that excluding purchased power from the formula creates an economic incentive to overutilize the firm s own generating equipment based on data for 113 privately owned u s electric utilities the empirical analysis confirms the theoretical prediction we gratefully acknowledge the financial support provided by the public policy research center and the public utilities research center at the university of florida and a grant from resources for the future without implicating them in what follows we also acknowledge the helpful comments on an earlier draft provided by john mayo and especially by two anonymous referees 1 the study by gollop and karlson 1978 is an exception they create an index that varies directly with the value of the adjustment clause formula to the firm 2 fuel adjustment clauses were in effect in 43 states in 1976 see isaac 1982 p 159

a study of basic bidding strategy in clearing pricing auctions this paper models bidding behaviors of suppliers in electricity auction markets under clearing pricing rule and with some simplified bidding assumptions optimal bidding strategy of suppliers is derived by solving a set of differential equations that specify the necessary conditions for bidders to maximize their expected payoffs the derived result indicates that bidders have incentives to mark up their bids above their costs of production the amount of markup depends on the probability of winning below and on the margin that are computed from the cost distribution of all suppliers market demand and the number of suppliers participating in the auction

certain considerations in the pricing of transmission service a utility b intervening between utilities a and c such that lambda sub a lambda sub b lambda sub c might implicitly choose to price the transmission service for wheeling power from a to c according to three concepts called attitudes these attitudes franchise entitlement and simultaneous purchase and set are defined and a nondimensional normalized method of evaluating the economic benefits accruing from their use are discussed in detail the pricing of transmission service over the short term typically for the hourly or weekly exchanges of economy energy and interruptible energy is discussed the opportunity for the intermediate utility in the market are examined

self selection and the earnings of immigrants this paper analyzes the way in which the earnings of the immigrant population may be expected to differ from the earnings of the native population because of the endogeneity of the decision to migrate the empirical study shows that differences in the u s earnings of immigrants with the same measured skills but from different home countries are attributable to variations in political and economic conditions in the countries of origin at the time of migration excerpt

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

power pooling an exercise in industrial coordination interconnected public utilities can achieve cost savings more reliable service lower capacity requirements and optimum siting by closely coordinating generation and transmission transactions within a common pool they can also achieve seasonal diversity and economy of energy in their exchanges despite the advantages the costs of pooling arrangements inefficient allocations of benefits and government regulations have been serious disincentives the relative tightness of agreements in 17 power pools demonstrates that tightly coordinated pools generally experience the most benefits 20 references dck

forward looking price setting in uk manufacturing given an equilibrium pricing rule minimization of a multiperiod quadratic cost function yields a precise specification for the weights on the leads and lags of a dynamic pricing equation using an equilibrium cointegrating vector the theoretical specification is found to fit the u k manufacturing data remarkably well non nested tests fail to reject either the backward looking error correction or the forward looking model against the alternative so long as dynamic homogeneity is imposed in the error correction model this is consistent with the notion that the error correction model is conflating the true structural model which is forward looking with the expectation formation process copyright 1992 by royal economic society

cost of wheeling methodologies the cost of wheeling and the methodology by which it is computed is a high priority problem throughout the power industry due to the growth in transmission facilities the cost differentials between utility companies and the dramatic growth in nonutility generation capacity this paper contains descriptions and summaries of computational procedures and data requirements of four embedded cost methodologies two long run incremental cost methods and the short run marginal cost method four methodologies are also presented for allocating the wheeling costs among a number of wheels when simultaneously present on a company s system as required for the standard long run incremental cost method

consumer payment minimization in power pool auctions this paper presents a new methodology within the framework of centralized optimization for calculating optimal generation schedules that minimize energy payments by power pool consumers this paper addresses issues related to market structure and the operation of power pools such as bid evaluation generator no load and start up cost recovery generator unit operating constraints and market clearing price determination unlike conventional unit commitment algorithms that minimize total energy production costs the method presented here minimizes payments by power pool consumers a payment minimization objective leads to a different unit commitment and dispatch solution and lower market clearing prices additionally optimal allocation of generator no load and start up costs over the scheduling period is integrated in the bid evaluation process leading to a further reduction in consumer payments

optimization based inter utility power purchases effective power transaction decisions can result in significant savings since marginal generation costs of neighboring utilities could be quite different transactions however are coupled with the scheduling of units through system demand and reserve requirements and are confined by many accustomed rules how to make effective transaction decisions is therefore a very difficult problem in this paper an optimization based method for the integrated consideration of power purchase transactions and the scheduling of thermal units is presented based on the augmented lagrangian decomposition and coordination method after the system wide demand and reserve requirements are relaxed by using lagrange multipliers and penalty coefficients the overall problem is decomposed into purchase and thermal subproblems for a purchase subproblem the optimal purchase level for each purchase interval is first determined the subproblem is then efficiently solved by using the dynamic programming approach without discretizing purchase levels thermal subproblems are solved by extending the author s previous method the multipliers and penalty coefficients are then updated at the high level so that system demand and reserve requirements are gradually satisfied over iterations numerical testing results based on modified northeast utility s data show that the algorithm is efficient and significant savings can be obtained

canadian interregional electricity trade analysing the gains from system integration during 1990 2020 abstract using a multiperiod multiregional linear programming model of canadian electric power supply allowing for technology choice and power transmission we estimate the long term gains from interregional trade in electrical energy measured in terms of supply cost reduction these gains are substantial in absolute terms but proportionately small about 5 other performance measures however such as aggregate coal consumption uranium consumption nuclear capacity expansion and plant capital costs vary considerably between self sufficiency for each region and complete interregional supply integration alternative objectives to minimum supply costs therefore acquire greater importance for selecting a socially optimal degree of regional cooperation

international transport of captured hbox co _2 who can gain and how much if carbon capture and storage ccs is to become a viable option for low carbon power generation its deployment will require the construction of dedicated co2 transport infrastructure in a scenario of large scale deployment of ccs in europe by 2050 the optimal cost minimising co2 transport network would consist of large international bulk pipelines from the main co2 source regions to the co2 sinks in hydrocarbon fields and saline aquifers which are mostly located in the north sea in this paper we use a shapley value approach to analyse the multilateral negotiation process that would be required to develop such jointly optimised co2 infrastructure first we find that countries with excess storage capacity capture 38 45 of the benefits of multilateral coordination implying that the resource rent of a depleted hydrocarbon field when used for co2 storage is roughly 1 per barrel of original recoverable oil reserves or 2 per boe barrel of oil equivalent of original recoverable gas reserves this adds 25 600 to current estimates of co2 storage cost second countries with a strategic transit location capture 19 of the rent in the case of national pipeline monopolies liberalisation of co2 pipeline construction at eu level could eliminate the transit rent and is shown to reduce by two thirds the differences between countries in terms of cost per tonne of co2 exported reaching agreement on such liberalisation may be politically challenging since the payoffs are shown to be strongly divergent across countries

the implementation of an energy brokerage system using linear programming the authors focus on the economics involved in energy transfers the function of an energy brokerage system is to establish interchange schedules between participating utilities in such a manner as to maximize the resulting savings a brokerage system that uses linear programming lp is presented to maximize the savings or profits to each utility subject to import and export constraints the cost quotations can also be determined using an lp formulation two examples to illustrate this formulation are given

application of auctions as a pricing mechanism for the interchange of electric power the expected move to a market based electric power industry will significantly change electric utility operations these changes will fundamentally alter the pricing of electric power how this pricing will be accomplished is a key issue traditionally embedded cost based methods have been used spot pricing has received attention as a possible approach in a market based electric power environment another market based approach is the use of auctions this paper presents the application of a sequential sealed bid and sealed offer auction to the pricing of electric power by using linear programming

an energy brokerage system with emission trading and allocation of cost savings an energy brokerage system can achieve lower emission levels for interconnected electric utilities in a cost effective way the paper presents a linear programming formulation of an energy brokerage system in an operational planning framework emission trading among utilities is envisaged to achieve emission reduction targets the power and emission buy sell quotes for individual utilities are computed and communicated to a central broker the broker determines the power and emission interchange schedule which maximizes the power system savings for all participating utilities the shapley value criterion is proposed for allocation of cost savings among the utilities this criterion reflects the true marginal contribution of a utility to the aggregate system savings and hence is superior to the existing methods of cost savings allocation

congestion influence on bidding strategies in an electricity market much of the research on bidding strategies in an electricity market has focused on idealized situations where participants have limited market power and the transmission system is not constrained yet congestion may act to effectively give a bidder market power and consequently the ability to influence the market clearing price in such a noncompetitive situation the bidding strategies of market participants will change in this paper the electrical power market is modeled as an oligopoly market and the cournot quantity model is applied to the bidding strategy problem the bidding process with congestion management is modeled as a three level optimization problem a statistical methodology is then proposed as a solution for large systems

strategic gaming in electric power markets abstract this paper presents an overview of strategic gaming used for understanding the effective company and regulatory strategies for various market participants under alternative scenarios on pricing and institutional structures for electric power utilizing the england and wales e w power pool as a testbed we develop an aggregate model of payoffs for various stakeholders under specified demand and supply scenarios with strategic moves by these stakeholders as the key input to be evaluated the use of this type of model in a strategic gaming setting is then examined together with a discussion of experience in using this approach in evaluating a particular decision problem regarding network investment strategies in the e w power market

transmission analysis by nash game method this paper describes an open access transmission method for maximizing profits in a power system the proposed method is based on the nash bargaining game for power flow analysis in which each transaction and its optimal price are determined to optimize the interests of individual parties transmission losses are considered by the proposed method and test cases and results are discussed to present the merits of the proposed method

price taker bidding strategy under price uncertainty this paper provides a framework to obtain the optimal bidding strategy of a price taker producer an appropriate forecasting tool is used to estimate the probability density functions of next day hourly market clearing prices this probabilistic information is used to formulate a self scheduling profit maximization problem that is solved taking advantage of its particular structure the solution of this problem allows deriving a simple yet informed bidding rule results from a realistic case study are discussed in detail

a re interpretation of the linear quadratic model when inventories and sales are polynomially cointegrated summary estimation of the linear quadratic model the workhorse of the inventory literature traditionally takes inventories and sales to be first difference stationary series and the ratio of the two variables to be stationary however these assumptions do not always match the properties of the data for the last two decades in the united states we propose a model that allows for the non stationary characteristics of the data using polynomial cointegration we show that the closed form solution has other recent models as special cases the resulting model performs well on aggregate and disaggregated data copyright 2006 john wiley sons ltd

has distance died evidence from a panel gravity model the estimated coefficient of distance on the volume of trade is generally found to increase rather than decrease through time using the traditional gravity model of trade this distance puzzle proved robust to several ad hoc versions of the model using data for 1962 96 for a large sample of 130 countries the introduction of an augmented barrier to trade function removes the paradox yielding a decline in the estimate of the elasticity of trade to distance of about 11 percent over the 35 year period for the whole sample however the death of distance is shown to be largely confined to bilateral trade between rich countries with poor countries becoming marginalized

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

optimal response of a thermal unit to an electricity spot market this paper addresses the optimal response of a thermal unit to an electricity spot market the objective is to maximize the unit profit from selling both energy and spinning reserve in the spot market the paper proposes a 0 1 mixed integer linear programming approach that allows a rigorous modeling of i nonconvex and nondifferentiable operating costs ii exponential start up costs iii available spinning reserve taking into account ramp rate restrictions and iv minimum up and down time constraints this approach overcomes the modeling limitations of dynamic programming approaches and is computationally efficient results from realistic case studies are reported