Coordination and decision making of regulation, operation, and market activities in power systems
Creators: name: Nakashima, Tomoaki
Publisher: name: University of British Columbia
Year: 2009

description: Electric power has been traditionally supplied to customers at regulated rates by vertically integrated utilities (VIUs), which own generation, transmission, and distribution systems. However, the regulatory authorities of VIUs are promoting competition in their businesses to lower the price of electric energy. Consequently, in new deregulated circumstances, many suppliers and marketers compete in the generation market, and conflict of interest may often occur over transmission. Therefore, a neutral entity, called an independent system operator (ISO), which operates the power system independently, has been established to give market participants nondiscriminatory access to transmission sectors with a natural monopoly, and to facilitate competition in generation sectors. Several types of ISOs are established at present, with their respective regions and authorities. The ISO receives many requests from market participants to transfer power, and must evaluate the feasibility of their requests under the system's condition. In the near future, regulatory authorities may impose various objectives on the ISOs. Then, based on the regulators' policies, the ISO must determine the optimal schedules from feasible solutions, or change the market participants' requests. In a newly developed power market, market participants will conduct their transactions in order to maximize their profit. The most crucial information in conducting power transactions is price and demand. A direct transaction between suppliers and consumers may become attractive because of its stability of price, while in a power exchange market, gaming and speculation of participants may push up electricity prices considerably. To assist the consumers in making effective decisions, suitable methods for forecasting volatile market price are necessary. This research has been approached from three viewpoints: Firstly, from the system operator's point of view, desirable system operation and power market structure are explored. Two typical ISO models, centralized and decentralized, have been identified and compared. These ISO models have been simulated to observe the advantages and disadvantages of the different systems. If no powerful players exist, the centralized system would achieve the maximum market efficiency. However, in decentralized systems, freedom of trade protects market participants from strategic bidding caused by powerful players. Reduced market efficiency is the price markets have to pay to prevent strategic bidding. Secondly, from the regulator's point of view, the effects of different policies imposed by regulators on power transactions are examined. The optimal schedule could be affected greatly by the ideal goals and their allowable values. Therefore, when the ISO defines its objectives and their allowable ranges, an agreeable conclusion among market participants is required. Fuzzy multiobjective optimization methods can be suitably applied to the scheduling of the ISO, reflecting its objectives and their allowable ranges properly. Thirdly, from market participants' point of view, models to represent and forecast the price and demand of power are developed. Electricity consumption and price are forecasted based on possibility theory and fuzzy autoregression. The fuzzy model can represent highly volatile demand-price relations as a range, and gives the possibility distribution of prices. Based on the proposed model, a procedure to help consumers decide whether to accept a bilateral transaction contract or market-based purchases of electricity has been developed. The same procedure can also be used by an electricity supplier or broker to determine an offering price.