Patent ID: 7349882

Claim:
A computer implemented system for optimal pricing of energy and energy reserve in an electricity market of at least one market participant, said system comprising: a data base; and a processor configured for: determining constraints of said at least one market participant; receiving reserve energy bids from said market participants; calculating, using mixed integers to represent variables, whether each reserve bid satisfies the relationship: 0 ≦p reg ( i,t )≦min { RR ( i,t ),ramp 10 ( i ),max[0,0.5·( RH ( i,t )− SS ( i,t ))]}· W ( i,t ) where p reg (i,t) is a power of regulating reserve energy for reserve eneray bid i at time step t, RR(i,t) is a regulating reserve range for the reserve energy bid i at time step t, ramp 10 (i) is a ten minute ramp capability for the reserve energy bid i at time step t; (RH(i,t) is a regulating high capacity limit for the reserve energy bid i at time step t, SS(i,t) is a self committed and scheduled capacity for the reserve energy bid i at time step t; W(i,t) is a regulating status binary variable for the reserve energy bid i at time step t; optimizing the dispatch of energy and energy reserve responsive to reserve energy bids that satisfy said relationship considering said constraints of said at least one market participant using mixed integer linear programming techniques; and pricing the dispatch of energy and energy reserve based on the results of said optimizing step.