Martin L. Baughman

An Empirical Study of Applied Game Theory: Transmission Constrained Cournot Behavior

Restructured energy markets present opportunities for the exercise of market power, meaning market players can potentially maintain prices in excess of competitive prices. In this paper, we investigate Cournot equilibrium in a simple example network. We analyze three market players in a transmission-constrained system and consider nonconstant marginal cost. Several scenarios are evaluated that show a pure strategy equilibrium can break down even when a transmission constraint exceeds the value of the unconstrained Cournot equilibrium line flow.

A Monte Carlo model for calculating spot market prices of electricity

The authors describe a model for calculating the spot price of electricity of a typical electric power system. The model combines economic dispatch calculations with loadflow and customer response functions in a Monte Carlo simulation model. The model contributes to the implementation of spot prices by providing a practical means of evaluating the spot price of a typical electric power system. It offers several different approaches for calculating generation curtailment premiums and transmission congestion charges. The model formulation is presented and its application is illustrated with case study results. >

Electric power transmission and distribution systems: Costs and their allocation

The costs derived from installing, operating, and maintaining the transmission and distribution system have historically comprised about 2/3 the total costs of producing and delivering electricity to residential-commercial customers, and over 1/3 the total costs of supplying electricity to large industrial customers. This paper estimates the costs of transmission and distribution for nine regions of the United States for the above two customer classes. These costs are detailed for six categories of equipment used in the transmission and distribution system and the contribution to the total cost of each equipment category is determined.

Scheduling of cool storage using non-linear programming techniques

Thermal energy storage for space cooling is a load management technology that achieves load shifting by creating and storing cooling capacity during off-peak hours in anticipation of peak period loading. The charge and discharge process in a cool energy storage system is typically a 24-hour cycle. In this paper, an optimal controller for this process is designed that minimizes the operating costs of the storage facility. A 24-hour load-forecast model is developed to achieve dynamic system response to the variations in the ambient weather conditions. Hourly building cooling loads are predicted over the 24-hour horizon to schedule adequate charging of storage to meet peak-period loads. The degradation of performance of the optimal control algorithm attributable to the lack of perfect foresight of weather conditions and associated building loads is analyzed via a case study. A safety margin is also calculated and presented to compensate for same. >

Optimizing combined cogeneration and thermal storage systems: an engineering economics approach

A computer program has been developed to minimize the present worth of the electric and thermal energy costs of a manufacturing facility as a function of the type and amount of cogeneration and thermal storage it might install. The model is particularly useful in instances where the rates paid for electricity are differentiated by time of day and season. The program has been applied successfully to two large industrial facilities located in the southern United States. It simulates the optimal electricity production and thermal energy usage patterns as a function of the equipment installed in the plant over a planning horizon of 15 years, based upon a years worth of historical data, projected load growth, and projected rates for fuel and electricity. The historical data consists of bihourly information on total electricity consumption and central station chiller electricity usage, as well as bihourly data on the plants process steam load. Figure 1 shows a generic industrial plant with an electricity feeder and a gas or fuel oil pipiline providing the energy needs with no thermal storage or cogeneration activity. Typically, the electricity is used for a variety of purposes, including motor drive, lighting, and other processing needs. Often, especially in the summertime, electrically driven chillers are a significant portion of the overall electricity demand. The chillers are shown in the figure as a source of cold water for the plant.

The economic efficiency impacts of alternatives for revenue reconciliation

About a dozen electric utilities in the US offer rates that possess real-time characteristics. In these implementations the real-time prices are updated at half-hourly or hourly intervals and in no case are the prices spatially differentiated. The implemented rates are based upon marginal generating costs with markups to account for system transmission and distribution costs or other revenue reconciliation needs. This paper analyzes how great is the impact of alternative price markup methods on measures of social welfare and the time pattern of real-time prices. A case study and sensitivity results are also presented.

Optimal pricing of non-utility generated electric power

The importance of an optimal pricing policy for pricing nonutility generated power is pointed out in this paper. An optimal pricing policy leads to benefits for all concerned: the utility, industry, and the utilitys other customers. In this paper, it is shown that reliability differentiated real-time pricing provides an optimal nonutility generated power pricing policy, from a societal welfare point of view. Firm capacity purchase, and hence an optimal price for purchasing firm capacity, are an integral part of this pricing policy. A case study shows that real-time pricing without firm capacity purchase results in improper investment decisions and higher costs for the system as a whole. Without explicit firm capacity purchase, the utility makes greater investment in capacity addition in order to meet its reliability criteria than is socially optimal. It is concluded that the nonutility generated power pricing policy presented in this paper and implied by reliability differentiated pricing policy results in social welfare-maximizing investment and operation decisions. >

A new planning model for assessing the effects of transmission capacity constraints on the reliability of generation supply for large nonequivalenced electric networks

This paper presents a new model for calculating the reliability of large electric power networks with transmission constraints. Generation loss of load probability (LOLP) and expected unserved energy (EUE) are calculated with and without transmission constraints and displayed for the system and for each load area over a wide range of load levels. A two step process first finds the cumulative probabilistic the flow distributions from incremental flows resulting from random generator failures and then performs load shedding as a heuristic process to remove line overloads. Convolution of states allows an extremely large number of generator states to be modeled in a reasonable amount of computation time. Test results for a large network and for the IEEE Reliability Test System (RTS) are discussed in the paper.

A new model for outaging transmission lines in large electric networks

This paper presents a new method for calculating line currents for multiple line outages in large electric networks at extremely high computational speeds. An example is given showing that only one minute of computation time is needed to test 160 k N-3 line outage configurations for a large network. Resulting line overloads are shown to agree well with AC load flow. The new method: (1) calculates line currents and powers for any set of multiple line outages; (2) tests for system separation due to lines outaged; (3) tests for electrical remoteness of lines being outaged; and (4) updates real power line distribution factors used in linear programming and probabilistic models. The method is restricted to passive networks in which tapped transformers are near unity.

An Oligopoly Simulation of a Restructured ERCOT: Will Future Prices Be Competitive?

Abstract Restructured energy markets present opportunities for the exercise of market power. It is instructive to simulate the restructured ERCOT market as a non-collusive oligopoly, comparing price and profits of the participants assuming that the three largest incumbents behave competitively to the case where they behave as non-collusive oligopolists, and taking into account proposed new generation and new market entrants.