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1998 Publications

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MATPOWER: Users's Manual (Version 2.0)
MATPOWER is a package of Matlab m-files for solving power flow and optimal power flow problems. It is intended as a simulation tool for researchers and educators which will be easy to use and modify. MATPOWER is designed to give the best performance possible while keeping the code simple to understand and modify. See the MATPOWER Home Page for more information.

Copyright 1997 Power System Engineering Research Center. MATPOWER: A MATLAB™ Power System Simulation Package, Version 2.0, December 24, 1997, User's Manual. Uploaded: July 27, 1998.  
Ray D. Zimmerman and Deqiang Gan 07/27/98 46.55 KB PDF 98-01
Real Time Control of Oscillations of Electric Power Systems
This project investigated the feasibility of an approach to provide operator assistance in the prediction and suppression of sustained system oscillations. The primary thrust of the project was based on a real-time simulation which would track the system dynamic behavior. The monitor for the closeness of the system to the onset of oscillations would be based on an indicator which provides a measure of the distance to oscillatory instability in terms of total load. The methods for suppressing sustained system oscillations were to be based on eigenvalue sensitivity techniques which can provide a ranking of various control options. Results on a single machine/infinite bus system show that the concept is viable. Results on a 37 bus equivalent system do not indicate feasibility for large-scale systems. The results indicate that eigenvalue movement in response to typical operation controls can be sufficiently nonlinear to make prediction of remedial action unreliable. Includes material on modeling and suppressing oscillations using eigenvalue and margin sensitivities.

Uploaded: July 27, 1998. Final Report prepared for Empire State Electric Energy Research Corporation and New York State Electric & Gas (ESEERCO/NYSEG), New York, September 1996.  
Peter Sauer, Mangalore A. Pai, Stephen Fernandes, Ian Dobson, Fernando L. Alvarado, Scott Greene, Robert J. Thomas, Hsiao-Dong Chiang 07/27/98 186.43 KB PDF 98-02
Markets for Electric Power: Experimental Results for Alternative Auction Institutions
The objective of this paper is to present experimental results for testing the performance of different auction mechanisms related to the introduction of competitive markets for the generation of electricity. The research is based on the concept of smart markets introduced by Vernon Smith and a simulation model (PowerWeb) of a realistic bulk power system. There are unique physical aspects associated with the supply of electricity (e.g. required instantaneous matching of supply and demand, unintended congestion of parallel transmission routes and maintenance of system stability in response to disturbances). As a result, traditional theories of efficient markets and auction structures developed for other commodities may not be efficient if applied without alteration to markets for electricity. Conversely, current utility rules of operation developed for a centrally-planned regime may not be appropriate in a competitive environment.
The research does not address the issues of multiperiod operations (unit commitment) and multidimensional markets (ancillary services), and considers only real power in a single time period. The main objective is to test three alternative auction mechanisms when market power is a potential problem. This situation occurs when limits on transmission lines are binding to form a load pocket in which demand is met by a few (in this case two) generators.

Uploaded: July 27, 1998. 31st Hawaii International Conference on System Sciences (HICSS-31), Kohala Coast, Kona, Hawaii, January 6-9, 1998.  
John Bernard, Robert Ethier, Timothy Mount, William Schulze, Ray Zimmerman, Deqiang Gan, Carlos Murillo-Sanchez, Robert J. Thomas, Richard Schuler 07/27/98 265.58 KB PDF 98-03
Voltage Collapse Margin Sensitivity Methods applied to the Power System of Southwest England
This report applies sensitivity methods to a model of the Southwest of England electric power system to determine their effectiveness in operating the system sufficiently far from voltage collapse blackouts. The sensitivity methods are described in detail in PSERC publications 97-07 and 97-08. The system data was graciously provided by the National Grid Company. The two main uses of the sensitivity methods are:
    1. Quickly quantify the effect of varying power system controls or parameters on the proximity to voltage collapse
    2. Quickly rank the severity of contingencies with respect to voltage collapse.
The results confirm that the sensitivity methods perform well on the Southwest of England model.

Uploaded: July 27, 1998. 31st Hawaii International Conference on System Sciences (HICSS-31), Kohala Coast, Kona, Hawaii, January 6-9, 1998  
Scott Greene, Ian Dobson 07/27/98 695.92 KB PDF 98-04
Alternatives for Calculating Transmission Reliability Margin (TRM) in Available Transfer Capability (ATC)
There is very little theory developed for the calculation of the Transmission Reliability Margin (TRM) in the Available Transfer Capability (ATC) computation of electric power systems. This paper proposes and evaluates several different approaches to the calculation of TRM. The TRM is supposed to account for uncertainty in the operating conditions used in computing Total Transfer Capability (TTC). This uncertainty may be in model parameters (line impedances), load forecast error (P and Q), or other ibase caseî data.

Uploaded: July 27, 1998. 31st Hawaii International Conference on System Sciences (HICSS-31), vol. 3, Kohala Coast, Kona, Hawaii, January 6-9, 1998.  
Peter W. Sauer 07/27/98 10.88 KB PDF 98-05
The Design of Optimal Demand Management Programs
Abstract - Reliable operation in a deregulated environment and under conditions of uncertainty requires that loads be considered adjustable. This paper assumes that participation in demand management programs is entirely voluntary, and the compensation for participation is an integral part of any demand management program. Another consideration is simplicity: demand management programs must be simple to understand, simple to use and reliable in their response.
This paper considers and describes a variety of voluntary demand management programs, including full interruption, equipment specific partial interruptions, limits in use of current and/or power, and programs that guarantee a certain ''relief performance''. It also considers a random mix of provider characteristics and demand characteristics. The paper illustrates that optimality (or near-optimality) requires not one but a small portfolio of incentive programs. It further illustrates that regulatory incentives may be required to ''line up'' utility optimality with customer optimality.

Uploaded: July 27, 1989. Ph.D. student dissertation, Department of Electrical and Computer Engineering, University of Madison at Wisconsin, 1999.  
Murat Fahrioglu and Fernando L. Alvarado 07/27/98 243.02 KB PDF 98-06
Market Power: A Dynamic Definition
Abstract - Market power refers to conditions where the providers of a service can consistently charge prices above those that would be established by a competitive market. There are many well known definitions of market power, including indices intended to quantify the degree of market concentration of energy supplies. Market power assessment within electric power markets require the consideration of the ever changing network conditions that result from congestion. This paper explores the effect of changes in network congestion conditions on one of these indices, the Herfindahl-Hirschman Index. Results indicate that congestion can lead to drastically different values of this index at various locations. Furthermore, when ownership of facilities is dispersed, this can greatly complicate the assessment of market concentration. The paper also explores several topics on strategic behavior possibilities.

Uploaded: July 27, 1998. Article, Research Gate, July 1998.  
Fernando L. Alvarado 07/27/98 225.79 KB PDF 98-07
Alternative Auction Institutions for Purchasing Electric Power: An Experimental Examination
This paper reports on research being conducted by a combination of economists and electrical engineers at Cornell University who are examining potential auc-tion institutions for restructured markets for electric power. As it is a report on developing results and analysis, the discussion remains general throughout. The research follows two related but independent strands. The first looks at the performance of various alternative auction mechanisms under different market sizes. The setting is a single sided auction with multi-ple units being offered and a vertical, multiple unit demand. This was conducted in the absence of a net-work, the equivalent of a system where transmission of electric power is lossless and costless. The second research strand investigates a realistic net-work environment using a single auction institution. This smart market experimental platform has the added benefit of being web based. One group size has been studied, with the group containing a subset operating in a load pocket enabling simultaneous analysis of differ-ent market situations. Analysis of the market effects of load pockets is of major importance, especially in the U.S. northeast. Three pilots have been conducted in this framework, and the most interesting aspects of our findings are recorded here.

Uploaded: April 27, 2001. 1998 Bulk Power System Dynamics and Control IV - Restructuring, pp. 59-68, Santorini, Greece, August 24-28, 1998.  
John Bernard, Ray Zimmerman, William Schulze, Robert Thomas, Timothy Mount, Richard Schuler 04/27/01 362.56 KB PDF 98-08
A Transient Stability Constrained Optimal Power Flow
Abstract - Stability is an important constraint in power system operation. Often trial and error heuristics are used that can be costly and imprecise. A new methodology that eliminates the need for repeated simulation to determine a transiently secure operating point is presented. The methodology involves a stability constrained Optimal Power Flow (OPF). The theoretical development is straightforward: swing equations are converted to numerically equivalent algebraic equations and then integrated into a standard OPF formulation. In this way standard nonlinear programming techniques can be applied to the problem.

Uploaded: July 27, 1998. 1998 Bulk Power System Dynamics and Control IV - Restructuring, pp. 83-90, Santorini, Greece, August 24-28, 1998.  
Deqiang Gan, Robert J. Thomas, Ray D. Zimmerman 07/27/98 54.33 KB PDF 98-09
Is modal resonance a precursor to power systems oscillations?
Abstract - The power system linearization and its modes vary as power transfers, redispatch or other power system parameters change. We suggest a new mechanism for interarea power system oscillations in which two oscillatory modes interact near a nondiagonalizable resonance to cause one of the modes to subsequently become unstable. The two modes are near resonance when they have nearly the same damping and frequency. The possibility of this mechanism for oscillations is shown by theory and computational examples. Theory suggests that passing near nondiagonalizable resonance could be expected in general power system models. The mechanism for oscillations is illustrated in 3 and 9 bus examples with detailed generator models.

Uploaded: August 19, 1998. 1998 Bulk Power System Dynamics and Control IV - Restructuring, pp. 659-684, Santorini, Greece, August 24-28, 1998.  
Ian Dobson, Jianfeng Zhang, Scott Greene, Henrik Engdahl, Peter W. Sauer 08/19/98 711.72 KB PDF 98-10
Margin and Sensitivity Methods for Security Analysis of Electric Power Systems
PhD thesis, University of Wisconsin. Reliable operation of large scale electric power networks requires that system voltages and currents stay within design limits. Operation beyond those limits can lead to equipment failures and blackouts. Security margins measure the amount by which system loads or power transfers can change before a security violation, such as an overloaded transmission line, is encountered.
This thesis shows how to efficiently compute security margins defined by limiting events and instabilities, and the sensitivity of those margins with respect to assumptions, system parameters, operating policy, and transactions. Security margins to voltage collapse blackouts, oscillatory instability, generator limits, voltage constraints and line overloads are considered. The usefulness of computing the sensitivities of these margins with respect to interarea transfers, loading parameters, generator dispatch, transmission line parameters, and VAR support is established for networks as large as 1500 buses. The sensitivity formulas presented apply to a range of power system models. Conventional sensitivity formulas such as line distribution factors, outage distribution factors, participation factors and penalty factors are shown to be special cases of the general sensitivity formulas derived in this thesis. The sensitivity formulas readily accommodate sparse matrix techniques.
Margin sensitivity methods are shown to work effectively for avoiding voltage collapse blackouts caused by either saddle node bifurcation of equilibria or immediate instability due to generator reactive power limits. Extremely fast contingency analysis for voltage collapse can be implemented with margin sensitivity based rankings. Interarea transfer can be limited by voltage limits, line limits, or voltage stability. The sensitivity formulas presented in this thesis apply to security margins defined by any limit criteria. A method to compute transfer margins by directly locating intermediate events reduces the total number of loadflow iterations required by each margin computation and provides sensitivity information at minimal additional cost. Estimates of the effect of simultaneous transfers on the transfer margins agree well with the exact computations for a network model derived from a portion of the U.S grid. The accuracy of the estimates over a useful range of conditions and the ease of obtaining the estimates suggest that the sensitivity computations will be of practical value.

Uploaded: September 3, 1998. Ph.D. student dissertation, Department of Electrical and Computer Engineering, University of Madison at Wisconsin, 1998.  
Scott Greene 09/03/98 1.55 MB PDF 98-11
The Efficiency of Multi-Unit Electricity Auctions
Abstract: This is an extensive revision of a previously posted paper with the same title (97-15). Using a complete information, game-theoretic model, we analyze the performance of different electricity auction structures in attaining efficiency (i.e., least cost dispatch). We find that an auction structure where generators are allowed to bid for load "slices" outperforms an auction structure where generators submit bids for different hours in the day.

Final Report: October 4, 1998. Uploaded: October 4, 1998. Journal: The Energy Journal, vol. 20, no. 4, pp. 89-166, 1999.  
Wedad J. Elmaghrabi and Shmuel S. Oren 10/04/98 289.24 KB PDF 98-12
Exotic Electricity Options and the Valuation of Electricity Generation and Transmission Assets
Abstract - This paper presents and applies a methodology for valuing electricity derivatives by constructing replicating portfolios from electricity futures and the risk free asset. Futures based replication is argued to be made necessary by the non-storable nature of electricity, which rules out the traditional spot market, storage-based method of valuing commodity derivatives. Using the futures based approach, valuation formulae are derived for both spark and locational spread options for both geometric Brownian motion and mean reverting price processes. These valuation results are in turn used to construct real options based valuation formulae for generation and transmission assets. Finally, the valuation formula derived for generation assets is used to value a sample of assets that have been recently sold, and the theoretical values calculated are compared to the observed sales prices of the assets.

Uploaded: September 29, 1998. Proceedings of the Chicago Risk Management Conference, Chicago, IL; May 1998.
Journal: Decision Support Systems, vol. 30, issue 3, pp. 383-392, January 2001  
Shijie Deng, Blake Johnson, Aram Sogomonian 08/16/18 381.95 KB PDF 98-13
Multi-unit Auctions With Complementarities: Issues of Efficiency in Electricity Auctions
Abstract - As auction based mechanisms for dispatch are emerging in previously regulated electricity supply industries, it is important to understand the effects of auction rules and structure on efficiency. This paper addresses exactly this relationship in a complete information framework by asking which auction structures are sufficient to guarantee that electricity demand is satisfied in a least-cost manner.

Report dated: April 2, 1998. Uploaded: September 29, 1998. Published in Journal: European Journal of Operational Research, vol. 166, issue 2, pp. 430-448, October 2005.  
Wedad J. Elmaghraby 08/18/16 372.76 KB PDF 98-14
Capturing Non-Convexities in Multi-Unit Electricity Auctions
As Electricity Auctions are being created around the world in newly deregulated electricity supply industries, several questions regarding the design of these auctions are being raised. This paper analyzes the ability of various electricity auction mechanisms to satisfy demand while attaining productive efficiency, i.e., minimizing total generation costs. Four possible auction mechanisms are considered and their performance is evaluated under three demand scenarios. Only a horizontal sequential auction is found to support an efficient equilibrium bidding strategy in all three demand scenarios.

Final Report: March 7, 1998. Uploaded: September 29, 1998.  
Wedad J. Elmaghraby 09/29/98 656.67 KB PDF 98-15
Priority Network Access Pricing for Electric Power
We propose a priority-pricing scheme for zonal access to the electric power grid that is uniform across all buses in each zone. The Independent System Operator (ISO) charges bulk power traders a per unit ex-ante transmission access fee based on the expected option value of the generated power with respect to the random zonal spot prices. The zonal access fee depends on the injection zone and a self-selected strike price determining the scheduling priority of the transaction. Inter zonal transactions are charged (or credited) with an additional ex-post congestion fee that equals the zonal spot price difference. The unit access fee entitles a bulk power trader to either physical injection of one unit of energy or a compensation payment that equals to the difference between the realized zonal spot price and the selected strike price. The ISO manages congestion so as to minimize net compensation payments and thus, curtailment probabilities corresponding to a particular strike price may vary by bus. We calculate the rational expectation equilibia for a three and four node system and demonstrate that the effciency losses of the proposed second best scheme relative to the effcient dispatch solutions are modest.

Uploaded: September 29, 1998. 1998 Bulk Power System Dynamics and Control IV - Restructuring, pp. 551-570, Santorini, Greece, August 24-28, 1998.  
Shijie Deng and Shmuel S. Oren 09/29/98 227.40 KB PDF 98-16
Combining Financial Double Call Options with Real Options for Early Curtailment of Electricity Service
Abstract - In a competitive electricity market, customers can ensure a fixed electricity price and benefit from their flexibility to curtail loads by purchasing forward electricity contracts bundled with financial options that reflect their "real options". This paper describes a "double call" option and derives the value of that option under the assumption that forward electricity prices behave as a geometric Brownian motion. It is shown that a forward contract bundled with an appropriate double call option provides a perfect hedge for customers that can curtail loads in response to high spot prices and that are able to mitigate curtailment losses with sufficient lead time.

Uploaded: May 21, 2002. 32nd Hawaii International Conference on System Sciences (HICSS-32), vol. 3, Maui, Hawaii, January 5-8, 1999.  
Shmuel S. Oren 08/18/16 262.01 KB PDF 98-17
Price-Based Adaptive Spinning Reserve Requirements in Power System Scheduling
In a deregulated electricity market such as the California WEPEX, spinning re- serves must be explicitly identi_ed as an ancillary service and priced. Additionally, scheduling coordinators who match suppliers and demands may either self-provide spinning reserves, or rely on the Independent System Operator (ISO) to provide reserves at the spot price. The deregulated market structure makes explicit the im- plicit softness that has always been recognized in the reserve constraints: additional reserves may have value even when a minimum reserve requirement has been met. In this paper we formulate the spinning reserve requirement (SRR) as a function of the endogenously determined marginal values of reserves. The spinning reserve re- quirement depends, according to a nonincreasing response function, on a price/value signal.
We present three power system scheduling algorithms in which this price/value signal is updated at each iteration of a dual optimization. Game theory is used to interpret the proposed algorithms. Numerical test results are also presented.ide reserves at the spot price. The deregulated market structure makes explicit the im- plicit softness that has always been recognized in the reserve constraints: additional reserves may have value even when a minimum reserve requirement has been met. In this paper we formulate the spinning reserve requirement (SRR) as a function of the endogenously determined marginal values of reserves. The spinning reserve re- quirement depends, according to a nonincreasing response function, on a price/value signal. We present three power system scheduling algorithms in which this price/value signal is updated at each iteration of a dual optimization. Game theory is used to interpret the proposed algorithms. Numerical test results are also presented.

Final Report Date: April 14, 1998. Uploaded: September 29, 1998. Journal: Electrical Power and Energy Systems, vol. 21, pp. 137-145, 1999.  
Chung-Li Tseng, Shmuel S. Oren, Alva J. Svoboda, Raymond B. Johnson 08/18/16 234.12 KB PDF 98-18
Energy Auctions and Market Power: An Experimental Examination
Testing auction mechanisms experimentally in a controlled environment provides an inexpensive means for evaluating their relative merits. The first part of this paper focuses on the comparison three different auctions with regard to market efficiency and pricing, given scenarios with two, four, and six competitors. Though the uniform price last accepted offer auction was superior overall, the number of competitors proved to be a more significant factor in determining auction performance. Significant exploitation of market power was observed in the duopoly case. The second part of the paper focuses on a transmission network with six sellers in which network constraints give rise to market power opportunities. Experimental evidence based on tests with student and expert subjects show exploitation of this strategic advantage. Several other scenarios are described in which the transmission network creates market power.

Uploaded: October 2, 1998. Published in the Proceedings of the 32nd Hawaii International Conference on System Sciences (HICSS-32), vol. 3, Maui, Hawaii, January 5-8, 1999.  
Ray D. Zimmerman, John C. Bernard, Robert J. Thomas, and William Schulze 08/18/16 286.63 KB PDF 98-19
Short-Term Generation Asset Valuation
Abstract - In this paper we present a method for valuing a power plant over a short-term period using Monte Carlo simulation. The power plant valuation problem is formulated as a multi-stage stochastic problem. We assume there are hourly markets for both electricity and the fuel used by the generator, and their prices follow some Ito processes. At each hour, the power plant operator must decide to run or not to run the unit so as to maximize expected profit. A certain lead time for commitment decision is necessary to start up a unit. The commitment decision, once made, is subject to physical constraints such as minimum uptime and downtime constraints. The generator's startup cost is also taken into account in our model. In this paper, the Monte Carlo method is employed not only in forward-moving simulation, but also backward-moving recursion of dynamic programming. We demonstrate through numerical tests how the physical constraints affect a power plant value.

Uploaded: October 5, 1998. 32nd Hawaii International Conference on System Sciences (HICSS-32), vol. 3, Maui, Hawaii, January 5-8, 1999.  
Chung Li Tseng and Graydon Bartz 08/18/16 576.04 KB PDF 98-20
Analytic and Experimentally-Derived Estimates of Market Power in Deregulated Electricity Systems: Policy Implications for the Management and Institutional Evolution of the Industry
Previous experimental and game-theoretic analyses of deregulated electricity markets suggest that communities having four or less effective suppliers, either because of transmission constraints or load characteristics, or retail customers facing suppliers or marketing agents having more than seventy percent of the region's market, are likely to experience prices well above competitive levels. While state regulatory bodies may be able to forestall the onset of retail wheeling and non-regulated retail energy pricing until a single supplier does not dominate initial market shares, it is more difficult to mute the exercise of market power by generators serving electrically isolated load pockets. And in both instances, if the accrual of some excess profits by initial, non-regulated suppliers are not tolerated, then little incentive will have been provided for competitors to enter the market and for more efficient technologies to evolve. Estimates are provided in this analysis of the circumstances for and the extent and duration of the exercise of market power. When combined with the present absence of incentives to build transmission lines that would reduce bottlenecks and the existing utilities' insistence upon full recovery of stranded costs through line charges and access fees, the powerful incentives to develop distributed generation are highlighted.

Uploaded: October 13, 1998. Published in the Proceedings of the 32nd Hawaii International Conference on System Sciences (HICSS-32), vol. 3, Maui, Hawaii, January 5-8, 1999.  
Richard E. Schuler 08/18/16 175.31 KB PDF 98-21
Market Power and Price Volatility in Restructured Markets for Electricity
The restructured market for electricity in the UK has experienced a systematic pattern of price spikes associated with the use of market power by the two dominant generators. Partly in response to this problem, the share of capacity owned by any individual generator after restructuring was limited in Victoria, Australia. As a result, a much more competitive market resulted with prices substantially lower than they were under regulation. Nevertheless, an erratic pattern of price spikes exists and the price volatility is a potential problem for customers. This paper argues that the use of a uniform price auction for electricity markets exacerbates price volatility. A discriminatory price auction is proposed as a better alternative that would reduce the responsiveness of price to errors in forecasting total load.

Uploaded: November 12, 1998. Published in the Proceedings of the 32nd Hawaii International Conference on System Sciences (HICSS-32), vol. 3, Maui, Hawaii, January 5-8, 1999.  
Timothy D. Mount 08/19/16 256.64 KB PDF 98-22
Control of Distributed Resources
Distributed resources (DR) include a variety of energy sources, such as turbines, photovoltaics, fuel cells, and storage devices, with capacities in the 1 kW to 10MW range. Deployment of DR on distribution networks could potentially increase their reliability and lower the cost of power delivery by placing energy sources nearer to the demand centers. By providing a way to by- pass conventional power delivery systems, DR could also offer additional supply flexibility.

Uploaded: November 3, 1998. 1998 Bulk Power System Dynamics and Control IV - Restructuring, pp. 323-330, Santorini, Greece, August 24-28, 1998.  
Robert H. Lasseter 11/03/98 54.29 KB PDF 98-23
Identifying Swing Mode Bifurcations and Associated Limits on Available Transfer Capability
Abstract - Analytic techniques for predicting onset of voltage collapse in power systems often rely upon identification of a saddle node bifurcation. While many authors acknowledge that the separation between voltage phenomena and phase angle phenomena is far from absolute, most recent works have viewed voltage variation as the more significant problem. The goal of the work presented here is to shift focus back to loss of stability mechanisms associated with phase angle behavior and electromechanical swing modes. We will exploit structural features in the network to identify a typical form for the eigenvector associated with a bifurcating "swing mode" that reduces in frequency and ultimately loses stability. In a simple case study, we demonstrate that the participation of angles in such a mode is greater than that of voltages.

Uploaded: November 15, 1998. 1998 American Control Conference, vol. 5, pp. 2980-2985, Philadelphia, Pennsylvania, June 21-26, 1998.  
Christopher L. DeMarco 08/19/16 1.42 MB PDF 98-24
Analysis and Visualization of Market Power in Electric Power Systems
Abstract - This paper discusses the assessment and visualization of market power in bulk electricity markets, with the explicit consideration of transmission system constraints. In general, market power is the ability of a particular seller or group of sellers to maintain prices profitably above competitive levels for a significant period of time. When an entity has and exercises market power, it ceases to be a price taker and becomes a price maker. The restructuring of the electric industry in many parts of the world has encouraged competitive markets with the objective of reaping the benefits of lower prices and innovation that competition can provide. Such benefits are not attainable when a player utilizing the electric transmission system may exert market power. This paper describers the procedures for analyzing and visualizing such situations.

Uploaded: October 2, 1998. 32nd Hawaii International Conference on System Sciences (HICSS-32), vol. 3, Maui, Hawaii, January 5-8, 1999.  
Thomas J. Overbye, Jamie D. Weber, Kollin J. Patten 08/19/16 604.14 KB PDF 98-25
Visualization of Flows and Transfer Capability in Electric Networks
Abstract - Effective power system operation requires power system engineers and operators to analyze vast amounts of information. In systems containing thousands of buses, a key challenge is to present this data in a form such that the user can assess the state of the system in an intuitive and quick manner. This is particularly true when trying to analyze relationships between actual network power flows, the scheduled power flows, and the capacity of the transmission system. This paper presents several power system visualization techniques to help in this task. These techniques include animation of power system flow values, contouring of transmission line flow values, data aggregation techniques and virtual reality data visualization. Results are shown for several large scale power systems.

Uploaded: October 2, 1998. 13th Power Systems Computation Conference, vol. 1, pp. 420-426, Trondheim, Norway, June 28 - July 2, 1999.  
Thomas J. Overbye, James D. Weber, Mark Laufenberg 10/02/98 416.56 KB PDF 98-26
Managing Transmission Risk: The Theory of Spatial Hedging and Arbitrage
This report shows how one may manage or eliminate transmission risk using relatively few liquid futures markets. The idea can be used to detect arbitrage opportunities and for partial hedging. Rigorous formulas are derived, numerical examples are shown and "rules of thumb" for risk management are presented. Abstract - The spatial variation in electricity spot prices in competitive markets is complex and counter-intuitive, and qualitatively different from other commodity markets. Even when transmission is only congested between two locations, it can result in price variations all over the system.
In theory, market participants could use futures markets to eliminate the financial risks that arise from spatial price variations. In practice however, while physical spot markets for electricity will exist at many locations in the power system, liquid futures markets will exist at only a small fraction of these locations. This report shows how one may manage or eliminate transmission risk using relatively few liquid futures markets. Locational hedging portfolios and synthetic locational futures contracts can be constructed by taking a precisely determined position at time 0 in all the futures markets, and taking another precisely determined position at a later time in the spot markets. The same idea is also used to realize arbitrage opportunities if such opportunities exist. While this is a well known risk management strategy for other commodities, it is non-trivial for electricity because of the requirements imposed by network flows. Based on rigorous formulas, the report presents simple risk management rules of thumb to detect opportunities for hedging and arbitrage.

Final Report: November 19, 1998. Uploaded: December 2, 1998. PSERC Report No. 98-27, November 19, 1998.  
Rajesh Rajaraman and Fernando L. Alvarado 12/02/98 40.31 KB PDF 98-27
Stochastic Models of Energy Commodity Prices and Their Applications: Mean-reversion with Jumps and Spikes
Abstract - In this paper, we present several mean-reversion jump diffusion models to describe energy commodity spot prices. We incorporate multiple jumps, regime-switching and stochastic volatility in these models. Prices of various energy commodity derivatives are obtained under each model. We show how the electricity derivatives can be used to evaluate generation and transmission capacity. We also show for our price models, how to determine the value of investment opportunities and the threshold value above which a firm should invest.

Report dated: October 25, 1998. Uploaded: December 6, 1998. This paper is part of the working papers series of the Program on Workable Energy Regulation (POWER). POWER is a program of the University of California Energy Institute, a multi-campus research unit of the University of California, located on the Berkeley campus.  
Shijie Deng 12/06/98 380.30 KB PDF 98-28
Designing Cost Effective Demand Management Contracts using Game Theory
Abstract - Demand relief from customers can help a utility solve a variety of problems. There exist all sorts of different demand management programs that utilities use. A critical issue is the incentive paid to the customer to participate in demand management programs and provide load relief. The utility has to design cost effective yet attractive demand management contracts. The main goal is to get load relief when needed. If the contracts are designed to be cost effective they can help the utility reduce costs. Customers sign up for programs when the benefits they derive in the form of up front payments and interruption payments exceeds their cost of interruption. In order to design such contracts, mechanism design with revelation principle is adopted from Game Theory and applied to the interaction between a utility and its customers. The idea behind mechanism design is to design a program incentive structure that encourages customers to reveal the value of power (and thus, the value of power interruptibility) without the need to explicitly have customers declare the value. This economic analysis is combined with power system sensitivity analysis to help determine the value of interruptibility for each system location.

Final Report: December 10, 1998. Uploaded: December 14, 1998. 1999 IEEE Power Engineering Society Winter Meeting, vol. 1, pp. 427-432, New York, New York, January 31 - February 4, 1999.  
Murat Fahrioglu and Fernando L. Alvarado 12/14/98 146.57 KB PDF 98-30
Estimating the Volatility of Spot Prices in Restructured Electricity Markets and the Implications for Option Values
Standard stochastic price paths do not adequately describe the behavior of electricity spot prices. A Markov regime switching model with a mean reverting stochastic process is proposed as an improved model. Data from four electricity markets are used to estimate the model by the method of maximum likelihood. Econometric tests confirm that stochastic jumps, captured by regime switches, are an important characteristic of the data. The Markov nature of the jumps is also statistically significant and suggests that jumps are sustained, not isolated spikes. This has consequences for unit self-commitment decisions. Option values are shown to be strongly affected by model specification, with two-state models producing higher option values, especially at high strike prices, when compared with a simple one- state mean reverting model. These results have important implications for asset valuation, and standard models such as the one-state model systematically undervalue electricity assets by failing to capture Markov regime switching.

Uploaded: December 18, 1998. PSERC Draft Report No. 98-31, December 8, 1998.  
Robert Ethier and Timothy D. Mount 12/18/98 132.33 KB PDF 98-31
The Dynamics of Customers Switching Suppliers in Deregulated Power Markets
As the possibility of effective competition is thought to arise in industries that were formerly characterized as natural monopolies, pressure by some customers and /or potential entrants is brought to bear on political and regulatory institutions to deregulate economically certain aspects of these industries, and to allow market pressures to substitute for regulatory oversight as a means of restraining excessive prices. The further hope is that once freed of rate-of-return restrictions imposed by regulators, serviceproviders will seek to compete technologically and to profit from cost cutting innovations that ultimately may be translated through market pressures into lower prices for customers.

Uploaded: February 26, 1999. Presented at 1998 Bulk Power System Dynamics and Control IV - Restructuring, pp. 47-58, Santorini, Greece, August 24-28, 1998.  
Richard E. Schuler 02/26/99 117.15 KB PDF 98-33
The Stability of Power Market Systems
Abstract - Market equilibrium conditions can be derived from more general dynamic equations describing the market-place. Dynamic equations provide insights into the behavior and stability of markets which are not available from static models. For example, markets with a single supplier with declining linear costs (economies of scale) may or may not be stable, depending on specific cost characteristics. Markets with more than one supplier with declining linear costs are always unstable. This paper illustrates a situation where the removal of congestion makes a market unstable.

Uploaded: December 18, 2000.
1998 IEEE Power Engineering Society Summer Meeting, San Diego, California, July 12-16, 1998.
IEEE TRANSACTIONS ON POWER SYSTEMS, VOL. 14, NO. 2, PP. 505-511, MAY 1999.  
Fernando L. Alvarado 12/18/00 134.15 KB PDF 98-34
The Dynamics of Market Power with Deregulated Electricity Generation Supplies
Abstract - Deregulated wholesale markets for bulk electricity supplies are likely to deviate from the perfectly competitive ideal in many areas where transmission losses, costs and capacity constraints isolate customers from the effective reach of many generators and limit the number of competitors. In those regions where a few suppliers or marketing agents dominate the market, prices may rise well above the competitive ideal of marginal cost. Furthermore, if all customers do not shift instantaneously to the lowest-priced supplier, perhaps because of inadequate information about the reliability of alternative generators and/or additional investments required to switch suppliers, then depending upon the duration of those lags, the optimal pricing policy of the existing dominant generators may be to ignore the competition for an appreciable period of time.
Using previously developed models of dynamic oligopoly pricing, estimates are provided of how rapidly and how far bulk power supply prices might deviate from competitive levels after the deregulation of those markets, depending upon the number of potential competitors serving a particular region and their individual market shares. These models have been calibrated and applied previously, ex-post, to the introduction of competition in long distance telephone service the United States, where they "predict" AT&T dynamic price behavior accurately, and they suggest that similar substantial lags may occur in the emergence of intensive price competition in some electricity markets.

Uploaded: June 27, 2006. Proceedings of the 31st Hawaii International Conference on System Sciences (HICSS-31), vol. 3, pp. 9-14, Kohala Coast, Kona, Hawaii, January 6-9, 1998.  
Richard E. Schuler 06/27/06 91.90 KB PDF 98-35
Thermal Unit Commitment Including Optimal AC Power Flow
Abstract - We propose a new algorithm for unit commitment that employs a Lagrange relaxation technique with a new augmentation of the Lagrangian. The new augmentation involves a duplication of variables that allows relaxation of the coupling between generator time- spanning constraints and system-wide instantaneous constraints. This framework allows the possibility of committing units that are required for the VArs that they can produce, as well as for their real power. Furthermore, although the algorithm is very CPU- intensive, the separation structure of the Lagrangian allows its implementation in parallel computers. Our work builds upon that of Batut & Renaud, as well as that of Baldick.

Uploaded: June 27, 2006. Proceedings of the 31st Hawaii International Conference on System Sciences (HICSS-31), vol. 3, pp. 81-88, Kohala Coast, Kona, Hawaii, January 6-9, 1998.  
Carlos E. Murillo-Sanchez, Robert J. Thomas 06/27/06 282.67 KB PDF 98-36