Optimal spot pricing in wholesale power markets
Regional fuel-cost differentials, temporal load differentials, and surpluses of central station capacity in the U.S. electric power industry provide requisite conditions for trade in wholesale power. The volume of wholesale trades and number of potential utility participants within organized or loosely formed markets have significant implications for competitiveness and efficiency. Current generation and wheeling pricing regulations enforced by the Federal Regulatory Energy Commission distort trades occurring in what could otherwise be an efficient spot market for wholesale power. The wholesale market is thought to be contestable in the short run when marginal-cost pricing emerges from the threat of entry by potential participants. Mathematical modeling methodology is employed to analyze spot prices for hourly economy energy under alternative behavioral scenarios. Market modeling under profit-maximizing and welfare-maximizing conditions serves to bound the problem between behavioral extremes. This is helpful in that market conditions are typically such that prices will emerge in the bounded range. The problem is formulated as a constrained nonlinear optimization which focuses primarily on the designation of temporally-defined wholesale demand.
- Research Organization:
- Colorado School of Mines, Golden, CO (USA)
- OSTI ID:
- 7227220
- Resource Relation:
- Other Information: Thesis (Ph. D.)
- Country of Publication:
- United States
- Language:
- English
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