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This content will become publicly available on October 10, 2017

Title: Dual pricing algorithm in ISO markets

The challenge to create efficient market clearing prices in centralized day-ahead electricity markets arises from inherent non-convexities in unit commitment problems. When this aspect is ignored, marginal prices may result in economic losses to market participants who are part of the welfare maximizing solution. In this essay, we present an axiomatic approach to efficient prices and cost allocation for a revenue neutral and non-confiscatory day-ahead market. Current cost allocation practices do not adequately attribute costs based on transparent cost causation criteria. Instead we propose an ex post multi-part pricing scheme, which we refer to as the Dual Pricing Algorithm. Lastly, our approach can be incorporated into current dayahead markets without altering the market equilibrium.
 [1] ;  [2] ;  [3] ;  [3]
  1. Federal Energy Regulatory Commission (FERC), Washington, D.C. (United States)
  2. Sandia National Lab. (SNL-NM), Albuquerque, NM (United States)
  3. Federal Energy Regulatory Commission (FERC), Washington, D.C. (United States); Johns Hopkins Univ., Baltimore, MD (United States)
Publication Date:
OSTI Identifier:
Report Number(s):
Journal ID: ISSN 0885-8950; 648218
Grant/Contract Number:
Accepted Manuscript
Journal Name:
IEEE Transactions on Power Systems
Additional Journal Information:
Journal Name: IEEE Transactions on Power Systems; Journal ID: ISSN 0885-8950
Research Org:
Sandia National Laboratories (SNL-NM), Albuquerque, NM (United States)
Sponsoring Org:
Federal Energy Regulatory Commission; USDOE
Country of Publication:
United States
97 MATHEMATICS AND COMPUTING pricing; generators; resource management; economics; electricity supply industry; algorithm design and analysis; ISO; mixed-integer linear programming; centralized day-ahead electricity market; nonconvex pricing; power system economics