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An unprecedented process of reforms has shaken the power industry during the last two decades. In order to sell the energy produced by their plants, many generation companies are now forced to prepare and submit daily offers to an electricity market under uncertainty about the offers submitted by their rivals. In this paper, we describe a methodology to prepare optimal offers for a generation company operating in a day-ahead market organized as a series of 24 hourly uniform-price multiunit double auctions. We explicitly consider the ability of the company to affect the price of electricity as well as the company's uncertainty about rivals' behavior. Index Terms--Electricity competition, market models, offering strategies, power generation scheduling.

The problem of ensuring that there is enough generation capacity to meet future demand has been an issue in market design since the beginning of the deregulation process. Although ideally the market itself should be enough to provide adequate investment incentives, there are several factors that prevent this result from being achieved, and some actual markets have already experienced problems related with a lack of generation capacity. A regulatory framework to address this question is presented. The procedure is based on an organized market where reliability contracts (based on financial call options) are auctioned, so both their price and their allocation among the different plants are determined through competitive mechanisms. This results in a stabilization of the income of the generators and provides a clear incentive for new generation investment, with a minimum of regulatory intervention. Additionally, the method represents a market-compatible mechanism to hedge demand from the occurrence of high market prices. Index Terms--Capacity markets, capacity payments, electricity markets, generation adequacy, long-term guarantee of supply, wholesale market design.

Algorithms that involve some kind of optimization have been adopted by several electricity pools as a tool to clear the market. Traditionally, this kind of models were used on a cost minimizing basis, but recent papers have pointed out that alternative dispatches may be obtained that, even with higher production costs, result in lower electricity prices for consumers. This paper studies this new payment-minimization approach, including the long-term economic signals that it provides and their impact on future investments. Our results show that minimizing consumer payment results in discriminatory scheduling for certain generation resources and may cause, in the long-run, higher prices for consumers. Index Terms--Electricity auctions, market design, unit commitment, marginal pricing, power generation dispatch, deregulation.