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This two-part paper surveys the frequency and voltage control ancillary services in power systems from various parts of the world. In this second part, essential economic features that must be taken into account when designing markets for ancillary services are first discussed. The methods adopted in eight different systems (Australia, France, Germany, Great Britain, New Zealand, PJM, Spain, and Sweden) for trading frequency and voltage control ancillary services are then compared. Lastly, new indicators for comparing volumes and costs of ancillary services across systems are proposed and calculated for the systems included in this survey. The companion paper surveys the technical features of these ancillary services. Index Terms--Ancillary services, cost, frequency control, market, reactive power, system services, voltage control, volume.

Due to the oligopoly structure of the electricity markets and to the constraints imposed by the transmission network, the producers may exert market power by strategically bidding higher than their marginal costs. This brings market performance far from the perfect competition equilibrium, with higher market clearing price and extra surpluses obtained by the producers. Demand elasticity can significantly affect the market performance contributing to mitigate the strategic bidding behavior of the producers. Compared to other commodity markets, demand elasticity in the electricity markets is low, but even a small increase can result in appreciable improvement of the market performance. The network constraints of the power system play a specific role in determining the oligopoly equilibrium of the gaming behavior of the electricity producers. The model of supply function equilibrium is first applied to a simple three-bus test system for a conceptual analysis and then to a standard IEEE 30-bus test system. The effects of an increase of demand elasticity are assessed, resorting to a set of proper quantitative indexes. Index Terms--Demand elasticity, market power, supply function equilibrium.

Nash equilibrium is usually used as the solution of generator's strategic bidding in electricity markets. The available literature has shown by simulation that multiple market equilibria or no pure equilibrium may be induced after the inclusion of network constraints (transmission constraints). This paper presents a systematical analysis for the impacts of network constraints on the market equilibrium in oligopolistic electricity markets. In our modeling, the independent system operator (ISO) dispatches generation and determines nodal prices via solving an optimal power flow (OPF); and the individual generator optimizes its submitted supply function with Nash-supply function equilibrium (SFE) strategy, after taking into account ISO's decision-making process on dispatched generations and nodal prices. The conditions for the existence of equilibrium are given, and it is shown that there may be multiple equilibria or no pure Nash equilibrium. The equilibrium, if it exists, will be at a point where generators pay no congestion charge. Index Terms--Electricity markets, Nash equilibrium, optimal response curve, strategic bidding.

When electricity becomes deregulated, the price of electricity is not determined by a regulatory authority but by market demand, supply conditions, and strategic behavior. Several oligopoly models have been proposed for representing strategic behavior in electricity markets, notable among which is the Cournot model. The literature on this model has for the most part provided a deterministic treatment of the demand and supply side quantifies. The market, however, is subject to both supply and demand side uncertainties. This paper provides analytical models and procedures based on generation system and load data for probabilistically representing two different market competition models--one is based on perfect competition and the other based on asymmetric oligopoly (Cournot). We account for the availability of generating units and show its effects on market prices. We also study the effects on a firm's expected profit when generator availabilities are neglected in the offers decisions. A numerical example is given for an electricity market for which the expected duration curve of the Nash-equilibrium electricity price as well as the mean of the individual firms' profits are calculated. The effects of unit commitment, transmission congestion, and transmission outages are not considered. Index Terms--Deregulation, electricity price, method of cumulants, oligopoly, price duration curve, reliability, stochastic Cournot model.

Suppliers in competitive electricity markets regularly respond to prices that change hour by hour or even more frequently, but most consumers respond to price changes on a very different time scale, i.e., they observe and respond to changes in price as reflected on their monthly bills. In this paper, we examine mixed complementarity programming models of equilibrium that can bridge the speed of response gap between suppliers and consumers yet adhere to the principle of marginal cost pricing of electricity. We develop a computable equilibrium model to estimate ex ante time-of-use (TOU) prices for a retail electricity market. It is intended that the proposed models would be useful 1) for jurisdictions (e.g., Ontario) where consumers' prices are regulated, but suppliers offer into a competitive market, 2) for forecasting forward prices in unregulated markets, and 3) in evaluation and welfare analysis of the policies regarding regulated TOU pricing compared to regulated single pricing. Index Terms--Electricity markets, equilibrium modeling, mixed complementarity problem, regulated pricing, time-of-use (TOU) pricing.

This paper presents a novel model for optimization of investments in new power generation under uncertainty. The model can calculate optimal investment strategies under both centralized social welfare and decentralized profit objectives. The power market is represented with linear supply and demand curves. A stochastic dynamic programming algorithm is used to solve the investment problem, where uncertainty in demand is represented as a discrete Markov chain. The stochastic dynamic model allows us to evaluate investment projects in new base and peak load power generation as real options, and determine optimal timing of the investments. In a case study, we use the model to compare optimal investment strategies under centralized and decentralized decision making. A number of interesting results follow by varying the assumptions about market structure and price response on the demand side. Index Terms--Centralized and decentralized decision making, generation expansion planning, real options, restructured power systems, stochastic dynamic optimization.

Competition in power markets exposes companies which participate to physical and financial uncertainties. Generator companies, bidding to supply power in day-ahead markets may face forced outages after bids are accepted by the system operator. When this happens they have to buy power from the real-time hourly spot market and sell to the ISO at the set day-ahead market clearing price. This paper shows simulations of random forced outages for generators and the resulting risk profiles of generators. Value at Risk (VaR) is calculated at 98% confidence level as a measure of financial risk. The risk profiles and the VaR of the generators are changed with changes in bidding functions. The simulations do not consider transmission limits or demand side bidding. Index Terms--Expected revenue, risk profile, value at risk (VaR).

A methodology is proposed for taking into account potential exacerbation of market power due to Financial Transmission Rights (FTR) allocations. Hedging Position Ratios (HPRs) are computed for FTR bids. These ratios quantify the relationship between the positions of an FTR bidder in the energy market and in the transmission rights allocation (based on the transmission rights bids). These ratios are used to identify the potential gambling positions from the transmission rights bidders and, therefore, used to prioritize critical positions in the auction. The transmission-right auction is modeled as a quadratic programming problem with a direct current (DC) approximation. The methodology is illustrated by a three-node network and then extended to larger networks. Index Terms--Market power, price-taker generator, transmission congestion management, transmission rights.

Most of the current research on operating reserve markets assumes that the required capacity is predetermined, which means that the demand of operating reserve capacity is inelastic. This paper considers that operating reserve capacity in a power system is flexible and that one should optimize it by cost-benefit analysis. Based on the reliability evaluation of the generation system, a clearing model of the operating reserve market is proposed to determine the optimal reserve capacity and simultaneously clear the operating reserve market. The model is discussed on both uniform-price and pay-as-bid auction mechanisms. By using a heuristic method, we suggest an efficient algorithm to solve the model. Case studies for reliability test system (RTS96) demonstrate the usefulness and efficiency of the proposed model. Index Terms--Cost-benefit analysis, operating reserve capacity, power market, reliability.

Under the deregulated environment of electric power industry, generation can be installed anywhere in the system resulting in an 'imbalance' between the generation and transmission. Shortages of generation in some subregions result in 'bottlenecks' within a system raising reliability concerns regarding subregional adequacy. Excess of generation capacity raises the issue of how much capacity in which location is entitled to receive payments for installed capacity. Therefore, there is a need to determine locational requirement for both generation and transmission such that assistance to subregions under random generator outages is not restricted. This paper presents optimization procedures for the determination of adequacy and responsibility for locational generation and transmission. The outlined procedures applicable to situations of planning to identify additional needs as well as to situations of market design for installed capacity in subregions. The paper closes by a discussion of forward auctions for the procurement of capacity in subregions. Index Terms--Installed capacity, loss of load expectation, optimization, reliability, risk, transfer capability.

Even with state of the art forecasting methods, the short-term generation of wind farms cannot be predicted with a high degree of accuracy. In a market situation, these forecasting errors lead to commercial risk through imbalance costs when advance contracting. This situation is one that needs to be addressed due to the steady increase in the amount of grid connected wind generation, combined with the rise of deregulated, market orientated electricity systems. In the presence of imbalance prices and uncertain generation, a method is required to determine the optimum level of contract energy to be sold on the advance markets. Such a method is presented here using Markov Probabilities for a wind farm and demonstrates substantial reductions in the imbalance costs. The effect of market closure delays and forecasting window lengths are also shown. Index Terms--Energy markets, Markov processes, NETA, risk analysis, wind energy.

A probabilistic power system stabilizer (PSS) design considering multioperating conditions is proposed in this paper. Under the assumption of normal distribution, the conventional eigenvalue sensitivity analysis is extended to probabilistic environment by describing the statistical nature of eigenvalues as expectations and variances. Two probabilistic indexes derived from the sensitivities of eigenvalue expectations and variances are introduced to the PSS site and parameter selection. The robustness of the system can be guaranteed because wide range of the load variation has been taken into account in probabilistic representation. The effectiveness of the proposed PSS is demonstrated on a 3-machine system by probabilistic eigenvalue analysis and transient response simulation. Index Terms--Eigenvalue, power system stabilizer (PSS), residue index, sensitivity and probability.

Electricity consumption varies with time. These temporal variations include moment-to-moment fluctuations plus hour-to-hour changes associated with diurnal, weekly, and seasonal patterns. The problem naturally splits into two time frames: (1) fast fluctuations, on the order of seconds to minutes, and (2) slower fluctuations, on the order of an hour or longer. Fast fluctuations in aggregate load result primarily from the random movements of individual loads. Slower fluctuations result from common external causes, such as time of day, day of the week, and weather. This study empirically examines intra- and interhour load following. It develops methods to separate intra- and interhour load fluctuations, identifies the key features of each, and shows how they differ from each other.

This paper describes an environment in which distribution companies (discos) and generation companies (gencos), buy and sell power via double auctions implemented in a regional commodity exchange. The electric utilities' profits depend on the implementation of a successful bidding strategy. In this research, a genetic algorithm evolves bidding strategies as gencos and discos trade power. A framework in which bidding strategies may be tested and modified is presented. This simulated electric commodity exchange can be used off-line to predict whether bid strategies will be profitable and successful. It can also be used to experimentally verify how bidding behavior affects the competitive electric marketplace. Keywords: Competitive auction markets, optimization, genetic algorithms, bidding strategies, deregulation, energy broker, power systems, operations.

Restructuring in the electric power industry will result in system operation at higher levels of loading, increasing the potential for voltage instability due to a saddle node bifurcation. In this paper we present a computationally efficient method for emergency system control following such an event. The method only needs information typically available from a state estimator; it does not require the user to supply detailed models of system dynamics.

Managing dispatch in an open access environment is a new challenge facing independent transmission system operators who are mandated to provide a level playing field for all transmission users. Two issues are especially important viz; use-of-transmission-system charges and congestion management. This paper examines aspects of these issues with emphasis on the latter. Pool, bilateral and multilateral dispatch co-ordination are explored and mathematical models developed for each case. The practical case when all three modes coexist is discussed with respect to both forward and real time dispatch. Keywords: Open transmission access, Power industry deregulation, Optimal dispatch.

The ability to solve the short-term load forecasting (STLF) problem with Artificial Neural Networks (ANNs) is investigated by conducting a fractional factorial experiment. The results of the experiment are analyzed, and the factors and factor interactions that affect forecast errors are identified and quantified. From the analysis, we derive rules for building a 'quasi optimal' neural network to solve the STLF problem. A comparison study demonstrates the superior performance of the 'quasi optimal' neural network over an automated Box-Jenkins seasonal ARIMA model in solving the STLF problem. keywords - fractional factorial designs, artificial neural networks, short-term load forecasting.

The power system of Saudi Consolidated Electricity Western Region (EWR) was characterized during the past few years by a considerable load growth which gave rise to a very high loading of cables and transformers. To avoid as much as possible brown- and black-out following system faults, an emergency load shedding scheme has been set up. The tuning of this scheme has been made in a detailed model of the system based on previously developed models and a new load modelling determined from recordings made during disturbed conditions. Keywords - Undervoltage load shedding, defence action, air conditioner modelling

This paper reports on the findings of a recently completed EPRI project [1] exploring the determination of load chracateristic for voltage stability analysis from field tests. The results of the extensive load tests performed on the B.C. Hdyro system are summarized. Based on the these results, important factors affecting test design and load parameter estimation are identified and typical load parameters are determined. Finally, a simple and effective load test procedure is proposed for future tests. Keywords: Voltage Stability, Load Modeling, Field Tests

Although state estimation is a mature technique which is widely available in the EMS industry, experience with practical implementation and use of state estimation and network security analysis functions at electric power utilities over the last two decades indicates recurring difficulties and problems attributable to inadequate external network modeling detail and data. This paper addresses the development of a set of guidelines for external network modeling and data exchange, based on the results of a recent project sponsored by EPRI. A general methodology is developed based on the results of a survey of a representative set of utilities and EMS suppliers, supplemented by subsequent analysis and simulation studies. Distinction is made between guidelines pertaining to external network topology, analog measurements, data exchange, and implementation procedures. A philosophy and approach for constructing and testing external models is also presented. Keywords - External network modeling, State estimation, Network reduction

Demand side management programs are strategies designed to alter the shape of the load curve. In order to successfully implement such a strategy, customer acceptance of the program is vital. It is thus desirable to design a model for direct load control which may accommodate customer preferences. This paper presents a methodology for optimizing both customer satisfaction and utility unit commitment savings, based on a fuzzy load model for the direct load control of appliances. Key Words: Direct load control, fuzzy logic, unit commitment

This paper discusses the impact of the enactment of the Clean Air Act of 1990 on the current industry practices as related to the economic dispatch problem. The problem was investigated in view of the new S[O.sub.2] emissions and underutilization constraints. Detailed problem formulations are presented and tools to evaluate different compliance plans and operation strategies are proposed. Test results on a large size power system are also included in the paper.

The purpose of this paper is to discuss recent practical experience in external network modeling at a number of utility control centers. This paper presents a set of short notes that discuss recent practical experiences on external network modeling. The introduction provides a framework for the rest of the short notes by discussing network representation, modeling issues, unobservable internal models versus unreduced external models, and data for the unobservable network. The first short note discusses the solution methods consisting of power flow, one pass SE, and two pass SE. The remaining short notes discuss recent practical experience on external network modeling at a number of utility control centers. The last short note describes techniques for developing REI equivalents.

The Transient Energy Function (TEF) method is a direct method of power system transient stability analysis. While research work on the subject continues, questions have been raised regarding potential applications of the method for on-line dynamic security analysis (DSA). This paper investigates some of the problems and suggests solutions for use of TEF in DSA, based on tests using real utility data. The test cases were provided by Public Service Electric and Gas Company (PSE&G). A pre-release version of a TEF program called DIRECT (version 2.9) was used. The tests indicate that TEF does have a place in DSA in conjunction with other available DSA methods.

A power system stays in the normal operating state when generation and load constraints are satisfied. However, due to system faults, sometimes these constraints are violated and may lead the system to an emergency state. The sequence that leads to a contingency may be different. Whether the power system will get through the contingency and keep itself from falling apart depends on the control strategy and system resources available. This paper discusses a new approach to recover the system frequency as fast as possible by controlling the generator output. Hydro units are selected to assume this task at the first stage due to the simplicity of their output control. Field tests to prove the feasibility of this approach are described and were conducted.

This letter addresses the risk-based self-scheduling problem of a price-taker Generation Company in the day-ahead competitive electricity markets. The letter analyzes a self-scheduling model that accounts for profit and risk simultaneously. The effect of risk is explicitly modeled in the self-scheduling problem taking into account the variance of the market-clearing prices. The trade-off of maximum profit versus minimum risk is properly addressed. Index Terms--Author, please supply your own keywords or send a blank e-mail to keywords@ieee.org to receive a list of suggested keywords.

In times of stress customers can help a utility by means of voluntary demand management programs if they are offered the right incentives. The incentives offered can be optimized if the utility can estimate the outage or substitution costs of its customers. This paper illustrates how existing utility data can be used to predict customer demand management behavior. More specifically, it shows how estimated customer cost functions can be calibrated to help in designing efficient demand management contracts. Index Terms--Contract design, customer cost, data calibration, demand management, load curtailment, system security.