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Title:
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Strategic generation with conjectured transmission price responses in a mixed transmission pricing system. Part I: Formulation
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Author(s):
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Published by:
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Publication date:
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ECN
Policy Studies
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1-5-2004
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ECN report number:
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Document type:
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ECN-RX--04-087
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Article (scientific)
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Number of pages:
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11
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Published in: IEEE Transactions on Power Systems, 19: 707-717, May 2004. (IEEE), , , Vol., p.-.
Abstract:
The conjectured supply function (CSF) model calculates an oligopolistic
equilibrium among competing generating companies (GenCos), presuming
that GenCos anticipate that rival firms will react to price increases
by expanding their sales at an assumed rate. The CSF model is generalized
here to include each generator?s conjectures concerning how the price
of transmission services (point-to-point service and constrained interfaces)
will be affected by the amount of those services that the generator
demands. This generalization reflects the market reality that large
producers will anticipate that they can favorably affect transmission
prices by their actions. The model simulates oligopolistic competition
among generators while simultaneously representing a mixed transmission
pricing system. This mixed system includes fixed transmission tariffs,
congestion-based pricing of physical transmission constraints (represented
as a linearized dc load flow), and auctions of interface capacity in
a path-based pricing system. Pricing inefficiencies, such as export
fees and no credit for counterflows, can be simulated. The model is
formulated as a linear mixed complementarity problem, which enables
very large market models to be solved. In the second paper of this two-paper
series, the capabilities of the model are illustrated with an application
to northwest Europe, where transmission pricing is based on such a mélange
of approaches.
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