Power System Economics: Designing Markets for Electricity
May 2002, Wiley-IEEE Press
* Part 1 introduces key economic, engineering and market design concepts.
* Part 2 links short-run reliability policies with long-run investment problems.
* Part 3 examines classic designs for day-ahead and real-time markets.
* Part 4 covers market power, and
* Part 5 covers locational pricing, transmission right and pricing losses.
The non-technical introductions to all chapters allow easy access to the most difficult topics. Steering an independent course between ideological extremes, it provides background material for engineers, economists, regulators and lawyers alike. With nearly 250 figures, tables, side bars, and concisely-stated results and fallacies, the 44 chapters cover such essential topics as auctions, fixed-cost recovery from marginal cost, pricing fallacies, real and reactive power flows, Cournot competition, installed capacity markets, HHIs, the Lerner index and price caps.
About the Author
Steven Stoft has a Ph.D. in economics (U.C. Berkeley) as well as a background in physics, math, engineering, and astronomy. He spent a year inside FERC and now consults for PJM, California and private generators. Learn more at www.stoft.com.
Acronyms and Abbreviations.
Part 1: Power Market Fundamentals.
What to Deregulate.
Pricing Power, Energy, and Capacity.
Power Supply and Demand.
What Is Competition?
Marginal Cost in a Power Market.
Designing and Testing Market Rules.
Part 2: Reliability, Price Spikes and Investment.
Reliability and Investment Policy.
Price Spikes Recover Fixed Costs.
Reliability and Generation.
Limiting the Price Spikes.
Market Dynamics and the Profit Function.
Requirements for Installed Capacity.
Inter-System Competition for Reliability.
Part 3: Market Architecture.
The Two-Settlement System.
Day-Ahead Market Designs.
The Day-Ahead Market in Theory.
The Real-Time Market in Theory.
The Day-Ahead Market in Practice.
The Real-Time Market in Practice.
The New Unit-Commitment Problem.
The Market for Operating Reserves.
Part 4: Market Power.
Defining Market Power.
Exercising Market Power.
Modeling Market Power.
Designing to Reduce Market Power.
Predicting Market Power.
Monitoring Market Power.
Part 5: Locational Pricing.
Power Transmission and Losses.
Physical Transmission Limits.
Congestion Pricing Fundamentals.
Congestion Pricing Methods.
Congestion Pricing Fallacies.
Refunds and Taxes.
Pricing Losses on Lines.
Pricing Losses at Nodes.
"...the quality of its content deserves a wide readership..."(Power System Economics The Journal of Energy Literature, Vol.V111, No.2, 2002)