Power System Deregulation: Loss Sharing in Bilateral Contracts and Generator Profit Maximization

Re-structuring of electric power system started taking place at the end of the 20th century. Restructuring also required a change in the conventional perception of the electric power system as a natural monopoly to a competitive open market system. The re-structuring, widely known as deregulation, involves many technically complicated issues ranging from system planning and operation to commercial and market areas. The introduction of deregulation has, however, led to confusions in the areas of transmission network loss sharing and the responsibility of generation of reactive power. This book provides a load flow based loss allocation technique supported by mathematical proof. Each power producing entity operates on the principle of profit maximization by optimizing its production cost of real power, reactive power and the spinning reserve margin. A profit maximization model based on the forecasted market price of real power, reactive power and spinning reserve has been developed and presented in this book. The model would help a producer to decide the production levels of these three commodities in order to realize the maximum profit.