The formulation of a Poolco model suitable for power system planning is presented. The model involves only slight enhancement to existing conventional power system software and directly enables the calculation of spot prices and a bidbased dispatch. Included is a method for decomposing spot prices to reveal components caused by system congestion. An example illustrates how financial hedges that are traded in the Poolco scenario will affect system planning decisions.

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central tenet of electric power industry deregulation is that the delivery of electric power (a service) must be decoupled from the purchase of the power itself (a product) and priced and contracted separately. Transmission of electricity must be offered and priced separately from the power itself, and delivery of power must stand on its own as a business. Regardless of the precise nature of the deregulated system's rules and structure, this means that transmission system operators need to know the actual operating costs of providing transmission services to their customers.Accurate knowledge of the actual costs of providing transmission services, particularly costs that vary as a function of time, location, or load pattern is vital to a system operator for a number of reasons:Pricing of transmission services in many regulatory frameworks is mandated to be based upon cost. Accurate knowledge of cost is thus required to determine prices that are defensible to both regulatory scrutiny and customer challenges.Operating decisions regarding economy of operation require knowledge of how costs relate to alternatives available to the transmission system. Business decisions with regard to operations, investment, and commitments to customers all require accurate knowledge of costs and how they vary, if for no other reason than so the operator can make certain that the sum of all revenues exceeds the sum of all costs. A recently completed research and development project developed a prototype transmission access pricing (TRAP? program to compute operating (variable) cost of transmission services for these purposes. The completed software represents a new type of power system software application and serves as both an indicator of future open transmission access analytical needs and a forum for further R&D. Locational Analysis o f CostsThe cost to deliver electric energy varies as a function of time, system status, and location within a power system. Temporal and state-related behavior of costs and how they vary as generation and load patterns shift can be handled by comparison of different scenarios or cases.

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