This paper describes a new probabilistic production costing algorithm henceforth t o be called the OPCOST method, which recognizes the stochastic nature of the duty cycle of a unit and models the generation system with explicit consideration of such operating characteristics as the system generation reserve policy, unit start up delay, unit start up failure, unit commitment policy and unit outage postponability. A comparison of the results obtained using a traditional production costing method and the OPCOST method show significant differences in the energies produced by the various categories of units. The OPCOST method IS physically based and minimizes the need for ad hoc assumptions. Therefore, the OPCOST method offers the possibility of greater accuracy and responsiveness t o system parameters.

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