Abst~act: This paper studies the management of costs associated with transmission constraints (i.e., transmission congestion costs) in a competitive electricity market. The paper examines two approaches for dealing with these costs. The first approach is based on a nodal pricing framework and forms the basis of the so-calledpool model. The paper also provides an analysis of financial instruments proposed to complement nodal pricing and includes illustrative test results on a large scale system. The second approach is based on cost allocation procedures proposed for the so-called bilateral model. The paper explains the basis for this model including a game-theoretic evaluation of some of its aspects. Both the pool and bilateral models have been at the center of the electric utility restructuring debate in California.

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This paper presents a new methodology within the framework of centralized optimization for calculating optimal generation schedules that minimize energy payments by power pool consumers. This paper addresses issues related to market structure and the operation of power pools, such as bid evaluation, generator no-load and start-up cost recovery, generator unit operating constraints, and market clearing price determination. Unlike conventional Unit Commitment algorithms that minimize total energy production costs, the method presented here minimizes payments by power pool consumers. A payment minimization objective leads to a different unit commitment and dispatch solution, and lower market clearing prices. Additionally, optimal allocation of generator no-load and start-up costs over the scheduling period is integrated in the bid evaluation process, leading to a further reduction in consumer payments.

This paper presents a method and the mathematical formulation for large scale optimal power flow sensitivity analysis. The method has been implemented in a computer program presently in use in the Pacific Gas and Electric Company. Some of the results of the sensitivity calculations are also presented. KEYWORDS;Large scale optimal power flow, Sensitivity analysis.Techniques and software for solving Optimal Power Flow (OPF) problems have attained a fair level of maturity ([1].[2],[3]). OPF packages are available which can reliably find a steady-state operating point (e.g. generation dispatch, voltage profile, and transformer tap settings) which minimizes some criterion such as system real power losses or real power generation costs while enforcing a variety of operational constraints such as limits on bus voltages, generator outputs, or flows on individual transmission lines. While knowledge of the optimal operating point for a given set of conditions (e.g. loads and equipment limits) is very useful, for some purposes knowledge of how the optimal operating point changes as conditions change may be more useful. That is, an analyst may wish to determine the sensitivity of the optimal operating point to a change in some parameter such as real or reactive load at a specific bus or a change in an operating limit such as the limit on the flow on a transmission line. We show how such sensitivity analyses can be efficiently performed for large-scale OPF problems once the optimal operating point is known. We also identify some application areas for such types of analysis.We developed the program OPSENS based on this method. The program is used to perform sensitivity analyses for PG&E's 1700 bus transmission network. The results of using the OPSENS program for calculating the sensitivity of system losses for a 34 bus and a 1700 bus transmission network to bus load changes are reported in this paper and compared to the results of multiple OPF studies. METHODWe shall use a parametric optimal power flow formulation in our analysis. The implementation of this method or the optimal power flow model used for obtaining the optimal operating point, however, need not use this formulation.

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