Multiple Market-Clearing Prices, Electricity Market Design and Price Manipulation

Multiple market-clearing prices arise from degenerate pricing conditions that can occur in electricity markets under economic dispatch. A stand-alone profitability test can distinguish transactions that are consistent with workably competitive markets from transactions that serve no economic purpose...

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Bibliographic Details
Published in:The Electricity journal 2012-05, Vol.25 (4), p.18-32
Main Author: Hogan, William W.
Format: Article
Language:English
Subjects:
Contracts
Economics
Electric power
Electricity
Foundations
Markets
Prices
Pricing
Profitability
Profits
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Summary:Multiple market-clearing prices arise from degenerate pricing conditions that can occur in electricity markets under economic dispatch. A stand-alone profitability test can distinguish transactions that are consistent with workably competitive markets from transactions that serve no economic purpose other than to manipulate prices and profit from other financial contracts. Generalizing this standard to the degenerate conditions that give rise to multiple market-clearing prices provides a principled solution, without undermining the market-design foundations that integrate economic dispatch, locational prices and financial transmission rights.
ISSN:1040-6190
1873-6874
DOI:10.1016/j.tej.2012.04.014