Evaluating market power in congested power systems

In this thesis, a linear programming algorithm is developed for determining a measure of market concentration in congested transmission systems. The linear program uses the effects of the congestors on the system to de rate the line limits of each transmission line. The derated line limits allow for the congestor’s contribution to the system flows to be taken into account when examining the available market for additional buyers and sellers in the system. The linear program uses transmission line constraints with de rated line limits and generation constraints to calculate the maximum simultaneous interchange capability for a group of buyers and sellers on the system. The results of the linear program provide information regarding the maximum amount of power the buyers can import, as well as the amount of generation each seller can provide towards the simultaneous interchange. When only a few of the available sellers can participate in the maximum simultaneous interchange capability of the buyers, the market of available generation is referred to as concentrated. Each seller’s contribution, as determined by the simultaneous interchange capability algorithm, can be used in determining a Her find a hl-Hirschman index (HHI) of concentration for the market. The resulting HHI value can then be compared to government standards for HHI regarding market power in the electricity industry. Finally, sample applications of the maximum simultaneous interchange capability algorithm are examined. These examples are used to discuss the ramifications of congestion on the transmission system’s concentration and the usefulness of the de rated line limit solution method for determining market concentration.