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Positioning for a Competitive Electric Industry with PG&E's Hydro-Thermal Optimization Model

Author

Listed:
  • Raymond B. Johnson

    (California Power Exchange, 1000 South Fremont Avenue, Alhambra, California 91803)

  • Alva J. Svoboda

    (Pacific Gas and Electric Company, Business Consulting/Information Resource Management, PO Box 770000, San Francisco, California 94177)

  • Claudia Greif

    (PG&E, Utility Electric Supply Department)

  • Ali Vojdani

    (Perot Systems Corporation, 12377 Merit Drive, Dallas, Texas 75251)

  • Fulin Zhuang

    (PG&E, Transmission Planning)

Abstract

The Hydro-Thermal Optimization (HTO) system optimizes the weekly electric production schedules of Pacific Gas and Electric Company's diverse resource mix. PG&E developed HTO to reduce operating costs, forecast marginal costs, and position itself for competition. PG&E implemented the system after extensive prototyping and validation and uses HTO daily for unit commitment, hydro scheduling, energy trading, fuel forecasting, resource evaluation, and marginal cost-based pricing. PG&E estimates annual benefits of HTO conservatively at $15 million. On a broader scale, PG&E has used HTO to analyze auction protocols for a deregulated power market and demonstrated that use of HTO-like tools to administer a power auction, as is done in the UK, could result in profit distribution inequities among bidders. HTO thus enabled PG&E to support a profound change in California's restructuring of the electric industry, from the proposed UK-type pool to a decentralized decision-making framework in which bidders optimize their own operations. As a result, California's $20 billion electric-power market will realize increased efficiencies and savings for both taxpayers and consumers.

Suggested Citation

  • Raymond B. Johnson & Alva J. Svoboda & Claudia Greif & Ali Vojdani & Fulin Zhuang, 1998. "Positioning for a Competitive Electric Industry with PG&E's Hydro-Thermal Optimization Model," Interfaces, INFORMS, vol. 28(1), pages 53-74, February.
    • Handle: RePEc:inm:orinte:v:28:y:1998:i:1:p:53-74
    DOI: 10.1287/inte.28.1.53
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    References listed on IDEAS

    as
    1. John A. Muckstadt & Sherri A. Koenig, 1977. "An Application of Lagrangian Relaxation to Scheduling in Power-Generation Systems," Operations Research, INFORMS, vol. 25(3), pages 387-403, June.
    2. Yoshiro Ikura & George Gross & Gene Sand Hall, 1986. "PGandE’s State-of-the-Art Scheduling Tool for Hydro Systems," Interfaces, INFORMS, vol. 16(1), pages 65-82, February.
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    Cited by:

    1. Steve Batstone & Geoff Pritchard & Golbon Zakeri, 2016. "Noninvasive Test Scheduling in Live Electricity Markets at Transpower New Zealand," Interfaces, INFORMS, vol. 46(6), pages 482-492, December.
    2. Spyros Kontogiorgis, 2000. "Practical Piecewise-Linear Approximation for Monotropic Optimization," INFORMS Journal on Computing, INFORMS, vol. 12(4), pages 324-340, November.

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