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Modeling regional electric power markets and market power

Author

Listed:
  • Robert F. Cope III

    (Department of Management, Southeastern Louisiana University, Hammond, LA, USA)

  • David E. Dismukes

    (Center for Energy Studies, Louisiana State University, Baton Rouge, LA, USA)

  • Rachelle F. Cope

    (Department of Management, Southeastern Louisiana University, Hammond, LA, USA)

Abstract

This paper develops a nonlinear, mathematical programming model for estimating production decisions in an open access, regional power market. Our approach allows one to estimate competitive power market equilibrium prices, which in turn offers empirical conclusions about marginal generation facilities, transmission interconnection congestion, and most importantly, load pockets and market power. Sensitivity analyses are conducted by subjecting the model to changes in production costs, peak hour demand, power imports, and transmission interconnection price assumptions. We then consider the issue of a firm's ability to exercise market power and the implications it may have on regional equilibrium power prices. The Louisiana power market is used as a case study for our work. Copyright © 2001 John Wiley & Sons, Ltd.

Suggested Citation

  • Robert F. Cope III & David E. Dismukes & Rachelle F. Cope, 2001. "Modeling regional electric power markets and market power," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 22(8), pages 411-429.
    • Handle: RePEc:wly:mgtdec:v:22:y:2001:i:8:p:411-429
    DOI: 10.1002/mde.1031
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    References listed on IDEAS

    as
    1. Edward Kahn & Ross Baldick, 1994. "Reactive Power is a Cheap Constraint," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 191-202.
    2. Lucas, Nigel & Taylor, Peter, 1993. "Characterizing generator behaviour: bidding strategies in the pool: A game theory analysis," Utilities Policy, Elsevier, vol. 3(2), pages 129-135, April.
    3. Dismukes, David E. & Cope III, Robert F. & Mesyanzhinov, Dmitry, 1998. "Capacity and economies of scale in electric power transmission," Utilities Policy, Elsevier, vol. 7(3), pages 155-162, November.
    4. Dennis Anderson, 1972. "Models for Determining Least-Cost Investments in Electricity Supply," Bell Journal of Economics, The RAND Corporation, vol. 3(1), pages 267-299, Spring.
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