A Caltech Library Service

A Unifying Approach to Assessing Market Power in Deregulated Electricity Markets

Wu, Chenye and Bose, Subhonmesh and Wierman, Adam and Mohesenian-Rad, Hamed (2013) A Unifying Approach to Assessing Market Power in Deregulated Electricity Markets. In: 2013 IEEE Power & Energy Society General Meeting, July 21-25, 2013, Vancouver, BC, Canada.

PDF - Accepted Version
See Usage Policy.


Use this Persistent URL to link to this item:


A competitive deregulated electricity market with increasingly active market players is foreseen to be the future of the electricity industry. In such settings, market power assessment is a primary concern. In this paper, we propose a novel functional approach for measuring long term market power that unifies a variety of popular market power indices. Specifically, the new measure, termed transmission constrained network flow (TCNF), unifies three large classes of market power measures: residual supply based, network flow based, and minimal generation based. Further, TCNF provides valuable information about market power not captured by prior indices. We derive its analytic properties and test its efficacy on IEEE test systems.

Item Type:Conference or Workshop Item (Paper)
Additional Information:[1] J. Chen, M. Macauley, and A. Marathe, “Network topology and loca- tional market power,” Computational Econ. , vol. 34, pp. 21–35, 2009. [2] K. Atkins, J. Chen, V. S. A. Kumar, M. Macauley, and A. Marathe, “Lo- cational market power in network constrained markets,” J. of Economic Behavior & Organization , vol. 70, no. 1, pp. 416–430, May 2009. [3] Y. Y. Lee, R. Baldick, and J. Hur, “Firm-based measurements of market power in transmission-constrained electricity markets,” IEEE Trans. on Power Systems , vol. 26, no. 4, pp. 1962–1970, Nov. 2011. [4] L. Xu and R. Baldick, “Transmission-constrained residual demand derivative in electricity markets,” IEEE Transactions on Power Systems , vol. 22, no. 4, pp. 1563–1573, Nov. 2007. [5] D. Gan and D. Bourcier, “Locational market power screening and con- gestion management: experience and suggestions,” IEEE Transactions on Power Systems , vol. 17, no. 1, pp. 180–185, 2002. [6] P. Wang, Y. Xiao, and Y. Ding, “Nodal market power assessment in electricity markets,” IEEE Trans. on Pow. Sys. , vol. 19, no. 3, pp. 1373– 1379, 2004. [7] S. Stoft, “Power system economics: Designing market for power,” 2002. [8] A. Mas-Colell, M. Whinston, J. Green et al. , Microeconomic theory . New York: Oxford university press, 1995, vol. 1. [9] P. Twomey, R. Green, K. Neuhoff, and D. Newbery, “A review of the monitoring of market power the possible roles of tsos in monitoring for market power issues in congested transmission systems,” 2006. [10] P. Burns, M. Huggins, R. Lydon, and et al. , Generators’ Strategies in the England and Wales Electricity Market: A Synthesis of Simulation Modelling and Econometric Analysis , ser. Technical paper. University of Bath, 2004. [Online]. Available: -tj7PAAACAAJ [11] A. K. David and F. Wen, “Market power in electricity supply,” IEEE Trans. on Energy Conversion , vol. 16, no. 4, pp. 352–360, Dec. 2001. [12] J. Bushnell and C. Day, “An international comparison of models for measuring market power in electricity,” Energy Modeling Forum Stanford University, 1999. [13] A. Y. Sheffrin and J. Chen, “Predicting market power in wholesale electricity markets,” in Proc. of the Western Conference of the Advances in Regulation and Competition , South Lake Tahoe, 2002. [14] A. Y. Sheffrin, J. Chen, and B. F. Hobbs, “Watching watts to prevent abuse of power,” IEEE Power and Energy Magazine , vol. 2. [15] California Independent System Operator, “Market power and com- petitiveness,” In Annual Report on Market Issues and Performance,, 1998. [16] Electric Reliability Council of Texas, “Ercot protocols,”, 2001. [17] R. Schmalensee and B. W. Golub, “Estimating effective concentration in deregulated wholesale electricity markets,” RAND Journal of Economics , vol. 15, no. 1, pp. 12–26, Mar. 1984. [18] K. Purchala, L. Meeus, D. Van Dommelen, and R. Belmans, “Usefulness of DC power flow for active power flow analysis,” in Proc. of IEEE PES General Meeting . IEEE, 2005, pp. 2457–2462. [19] K. S. Pandya and S. K. Joshi, “A survey of optimal power flow methods,” J. of Theo. and Applied Info. Tech. , vol. 4, no. 5, pp. 450–458, 2008. [20] A. Holder, Parametirc LP Analysis . John Wiley & Sons, 2010. [21] S. Boyd and L. Vandenberghe, Convex Optimization . Cambridge University Press, 2004. [22] R. M. Freund, “Postoptimal analysis of a linear program under simulta- neous changes in matrix coefficients,” in Mathematical Programming Essays in Honor of George B. Dantzig Part I , ser. Mathematical Programming Studies. Springer Berlin Heidelberg, 1985, pp. 1–13. [23] R. Monteiro and I. Adler, “Interior path following primal-dual al- gorithms. part i: Linear programming,” Mathematical programming , vol. 44, no. 1, pp. 27–41, 1989. [24] “IEEE Power Systems Test Case Archive,”
Group:Resnick Sustainability Institute
Funding AgencyGrant Number
NSFNetSE CNS 0911041
NSFECCS 1253516
Southern California EdisonUNSPECIFIED
National Science Council of TaiwanUNSPECIFIED
R.O.C.NSC 101-3113-P-008-001
Resnick Institute UNSPECIFIED
Okawa FoundationUNSPECIFIED
National Basie Research Program of China2011CBA00300
National Basie Research Program of China2011CBA00301
Subject Keywords:Market power, electricity markets
Record Number:CaltechAUTHORS:20130930-122810401
Persistent URL:
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:41558
Deposited By: Kristin Buxton
Deposited On:30 Sep 2013 19:36
Last Modified:30 Sep 2013 19:36

Repository Staff Only: item control page