PRICING FOR SYSTEM SECURITY

Security in power systems refers to the ability of the system to withs tand imminent disturbances (contingencies). Maintaining security is an issue which must be addressed at the system level. It is shown in thi s paper, however, that it is possible to maintain system security in a n operating environment with many participants (power companies, indep endent power producers, co-generators, consumers) each attempting to o ptimize their own benefit; through pricing incentives and appropriate information exchange. Rates for power generation/consumption and for a n offer to use during a contingency, as well as information on the pro bability distribution of contingency need for each participant, are de rived so that individual optimization will lead to the socially optima l solution in which system security is optimized and the aggregate ben efit is maximized.