APPLICATION OF GAMES WITH INCOMPLETE INFORMATION FOR PRICING ELECTRICITY IN DEREGULATED POWER POOLS

We present a game theoretical approach to the problem of pricing elect ricity in deregulated energy marketplaces. We assume that an Independe nt System Operator receives bids by Pool participants and defines tran sactions among participants by looking for the minimum price that sati sfies the demand in the Pool. The competition among Pool participants is modeled as a non-cooperative game with incomplete information. We a ssume that each Pool participant knows its own operation costs but doe s not know his opponents' operation costs. The game with incomplete in formation is transformed into a game with complete, but imperfect, inf ormation and solved using the Nash equilibrium idea. The approach pres ented in this paper is geared towards providing support for pricing el ectricity in deregulated Pools.