SPOT PRICING OF CAPACITIES FOR GENERATION AND TRANSMISSION OF RESERVEIN AN EXTENDED POOLCO MODEL

The Poolco model is emerging as one of the most acceptable options for organizing the spot market of electricity. Although the model represe nts a reasonable and safe transition from present industry practices t o what is required in a competitive electricity market, many important issues remain to be resolved. In particular, issues regarding reliabi lity related services are of a special concern to the industry. This p aper is devoted to the issue of reserve service delivery and pricing. The Poolco model is extended in this paper to include spot pricing of reserve generation and transmission capacities, as well as demand side bidding. In our extended model, suppliers submit bids for power as we ll as for reserve capacities. A new formulation of the extended securi ty constrained economic dispatch which allocates both power and reserv e generation resources is presented in this paper. The dispatch of the resources is constrained by limitations of system transmission capaci ties. The proposed formulation is considered to be relevant not only i n the Poolco, but in a more general setup. An illustrative example is used to introduce concepts and present results. Finally, some general issues regarding formats of proposals, balance of payments and uniquen ess of the prices that apply equally to both the original and extended Poolco models are discussed.