Bilateral transaction bargaining between independent utilities under incomplete information

A new approach to designing bilateral power transaction bargaining models b etween two independent utilities in a deregulated electricity market is pro posed. In the paper it is assumed that each utility (a seller or a buyer) k nows its own operating costs but does not know those of its opponent. The b ilateral power transaction problem is then considered as nonco-operative ba rgaining under incomplete information. Each participant develops its own ba rgaining strategy based on estimates of the opponent's operating costs and bargaining strategy. Two bargaining models are developed and examples are e mployed for demonstration.