Modeling nodal prices in deregulated electricity markets in the usa: current practices and future needs

The purpose of this paper is to model the stochastic behavior of the nodal prices of electricity in deregulated markets in the USA, and in particular, to explain how this behavior has changed over time. These changes require different modeling strategies to capture the salient features of the market. The paper discusses three different models. The first model represents the period immediately after deregulation when price spikes were observed during the summer months using stochastic regime switching. Regulators in the northeastern markets responded to these “uncompetitive” price spikes by implementing various forms of market monitoring to mitigate the speculative behavior of generators. However, in a market like New York State, congestion on the transmission lines transferring power to New York City still led to spatial price differences. A new market for Transmission Congestion Credits (TCC) was established to allow generators to hedge these price differences. The second strateg...

• Type: Journal
• Year: 2011
• Where: ICASSP
• Authors: Timothy D. Mount
• Keywords: ICASSP 2011, Market, Price Differences, Signal Processing, Spatial Price Differences