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2.1 Introduction
Electrical power industry has been dominated by large utilities that have overall authorities on activities in generation, transmission and distribution of power refer to as vertically integrated utilities. During the nineties many electrical utilities and power network companies world wide have been forced to changed their ways of doing business from vertically integrated mechanism to open market system. This kind of process is called as deregulation or restructuring. Deregulation word refers to un-bundling of electrical utility or restructuring of electrical utility and allowing private companies to participate. The aim of deregulation is to introduce an element of competition into electrical energy delivery and thereby allow market forces to price energy at low rates for the customer and higher efficiency for the suppliers.
In Fig. 2-1 shows the basic structure of regulated power system, in which one controlling authority-the utility-operated the generation, transmission and distribution systems located in a fixed geographic area.
2. Losses occurred in distribution is accounted by spreading the cost over all three components. Hence utilities often charged their customers at an average tariff depending upon their aggregated cost during the particular period. 3. The prices setting is done by an external regulator agency often involved considerations other than economics. (Political party interferences or government policies on new issues etc.)
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4. The main objective of VIEU is to minimize the total cost while satisfying all the associated problems and constraints, but this leads to complex operation issues because of the big size VIEU. Further VIEU needs centralized planning for longterm generation, transmission expansion, midterm planning activities such as maintenance, production scheduling, fuel scheduling for optimal cost.
In spite of all the above demerits VIEU have performed satisfactorily over the long years with respect to operation, control and planning. But after 1990 there has been very big mismatch between the growth of the load and the generation expansion. This has led to ineffective operation of the system. Hence the concept of deregulation has been mooted. When the generation, transmission and distribution system control are separated in terms of management and ownership, the power system is said to be deregulated.
Multiple sellers
Competition
Regulated monopoly
Competition
from the point of view of security of the systems, congestion management, real time operation etc. Responsibilities of Independent System Operator 1. System security and reliability 2. Power delivery 3. Transmission pricing 4. Service quality assurance 5. Promotion of economic efficiency and equity 6. Fair market
Market trader/Market operator (Retailer) Market operator is an entity in the de-regulated environment and is responsible for the operation of market trading of electricity. He receives the bid offers from various market participants and determines the markets price based on certain criteria in accordance with the market structure.