ILLINOIS INSTITUTE OF TECHNOLOGY

ELECTRIC POWER AND POWER ELECTRONICS CENTER

Electricity Restructuring and the Role of Security in

Power Systems Operation and Planning

Dr. Mohammad Shahidehpour

2006
1

Outline:

Vertically Integrated Electric Power Systems

Monopoly in the electric power industry

Regulating entities (FERC, NERC)

Essence of Restructured Power Systems

Regulation in the electric power industry
History
Rate-of-return regulation

Outline:

Electricity Restructuring

What is restructuring
Milestone laws and orders in the restructuring process
PURPA, EPAct, FERC Orders. 888, 889, 2000, SMD NOPR
Components of a restructured power system
Electricity market models
Electricity market participants
Electricity market types
Various electricity markets in the United States (California, PJM,
ERCOT, New York, New England, Midwest, others)
3

Outline:

Power System Security

Real-time Security
Online contingency analyses
Short-term Security
Generation unit commitment
Mid-term Security
Power system maintenance scheduling
Long-term Security
Power system planning issues

Discussions:

discuss power system security and its issues.

review the status of security analyses in vertically integrated

utilities

discuss the impact of system security on the operation and the

planning of restructured power systems.

discuss assumptions, functions, and calculation tools that are

considered for satisfying power systems security requirements.

Discussions:

present the security coordination among time-based scheduling

models.

analyze real-time security analysis, short-term operation, midterm operation planning, and long-term planning.

highlight issues and challenges for implementing security

options in electricity markets

conclude that global analyses of security options could provide

additional opportunities for seeking optimal and feasible
schedules in various time scales.
6

The beginning

Thomas Edison is best known for his inventionsparticularly the

incandescent lamp.

His contributions toward the development of the electric power grid

are often underappreciated.

Edison designed the entire electrical system down to the wall

outlet and in 1881 established the first power company.

Edison's system was in the Wall Street section of New York.

Today, vestiges of it supply DC power to about 2000 customers.

In most urban centers, electric utilities were given franchise rights

to be the exclusive provider of electricity.

In exchange for those rights, they agreed to pay franchise taxes to

the cities and to serve customers at an agreed upon fee.

The Interconnection

Beginning in the 1930s, isolated power systems melded into large

interconnected systems.

In the 1950s and 1960s, isolated systems were converted to large

regional pools.

bulk delivery over long distances

originated at large generating plants

easy access to fuel sources.

With economies of scale, price declined and demand increased.

Hydro, nuclear, oil, coal, and natural gas units generate electrical
energy at 1325 kV.

Higher generator voltages would be more efficient, but more

generator insulation is needed.

Transmission voltages are 115, 138, 230, 345, 500, and 765 kV.

230 kV system is the backbone of the US electricity grid.

In Canada and the US, the grid is 200,000 miles at or above

230 kv serving more than 300 million consumers.

10

Invisible Asset

High reliability has rendered electricity grid nearly invisible, at

least until the lights go out.

Blackout of 14 August 2003 raised questions about how a power

grid works and why it fails.

Many people asked: How could a small local problem bring the
lives of 50 million people to a standstill in a few minutes?

11

Electricity Facts

Electricity is a cornerstone of the economy.

Electricity is an essential commodity that has no substitute.
Unlike most commodities, electricity cannot be stored easily, so it must
be produced at the same instant it is consumed.
Electricity Market in United States
Electric power industry represents approximately 4% of the gross
domestic product (GDP) in the U.S.
In terms of revenue, it surpasses many other industries, such as
telecommunications, airline, and gas.
$1 trillion total asset value
$247 billion annual revenue
12

Electricity Facts

13

Forms of Regulation

State regulation
under the control of state public utility commissions (PUCs)
Regulate rates that residential, commercial, and industrial
customers pay for utility services

Federal regulation
Federal Energy Regulatory Commission (FERC) and the
Department of Energy (DOE)
Issues of safety, nuclear power plants, environmental quality,
pricing of interstate sales and transmission services

14

Rate-of-Return Regulation

Rate structure determination

Residential: private households
Commercial: non-manufacturing businesses, including hotels, motels,
restaurants, wholesale, retail, health, social, educational
Industrial: manufacturing, construction, mining, agriculture, fishing, and
forestry establishments
Illinois (2003, cents per kWh): average (6.88), residential (8.38),
commercial (7.22), industrial (4.91)
National (2003, cents per kWh): average (7.42), residential (8.70),
commercial (7.98), industrial (5.13)

charges different tariffs for different amounts of electricity

a two-part tariff to allocate fixed costs among customers and use marginalcost pricing to allocate variable costs.
15

Natural Monopoly

Business of providing electricity services has long been considered

by economists to be a "natural monopoly."
In theory, a natural monopoly exists in a market if one service
provider in the market can serve customers more efficiently than
many competing service providers.
Rationale of electricity industry as natural monopoly
Capital intensive: generating plants, transmission network,
and distribution network.
Efficiency: the larger the installed capacity, the more efficient.

16

Natural Monopoly No More

Emergence of new technologies

Challenge to the rationale of natural monopoly
Generation side
size is not the only determining factor
example: combined-cycle units
Transmission and distribution side
distributed generation
example: wind, photovoltaic

17

Market Participants

Market Operator
ISO/RTO
Market Participants
GENCOs
TRANSCOs
DISTCOs
Others
RETAILCOs
Aggregators
Marketers
Brokers
Customers
18

Independent System Operator (ISO)

A competitive generation market requires an impartial "traffic cop"

to operate the grid on a real-time basis and enforce grid reliability.
Primary responsibility of the ISO is reliability.
Duties could be expanded to include economic dispatch of
generation and off-system sales and purchases.

19

ISO Structures: MinISO

Focus
transmission security
Basis
coordinated multilateral trade model
Example
the original California ISO
no jurisdiction over forward energy markets
very limited control over actual generating unit scheduling

20

ISO Structures: MaxISO

Focus

security as well as market clearing

inclusion of a Power Exchange (PX)
PX is an independent, non-government and non-profit entity which
provides a competitive marketplace by running an auction for trading
electricity.
PX would function within the same organization as the ISO.

Basis

optimal power flow dispatch model

requires extensive data from market participants

Example

The PJM ISO and the National Grid Company (NGC) in the UK
a wide range of authorities and control

21

Regional Transmission Organization (RTO)

get rid of discriminatory transmission practices

eliminate pancaked transmission prices
promote regional energy transactions and coordination
PJM, ISO-NE

22

Generating Company (GENCO)

Operates and maintains existing generating plants.

Its objective is to maximize profit.

take part in various markets
energy market
ancillary services markets
competitive actions
arbitraging
gaming

Responsible for any possible risks.

23

Transmission Company (TRANSCO)

Transmits electricity using a bulk transmission system.

Has the role of building, owning, maintaining, and operating the

transmission system in a certain geographical region to provide
services for maintaining the overall reliability of the electrical system.

Its assets will be under the control of the regional ISO.

Recovery of investment and operating costs

access charges (usually paid by local users)
transmission usage charges (based on line flows contributions)
congestion charges
24

Distribution Companies (DISTCO)

Distributes electricity to customers in a certain geographical

region.

Is responsible for building and operating its distribution system

to maintain a certain degree of reliability and availability.

Is responsibility of responding to distribution network outages

and power quality concerns.

25

Other Participants

Aggregator
an entity that aggregates customers into a buying group for buying
large blocks of electric power and other services with a cheaper
price
Marketer
an entity that buys and re-sells electric power but does not own
generating facilities
Customer
end-user of electricity with certain facilities
connected to distribution system, in the case of small customers
connected to transmission system, in the case of bulk
customers
26

Restructuring Participants
P o w e r F lo w

M o n e y F lo w

GENCO
B roker

TRANSCO

D IS C O

M a r k e te r

R e ta ile r

A g g r eg a to r
C u sto m e r
27

Electricity Market Models

PoolCo Model
A PoolCo is defined as a centralized marketplace that clears
the market for buyers and sellers.
An ISO within a PoolCo would implement the economic
dispatch and produce a single price for electricity, giving
participants a clear signal for consumption and investment
decisions.
Market dynamics in electricity market will drive the spot price
to a competitive level.

28

Electricity Market Models

Bilateral Contracts Model

Bilateral contracts are negotiable agreements on delivery and
receipt of power between two traders, who set terms and conditions
of contracts independent of the ISO.
The ISO would verify that a sufficient transmission capacity exists to
complete the transactions and maintain transmission security.
The bilateral contract model is very flexible as trading parties specify
their desired contract terms.
Disadvantages: the high cost of negotiating and writing contracts,
and the risk of the credit worthiness of counter-parties.

29

Electricity Market Models

Hybrid Model
Combines features of the previous two models.
The utilization of a PoolCo is not obligatory.
Any customer would be allowed to negotiate a power supply
agreement directly with suppliers or choose to accept power
at the spot market price.

30

Power Market Types

Based on commodities being traded

energy market
ancillary services market
transmission market
Based on time scales
forward market
day-ahead
hour-ahead
real-time market

31

Energy Market

Energy market is the marketplace where competitive trading of

electricity occurs.
Energy market creates a centralized mechanism to facilitate energy
trading between buyers and sellers.
In general, the ISO or the PX operates the energy market.
The ISO (or PX) accepts demand and generation bids (a price
and quantity pair) from the market participants, and
determines the Market Clearing Price (MCP) at which energy
is bought and sold.

32

Energy Market

In general, the way to determine MCP is as follows.

Aggregate the supply bids into a supply curve and aggregate the
demand bids into a demand curve.
The intersection point of the supply curve and demand curve is the
MCP.

33

Ancillary Services Market

Ancillary services are those services needed to support the reliable

operation of power system.
DISTRIBUTION OF ANCILLARY SERVICE COSTS
SYSTEM CONTROL
7%
VOLTAGE SUPPORT
11%

LOSSES
34%

REGULATION
15%

SPINNING RESERVE
10%

SUP P LEMENTAL RESERVE

1%

LOAD FOLLOWING
20%
ENERGY IMBALANCE
2%

34

Ancillary Services Market

Different ancillary services in the ancillary services market could be cleared

sequentially or simultaneously.
Sequential approach

A market is cleared for the highest quality service first, then the next
highest, and so on.

In each round, market participants would be allowed to rebid their

unfulfilled resources in the previous rounds.

Participant could modify the bid in a new round before resubmitting it.
Simultaneous approach

Market participants would submit all bids for ancillary services at once,
and the ISO (or PX) would clear the ancillary services market
simultaneously by solving an optimization problem.

The objective of the optimization problem would depend on the market

and could include the minimization of social cost, the minimization of
procurement cost, etc.

35

Transmission Market

In a restructured power system, transmission network is the key mechanism for

competition.
The commodity traded in the transmission market is transmission rights,
including

the right for transferring power through the network

the right to inject power into the network

the right to extract power from the network

The holder of a transmission right can

physically exercise the right by transferring power

be compensated financially for transferring the right for using the

transmission network to others
The importance of transmission right is mostly reflected in the case of
transmission congestion.

By holding certain transmission rights, participants could hedge

congestion charges through congestion credits.
36

Forward and Real-time Market

Forward Market

A day-ahead forward market is a market for scheduling resources at each

hour of the following day.

An hour-ahead forward market is a market for deviations from the dayahead schedule.

Both energy and ancillary services can be traded in forward markets.

Real-time Market

The real-time market is established to meet the balancing requirement.

To ensure the reliability of power systems, the production and
consumption of electric power must be balanced in a real-time basis.
However, real-time values of load, generation, and transmission system
could differ from forward market schedules.

The real-time market is usually operated by the ISO.

37

Multitude of Players

Traditional power producers

investor owned, federally owned, publicly owned, and
cooperatively owned electric utilities
Non-traditional power producers
QFs under PURPA
EWGs under EPAct
IPPs
New Participants
Brokers, marketers, aggregators

38

Milestones in the Restructuring Process

Public Utility Regulatory Policy Act (PURPA) (1978)

PURPA was passed in response to the unstable energy climate of
the late 1970s.
PURPA was sought to promote conservation of electric energy by
creating a market for power from non-utility power producers
buying power from QFs (usually cogeneration or renewable
energy) at "avoided cost" which is the cost the electric utility
would incur were it to generate or purchase from another source
promoting renewable energy

39

Milestones in the Restructuring Process

Energy Policy Act (1992)

mandated that the Federal Energy Regulatory Commission
(FERC) open up the national electricity transmission system to
wholesale suppliers on a case-by-case basis
EPAct created a framework for a competitive wholesale
electricity generation market

established a new category of electricity producer, exempt

wholesale generator (EWG), that generate and sell electricity at
wholesale without being regulated as utilities under PUHCA .

40

Milestones in the Restructuring Process

FERC Order No. 888 (1996)

Title: Promoting Wholesale Competition Through Open Access Nondiscriminatory Transmission Services by Public Utilities; Recovery of
Stranded Costs by Public Utilities and Transmitting Utilities
all public utilities that own, control or operate facilities for the
transmission of electric energy to file open access non-discriminatory
tariffs
causing public utilities to functionally unbundle wholesale generation
and transmission services
Permits public utilities and transmitting utilities to seek recovery of
legitimate, prudent and verifiable stranded costs associated with
providing open access
Goal: to remove impediments to competition in the wholesale bulk
power marketplace and to bring more efficient, lower cost power to the
Nation's electricity consumers.
41

Milestones in the Restructuring Process

FERC Order No. 889 (1996)

Title: Open Access Same-Time Information System (formerly
Real-Time Information Networks) and Standards of Conduct

development of an electronic communication system: Open

Access Same-Time Information System (OASIS)
giving birth to new classes of entities such as the ISO which
manages information, independent of power generators,
retailers and users, and does not own any power facilities

42

Milestones in the Restructuring Process

FERC Order 2000 (December 1999)

Title: Regional Transmission Organization

Advancing the formation of Regional Transmission Organizations

(RTOs).
Requiring that each public utility that owns, operates, or controls
facilities for the transmission of electric energy in interstate commerce
make certain filings with respect to forming and participating in an RTO.
Codifying minimum characteristics and functions that a transmission
entity must satisfy in order to be considered an RTO.
Goal: to promote efficiency in wholesale electricity markets and to
ensure that electricity consumers pay the lowest price possible for
reliable service.
43

Milestones in the Restructuring Process

Standard Market Design (SMD NOPR) (July 2002)

Title: Remedying Undue Discrimination through Open Access
Transmission Service and Standard Electricity Market Design
Congestion management
Location-based pricing
Financial Transmission Rights
Multi-settlement for Energy
Day-Ahead Market
Real-Time Market
Termination (July 2005): Given the continuing development of
voluntary RTOs and ISOs and FERCs expressed intent to look into
revisions to the Order No. 888 pro forma tariff in a separate
proceeding, we have concluded that the SMD NOPR has been
overtaken by events. Accordingly, FERC will exercise its discretion to
terminate this proceeding.
44

Operation of Electricity Markets

Load
Forecasting
Price
Forecasting

ISO
Market
Forecasting

Forecasting

Congestion
Management

Markets

PBUC

Energy
A/S
Market
Operation

Transmission
Pricing
Market
Power

Load
Forecasting
Price
Forecasting

Forward
Market
SCUC
Ancillary
Services
Auction

GENCOs

Transmission

Bidding
Strategy

Arbitrage
Gaming

Risk
Management

Asset
Valuation &
Risk Analysis

Market
Monitoring

45

Price Differences

It is probably not coincidental that many of the states that are leaders in the
restructuring are among the states with high average prices.
Electric Industry Average Retail Price of Electricity by State, 2003 (Cents per kWh)

46

Current Situation

U.S. electric industry restructuring (as of February 2003)

47

California ISO

Beginning operation in
1998
Undergoing secondround market design

48

ERCOT

49

ISO-NE

Beginning
operation
1999
Connecticut,
Maine,
Massachuset,
New
Hampshire,
Rhode Island
and Vermont

50

Midwest ISO

Beginning operation on April 1, 2005

51

NYISO

Beginning operation in 1999

52

PJM

Beginning
operation in 1997
all or parts of
Delaware, Illinois,
Indiana, Kentucky,
Maryland,
Michigan, New
Jersey, North
Carolina, Ohio,
Pennsylvania,
Tennessee,
Virginia, West
Virginia and the
District of
Columbia
53

Market Operation: Objective

Two objectives
ensuring a secure operation
facilitating an economical operation

54

Economic Operation of a Single Utility

Minimizing operation cost

Security-constrained unit commitment

Security-constrained economic dispatch

Cost-based operation
Actual cost (vs. bid-based in the market environment)
Heat rate curve and incremental heat rate curve
Cost curve and incremental cost curve

55

Characteristics for Economic Operation

Input/output curve

56

Characteristics for Economic Operation

Incremental heat rate / cost curve

57

Economic Dispatch

Defining the ED problem

58

Economic Dispatch

Equal incremental cost principle

59

Economic Dispatch

Practical consideration

Generation limits

60

Why Interchange

Single utility system

Originally, individual power systems were designed to serve
as self-sufficient islands.

Each power system was planned to match its generation with

its load and reserve margins.

The system planning criteria were based on the expected

load growth, available generation sites, and adequate
transmission and reactive power capabilities to provide an
uninterrupted power supply to customers in the event of
generation and transmission outages.
61

Benefits of Interchange

Electric power systems interconnect because the interconnected system

is more reliable, it is a better system to operate, and it may be operated at
less cost than if left as separate parts.
Interconnected systems have better regulating characteristics. A
load change in any of the systems is taken care of by all units in the
interconnection, not just the units in the control area where the load
change occurred.
Interconnections are more reliable since the loss of a generating unit
in one of them can be made up from spinning reserve among units
throughout the interconnection.
The opportunity to improve the operating economics arises any time
two power systems are operating with different incremental costs.
62

Economic Interchange between Two Utilities

Application of equal incremental cost principle

63

Without Interchange

Area 1:

P1 = 322.7 MW

P2 = 277.9 MW

P3 = 99.4 MW

Total generation = 700 MW

Lambda = 17.856 $/MWh

Operating cost = 13,677.21 $/h

Area 2:

P4 = 524.7 MW

P5 = 287.7 MW

P6 = 287.7 MW

Total generation = 1100 MW

Lambda = 16.185 $/MWh

Operating cost = 18,569.23 $/h

Total operating cost for both areas = 13,677.21 + 18,569.23 = 32,246.44 $/h

64

With Interchange

Dispatch

P1 = 184.0 MW

P2 = 166.2 MW

P3 = 54.4 MW

P4 = 590.0 MW

P5 = 402.7 MW

P6 = 402.7 MW

Total generation in area 1 = 404.6 MW

Total generation in area 2 = 1395.4 MW

Total generation for entire system = 1800.0 MW
Lambda = 16.990 $/h
Operating cost, area 1 = 8530.93 $/h
Operating cost, area 2 = 23,453.89 $/h
Total operating cost = 31,984.82 $/h
Interchange power = 295.4 MW from area 2 to area 1

65

Savings from Interchange

Area 1 costs:

$13,677.21
$8,530.93
$5,146.28

Area 2 costs:

without the interchange

with the interchange
Savings
without interchange
with interchange
Increased cost

Combined, net savings

$18,569.23
$23,453.89
$4,884.66

$261.62

66

Economic Interchange between Two Utilities

Allocation of savings
Area 1: Area 1 can argue that area 2 had a net operating cost
increase of $4,884.66 and therefore area 1 ought to pay area 2 this
$4,884.66. Note that if this were agreed to, area 1 should reduce its
net operating cost by 13,677.21 - (8,530.93 + 4,884.66) = $261.62
when the cost of the purchase is included.
Area 2: Area 2 can argue that area 1 had a net decrease in operating
cost of $5,146.28 and therefore area 1 ought to pay area 2 this
$5,146.28. Note that if this were agreed to, area 2 would have a net
decrease in its operating costs when the revenues from the sale are
included: 18,569.23 - 23,453.89 + 5,146.28 = $261.62.
Split the savings
area 1 would pay area 2 the amount of $5,015.47 and each area
would have $130.81 reduction in operating costs.
67

Market Operation: Objective

Two objectives
ensuring a secure operation
facilitating an economical operation
Security! Security! Security!
Security is of utmost importance in all aspects of power
system operation.
In a regulated environment, security is ensured by centrally
dispatching various committed resources.
In a restructured environment, security could be facilitated by
utilizing various services available to the market.

68

Electricity Market Operation

Conflict between economics and security is inevitable in electricity

markets.
Transmission system security is challenged by market participants
investment decisions based on profit maximization.
Customers expect a least-cost and high-quality supply of electricity

It may require additional investments and more sophisticated

operation techniques for enhancing power systems security.

69

Adequacy and Security

Reliability: is degree to which the performance of electrical system

could results in power being delivered to consumers within accepted
standards and desired amounts.

Reliability encompasses two concepts: adequacy and security.

Adequacy: is the ability of a power system to supply consumers

electric power and energy requirements at all times.

Security: is the ability of a power system to withstand sudden

disturbances.

70

Adequacy / Security of Power Systems

Adequacy implies that sufficient generation and transmission

resources are available to meet projected needs plus reserves for
contingencies.

Security implies that the power system will remain intact even after
outages or equipment failures. This presentation focuses on static
security requirements of power systems operation.

71

Deterministic vs. Probabilistic Security

Absolute security cannot be guaranteed in a complex and uncertain

power markets
unpredictable and multiple equipment failures or sudden variations of
customer demands could cause severe impacts on power systems
security.

Deterministic and probabilistic viewpoint of power systems security.

In a deterministic sense, a secure power system should withstand a
pre-specified list of contingencies.

In a probabilistic sense, a secure power system should exhibit a fairly

high probability for residing in the normal state as defined in the next
section.
72

Security Time Scales

Real-time (on-line) security analysis which maintains the system

security in real-time

Short-term (day ahead and weekly) operation which encompasses

security-constrained unit commitment (SCUC) and securityconstrained optimal power flow (SCOPF)

Mid-term (monthly and yearly) operation planning which encompasses

optimal maintenance scheduling of equipments and optimal allocation
of resources (fuel and hydro) for maintaining the system security

Long-term (yearly and beyond) planning which encompasses

generation resource and transmission system planning for maintaining
the system security
73

Long-term Planning
GenerationResource
ResourcePlanning
Planning
Generation
TransmissionPlanning
Planning
Transmission

Mid-term Operation Planning

MaintenanceScheduling
Scheduling
Maintenance
FuelAllocation
Allocation
Fuel
EmissionAllowance
Allowance
Emission

Hierarchical power
system security analysis

OptimalOperation
OperationCost
Cost
Optimal

Short-term Operation
Security-constrainedUnit
UnitCommitment
Commitment
Security-constrained
Security-constrainedOptimal
OptimalPower
PowerFlow
Flow
Security-constrained

Real-time Security Analysis

SystemMonitoring
Monitoring
System
ContingencyAnalysis
Analysis
Contingency
74

Security and Risk

Real-time and short-term operation risks are associated with power

system failures, and hourly load fluctuations due to sudden changes in
weather conditions.
Short-term operation is exposed to financial risks associated with
volatility of electricity prices.

Mid-term operation planning risks are associated with the procurement of

fuel or the availability of natural resources such as water inflows.
Mid-term operation planning is exposed to financial risks associated
with prices of forward electricity and fuel.

Long-term planning risks are associated with the construction of

generating plants and transmission facilities.
Financial risks are great due to the construction lead time and
interest rates.
75

Global Analyses of Security

A global analysis of security options could provide additional

opportunities for seeking optimal states in time scales

Long-term and mid-term operation planning could provide a wider

range of options for managing security in short-term and real-time
power systems operations.

Power system operation strategies over shorter time periods (realtime and short-term) could yield security signals for longer-term
scheduling (mid-term and long-term).

76

Real-time Security Analysis

On-line security analysis is performed in Energy Management

Systems (EMS) at power system control centers.

On-line security analysis encompasses two main parts: system

monitoring and contingency analysis.
System monitoring is exclusively a real-time function

Contingency analysis is used in off-line applications as well.

77

Normal
Secure
Preventive
Action
Alert

Restoration
Control

Abnormal

Corrective
Action
Emergency

Restorative
Emergency
Control

78

Power System States

Secure state: there is an adequate supply of power available to meet

the demand at steady state.
power system components function within their security limits

Occurrence of any pre-specified contingency or changes in power

systems operation will not result in any system violations.

Alert state: indicates that in the event of contingencies or changes in

the normal operation of a power system, insufficient security margin
could result in system violations

system state can be secured by pre-specified preventive actions;

otherwise the system state will shift to the emergency state.
79

Power System States

Emergency state: represents a state of contingencies with violations

in the normal system operation.

proper corrective actions can return the system state to normal.

Otherwise, the system state could transfer to the restorative state.

Restorative state: represents a critical situation which may require

certain system sections to split away in order to meet the partial
system demand.

Restorative actions could include starting backup generating units,

load shedding, and switching normally partitioned sections.
Restorative control could maintain the system state at alert or
secure state which would otherwise result in emergency state.
80

Short-term Operation Planning

In the day-ahead market, participants submit hourly and block

generation offers to the ISO

The ISO calculates a security-based optimal generation schedule

for supplying hourly loads.

An acceptable security-based economical solution is reached by

the ISO in cooperation with market participants if the day-ahead
market is healthy and robust.

81

GENCOs

TRANSCOs

Schedules

DISCOs

Bids

ISO
UC
SCUC

SCOPF

82

Optimal Generation Scheduling for Managing

Security

Unit Commitment (UC)

Generating units scheduled at peak loads hours should be shut

down at off-peak hours to minimize dispatch cost of generators.

UC determines a day-ahead schedule for minimizing the cost of

fuel and starting-up/shutting-down generating units while
satisfying the prevailing constraints.

UC is a non-convex, non-linear, large-scale, mixed-integer

optimization problem with a large number of 0-1 variables,
continuous and discrete control variables, and a series of
equality and inequality constraints.

83

Optimal Generation Scheduling for Managing

Security

Unit Commitment (UC)

Hourly Load balance

Hourly generation bids
System spinning and operating reserve requirements
Minimum up and down time limits
Ramp rate limits of units
Generating capacity constraints
Startup and shutdown characteristics of units
Fuel and multiple emission constraints
Bilateral contracts
Must-on and area protection constraints
84

Computational Aspects of Unit Commitment

Optimization techniques have been proposed for achieving a near

optimal solution in unit commitment.
enumeration,
priority listing, dynamic programming (DP),
Lagrangian relaxation (LR),
mixed-integer programming (MIP),
Meta heuristic methods
genetic algorithms,
artificial neural networks,
expert and fuzzy systems
85

Control of Transmission Flows for Managing

Security

The ISO improves the system security by taking over the control of
transmission system.

Power transmission equipment, such as

tap-changing transformers,

phase shifters,

flexible ac transmission systems (FACTS),

controllable series capacitors,

switchable lines, and so on

The devices play an absolutely key role in transferring the leastcost electric energy from suppliers to customers, implementing
optimal control of power systems, and guaranteeing the
transmission system security.
86

Control of Transmission Flows for Managing

Security

Tap-changing transformers could link neighboring systems with

different operating voltages and maintain voltages within their limits
for security purposes.

Phase shifters, controllable series capacitor, and FACTS are often

applied to control power flows and to enhance the available transfer
capability (ATC) of transmission lines.

FACTS can alleviate transmission flow congestions, facilitate the power

transfer through constrained transmission systems, and reduce load
curtailment requirements

87

Load Shedding for Managing Security

Load shedding which is regarded as the last resort for maintaining

security will add virtual generators at load buses where load shedding
is allowed.

Effect of virtual generators is to shed local loads for removing

violations at steady state and contingencies.

Load shedding at a substation could represent several load

curtailment contracts.

88

Example of SCUC
1

G1

G2

L1

L2

T1

T2

L3

G3
89

Unit Cost Coefficients

Uni
t

Bus
No.

a
(MBtu)

b
(MBtu/MWh)

c
(MBtu/MW2h)

G1

176.9

13.5

0.1

G2

129.9

32.6

0.1

G3

137.4

17.6

0.1

Unit

Pmax (MW)

Pmin (MW)

G1

220

100

50

-40

G2

100

10

50

-40

G3

20

10

50

Unit

Min Down
(h)

Min Up
(h)

Qmax
(MVar)

Ramp (MW/h)

Qmin
(MVar)

Ini. St. (h)

-40

Start Up
(MBtu)

Fuel Price
($/MBtu)

G1

-4

55

100

1.2469

G2

-2

50

200

1.2461

G3

-2

20

1.2462

90

Bus No.

Voltage-Max (pu)

Voltage-Min (pu)

1.05

0.95

1.15

0.85

1.15

0.85

1.05

0.91

1.15

0.85

1.15

0.85

Line No.

From Bus

To Bus

R (pu)

X (pu)

Flow Limit (MW)

1
2

1
1

2
4

0.0050
0.0030

0.170
0.258

200
100

0.0070

0.197

100

4
5

5
3

6
6

0.0020
0.0005

0.140
0.018

100
100

Tap-Changing
Transformer No.

From
Bus

To
Bus

X
(pu)

Tap
Max

Tap
Min

T1

0.037

0.98

0.95

T2

0.037

0.98

0.95

91

Load distribution
Hour

Pd
(MW)

Qd
(MVAR)

Hour

Pd
(MW)

Qd
(MVAR)

175.19

50.37

13

242.18

69.63

165.15

47.48

14

243.60

70.03

158.67

45.62

15

248.86

71.55

154.73

44.49

16

255.79

73.54

155.06

44.58

17

256.00

73.60

160.48

46.14

18

246.74

70.94

173.39

49.85

19

245.97

70.72

177.60

51.06

20

237.35

68.24

186.81

53.71

21

237.31

68.23

10

206.96

59.50

22

232.67

66.89

11

228.61

65.73

23

195.93

56.33

12

236.10

67.88

24

195.60

56.23

92

Case 0: UC without transmission and voltage constraints

Daily Cost = $96,882.23
Hours (0-24)
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
1 1 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 0 0 0 0 0
1 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 0 0

Case 1: SCUC with dc transmission constraints

Daily Cost = $98,354.93
U
1
2
3

Hours (0-24)
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
1 1 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 0 0
1 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 0 0

93

Case 2: SCUC with ac transmission constraints

Daily Cost = $97,970.34
U
1
2
3

Hours (0-24)
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
1 1 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 0 0 0
1 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 0 0

Case 3: SCUC with ac network security constraints

Daily Cost = $99,568.13
U
1
2
3

Hours (0-24)
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
1 1 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
1 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 0 0 0

94

AC Contingency Dispatch based on

Security-Constrained Unit Commitment

95

Case 0: UC without transmission and voltage constraints

Daily Cost = $101,598.18
Hours (0-24)
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
1 1 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 0 0
0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0

Case 1: Steady state dispatch with ac network constraints

Daily Cost = $103,135.90
Hours (0-24)
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
1 1 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 0 0
0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0

Case 2: Outage of line 5-6

Daily Cost = $119,069.80
Hours (0-24)
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
1 1 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0
0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
96

Case 0

U1

U2

U3

Case 2

U1

U2

U3

LS

168.69

10.00

0.00

168.69

10.00

0.00

0.00

168.45

0.00

0.00

168.45

0.00

0.00

0.00

161.84

0.00

0.00

161.84

0.00

0.00

0.00

157.83

0.00

0.00

157.83

0.00

0.00

0.00

158.16

0.00

0.00

158.16

0.00

0.00

0.00

163.69

0.00

0.00

163.69

0.00

0.00

0.00

176.87

0.00

0.00

176.87

0.00

0.00

0.00

194.21

0.00

0.00

209.67

0.00

0.00

194.21

0.00

0.00

0.00

10

211.54

0.00

10.00

209.67

0.00

0.00

0.00

11

220.00

0.00

13.18

10

211.54

0.00

10.00

0.00

12

220.00

10.00

10.82

11

206.62

10.00

16.56

0.00

13

220.00

10.00

17.03

12

199.54

21.28

20.00

0.00

14

220.00

10.00

18.47

13

193.78

33.24

20.00

0.00

15

220.00

13.83

20.00

14

192.45

36.02

20.00

0.00

16

220.00

20.90

20.00

15

189.25

43.05

20.00

1.53

17

220.00

21.12

20.00

16

185.98

50.57

20.00

4.36

18

220.00

11.68

20.00

17

185.87

50.80

20.00

4.44

19

220.00

10.89

20.00

18

190.25

40.75

20.00

0.67

19

188.91

41.98

20.00

0.00

20

220.00

10.00

12.10

20

198.36

23.74

20.00

0.00

21

220.00

10.00

12.05

21

198.40

23.65

20.00

0.00

22

211.68

10.00

10.00

22

208.01

13.67

10.00

0.00

23

205.07

0.00

0.00

23

195.07

10.00

0.00

0.00

24

200.69

0.00

0.00

24

200.69

0.00

0.00

0.00

97

Interdependency of Transmission Systems for

Managing Security

In order to provide a secure supply of power to customers, regional

power systems are interconnected via tie lines to form multi-area power
systems.

Interconnection promotes the interdependency of regional systems

which could trade energy with their neighboring systems for security
and economical purposes while satisfying physical and financial
constraints.

Such interdependencies may also lead to widespread disruptions in

power systems operation due to cascading outages.

The recent blackout in the northeastern region of the United States

exhibited such cascading events among interdependent power
systems.
98

Interdependency of Energy Supply Infrastructure

for Managing Security

Affordable and clean sources of energy (gas, water, and electricity)

are a prerequisite for economical strength in industrialized societies.

Generation resources inevitably play an important role in maintaining

the power systems security.

The unbundling of electricity sector and the impetus of competition

have resulted in new technologies in power generation, which
reduce pollution, increase efficiency, and lower the cost of
supplying competitive loads.

These technologies often apply to conventional (coal, oil, gas,

hydro, nuclear) as well as to unconventional (solar, wind, fuel
cells) sources of energy.
99

Interdependency of Generation Resources for

Managing Security

Renewable and distributed units

pumped storage hydro,

wind,

photovoltaic/battery,

biomass,

cogeneration, which captures waste heat for energy

could be utilized at load centers for promoting energy conservation

and efficiency, reduce the dependence of electricity infrastructure on
coal, oil and gas infrastructure systems, and enhance the security of
electric power systems.
100

Interdependency of Energy Supply Infrastructure

for Managing Security

Advent of combined cycle units and environmental concerns have

necessitated extensive gas supply and transmission infrastructure.

Interdependency could inevitably result in a new electricity risk

associated with the security of power system infrastructure.

Interdependency could significantly increase the vulnerability of

gas pipelines from the security viewpoint and complicate the
monitoring and control of electric power systems.

101

Interdependency of Generation Resources for

Managing Security
30

Combined cycle units

high efficiency,
fast response,

Total Daily Generation

(GWh)

24.445

shorter installation time,

22.433

20

14.634

10
2.570

2.434

1.8

2.0

0
1.0

1.2

1.5

Gas Price ($/MBtu)

environmental friendliness

could flexibly meet rapid changes in the competitive electricity market,

and improve the power systems ability to withstand the risk of
disruptions in the case of massive contingencies.

102

Interdependency of Generation Resources for

Managing Security

Fuel switching units, which switch from natural gas to other types of
fuels at peak hours and at high demand seasons for natural gas,
could conceivably hedge short-term price spikes of natural gas for
supplying electricity demand.

Fuel switching/blending options could partially mitigate upward price

volatility of electricity and maintain a more secure and healthy
operation of electricity markets. 3.5
COAL
GAS
$ per mmBTU

3
2.5
2
1.5
1
1990

1992

1994
Year

1996

1998
103

Optimal Fuel Ratio

1
0.8
0.6
0.4
Unit 8002
Unit 8003

0.2
0
500

1500

2500
Emission Cap (lbs)

3500

4500

104

Interdependency of Energy Supply Infrastructure

for Managing Security

Limited gas supply or interruptible gas contracts may reduce the

power generation of a gas-fired generator without dual fuel capability.

An interruption or pressure loss in gas transmission systems could

lead to a loss of multiple gas-fired electric generators which could
dramatically jeopardize the power systems security.

Outages in gas transmission, inconsistent strategies for control,

monitoring, and curtailment in the energy infrastructure could further
constrain the power system operation and even lead to additional
outages.
105

Electricity generation by fuel (Billions of KilowattHours)

106

Major natural pipeline transportation routes and capacity

level at key locations

107

Gas flow infrastructure from wellhead to gasfired units

Gas Well

S1

C1

V2

V1

V3

D2
D1

D3
G2

G1

V4
Electric power systems
D4

G3

G4

D5
V5
S2

D6
V6

C2

T. Transmission pipeline D. Distribution pipeline

S. Underground Storage C. Compressor
V. Valve
G. Gas-fired Unit

108

One-Line Diagram of 118-Bus System

Zone 1

Zone 2

7
2

13

33

44

117
12

55

11

56

34

53

14

46

17

54

45
15

43

36
35
37

18

57
52

47
42
39

16

58
51

19

41

59

48

40

49

50

60

38
8
9

30

10

20
113

31
29

73

32

66

21

62

69

67
64

65
28

114

71

26

81

22

75

118

76 77

115
25

27

68
23

61

80

63

72
74

116

24

98

99

70
78

87

79

97

86
85

90

88
89

96
84

83

82
95
93

91

112
94

107

92

106
100
102

101

106
109

105
103

111

104
108

110

Zone 3

109

Incremental LMP across tie line 54

Inc. LMP at Buses

30&38 ($/MWh)

12

No pipeline Outage
Pipeline Outage

10
8
6
4
2
0
1

9 11 13 15 17 19 21 23
Hour

110

Load shedding as a function of gas pipeline outages

Load Shedding (MW)

500

430.00

400

330.00
250.00

300
200
100

120.00
0.00

0.00

200

0
400

600

700

850

Generation Loss due to Gas Pipeline Outage (MW)

111

LMP($/MWh)

LMP at bus 86

50

No PV/Battery

40

PV/Battery

30
20
10
0
1

9 11 13 15 17 19 21 23
Hour

112

Daily scheduling of PV/Battery generator

Generation (MW)

PV

Battery

4
2
0
-2 1

9 11 13 15 17 19 21 23

-4
Hour

113

Mid-term Operation Planning

GENCOs mid-term objectives are to extend the life span of existing

generating units through proper maintenance and to optimize
competitive payoffs by trading energy with the market.

TRANSCOs mid-term objectives are to maintain transmission

security through proper maintenance and to optimize competitive
payoffs by wheeling energy.

The ISOs responsibility is to guarantee the system security and leave

out participants payoffs as a security constraint.

114

Mid-term Operation Planning

Mid-term operation planning intends to satisfy the following

requirements:

Enhance the power systems security based on limited generation

and transmission equipment
Optimize the allocation of limited natural resources (water, fuel)

Extend the life span of generating and transmission units

Prolong investment costs for adding new facilities

Reduce operation costs for supplying competitive loads (mid-term

load and price forecasts, renewable energy availability)

115

Cost of Mid-term Operation

Total cost of mid-term operation planning could be divided into

production cost and maintenance cost.

Production cost of a GENCO is a function of fuel usage for

thermal generating units and other operation costs.

Maintenance costs of GENCOs and TRANSCOs could be

minimized when outages are scheduled according to seasonal
load durations and the availability of resources and manpower.

System security could create a substantial barrier on the cost

minimization of mid-term operation planning when available facilities
are on maintenance.
116

Cost of Mid-term Operation

Competitive objectives and constraints of market participants could be

conflicting.

It could be impractical to seek an all-encompassing objective for

participants optimal maintenance scheduling in a secure power
system environment.

Short-term operation (days or weeks) could impact mid-term

operation planning and the overall system security when considering
limited resources, transmission facilities, and emission allowance.

It could be appealing to the mid-term problem to develop a closer

coordination strategy between mid-term operation planning and
short-term operation solutions.
117

Features of Mid-term Operation Planning

Generation and transmission maintenance schedules

MIP-based SCUC (ac constraints)

Long-term fuel and emission constraints

Hourly-based variable maintenance cost

Hourly-based variable maintenance duration

118

Coordination in the Integrated Model

Coordination between generation and transmission maintenance

Coordination between security-constrained generation

scheduling and equipment maintenance

Coordination between resource allocation and optimal

generation

Coordination between transmission security and optimal

maintenance & generation scheduling

119

Objective
minimize
{
operation cost
+
equipment maintenance cost
}

120

Constraints
1. Generation maintenance constraints

maintenance windows
resources and crew availability

2. Transmission maintenance constraints

maintenance windows
resources and crew availability

121

Constraints (cont.)
3. Generation constraints

Load balance
System spinning and operating reserve requirements
Minimum up and minimum down times
Ramp rate limits
Startup and shutdown characteristics of units
Generating capacity of generating units

4. Fuel consumption and emission allowance constraints

122

Constraints (cont.)
5.

Coupling constraints between generation maintenance

and unit commitment decision variables

6. DC transmission coupling constraints between transmission

maintenance and economic dispatch decision variables:
First Kirchoffs law for bus power balance
Second Kirchoffs law for lines
Transmission flow limits
Limits on phase-shifting transformers

123

6.

DC transmission coupling constraints between transmission

maintenance Y and economic dispatch P decision variables:
First Kirchoffs law for bus power balance:

sf + wp = d

Second Kirchoffs law for lines:

f mn mn ( m n ) M j * (1 Y jt ) ( j m, n)

Transmission flow limits:

f mn PL j ,max * Y jt

( j m, n)

124

Mid-term Operation Planning

MP1
Optimal Maintenance Schedule (MP2)

Maintenance
Schedule

Shadow Prices

Optimal Allocation of Limited Fuel and Emission

Allowance (SP2)

Mid-term operation
planning for security

Optimal Maintenance
Schedule and Resource
Allocation

Infeasibility Cuts

Transmission Security Evaluation (SP1)

Optimal Maintenance
Schedule and Resource
Allocation

Penalty Prices
Short-term Operation

Short-term SCUC
(week 1)

Short-term SCUC
(week n)

125

One-line diagram for 6-bus test system

Unit 1

Unit 2

Bus 1

Load 1

Bus 2

Tap-Ch T1

Bus 3

Line 1
Line 2
PS 1

Line 3
Bus 5

Bus 4

Load 2

Tap-Ch T2

Bus 6

Line 4
Load 3
Unit 3

126

Unit data

127

Branch data

128

Equipment maintenance limits for 6-bus system

129

Peak load =270MW

130

Case studies

Case 0: Without any equipment maintenance

Case 1: With generation maintenance

Case 2: With transmission maintenance

Case 3: With generation and transmission

maintenance

131

Case 0
U1
U2
U3
L1-2

Case 1

H91-H114

H145-H168

U1
U2
U3
L1-2

H119-H142

132

Case 2
Maintenance of line 1-2 and hourly violations

U1
U2
U3
L1-2

H119-H142

133

Case 3_Feasible

H145-H168

H91-H114
U1
U2
U3
L1-2

H119-H142

H119-H142

Case 3_Optimal
H31-H54

H121-H144

U1
U2
U3
L1-2

H120-H143
H145-H168
134

Case 3_Optimal
H31-H54

H121-H144

U1
U2
U3
L1-2

H120-H143
H145-H168

Case 3_Contingency

H80-H103

H145-H168

U1
U2
U3

L1-2

H114-H137

H121-H144
135

136

Equipment maintenance limits for 118-bus system

137

Case 1: SCUC without equipment maintenance

U10
U20
U34
L51

Equipment maintenance cost = $0.00

Operating cost = $10,112,075.13
Total cost = $10,112,075.13

Case 2: SCUC with equipment maintenance

H121-H144

U10
U20
U34
L51

H1-H24
H5-H12

H21-H30

Generator maintenance cost = $62,400.00

Line maintenance cost = $90,000.00
Operating cost = $10,137,660.83
Total cost = $10,290,060.83

H145-H168

138

UC for Case 1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54

UC for Case 2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54

139

Impact of Security on Transmission System

Planning

Self-interested players participate in the planning and operation of

power systems.

GENCOs are freely and actively making plans for generation

expansion which could dramatically impact the existing transmission
flows and congestions.

Customers can also select their own electric energy suppliers based
on economics, power quality, and security.

As a result, the transmission system planning is facing credible

challenges for managing its economics and security.

140

Transmission System Planning

Among prospective transmission investors, entities which command

the least financial payoff and provide the highest level of security in
the short-term operation should be rewarded with the rights for
establishing and operating new transmission facilities.

The debate in the competitive electricity market focuses on the entity

that should be responsible for transmission system planning.

Stakeholders believe that the transmission operation is regional and

transmission planning should be controlled and monitored by regional
regulating authorities, such as the regional transmission organization
(RTO).

141

Transmission System Planning

RTO could define transmission projects which are essential to satisfying

customer demands and market requirements as expressed by

load growth forecasts,

new load and generation interconnection requests,

long-term transmission service requests,

improved operational security,

mitigation of local and regional transmission congestion,

replacement of old transmission and generation facilities,

increased operational and economical efficiency, and so on.

142

Case for Transmission System Planning

Transmission costs only one tenth as much as generation. So why

not build enough transmission so that it would never constrain
generation markets?

This planning approach is appealing to power engineers who prefer

systems with excess capacity.

The construction of new transmission lines is often opposed by

local residents and is politically difficult to achieve.

Regulatory rules may not permit utilities to recover fully the cost of
such overbuilt systems.

143

Reasons for Under-Investment

Extended periods of uncertainty over energy policies and

transmission ownership and operation,

Market participants including transmission companies have focused

on business opportunities in merchant generation and transmission
and energy marketing,

The cap on retail energy rates has made it difficult for transmission
companies to recover their investment costs,

Transmission investments are difficult to justify to state regulators

since much of the benefits are to accrue over a wide region while
the customers of the local utility will be paying the costs

144

Outreach and Public Education

A key to the public support of a transmission planning project

is the public understanding of those who may not see any
direct benefits from the transmission line.

Political entities have often refused to take a broader public

interest perspective by pre-empting local oppositions.

Open discussion of the project, its benefits and drawbacks,

and the owners responsibilities in building and operating the
transmission line, could streamline public understanding.

145

Select a Candidate Generation Set

Master Problem
Define a trial plan
Feasibility Cuts
(Generation
Planning)

Feasibility Subproblem
(Generation Planning)
Feasible
No
Define Market Price
Master Problem
(SCUC)

Feasibility Cuts
(SCUC)

Optimum Operation
Cuts
(Generation Planning)

Feasibility Subproblem
(SCUC)
No
Feasible
Optimum Operation Subproblem
(Generation Planning)
No
Converge?
Select Optimum Investment Plan

146

29

30

26

28
25

27

22

10
24

21

9
17

20

11

16
2

19
12

15

18

30-bus Test System

13

14

23

147

Generator data
Unit
Type

Limit on the
Added Units per
Type

Potential Unit Number

(At Bus)

Unit Life
(years)

Construction
Time (years)

12 13 (23) 15 16 (24)
18 19 (25) 21 22 (27)

20

2 (2) 14 (23) 17 (24) 20 (25)

23 (27) 24 25 (18) 27 28 (20)

20

5 (11) 7 (19) 8 (4) 9 (12)

20

1 (1) 10 (16) 11 (17)

26(18) 29 (20)

20

3 (5) 4 (8)

20

6 (13)

20

148

Generator data
Unit
Type

Initial Construction
Cost ($ Billion)

Capacity
(MW)

Operating
Cost ($/MW)

Fixed O&M Cost

($Million/Year)

FOR
(%)

0.08

100

26.9

1.0

0.08

0.15

200

24.2

1.8

0.02

0.20

300

20.2

1.5

0.005

0.22

400

18.7

2.0

0.005

0.25

450

16.3

2.5

0.001

0.27

500

14.2

2.5

0.001

149

Planning
Year

Peak Load
(MW)

Investment
($ Billion)

Capacity
(MW)

Max # of
Units

EENS
(MWh)

2100

0.1

100

70000

2200

0.18

300

65000

2300

0.18

300

55000

2400

0.18

300

54000

2500

0.18

300

52000

2600

0.18

300

45000

2700

0.18

300

40000

2800

0.3

400

32000

2900

0.3

400

28000

10

3000

0.3

400

25000

11

3100

0.3

400

22000

12

3200

0.3

400

10000

13

3300

0.3

400

13000

14

3400

0.3

400

12000

15

3500

0.3

400

11500
150

Location and types of candidate units

Available Sites

Types of Candidate Units

Buses 4, 12

1 x 300 MW

Buses 16, 17

1 x 400 MW

Buses 18, 20

2 x 200 MW or 1 x 400 MW

Buses 23, 24, 25, 27

2 x 100 MW or 1 x 200 MW

151

New Units Over the 5-year Horizon

Planning
Year

New Units Added in Each Planning Year

Case 0

Case 1

Case 2

Case 3

Case 4

21, 22

21, 22

18, 19

18,19

12,13

23

23

17

17

17

17

17

20

20

23

26

26

29

29

26

10

10

10

11

12

10

10

10

13

14

15

152

Comparison of Costs & Profits

($ Billion)

Case (Deterministic)

(Probabilistic)

Revenue

9.70

9.70

9.70

9.56

9.66

Operation Cost

6.68

6.81

6.91

6.84

6.87

Fixed O&M Cost

0.31

0.31

0.31

0.32

0.32

Transmission
Cost

1.13

1.14

1.16

1.12

1.13

Construction Cost

0.90

0.90

0.90

1.04

1.04

Curtailment Cost

0.0

0.0

0.0

0.0

0.022

Profit

0.68

0.54

0.42

0.24

0.278
153

Conclusions

Recent blackouts throughout the world provided a growing evidence

that certain actions are urgently needed to ensure that the electricity
sector will continue to provide secure and affordable energy to its
customers.

Restructuring of electricity and the creation of self-interested entities

such as generating and transmission companies have surfaced many
shortcomings of the existing electricity systems in an interconnected
network.

This presentation reviewed some of the existing methodologies for

enhancing the power systems security in vertically integrated utilities
and proposed alternatives in various time scales for improving the
security of restructured power systems.
154