A decision analysis approach to the transaction selection problem in a competitive electric market

The power industry is presently participating in a changing business environment. While planning to meet future peak demand is still a concern, the efficient utilization of existing generation and transmission resources is fast becoming of primary interest. The electric market is being deregulated to promote competition. In such a situation, the market players will have many choices for power transactions. In this new environment, the transaction selection problem will be complicated to solve because of the risk involved in the economic and reliable operation arising from uncertainties in many factors. This work integrates the economic and reliability aspects of power systems in the new business environment. The approach is based on decision analysis methodology, which involves the use of a set of mathematical techniques to explicitly address risk, uncertainty, and complexity in the transaction selection problem. The methodology successfully finds the best tradeoff between low cost and low risk in the cost based operation of the electric market. (C) 1996 Elsevier Science S.A.