Equilibrium market power modeling for large scale power systems

A review of economic equilibrium models for simulating imperfect competition among electricity producers is presented in this paper. The presentation emphasizes the application of a model using a linearized DC grid is formulated using the concept of Cournot and supply-function games, and the resulting models are solved as a linear complementarity program (LCP). Both POOLCO and bilateral-type markets can be simulated. Properties of the solutions are to these models are analyzed. The paper includes applications to the Eastern Interconnection that explore how transmission limitations and possible mergers might affect the equilibrium prices and market shares calculated by the model.