Strategic behavior of generation companies in the generation scheduling process

Power producers distort parameters of their production cost functions and limits for generated power to increase their profit. System Operator uses submitted data for medium-term generation scheduling. Power producers project the levels of market prices and predict prosperous decisions of System Operator. Power producers prepare data taking into account possible behavior of rivals. The paper presents a two-level optimization problem for the data preparation by strategic producers. Nash equilibrium is modeled to represent the behavior of generation companies. Case study demonstrates that producers tend to distort cost functions. An increase in profit of power producers due to data manipulation is shown.