A Simulation Approach to Balancing Annual Risk and Reward in Retail Electrical Power Markets

Retail electrical power marketers, also known as retailers, typically set up contracts with suppliers to secure electricity at fixed prices on the one hand and with end users to meet their load requirements at agreed upon rates on the other hand. Providing future load requirements accurately to the suppliers is an integral part of these supply contracts. We analyze a series of retailer strategies to determine future loads using simulation at the hourly level for a simulated year (8,760 hours). We provide numerical results based on actual data for the PJM market and provide insights into these retailer strategies.