Studies of bilateral contracts with respect to steady-state security in a deregulated environment

Under a deregulated environment, electricity consumers and suppliers will be permitted to establish various bilateral service contracts. The transmission company however will only have to honour and execute these bilateral contracts as far as the system design and operating conditions permit. A fundamental question is to what extent the system security could affect these contracts and what kinds of system reinforcements will be required to meet the future contract needs. This paper describes a series of studies modelling the bilateral contracts by using a transaction matrix (T). The concept of the transaction matrix is to expand the conventional load flow variables such as generations (Pg) and loads (Pd) into a 2-dimensional matrix (T). Each element of T, namely t_ij, corresponds to a bilateral contract between a supplier (Pg_i) and consumer (Pd_j). A generalized linear programming formulation is then proposed to solve various system operation and planning problems under a deregulated environment subjected to the steady-state security constraints (e.g. generation and line flow limits). Examples are presented to illustrate how to use this formulation to maximize any bilateral contract, individual generation or groups of generations; or to minimize the necessary correction needed for a proposed transaction matrix (T⁰) in order to comply with the security requirements. Other studies such as the use of Monte Carlo methods to study the behaviour of random bilateral contracts are also presented and discussed