Economically destabilizing electric power markets for profit

Electric generators and distributors, in many cases no longer vertically integrated with guaranteed customers and suppliers, are starting to compete to sell and buy electricity. It is not at all clear, though, that current wholesale electricity markets produce economically optimal or efficient results. In fact, anecdotal evidence to the contrary has continually arisen. The purpose of this article, then, is to introduce market analysts to the study of model agent driven power market auctions. In particular, scenarios are examined where some of the players attempt to profit by intentionally driving market prices and creating economic instabilities. A double auction market of electricity is modeled, and different scenarios for malicious activities from the sellers´ side are considered. The results of simulating using genetic algorithms and the Roth/Erv leaning algorithm are summarized. It is shown that under commonly found circumstances some of the players can significantly influence the market for profit (their own). It is also noticed that structural market power exists when the uniform pricing algorithm is selected. It is also noticed that the buyers are very disadvantaged if they are not able to hide their valuation for the commodity