Nodal Market Power Detection under Locational Marginal Pricing

This paper proposes an index for nodal market power detection in power market under Locational Marginal Pricing (LMP). This index is an ex-ante technique to detect the market power. More precisely, this criterion detects the potential of exercising market power regardless of detecting the actual market power. Also it is obvious that pricing and market clearing method affect the potential of exercising market power. Different potential of market power exists in different pricing methods. This index has been analyzed under LMP method which seems to be a desirable environment to exercise market power. In LMP method by load growth, in some determined load levels which is called Critical Load Levels (CLLs), locational marginal prices have step change. This step change in locational marginal prices causes step change in revenue and benefit of Gencos. So it is significant to detect the behavior of Gencos in the CLLs. The proposed criterion has been tested on constant system load and CLLs for two test system.