Optimal Economic Power Transfers

There are two types of energy transactions between electric utilities. Utility A may sell power to utility B because the latter experiences shortage of generation to supply its own load, or utility A has surplus of low cost generation and utility B is willing to buy some power from A to replace its more expensive generation. If utilities A and B do not have direct interconnection, the power has to be "wheeled" through the transmission system of intervening utilities. The purpose of this paper is to describe the mathematical model used in a program to assess the potential for transactions among utilities, taking into account production costs, wheeling charges, load variations and transmission and generation limits. The results are determined by maximizing the profits of all or selected group of companies. An important feature of the model is that each power transaction is broken down in terms of fuel-to-fuel subtransactions where the following information is explicitly identified: 1) selling utility, 2) fuel type used by the selling utility to generate the required power for the sale, 3) buying utility, 4) fuel type of generating units turned down by the receiving utility as a result of the energy purchase. Existing optimal generation dispatch models usually treat an interconnected system as a multi area system where dispatch is optimized on a global basis. As a result of the global system dispatch, certain utilities may end up being dispatched in an uneconomical manner so that global optimality is achieved.