The Interaction of Economic Dispatch Fuel Pricing and the Optimal Procurement of Fuel

This paper deals with the interaction of economic loading of the generating units and the optimal fuel procurement on an electric power system. A survey, reported upon in this paper, reveals that considerable disagreement exists on the setting of economic dispatch fuel prices. A mathematical proof is presented which shows that the incremental fuel price should be used. Sensitivities of the system fuel cost due to deviations from the optimal dispatch prices and a methodology for optimal procurement of fuel which also yields the values of the incremental fuel prices are presented.