Combined pool/bilateral dispatch. I. Performance of trading strategies

This three-paper series deals with the dispatch of power networks under mixed pool/bilateral trading. The major questions examined are (i) to what degree does the relative level of pool versus bilateral trading influence performance in terms of individual power levels, costs, prices, revenues and expenditures; (ii) what is the comparative performance of mixed trading with firm and nonfirm bilateral contracts under various curtailment strategies; and (iii) is the revenue derived from the pool and bilateral trading consistent with the corresponding unbundled costs? The above issues are sequentially addressed in each of the three parts. The eventual goal of these results is to help generator and load-serving entities choose appropriate relative levels of pool versus bilateral trades while considering risk, economic performance, as well as physical constraints. This paper proposes a one-step optimal power flow model that dispatches the pool in combination with the privately negotiated bilateral contracts while minimizing cost and accounting for both losses and congestion. In part I, notions of pool/bilateral demand and generation as well as a number of technical and economic performance measures for each competing entity are defined. This dissection of total and individual financial measures according to pool or bilateral trading allows the market participant to evaluate the profitability of each component of its chosen pool/bilateral mix. A number of simulation results illustrate the effect of varying the relative levels of pool/bilateral trading on the values of individual performance measures