Nodal reliability pricing for multiple available types of classes end-users

One of the main objectives of power system restructuring and deregulation is to allow customers to select their desired service based on their preferences and/or necessities. In most of the new electricity markets, a System Operator, SO (also known as an Independent System Operator) is responsible for ensuring that market participants satisfy the so-called n-1 security criterion (all generators involved in the market are required to provide energy with a minimum level of availability) at all times. While it is plausible to state that the SO must satisfy the n-1 criterion at any cost, the cost of guaranteeing a high level of system reliability is a cost that some consumers presumably would want to avoid. We describe a market model where customers select electricity contracts by differentiating electricity in multiple availability types and multiple types of classes based on desired risk level.