Economic implications to electric power utilities of wind energy produced by nonutility generation

A technique is presented in this paper to evaluate the appropriate price that results from a short term contract between a utility and a nonutility generation (NUG). In the technique, the price for purchase of energy from the NUG is considered to be based on the energy cost that a utility avoids. The energy cost that a utility avoids is termed as avoided operating cost (AOC). The evaluation of the AOC is based on the optimum loading configuration of the committed units both before and after the inclusion of NUG energy. The technique can be utilized by a utility as a basic framework upon which relevant system operating criteria, system constraints and cost parameters can be added