Demand price sensitivity and market power in a congested fuel and electricity network

Fixed demands for electricity are incorporated into a game theoretic model of strategic generators who are supplied by a fuel transportation network and produce power for a congested electricity transportation network governed by an independent system operator. Some counter-intuitive effects on measures of market power result from reducing the proportion of demands that are fixed rather than price-sensitive. Examination of the dual prices found in the complementarity problem´s solution reveal how these effects result from either a load pocket created by transmission congestion or the cost structure induced by the fuel supply network. One of the counter-intuitive effects also appears in a competitive benchmark model.