Agent-Based Simulation of an Automatic Mitigation Procedure

This paper describes experiments using computer-based agents to simulate the impact of the California ISO´s proposed Automatic Mitigation Procedure on market behavior. The agents play the role of market participants by formulating bids to maximize their profits. They exercise their skills under a number of scenarios with and without AMP being present and for various levels of demand and transfer capability over a simple, two-node market. The results of these experiments indicate that AMP is effective in reducing market clearing prices under situations when they would otherwise reach the price cap. In congested networks, congestion rents can be fleeting when suppliers are able to equalize prices across zones through strategic bidding. The analysis of significant issues such as the long-term effect of the AMP on investment incentives or its potential to help coordinate out-of-market activities lies beyond the capabilities of this type of simulation.