Benefit allocation after the merger of electricity markets

The restructuring of the power industry has the objective of increasing the industry´s efficiency. The increases in efficiency sometimes have not been realized to the extent possible due to the opposition of some stakeholders to the merger of electricity markets. A clear example is the failed attempt to merge the PJM, NYISO and ISO-NE markets in 2001-2002. In this paper, we propose and investigate a benefit allocation scheme based on cooperative game theory that allows each player to benefit from the merger. The scheme is a temporary solution useful in the transition from the separate markets to the merged market. An illustrative example is provided.