Optimal demand response program for active market power reduction

Evaluation of market power is one of the important aspects of power market analysis. The market power problem in electricity market is more complicated than other commodity markets because of its special characteristics. In general, market power is the ability of one seller or a group of sellers in keeping the market price more than its contest, in a long time and in the direction of their benefit. Transmission network characteristics is one of the most important factors in creation of the market power. The transmission congestion increases the potential of market power occurrence. The main purpose of this paper is determination of optimal Demand Response Program for reducing the market power and electricity price from the Independent System Operator viewpoint. In this paper, the electricity price has been calculated according to the sum of the paid cost to the producers proportional to their locational marginal price, and the paid cost to the customer proportional to their participation in demand response program.