Spot fuel markets´ influence on the spot electricity market using Leontief model

Nowadays, the new electric industry has segmented the vertically integrated utility into a horizontally integrated set of companies. This segmentation promotes competition in the different sectors (generation, transmission, and distribution). However, generation presents the highest level of competitiveness. Generation is not only involved in selling power but also ancillary services. Prices of energy are directly related with prices in fuel such that any variation in fuel prices will be reflected in energy prices to consumers. Therefore, the operation of the electricity market is related with other markets, such as fuel markets, transportation markets, and environmental markets. This document presents an overview of fuel markets impact in the electricity spot market. Leontief energy model is used to model the interaction among the different markets in a more global viewpoint The interaction of markets is analyzed by simulating an energy market with small number of participants.