A unifying approach to assessing market power in deregulated electricity markets

A competitive deregulated electricity market with increasingly active market players is foreseen to be the future of the electricity industry. In such settings, market power assessment is a primary concern. In this paper, we propose a novel functional approach for measuring long term market power that unifies a variety of popular market power indices. Specifically, the new measure, termed transmission constrained network flow (TCNF), unifies three large classes of market power measures: residual supply based, network flow based, and minimal generation based. Further, TCNF provides valuable information about market power not captured by prior indices. We derive its analytic properties and test its efficacy on IEEE test systems.