Midterm decision-making framework for an electricity retailer based on Information Gap Decision Theory

In midterm planning, the objective of an electricity retailer is to manage a portfolio of different contracts and to determine the selling price offered to its clients. This paper provides a novel technique based on Information Gap Decision Theory (IGDT) to assess different strategies for a retailer under unstructured pool price uncertainty. This method can be used as a tool for assessing the risk levels, considering whether a retailer is risk-taking or risk-averse regarding its midterm strategies. Supply sources include forward contracts, a limited self-generating facility, and the pool. It is shown that in robust strategy, procurement from sources with uncertain prices decreases. Also, the selling price offered to the consumers rises, decreasing the actual demand of the retailer, and consequently the expected profit is decreased. A case study is used to illustrate the proposed technique. (C) 2014 Elsevier Ltd. All rights reserved.