Negotiation models for electricity pricing in a partially deregulated electricity market

A rapid move to a market based electric power industry will significantly alter the structure of electricity pricing and system operation. In this paper, we consider a game of negotiation in the electricity market, involving electric utilities, IPPs and large scale customers. We analyze the two-level game strategies for the negotiation process between utilities, IPPs and customers. These have been previously recognized as a way to come up with a rational decision for competitive markets, in which players intend to maximize their own profits. The derived operation rules based on competition can be viewed as an extension of the conventional equal incremental cost method for the deregulated power system. The proposed approach was applied to several systems to verify its effectiveness.