Framework for energy brokerage system with reserve margin and transmission losses

The power industry in the United States is presently participating in a changing business environment. While planning to meet future peak demand is still a concern, the efficient utilization of existing generation and transmission resources is fast becoming of primary interest. This interest suggests to move from cost-based market operations to price-based market operations. In such a business environment, a need for a mechanism to determine the pricing of various ancillary services is desired as the ancillary services go together with electrical power transfer. The proposed approach develops a novel method of pricing mechanism for reserve margins and transmission losses as a part of the overall transaction in an energy brokerage system. The brokerage model described in this paper is based on formulations using linear programming.