Predatory gaming strategies for electric power markets

The recent deregulation of the electric industry in the United States opened some sectors of the power market to competition. Buyers and sellers of electric power are competing for limited resources. Although regulations exist attempting to limit such activity, when large amounts of money are at stake, the participants have incentives to engage in predatory behavior. The goal of this study is to model an agent driven bilateral power market auction where some of the players attempt to benefit from causing instabilities like brownouts and blackouts, as well as economic instabilities by applying different gaming strategies. The market structure is similar to the California power market. The network considered consists of six generators in three zones and two loads connected by a six bus power network. An independent entity takes care of the congestion management as well of allocation of the available resources. One of the companies engages in predatory behavior, using the congestion management policies combined with carefully chosen bids to cut off one or more of the generators of the other company. Vulnerabilities associated with shutdown and startup costs, minimum up and downtimes, ramp rate and generator limits for each generator, are utilized to achieve market destabilization. Customers may be negatively impacted by the predatory behavior, since reducing the power delivered to a customer is sometimes the best solution to the total congestion management optimization problem.