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Summary form only given. A probabilistic method for a pool based combined energy and reserve market, that considers both generators and interruptible loads (ILs), is proposed in this paper. We minimize generation production cost together with the cost associated with expected energy not supplied (EENS) due to outages of generating units and failures of ILs to supply the reserve when required. The proposed settlement scheme allocates equitably cost of reserve among generators and ILs. Given that the method takes into account reliability of individual generators and ILs, the proposed scheme provides incentives for all market participants to improve their performance. A number of case studies are carried out to illustrate the impact of participant's characteristics on the reserve cost allocation.