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Currently, demand response resources can sell load reductions in wholesale energy markets. However, paying for load reductions ultimately results in an unbalanced market, where the amount of resources sold (megawatts) is less than the amount of resources bought (megawatts and “negawatts”). To resolve this imbalance, the ISO must allocate the cost of compensating demand response to those buyers who benefit from reduced LMPs. Current cost allocation methods are quite broad and based on each energy buyer's share of the total load. In an uncongested network, this results in a “fair” allocation of costs, i.e., an allocation proportional to the benefits that each party accrues. However, in a congested network, this is no longer the case, as price separation occurs between nodes. In this paper, we therefore propose a cost allocation method based on LMP sensitivity that accounts for the effect of congestion on the distribution of benefits between nodes with different LMPs. Since this sensitivity-based method only takes into account the cost allocation per node, we also propose a means of allocating costs between individual load serving entities (LSEs) at a single node. Due to this refinement, LSEs are rewarded according to their individual contribution to demand response. Finally, we define a fairness index to evaluate the performance of the proposed method as compared to a load-based allocation. We find that when load reductions are small (1%–3% total load), the fairness index of the proposed method is very close to zero, indicating almost identical benefit to cost ratios for all market participants. Although the fairness index increases with increasing load reductions, results show that even for larger load reductions, the fairness index is still lower for the proposed method than for the load-based allocation method. [ABSTRACT FROM PUBLISHER]

Among the ancillary services, a great number of cost allocation strategies have been broadly developed in the deregulated environment. Generally, the utilization of such services can be determined by directly evaluating the actual amount of the usage or by indirectly analyzing the fair/reasonable contribution/attribution to the market participants. In the case of the primary frequency regulation (PFR) service, which is operated by the participating generating units to maintain the real-time balance between the generation and load, the discussion of the PFR service attributed to the load side has still received relatively little attention. In this paper, a new strategy of the cost allocation of the PFR service from the customer side is proposed. Two main factors, the load fluctuation and the frequent demand change, are considered to figure out the PFR reaction relating to the different substations. The design of a scheme for determining the cost allocation index of the PFR service can be applied to the presently exiting power market. In addition, the actually load series recorded from the extra-high voltage (EHV) substations of the Taipower system located in northern, central, and southern Taiwan are meticulously analyzed and utilized to verify the feasibility and practicability of cost allocation. [ABSTRACT FROM AUTHOR]

Security cost analysis is important in electricity markets to address the correlation between market operation and power system operation. This paper proposes an efficient security cost analysis method and describes its implementation using a three-tier client/server architecture and up-to-date web technologies. The proposed security cost analysis is based on a system security index and its sensitivities with respect to certain system parameters. The web implementation allows easy and effective access by all market participants to make competitive decisions based on the security costs and sensitivity information obtained through the proposed security cost analysis techniques. The web implementation of the proposed method is successfully tested on a six-bus system and a 129-bus system. [ABSTRACT FROM AUTHOR]