Pricing System Security in Electricity Markets

|This paper proposes and describes in detail two distinct and novel methodologies to try to address the issue of a proper representation of system security in the operation of decentralized and hybrid electricity markets, so that adequate price signals can be given to all market participants. Both methodologies are based on the use of voltage stability theory to better account for system security. For each of the presented techniques, a methodology to determine \nodal" marginal prices is proposed and described in detail. A 6-bus system with both supply and demand-side bidding is described and used to test and compare the proposed techniques. Keywords|Electricity markets, locational marginal prices (LMP), security, available transfer capability (ATC).