Estimation of A Sensitivity-Based Metric for Detecting Market Power

Oh, Hyungseon | Thomas, Robert J. | Power Systems - Monitoring and Performance
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HyungSeon Oh, Robert J. Thomas
submitted to IEEE Transactions on Power Systems

The abuse of market power is a potentially serious problem for market designers. Few if any indices exist to measure the potential for market power in real-time. In references [1-2] an expression for a dispatch-to-price sensitivity matrix, M, was derived. The expression requires information about network topology and parameters as well as the rules used to operate the market. While computing the matrix is conceptually easy for those with all the market and system information (e.g., an ISO), the method is probably impractical for market participants due to the inaccessibility of much of the information. In this paper we suggest a method for estimating the M-matrix by using publicly available data. This suggests that any market participant who does the computation will know when conditions permit them to lower/raise prices through decreased/increased bids and/or offers.