Identifying the Potential for Market Power in Electric Power Systems in Real-Time

The analysis of recently restructured electric power systems has led to discussions concerning the ability of market participants to manipulate the market to their advantage. Indeed there are instances in which market manipulation has been convincingly established. In this paper we advocate a practical and objective approach to examine market power based on revenue sensitivities. Computing the sensitivities requires only currently available information together with the rules used to operate the electricity market and system. We specifically identify those suppliers with the ability to increase revenues by raising prices or withholding capacity. These suppliers may enjoy some measure of market power since such ability would not be possible in a competitive market in which their generation is easily substitutable. We present a visualization of relevant metrics that have the potential to allow those with the market monitoring function to observe opportunities for market power in real-time. Possible uses for the information are discussed.