Study On Distribution Market Regulation And Electricity Supply Companies' Risk Evasion Pricing

In recent years, deregulation, competition and marketization reform has been the general direction of worldwide electricity power industry developing and reforming. Marketization reform of electricity distribution side is inevitable trend of the development of traditional distribution industry. Under electricity market environment, supply companies are facing huge market risks, meanwhile the appearing of new operation mode let regulation department have to deal with difficulties in regulation, in order to promoting competition and improving efficiency. This paper focuses on distribution regulation and supplier's risk evasion under distribution electricity market environment, the main contents of the research including: 1) Physical and theory base analysis of distribution electricity market, 2) Research on distribution electricity market based on yardstick competition mode, 3) Study on retailing electricity price regulation mode with physical restriction of distribution networks, 4) Study on models of co-related change of Time-of-Use (TOU) price and wholesale market price, 5) Research on market risk evasion for electricity power suppliers with interruptible load management, 6) Study on electricity power suppliers bidding strategies under incomplete information environment.Firstly, this paper discusses the physical base and theory base of building up a competitive electricity distribution market, from the physical law and characters of distribution system, combined with the points of modern economic theory which leads electricity distribution introducing competition. The discussion showsreasonable of turning electricity distribution from monopoly to competition. Contestable section and natural monopoly section are analyzed, electricity distribution market types and trade modes are introduced, which forms the base of following research on electricity distribution market.Secondly, the paper proposes a basic frame of leading the yardstick competition to electricity distribution side in China, according to practical experiences of other countries'. Through researching on competition and regulation mode, deregulation and regulation-rebuilding procession are illustrated in the paper. The basic theory, merits and existing problems of yardstick competition are presented. It is point out that yardstick competition is fitted for electricity distribution industry, with the merits of giving sound incentives, without influenced by imperfect information, adapting to transition process, et al. The development of yardstick competition based electricity distribution market in foreign countries are introduced. On the basis of that, the frame of yardstick competition are presented, which provides a feasible way to promote marketization of electricity distribution in China, and to stop monopoly and introduce competition through yardstick competition method.Thirdly, supposing different retailers engage in distribution market, the problem of retail price regulation for different electricity supply companies is discussed, where social welfare of distribution system is the object. Social welfares of distribution system are analyzed with the introducing of shadow cost of public funds. Based on the analysis, elasticity and cross-elasticity of price are introduced. Mathematical models of optimal retail pricing are set up with considering physical constriction of radial distribution networks, with the object of maximum social welfare. Analytical formulas of optimal retail price are derived from the model, and recurrence formulas for series regulation periods are also given. The relationship among regulated price, nodal electricity costs, elasticity of prices and shadow cost of public funds are determined by the model of retailing price for regulation purpose. Proposed model is feasible for regulated pricing of distribution companies whose status are different in market.Fourthly, in competitive market, retail prices are comparatively fixed, whilewholesale prices and load demand are variable, which lead distribution utilities facing huge risks. Co-related change of retail prices and wholesale prices is regard as an effective way to evade risks. This paper analyzes the main tasks and costs of distribution utility, as well as the characters of time-of-use (TOU) pricing in market environment. A TOU pricing method is presented to relate wholesale and retail prices, based on that, mathematical models are set up for the first time, and the optimal solutions are derived. Different types of participants, elasticity of load in presented models are also discussed. Proposed model provides sound economic information for electrical customers through TOU prices, which modulates the customers' electricity demand. Simulation results show the feasibility of proposed methods.Fifthly, The problem of evasion risk in wholesale market for electricity supply company is discussed in the paper, through the way of interruptible load management. According to the characters of market risks faced by the company, a mathematical model is presented, in which price fluctuating in wholesale market is modeled in utility functions of interruptible load. The model fully reflects the influence of risks to interruptible load. Combined with incentives theory, the incentive mechanism in interruptible load and its compensative costs design are also discussed. Based on that, three interruptible load modes are proposed for competitive market environment. Customers' load management behaviors are encouraged by sound compensation fee, such help the company optimizing interruptible load and increasing load elasticity, so as to evade market risks for company.Finally, electricity suppliers' bidding problems in short-term market under the market environment of demand side bidding are studied in the paper. Due to electricity suppliers' participating in bidding process, the bidding problems become more complicated than that in signal buyer market environment. First the electricity market mode is analyzed, and then the method of supposed player is presented in the condition of incomplete information. Buyer's bidding problem is simplified as the game between the buyer and supposed player, and the bidding strategies in thecondition of incomplete information are also given. Conclusions of the research will promote the process of introducing competition and building up competitive wholesale market, also those will help electricity supplier in deciding bidding strategies and evading market risks.