| The first part of this dissertation develops a method for estimating short-run zonal supply curves in transmission-constrained electricity markets that can be implemented quickly by policy analysts with training in statistical methods (but not necessarily engineering) and with publicly-available data. My model enables analysis of distributional impacts of policies affecting operation of electric power grid. I develop a fuzzy nonlinear statistical model that uses fuel prices and zonal electric loads to determine piecewise supply curves, each segment of which represents the influence of a particular technology type on the zonal electricity price. The domain belonging to different technologies can overlap, which means a mixture of two fuels can be marginal. The magnitude of this overlap is a function of the relative fuel prices. My problem thus requires the simultaneous estimation of the slope of each supply-curve segment, thresholds that define the endpoints of each segment and the level of marginal fuel overlap.;I also analyze the impacts of imposing a ;My problem formulation suggests a number of regulatory implications for flexible transmission architecture. First, inclusion of a price signal in the wholesale electricity markets for the FACTS capacity can lead to a more efficient operation of such devices. Second, the additional transfer capability offered by FACTS devices may effectively clear the real-time market in some circumstances (i.e., the additional transfer capability displaces higher-cost generation), suggesting that FACTS devices have the power to set prices. Third, if FACTS devices are compensated based on locational price differentials, the owners of such devices may not have the right incentive to offer the socially optimal amount of transfer capability to the system. The market structure is explained and marginal value for the FACTS capacity is calculated in a two-node and a thirty-bus system. The results show that the outcomes of both payment structures are equivalent when the congestion is large enough. (Abstract shortened by UMI.). |
