Research On The Balancing Account And Price Cap Of The Regional Electricity Market In China

At present our electricity market is in the initial stage of market reformation, and it belongs to the single-buyer model. With the penetration of competition mechanism, instabilities caused by dealing risks are also increasing. In the electricity market under imperfect competition, generators always attempt to earn super profits by exercising market power, at same time such action may make the power purchase cost increased. When equilibrium price is persistently close to the price cap, it leads to serious deficit in balancing accounts, thus electricity market will be faced with huge operational risk. In order to carry the steady reformation over, keep the electrovalence stable, and maintain the power system safe operation, regulation mechanisms against dealing risks need be improved. To restrict generators to exercise market power and evade the risk of deficit in balancing accounts, it is particularly important to set a rational price cap. Due to the serious deficit in balancing accounts, the northeast regional electricity market was suspended in 2006 and it was mainly because of generators'high bidding in Liaoning and Jilin. The fact showed that there were some problems in the mechanism and operation of the balancing account and price cap themselves. Firstly this paper introduced the basic features and operation mechanisms of the electricity market, and then present dealing risks and regulations are elaborated and analyzed, at last problems and measures to solve in balancing account and price cap presently are especially analyzed at last. Under the market mode of single-purchaser and the settlement of market clearing price (MCP), based on related principle in mechanism design theory a sealed dynamic price cap is designed and corresponding settlements as well as reward and punishment mechanism are proposed. The proposed mechanism satisfies the constraint of generators'incentive compatibility and balance accounts, so it can incite generators to bid according to real costs and ensure the capital of balance accounts maintaining at the lowest limit. Results of case analysis show that the proposed mechanism is correct and available. Based on the theories of insurance, considering the mechanism design and management of the electricity market, this paper raised the balance account insurance of unit capacitance, and emphatically discussed the determination of premium rate. According to the case study, the efficiency of the balance account mechanism was verified. By the balance account insurance of unit capacitance, the balance account can get the compensation from insurance agent, make the risks dispersive and avoid risks caused by price fluctuating. At the same time, the insurance agent can also achieve its stable operation.