The course deals in detail with power system operation and control in the deregulated electricity market environment. The topics include electricity market design and auction mechanisms, price formation, role of the independent system operator in pool versus bilateral markets, generation scheduling in deregulation, transmission pricing paradigms, congestion management, transmission rights, ancillary services procurement and pricing, and security management in deregulation. A highlight of the course is the country- specific information provided on various operational aspects of restructured power systems worldwide.


  1. To provide in-depth understanding of operation of deregulated electricity market systems
  2. To examine topical issues in electricity markets and how these are handled world-wide in various markets
  3. To train the participants to analyze various types of electricity market operational and control issues using new mathematical models

Course prerequisites

Basic understanding of power system engineering is required. Knowledge of mathematical programming is desirable.

Main topics and delivery plan

  1. Power market fundamentals
  2. Market architecture
  3. Market power
  4. Transmission open access
  5. Ancillary services in deregulation
  6. Congestion management in deregulation
Module and Topic Session Details
Module-1: Background review 1 Review of Concepts- marginal cost of generation, least-cost operation, incremental cost of generation; Kuhn-Tucker’s conditions of optimum, inter-utility interchanges
Module-2: Fundamentals of Electricity Markets and Energy Auctions 2 Supply and demand functions, equilibrium, types of electricity markets, imperfect markets
3 Bilateral and pool markets, LMP based markets, auction models and price formation, price based unit commitment, country practices
4 Market power and imperfect competition; Bertrand and Cournot games
Module-3: Transmission Open Access 5 Power wheeling transactions and marginal costing, transmission costing
6 Transmission pricing paradigms- embedded cost based, incremental cost based methods, country practices
Module-4: Transmission Congestion Management and Transmission Rights 7 Congestion management methods- market splitting, counter-trading; Effect of congestion on LMPs- country practices
8 Firm Transmission Rights, FTRs as benefits and liability, FTR auction models, country practices
9 -continued-
Module-5: Ancillary Services and System Security in Deregulation 10 Classifications and definitions, AS management in various markets- country practices
11 Frequency regulation, reserves and AGC services
12 Reactive power ancillary services in electricity markets- country practices
13 System security in deregulation


  1. S. Stoft, Power System Economics: Designing markets for electricity, Wiley-Interscience, 2002.
  2. A. J. Wood and B. F. Wollenberg, Power generation, operation and control, Wiley-Interscience, 2nd Edition, 1996.
  3. K. Bhattacharya, M.H.J. Bollen and J.E. Daalder, Operation of restructured power systems, Kluwer Academic Publishers, 2001
  4. M. Shahidehpour, H. Yamin and Z. Li, Market operations in electric power systems, Wiley Interscience, 2002
  5. D. S. Kirschen and G. Strbac, Fundamentals of power system economics, John Wiley and Sons, 2004
  6. N. S. Rau, Optimization principles: Practical Applications to the Operation and Markets of the Electric Power Industry, Wiley-IEEE Press, 2003.


For more information, please contact directly the course coordinator Prof Kankar Bhattacharya.