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Why Applicants Should Use Computer Stimulation Models to Comply With the FERC's New Merger Policy

Fortnightly Magazine - February 1 1997

anticompetitive price increase, the locations of customers adversely affected by the price increase, and the generators that would increase output in response to the price increase provided they would behave competitively. They can provide all the information necessary to implement the FERC's analytic screen, with the added refinement that they take account of the geographic pattern of loads.

Dispatch/transportation models are limited in one respect: They do not explicitly incorporate the electrical properties of the transmission grid. However, a load-flow model can be used to check that implied power flows are consistent with the properties of the transmission grid. Transmission constraints in the dispatch/

transportation model can be modified accordingly.

2. Dispatch/Unit-commitment Models. Models in this group, such as PROMOD, are commonly used in planning generation resources and estimating fuel consumption and operating costs for individual utilities. These models incorporate the most realistic representations of those generator characteristics relevant to unit-commitment and dispatch decisions. However,

dispatch/unit-commitment models are likely to prove less useful

than well-designed, dispatch/

transportation models in analyzing competition among utilities or in addressing market power issues in areas larger than local load pockets.

Dispatch/unit commitment models incorporate detailed proprietary data for individual utilities; a utility is unlikely to have access to all the information required by the models for its competitors' generating units. Furthermore, these models are designed for relatively small numbers of control areas. They may not perform as well for regions large enough for proper analysis of the geographic scope of competition and computation of valid market shares. Finally, these models were not designed to answer questions concerning competition, market shares, or market power. As a result, applicants would find it necessary either to revise the models or to perform development work on post-processing programs before using them to address a number of central issues of market power.

3. Load-flow Models. These models, such as PSS/E and Power World, simulate energy flows over a transmission grid. Their strength comes from the fact that they explicitly account for the flow of energy over all paths on an alternating current transmission grid (that is, loop flows), as well as the properties of the transmission grid that give rise to thermal and voltage constraints on energy transfers. They can also provide information on losses.

Pure load-flow models also exhibit a weakness: They ignore information on generation costs and transmission tariffs. As a result, taken alone these models can provide only limited information regarding market shares and market power. Even so, these models represent the standard source of estimates regarding the transfer capability limits of the transmission system.

4. Load-flow/Dispatch Models. This last category, which includes vehicles such as the Multi-Area Production Simulation (MAPS) and Transmission-Oriented Production Simulation (TOPS) models, integrate load-flow models with

dispatch and are capable of simulating dispatch over large areas while accounting for load flows. Their disadvantage is evident: They require large amounts of data, many of which are not publicly available. For example, the models require data on loads at individual busses instead of the publicly available aggregate loads for utilities. And while this group offers