New Market Power Driven Multistage Transmission Expansion Strategy in Power Markets

Rong Fu*, Member, IEEE, Ping Wei, Guoping Jiang, Xifeng Zhou, Qiulan Wan and Guoqing Tang
Abstract--In this paper a new market power driven transmission expansion planning strategy is presented in deregulated power market environment. A Lerner index is utilized as market power driving signal during the process of transmission network expansion. To compromise between the network expansion revenues and costs, two multistage transmission expansion models managed by different transmission planners are constructed to determine optimal expansion schemes, one is the minimization of investment cost and congestion cost under the level of Lerner index constraint subject to a nonprofit transmission administrator, and the other is managed by a for-profit transmission company to maximize the allowed investment return not exceeding an acceptable level of Lerner index limit. The algorithm has been developed to solve the complete planning process to provide optimal expansion schemes for the planning horizon under a proper double-sided auction market pattern. These two approaches are compared on the modified IEEE 24-bus example system. And the test results demonstrate that the proposed methods are very suitable and realistic for solving the multistage transmission expansion planning problem under electrical market environment. Index Terms--Transmission expansion planning, vertical market power, Lerner index, network revenue, congestion cost, investment return, electricity market.

I. INTRODUCTION N a restructuring and competitive electricity market, affected by the competition and cooperation of all power participants with the increase of technical and economical and other factors, transmission system expansion planning has two major differences between the competitive and traditional environment, 1 The adjustment of power industry structure has made network planning objectives different from those of the traditional ones. Transmission planning addresses problems of expanding or strengthening transmission network to serve the growing electricity participants in optimal ways. Since Garvers paper in 1970, a variety of new researches such as classic optimization algorithms [1], [2], metaheuristic algorithms [3-5] and decision making strategies [6], [7] have been conducted to study the transmission network expansion planning models. In

Rong Fu is with Nanjing Univ. of Posts and Telecommunications, Nanjing 210003, China (e-mail: furong@njupt.edu.cn) Ping Wei is with the Southeast Univ., Nanjing 210096, China

traditional power transmission planning, future power flow patterns are based on load forecasted generation schedules and customers are treated as passive receivers [8], [9]. While in the deregulated market environment, market participants would like to exhaust network resources to achieve more revenue, and their independent rational behaviors will inevitably reflect system optimal operation point with economic significance. So, those mathematical models developed for the traditional regulated monopoly power systems are not strictly suitable for the competitive electricity market patterns and new expansion models and strategies are necessary to develop. It has been a trend that the transmission expansion planning must simulate market behavior sufficiently to encourage and facilitate fair electricity market environment. The main objective of transmission planning in competitive power market is to deliver reliable power from generators to loads, relieve the market power of transmission system and provide a fair environment to all market participants. The paper [10] considers how to provide nondiscriminatory access to all market participants. The paper [11] proposes planning risk objectives to develop transmission planning model under different market-driven power transfer patterns. In auction market pattern, an auction results based network expansion model is formed in [12] to encourage and facilitate competition among electric market participants. However, transmission physical constraints and market concentration may prevent power transportation from being fully competitive, allowing firms to exercise market power. These above solutions could not effectively evaluate such vertical market power that transmission firms may integrate to own in network planning process. The industrial organization literature proposes many theoretical and empirical examples to show that peculiarities of markets can make a large difference in market power [13]. In power markets, relevant consideration mainly includes the system characteristic analysis, the ability to maintain transmission prices and firms vertical integrations [14], [15]. Specifically, how to handle vertical market power that transmission company may own to maintain prices in transmission network planning is firstly proposed in this paper. How to plan or expand network under an acceptable level of market power control over the planning period? in our paper an effective Lerner index (LI) is built to evaluate the vertical market power in future operation conditions. As a transmission network in a competitive

1-4244-0493-2/06/$20.00 2006 IEEE.

market may be managed by a nonprofit transmission administrator (TA) or a for-profit transmission company (TransCo) or transmission market, the network should be planned and expanded under the acceptable or the optimal level of vertical market power in the network over the planning horizon. Also, the balance between the network expansion revenue and the expansion investment cost should be studied. Hence we propose two new effective network expansion models based on this strategy in the competitive market environment. And with these models, the overall network performance is evaluated and the adequacy of the network is quantified. The work is organized as follows. Section II proposed the optimal power-pool operation with bidding for generations and customers and introduces a new Lerner index to evaluate the vertical market power owned by transmission company in double-sided auction market pattern. Section III presents the new strategy for multistage network expansion planning, taking into consideration the investment revenue, investment cost, the congestion cost and upper bound of Lerner index. This has been investigated using two planning models according to different network planners:1) finding the optimum network expansion schedule for minimum of investment cost with congestion-cost savings under Lerner index constraints managed by non-profitable TA managers; 2) finding the optimum transmission expansion schedule for maximum allowed investment returns under a Lerner index hedgeable limit managed by profitable TransCo managers. The proposed planning models consist of the optimization process of expansion planning, network operation optimization, and the forecasting of generations and demand behaviors, which are all inter-related over the planning horizon in double-sided market pattern. As a preliminary study, some of these processes are presented by simple functions in this paper, but they can be easily extended to elaborate more detailed re-presentations without affecting the proposed planning methodologies. Numerical results on modified IEEE 24-bus reliability test system are presented in Section IV to compare the proposed two effective approaches and verify the effectiveness and efficiency of the proposed methods. Finally, conclusions are given in Section V. II. A NEW LERNER INDEX IN POWER-POOL MARKET To formulate a power-pool operation model in the double-sided auction market pattern, basic assumptions are first listed as follows: 1) In the operational stage, the independent system operator (ISO) and/or power exchange (PX) perform the market-clearing process for one time period. 2) Generation companies (GenCos) and Distribution companies (DistCos) submit bids rationally reflecting their marginal cost and benefit function respectively with somewhat distortion.

3)

The DC load flow model is used in the equivalent DC network with Q-V sub-problem and transmission loss neglected.

A. The Bidding of Supplies and Customers In an hourly one strategic bidding process, suppliers (GenCos) and consumers (DistCos) may not actually bid their true marginal cost or benefit functions. For the purpose of network planning, it is reasonable to assume that the system operator can estimate their average behavior, which reflects their true cost or benefit functions with somewhat little distortions. 1) Supply Function: For a particular supplier i, the price production cost function is represented as 1 2 Ci ( g i ) = m gi g i + b gi g i (1) 2 where mgi, bgi are bidding production curve parameters, and gi represents power supply quantity. The supply bid of Fig.1 illustrates the suppliers surplus (SSi(gi)) and production cost (Ci(gi)) at its operating point (gi, pi), where SS i ( g i ) = pi g i C i ( g i ) (2) 2) Consumer Function: For a particular customer j, the consumer benefit function is represented as 1 B j (d j ) = mdj d 2 (3) j + bdj d j 2 where mdj, bdj are bidding benefit curve parameters, and dj represents power demand quantity. The demand sided bid of Fig. 1 also illustrates the main attributes of consumers surplus (CSj(dj)) and consumer benefit (Bj(dj)) at its operating point (dj, pj), where (4) CS j (d j ) = B j (d j ) p j d j B. Market Operational Model The market mechanism is designed to maximize total social welfare (total apparent suppliers surplus and total apparent customers surplus and total apparent network revenue)[16], where network revenue (NR(g,d)) is represented as the merchandizing surplus from network transportation[11]. In a lossless model, it becomes,
NR (g, d) =

j =1

ND

p jd j

p g
i i =1

NG

(5)

where NG and ND represent the total number of suppliers and customers; g and d are the vector forms of gi and dj , respectively. The market operation model can be written as follows,
max J =

i =1

NG

SS i ( g i (t )) +

CS
j =1

ND

j ( d j (t )) +

NR (g, d)

(6a) subject to the following constraints: power balance equation


j =1

ND

d j (t )

g (t ) = 0
i i =1

NG

(6b)

supply, demand and line-flow limits g i ,min g i (t ) g i ,max i=1,2,NG

d j ,min d j (t ) d j ,max

(6c) (6d) (6e)

j=1,2,ND

z m,min z m (t ) z m,max m=1,2,NL

where t is the transaction time period index in 1 hour steps; NL represents the total number of branches; gi,max and gi,min are the supplier is maximum and minimum limits; dj,max, dj,min are the customer js maximum and minimum limits; zm is the active power flow in branch m; zm,max, zm,min are the branch ms maximum and minimum limits. Equations (6a)-(6e) form a constrained optimal load flow problem [17], and then the optimal operating point can be solved to determine market-cleared generation and demand quantities (g,d), Locational Marginal Prices (LMPs) for all supplies (pi) and customers (pj), congestion cost and network revenues NR. The congestion cost (CC), which is the loss of social benefit due to network congestion, can be expressed as the difference between system operational benefit maximization (6) under following two different optimal dispatch procedures: 1) without considering line capacity limits and 2) considering line capacity limits, CC (t ) = {max J | st. (6b) (6d )} {max J | st. (6b) (6e)} (7) C. Lerner Index for Network Expansions In double-sided auction market, the difference between locational market-clearing prices represents network revenues that generations at low-priced locations pay to supply power to customers at high-priced locations [18]. The market settlement will inevitably exercise the vertical market power, which is owned by transmission company to maintain transmission pricing. In order to analyze the vertical market power and congestion effects to network planning, an effective Lerner index as a market concentration analyze method can be defined as follows:
LI (t ) = P C MC mean( p n (t )) p MC (t ) = P mean( p n (t ))

have no market power to control market prices and there exists a flat distribution of nodal prices. If power transmission limits constraints are active, the marketclearing price of the congested line will increase rapidly and excise market power due to the transmission constraints. It is generally true that the more vertical market power the transmission company owns, the higher is the Lerner index in the network. Compared to LMP and other cost index dispersion, the Lerner index addresses transmission pricing directly and provides more basic economic signals for network upgrades. The lone-term variations of Lerner index and congestion index will indicate the overall network reliability performances. Also, the accumulated network revenues caused by network congestion can be used for transmission expansion to alleviate the unhedgeable network congestion. Therefore using the issues of Lerner index, congestion details and other important concepts relevant to market operation, the network expansion problem can be modeled with the network adequacy explicitly quantified. In Section III, we propose the cooperated strategy for transmission expansion considering two situations separately. 1) One investment cost saving model managed by TA, where network investment cost and congestion cost are justified by multistage Lerner index constraints. 2) One market-driven network expansion model managed by TransCo, based on maximizing investment return under the level of multistage Lerner index limits. III. MULTISTAGE TRANSMISSION EXPANSION PLANNING Long-term network planning determines the expansion plan including the time and location of new transmission facility additions. To nonprofit transmission administrator planners, the network expansion scheduling problem can be settled to minimize the investment and congestion cost with transmission network adequacy quantified. While for-profit transmission company planners seek to have the maximum of transmission network investment return. This determines the expansion plan to maximize the investment return not to exceed an acceptable level of vertical market power over the planning period. The formulation of expansion scheduling problem based on these two expansion objectives are given by (9) and (10) respectively. A. Investment Cost Saving Model Based on the TAs network expansion criteria to minimize long-term discounted network investment cost and the social cost (cost of congestion), and considering the overall evaluation of the network adequacy, we propose a new mathematical formulation for the multistage transmission expansion planning problem as follows,

(8)

where P and CMC are system clearing price and marginal cost according to the definition of Lerner index; n is bus index (total number of bus nodes is N). Thus P can be expressed as mean(pn(t)), the mean of all buses LMP; CMC can be expressed as the market participants marginal costs pMC(t), which can be computed from the optimal power dispatch procedure (6a)-(6d) without considering system congestion limits (6e). When the power transmission capacity is adequate and no transmission line is overloaded, the Lerner index LI would be zeros, which means that transmission company

min v =

(1 + )
l

Cl S l

tf

t y T

(1 + )

CC (t y )
ty

(9a)

To solve such complex problems, the long-term formulation in completely decoupled formats consists of the following two sub-problems. D.1 Multi-stage Expansion Scheduling (Master) Problem Multi-stage expansion scheduling master problem determines the expansion schedule Sl and tf based on the different investment criteria to different investment planners. In practice, the capacity upgrades are discrete in nature by circuits, so expansion scheduling investment (master) problem becomes an integer programming subproblem, which handles with the adding year for each candidate planning line. The formulations of expansion scheduling problem based on these two expansion criteria are given by (11) and (12) respectively. These are sub-problems of the overall planning models (9) and (10) separately. It is optimized using a niche genetic algorithm [19] for the scheduling horizon using annualized quantities, as follows: Investment Cost Saving Master Problem
min v =

subject to constraints (6b)-(6e) and LI (t y ) < ty T

S l ,min S l S l ,max

(9b) (9c)

where T is the planning time horizon; tf is the year when planning circuit added; ty is yearly operating time domain; Cl is the investment cost of branch l; Sl is number of circuits added for branch l in year tf; [Sl,min, Sl,max] is the expansion limits; CC(ty) is the annual system congestion cost; LI(ty) is the annual system Lerner index; is the tolerant rate of Lerner index under the supervision of market regulation administrators; is the discount rate. We next explain the meaning of this investment cost saving model. The objective function (9a) has two parts: the first part is the discounted network investment cost; the second part is the discounted cost of congestion as operating cost. Market operating constraints (6b)-(6e) are considered in the model. Inequality constraint (9b) evaluates multistage network performance by controlling the vertical market power index with a tolerant range. And constraint (9c) is to control the number of the added circuits within the expansion limits. By analyzing a set of typical scenarios representing the annual system operating conditions, the annual congestion cost (CC(ty)) and the annual Lerner Index (LI(ty)) will be provided. B. Investment Return Maximum Model In competitive market environment, transmission company seeks to maximize their network investment return during the process of network expansion. Based on the TransCos network expansion criteria to maximize investment return and maintain the vertical market power below an acceptable upper bound, the overall formulation of investment return maximum model can be written as NR (t y ) Cl S l (10a) max w = ty tf t y T (1 + ) l (1 + )

(1 + )
l

Cl S l

tf

t y T

(1 + )

CC k (t y )
ty

subject to S l ,min S l S l ,max

(11)

where the optimal generation and demand quantities (gk,dk) , the congestion cost CCk(ty) and the Lerner Index LIk(ty) are calculated from transmission operating slave problem (6) in optimization iteration process k. Investment Return Maximum Master Problem
max w =

t y T

(1 + )

NR k (t y )
ty

(1 + )
l

Cl S l

tf

subject to S l ,min S l S l ,max

(12)

subject to constraints (6b)-(6e) and t T LI (t y ) <

S l ,min S l S l ,max

where the optimal generation and demand quantities (gk,dk) and the network revenue NRk(ty) are calculated from transmission operating slave problem (6) in optimization iteration process k. D.2 Yearly Transmission Operating (Slave) problem Yearly transmission operating (slave) problem is a market based system operational optimization problem for a network specified by the network expansion scheduling subproblem. In competitive markets, hourly market settlements and their price details are highly volatile, and accounting for these parameters the computation of investment models is very complex. To solve the computational burdens, it may be possible to use typical hours or typical periods in one planning stage (one year) to substantially reduce this requirement, yet have reasonable estimate of the required system attributes over the whole year.

(10b) (10c)

where NR(ty) is the annual system network revenue. The objective function (10a) has two parts: the first part is the discounted network investment cost; the second part is the discounted social cost as operating cost. The meanings of other parameters and constraints can be referred to model (9). D. Solution Process Above two models result hard mixed-integer nonlinear optimization problems, which represents the long-term investment cost saving minimization and investment return maximization respectively.

In this preliminary study, the power-pool model shown in (6) with double-sided auction is solved as the yearly transmission operating slave problem in order to obtain the optimal system operating point required for network expansion module. We use the interior point programming algorithm to solve this subproblem. The solution yields the marketcleared generation and demand quantities and LMPs. For network planning studies, the provided significant indexes such as congestion cost (CC), network revenue (NR), and Lerner Index (LI) are particularly useful in investment scheduling master problem. D.3 Solution Algorithm The algorithm described below will solve the scheduling master problem and operational slave problem with the corresponding computation steps: a. Input the original data. And set iteration index k=1. b. In the expansion scheduling master problem, generate a group of initial planning schedules with planning line Sl and planning year tf randomly with genetic algorithm and take them as the initial population. c. In the transmission operating slave problem, solve the optimal market settlement and compute the optimal operating indexes such as the annual Lerner index LIk(ty), the annual congestion cost CCk (ty) and the annual network revenue NRk(ty) to these candidate network schemes during the whole planning horizon for optimization iteration process k. d. Solve the investment master problem for transmission plans for iteration process k again. Firstly, evaluate the objective functions (11) or (12) controlled by different transmission planners separately, i.e. the planning costs or the planning returns to all candidate planning schemes respectively. Then, calculate the fitness function using the penalty function approach based on the objective function. Finally, the genetic operators are applied to produce new offspring as optimal planning schemes given to next iteration process k+1. e. Repeat step c and d until the tolerance between two consecutive iterations k is satisfied or the maximum iteration times L reached. f. Take the best chromosome found in the solving process as the final transmission system planning lines and planning years. According to above two methods of investment management, the peculiarities of presented approaches are listed below: By simulating dynamic economical behavior of each market player using the cost (benefit) function with probabilistic parameters, the bidding behaviors of market participants are modeled to simulate the market performance so as to obtain optimal network operating points. By calculating market clearing prices, an effective

Lerner index and relevant important economical indexes are built. With these indexes, the overall network performance is evaluated to relieve the network congestion and the adequacy of network is quantified. By designing to different kinds of network planners, proposed investment expansion models are more realistic and adaptive to competitive market mechanism than tradition expansion model. To nonprofitable TA managers, minimization of network investment cost and congestion cost are justified by multistage Lerner index constraints, while the profitable TransCo seeks to maximize their investment returns containing the market power index below an acceptable upper limit supervised by market regulation administrators. In our model the complex multi-stage transmission planning problem can be easily decomposed into two sub-problems, one is an integer optimization problem, and the other is a nonlinear optimization problem. Each sub-problem can be solved by different optimization methods iteratively, so that solution procedure is more effective. IV. NUMERICAL RESULTS The developed network expansion methodologies are applied to determine the optimal expansion schedule for the modified IEEE-24 bus reliability test system [12]. The network single line diagram is shown in Fig.1, which has 14 generating companies (GenCos) and 17 distribution companies (DistrCos). Network details are as paper [20] ,except the capacities of the transmission lines are modified as shown in Table I. Initial details of system parameters corresponding to the peak loading scenario are shown in Table II to represent the first year for the network-expansion study. And the minimum generation capacity bid gmin is set to be zero. The multi-stage planning horizon is taken as eight years. The options for expansion are that extra lines can be constructed on all 38 existing branches. There is only one type of line and up to two new lines can be installed per existing branch. The growth in bids is represented by annual growth rates for intercepts (bg,bd) and the demand bids limits (dmin ,dmax) are 4% and 5%, respectively. An increase in the maximum generation limit (gmax) is introduced in discrete steps. For this test application, the maximum generation capacity bid (gmax) increases in the third and the sixth year by a factor of 1.5 and 2.5, respectively. The line costs were estimated with the specific cost $1000 per mile. The discount rate ( ) was taken as 10% for the eight-year network planning study.

additions and their upgraded year. The first plan pl1 is the optimum plan for the condition =0% If the tolerant rate of the Lerner Index limit is set to be 0%, one circuit is added in Line14-16, Line 16-17, Line 3-24 in year 1, year 3 and year 5, and one circuit Line11-14 in year 6, and one circuit each in Line17-18 and Line 14-16 in year 8. When the allowable LI constraint is set to be 2% and 5% respectively, it is found that the addition of circuits in Line3-24 are delayed to upgrade and one circuit each in Line 17-18 and Line 14-16 planning addition is put off due to the relaxation of congestion constraint levels.
TABLE III NETWORK EXPANISION SCHEDULES WITH COST SAVING MODEL pl1 pl2 pl3 Each line added (=0%) (=2%) (=5%) 14-16 16-17 3-24 11-14 17-18 14-16 Year 1 3 5 6 8 8 Year 1 3 6 6 0 0 Year 1 3 6 6 0 0

Fig.1 Single line diagram of IEEE-24 buses system

TABLE I COMPARISON OF TRANSMISSION CAPACITY PARAMETERS Original capacity Capacity assumed for the study (MVA) (MVA) 175 175 400 300 500 400 TABLE II INITIAL BIDDING DETAILS IN THE FIRST PLANNING YEAR No. bg 71 24 71 24 34 33 41 20 20 10 10 24 20 19 GenCos mg 0.046 0.043 0.031 0.074 0.064 0.062 0.067 0.070 0.051 0.073 0.057 0.013 0.044 0.056 gmax 40 152 40 152 300 591 60 155 155 400 400 300 310 350 DistCos bd md dmin dmax 58 1 0.054 50 110 30 0.013 2 50 100 44 0.031 3 125 180 10 0.052 4 40 75 5 32 0.034 40 75 19 6 0.037 60 140 7 29 0.041 60 125 34 8 0.026 90 175 9 68 0.073 90 175 69 10 0.055 90 195 11 43 0.059 125 265 45 0.015 12 90 195 13 20 0.061 155 320 63 0.057 14 50 100 27 15 0.071 160 330 32 0.025 16 100 180 19 17 0.040 60 130 *Units: bg, bd in $/MWh; mg, md in $/MW2h; gmax, dmin, dmax in MW

It is found that these optimal capacity additions could reduce system congestion, and therefore the congestion cost and vertical market power. When equals 0%, there exists no congestion and vertical market power after these line upgrades and this is a more idealized planning schemes. If is set to be a practical value 2% or 5%, some planning lines are delayed and the network would still have some congestion after the planning line upgrades. The same expansion schemes when equals 2% and 5% shows that the non-profitable TAs would like to balance the capacity addition cost by the congestion cost under the range of allowable Lerner Index limits. B. Network Expansion with Investment Return Maximum Model The results of network capacity expansion where the network investment return is maximized to keep the vertical market power within a certain value are shown in Table IV. Three optimum transmission expansion plans, denoted as pl4, pl5 and pl6 under different LI limit levels, are obtained by the model (10) respectively.
TABLE IV
NETWORK EXPANSION SCHEDULES WITH RETURN MAXIMUM MODEL

A. Network Expansion with Investment Cost Saving Model The results of network capacity expansion where the capacity addition cost and the congestion cost are balanced by the Lerner Index constraints are shown in Table III. Three optimum transmission expansion plans, denoted as pl1, pl2 and pl3 under different LI limit constraints, are obtained by the model (9) respectively. All the optimum plans include the added transmission line

pl4 Each line added 14-16 16-17 3-24 11-14 17-18 14-16 (=0%) Year 1 3 5 6 8 8

pl5 (=2%) Year 1 3 0 8 0 0

pl6 (=5%) Year 3 0 0 0 0 0

If the tolerant rate of LI limit is set to be 0%, the expansions planning scheme pl4 is the same with planning schedule pl1. It shows that the economical signal i.e. vertical market power index is quite significant prior to the network additions in idealized expansion environment. When the upper bound of LI limit is set to be 2%, it is found that one circuit each in Line 3-24, Line 17-18 and Line 14-16 is put off and the addition of circuits in Line11-14 is delayed to upgrade due to the relaxation of Lerner Index upper level. While equals 5%, only one Line 14-16 is necessary to add in year 3. Further objective comparisons of these six expansion schedules are shown in Table V, which reflects multistage investment cost, congestion cost and network revenue under various conditions. The optimum plan pl1 determined by model (9) and the plan pl4 determined by model (10) when is set to 0% have the investment cost $1.0275106, the congestion cost and network revenue is zero. It reflects that high market power constraint condition plays a restrained role to transmission planning. When equals 2% and 5%, the optimal expansions pl2 and pl3 determined by model (9) have the same investment cost $8.2263105, the congestion cost $5.4544104 and the network revenue $5.201106. It is found that network would still have some congestion cost and network revenue after these lines upgrades. And the congestion costs could effectively balance the cost of these upgrades under various vertical market power constraint conditions. The optimal expansions pl5 and pl6 determined by model (10), when equals 2% and 5% respectively, have the investment cost $5.1594105 and $2.0285105, the congestion cost $4.1552106 and $3.2506107, the network revenue $5.7585107 and $2.3381108, respectively. Although under the same limits of vertical market power, pl5 and pl6 could receive more congestion revenue than pl2 and pl3. It reflects that high network revenue return would exercise profitable transmission company to use vertical market power to maintain prices and delaying to network expansion. If the Transco is privately own profit oriented entity, necessary market power constraints are needed to alleviate the unhedgeable congestion.
TABLE V COMPARISON OF PLANS UNDER VARIOUS CONDITIONS Values /$104 Investment Cost Congestion Cost Network Revenue pl1 102.75 0 0 pl2 82.66 5.45 520.1 pl3 82.66 5.45 520.1 pl4 102.75 0 0 pl5 51.59 415.52 5758.5 pl6 20.28 3250.6 23381

government owned nonprofit utility or privately owned for-profitable utility. It reflects that the system allowed to more congestion degrees with little vertical market power limit will cause the delay or decrease of new transmission circuits. However, it should be noted that the investment cost saving model managed by TA has the advantage of balancing the investment cost by allowable congestion cost under reasonable market power limits, while the maximum investment return gained by for-profitable transmission company needed to maintained under the maximum allowed vertical market power level. As that investment return maximization criteria cannot significantly exercise the for-profitable planners to automatically balance the congestion and vertical market power, the choice of the proper level of LI limit is needed for further detailed study. Also, two methods can be combined to investigate a more practical strategy for a comprehensive optimal market power level. In this simple scenario-based example, it illustrates that the limit of Lerner Index as 2% would result in more effective and realistic expansion plans. V. CONCLUSIONS A new market power driven technique of multistage transmission planning under deregulated electricity market environment has been presented. It firstly proposes a Lerner index in the transmission network as an vertical market power indicator for the need of transmission expansion planning. By this Lerner index, the transmission expansion problem is then modeled with two criteria managed by different kinds of transmission planners to compromise between the network expansion revenues and costs. Next, an improved niche genetic algorithm is applied to solve the expansion schemes, which are sets of time-ordered discrete investment decisions for the network planners. Theoretical development and implementation of the planning procedure have been presented in a test system to validate the efficiency and realistic importance of the proposed methods. It should be noted that the example presented is only for illustrative purposed. Further studies need to be conducted to incorporate more detailed variable consideration of market patterns and the competition of investors. More realistic data will be required to conduct more realistic planning studies. REFERENCES
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It is found that the results of expansion additions show the similar general trends of these optimal expansion schedules, no matter the transmission planner is

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Xifeng Zhou is an associate professor in the Nanjing University of Posts and Telecommunications. His main research interest is electrical system operation. Qiulan Wan is a professor in Southeast University of China. Her research interests include power system analysis and control in power market environment. Guoqing Tang is a professor in Southeast University of China. His research interests include power system analysis and control under market environment.