Separation and Volatility of Locational Marginal Pricesin Restructured Wholesale Power Markets

This study uses an agent-based test bed (“AMES”)to investigate separation and volatility of locational marginalprices (LMPs) in an ISO-managed restructured wholesale powermarket operating over an AC transmission grid. Particular attentionis focused on the dynamic and cross-sectional response ofLMPs to systematic changes in demand-bid price sensitivities andsupply-offer price cap levels under varied learning specificationsfor the generation companies. Also explored is the extent to whichthe supply offers of the marginal (price-determining) generationcompanies induce correlations among neighboring LMPs.[...]