Reconciling social welfare, agent profits, and consumer payments in electricity pools

Francisco D. Galiana, Alexis L. Motto, François Bouffard

    Research output: Contribution to journalArticlepeer-review


    Under a common condition called profit suboptimality, market equilibrium cannot be reached in electricity pools; in other words, no system marginal price exists for which the profit-driven independent generators would self-schedule to levels that exactly meet the demand. On the other hand, although a centrally imposed generation schedule satisfies power balance, it may force some agents do operate at a profit below what they could achieve under self-scheduling. This paper examines these incompatible goals and proposes a conflict resolution scheme based on the notion of generalized uplift functions. These functions are defined such that they: i) change the offered generation cost characteristics so as to increase the system marginal price, thus forcing the consumers to compensate the generators for part of their combined loss of profit; ii) execute an equitable transfer of revenues among the generators so that these also participate in any loss of profit compensation; iii) ensure market equilibrium at the centralized minimum cost solution; iv) ensure that the net sum of the uplifts adds up to zero.
    Original languageEnglish
    Pages (from-to)452-459
    Number of pages7
    JournalIEEE Transactions on Power Systems
    Issue number2
    Publication statusPublished - May 2003


    • Generalized uplifts
    • Loss of profit
    • Marginal pricing
    • Market equilibrium
    • Pool operation


    Dive into the research topics of 'Reconciling social welfare, agent profits, and consumer payments in electricity pools'. Together they form a unique fingerprint.

    Cite this