California's power crisis has implications for power markets world wide, because of the severity and unpredictability of its impacts. This paper discusses the causes of the crisis and derives lessons for energy policy makers. The crisis was triggered by a fundamental imbalance between the...

In Chao and Peck (1996), we introduced a new approach to the design of an efficient electricity market that incorporates externalities due to loop flows. This approach enables an innovative flow-based bidding scheme for pricing transmission services. In the short term, due to some technological...

The peak load pricing problem has been discussed quite extensively in the literature. Central to the problem is the choice of output capacity and price for a basically nonstorable commodity such as electricity. This article considers both uncertain demand and uncertain capacity simultaneously in...

As competition is introduced into the electric power industry, access and pricing policy for transmission will play a pivotal role in shaping future market structure and performance. The externalities associated with the loop flow phenomenon in an electric power network constitute a significant...

This paper examines market design issues for reliability management in competitive power markets. The institutional structure is characterized by a power exchange that conducts electricity market trading, a system operator that operates the electric power system, and a property right system for...

Facing growing technological and environmental challenges, the electricity industry needs effective pricing mechanism to promote efficient risk management and investment decisions. In a restructured electricity market with competitive wholesale prices and traditionally regulated retail rates,...