Problem 1:

𝜌𝐴𝑠𝑒𝑙𝑙 = 0.4𝑃𝐺𝐴 + 15

𝜌𝐵𝑠𝑒𝑙𝑙 = 0.15𝑃𝐺𝐵 + 11
𝑏𝑢𝑦
𝜌𝑋 = 235 − 0.45𝑃𝐷𝑋
𝑏𝑢𝑦
𝜌𝑌 = 175 − 0.235𝑃𝐷𝑌

a. To find the market settlement with transmission constraints ignored:

𝑇𝑜𝑡𝑎𝑙 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑖𝑜𝑛 = 𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑚𝑎𝑛𝑑. So,
𝑃𝐺𝐴 + 𝑃𝐺𝐵 = 𝑃𝐷𝑋 + 𝑃𝐷𝑌 So,

𝜌∗ − 15 𝜌∗ − 11 235 − 𝜌∗ 175 − 𝜌∗
+ = +
0.4 0.15 0.45 0.235

Solving for 𝜌∗ , we get:

𝝆∗ = 𝟖𝟖. 𝟎𝟔𝟕 $/𝑴𝑾𝒉 at which:

𝑷𝑮𝑨 = 𝟏𝟖𝟐. 𝟔𝟔𝟕 𝑴𝑾
𝑷𝑮𝑩 = 𝟓𝟏𝟑. 𝟕𝟕𝟗 𝑴𝑾
𝑷𝑫𝑿 = 𝟑𝟐𝟔. 𝟓𝟏𝟖 𝑴𝑾
𝑷𝑫𝒀 = 𝟑𝟔𝟗. 𝟗𝟐𝟖 𝑴𝑾

b. Taking the transmission limits into account, the market will be split into two regions, east and
west:

West region East region

A Tmax B

Y X

𝑦𝑖𝑒𝑙𝑑𝑠 235−𝜌𝐸 𝜌𝐸 −11

𝑃𝐷𝑋 (𝜌𝐸 ) + 𝑇𝑚𝑎𝑥 = 𝑃𝐺𝐵 (𝜌𝐸 ) → + 𝑇𝑚𝑎𝑥 = from which we get:
0.45 0.15

𝝆𝑬 = 𝟔𝟕 + 𝟎. 𝟏𝟏𝟐𝟓𝑻𝒎𝒂𝒙 … (𝟏)

𝑦𝑖𝑒𝑙𝑑𝑠 𝜌𝑊 −15 175−𝜌𝑊

𝑃𝐺𝐴 (𝜌𝑊 ) + 𝑇𝑚𝑎𝑥 = 𝑃𝐷𝑌 (𝜌𝑊 ) → 0.4
+ 𝑇𝑚𝑎𝑥 = 0.235
from which we get:

𝝆𝑾 = 𝟏𝟏𝟓. 𝟕𝟖𝟕 − 𝟎. 𝟏𝟒𝟖𝑻𝒎𝒂𝒙 … (𝟐)

1
c. 𝐶𝑜𝑛𝑔𝑒𝑠𝑡𝑖𝑜𝑛 𝑟𝑒𝑛𝑡 = (𝜌𝑊 − 𝜌𝐸 ) ∗ 𝑇𝑚𝑎𝑥

𝑪𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒓𝒆𝒏𝒕 = 𝟒𝟖. 𝟕𝟖𝟕𝑻𝒎𝒂𝒙 − 𝟎. 𝟐𝟔𝟏𝑻𝟐𝒎𝒂𝒙

West regions participants (A and Y) will pay this congestion rent.

d. For customer-X:
𝐶𝑜𝑛𝑔𝑒𝑠𝑡𝑖𝑜𝑛 𝑐ℎ𝑎𝑟𝑔𝑒𝑋 = 0 as it’s not contributing to the congestion. Hence, it’s not liable to
charges.
2
𝐹𝑇𝑅 𝑐𝑟𝑒𝑑𝑖𝑡𝑋 = (𝜌𝑊 − 𝜌𝐸 ) ∗ 0.5𝑇𝑚𝑎𝑥 = 24.394𝑇𝑚𝑎𝑥 − 0.13𝑇𝑚𝑎𝑥

𝑵𝒆𝒕 𝒄𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒑𝒂𝒚𝒎𝒆𝒏𝒕𝒔𝑿 = 𝑪𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒄𝒉𝒂𝒓𝒈𝒆𝑿 − 𝑭𝑻𝑹 𝒄𝒓𝒆𝒅𝒊𝒕𝑿 = 𝟎. 𝟏𝟑𝑻𝟐𝒎𝒂𝒙 − 𝟐𝟒. 𝟑𝟗𝟒𝑻𝒎𝒂𝒙
This number will be negative. Hence, customer-X will be earning money.

For generator-A
𝐶𝑜𝑛𝑔𝑒𝑠𝑡𝑖𝑜𝑛 𝑐ℎ𝑎𝑟𝑔𝑒𝐴 = 0 as it’s not contributing to the congestion. Hence, it’s not liable to
charges.
2
𝐹𝑇𝑅 𝑐𝑟𝑒𝑑𝑖𝑡𝐴 = (𝜌𝐸 − 𝜌𝑊 ) ∗ 0.75𝑇𝑚𝑎𝑥 = −36.59𝑇𝑚𝑎𝑥 + 0.195𝑇𝑚𝑎𝑥

𝑵𝒆𝒕 𝒄𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒑𝒂𝒚𝒎𝒆𝒏𝒕𝒔𝑨 = 𝑪𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒄𝒉𝒂𝒓𝒈𝒆𝑨 − 𝑭𝑻𝑹 𝒄𝒓𝒆𝒅𝒊𝒕𝑨 = 𝟑𝟔. 𝟓𝟗𝑻𝒎𝒂𝒙 − 𝟎. 𝟏𝟗𝟓𝑻𝟐𝒎𝒂𝒙
This number will be positive. Hence, generator-A will be paying money.

e. For the LMP market to converge to a uniform-price market:

𝜌𝑊 = 𝜌𝐸 from equations (1) & (2) above, we get:

𝑻𝒎𝒂𝒙 = 𝟏𝟖𝟕. 𝟐𝟔𝟏 𝑴𝑾

2
 Problem 2:
a. With the transmission line limits ignored, the total load is 500 MW. Hence, it will be supplied by
the cheaper generator (G1). So,

𝑳𝑴𝑷𝟏 = 𝑳𝑴𝑷𝟐 = 𝑳𝑴𝑷𝟑 = 𝑳𝑴𝑷𝟒 = 𝟏𝟎 $/𝑴𝑾𝒉

b. With the impedances of the transmission lines as shown and using superposition, the power flows
will be as follows:

G1 G1
320 MW 180 MW 180 MW
1 2 1 2

2z 2z

z 120 MW z
266.67 MW + z 53.333 MW + z
60 MW

2z 2z

3 4 3 4
320 MW

And hence, the resultant power flow is:

G1
500 MW 180 MW
1 2
2z
173.333 MW z
326.67 MW z 6.67 MW
6.67 MW
2z
3 4
320 MW

3
c. If the transmission lines limit of 250 MW is considered, it can be seen from the results in point (b)
that line 1-3 is congested. So, generator G2 will have to supply some power so as to restrict the
power flow in line 1-3 to 250 MW. Due to the transmission line impedances, the power flow for
this additional power (x) from G2 will be:

1 G1 2
2z

x/2 z
z
x/2

2z
3 4 x
G2

This power will be relieved from generator G1.

In point (b), line 1-3 was delivering 326.67 MW and its capacity is 250 MW. Hence,

𝑥
≥ 326.67 − 250
2

From which we get:

𝑥 = 153.33 𝑀𝑊

So, 𝑃𝐺1 = 500 − 153.33 = 346.67 𝑀𝑊

The power flow will then be:

G1 346.67 MW 180 MW
1 2
2z

250 MW z 96.67 MW z 83.33 MW

70 MW
2z
3 4 153.33 MW
320 MW
G2

𝑳𝑴𝑷𝟏 = 𝟏𝟎 $/𝑴𝑾𝐡

𝑳𝑴𝑷𝟒 = 𝟐𝟎 $/𝑴𝑾𝐡

4
To get 𝐿𝑀𝑃2 , we assume a 1 MW increase in the load at bus-2 and see the impact on the
generation levels at G1 and G2 (∆𝑃𝐺1 and ∆𝑃𝐺2 ) as follows:

- To meet this 1 MW increase in load, the increase in generation levels will be:

∆𝑃𝐺1 + ∆𝑃𝐺2 = 1 … (1)

- Also, to keep the power flow in line 1-3 at its capacity limit of 250 MW, the additional power
flows in line 1-3 (from 1 to 3) from both generators due to this change in generation should
cancel each other (considering transmission line impedances) as indicated in the figure below:

G1
+∆𝑃𝐺1 +1 MW
1 2
2z
+2∆𝑃𝐺1 /3 z +5∆𝑃𝐺2 /6
+∆𝑃𝐺2 /6 z
+∆𝑃𝐺1 /3

2z

3 4
+∆𝑃𝐺2
G2
1 1
∗ ∆𝑃𝐺1 − ∗ ∆𝑃𝐺2 = 0 … (2)
3 6

Solving (1) and (2) simultaneously, we get:

1 2
∆𝑃𝐺1 = 3 𝑀𝑊 and ∆𝑃𝐺2 = 3 𝑀𝑊. So,

𝟏 𝟐
𝑳𝑴𝑷𝟐 = ∗ 𝟏𝟎 + ∗ 𝟐𝟎 = 𝟏𝟔. 𝟔𝟕 $/𝑴𝑾𝒉
𝟑 𝟑

Applying the same steps to get 𝐿𝑀𝑃3 , for a 1 MW load increase at bus-3 we get:

∆𝑃𝐺1 + ∆𝑃𝐺2 = 1 … (3)

5 1
∗ ∆𝑃𝐺1 + ∗ ∆𝑃𝐺2 = 0 … (4)
6 3

Solving (3) and (4) simultaneously, we get:

−2 5
∆𝑃𝐺1 = 3
𝑀𝑊 and ∆𝑃𝐺2 = 3 𝑀𝑊. So,

−𝟐 𝟓
𝑳𝑴𝑷𝟑 = ∗ 𝟏𝟎 + ∗ 𝟐𝟎 = 𝟐𝟔. 𝟔𝟕 $/𝑴𝑾𝒉
𝟑 𝟑

5
Problem 3:
G1
1 3
z
z
z 5
z
z

4 2
G2

At bus-3:

- For a 1 MW increase in load and a lossless system:

∆𝑃𝐺1 + ∆𝑃𝐺2 = 1 … (1)

- Also, to keep the power flow in line 1-4 the same and do not increase the congestion, the
additional power flows in line 1-4 (from 1 to 4) from both generators due to this change in
generation should cancel each other (considering transmission line impedances):

1 2
∗ ∆𝑃𝐺1 − ∗ ∆𝑃𝐺2 = 0 … (2)
5 5

Solving (1) and (2) simultaneously, we get:

2 1
∆𝑃𝐺1 = 3 𝑀𝑊 and ∆𝑃𝐺2 = 3 𝑀𝑊. So,

𝟐 𝟏
𝑳𝑴𝑷𝟑 = ∗ 𝟏𝟎 + ∗ 𝟐𝟎 = 𝟏𝟑. 𝟑𝟑 $/𝑴𝑾𝒉
𝟑 𝟑

Similarly, at bus-4:

∆𝑃𝐺1 + ∆𝑃𝐺2 = 1 … (3)

4 1
∗ ∆𝑃𝐺1 + ∗ ∆𝑃𝐺2 = 0 … (4)
5 5

Solving (3) and (4) simultaneously, we get:

−1 4
∆𝑃𝐺1 = 3
𝑀𝑊 and ∆𝑃𝐺2 = 3 𝑀𝑊. So,

−𝟏 𝟒
𝑳𝑴𝑷𝟒 = ∗ 𝟏𝟎 + ∗ 𝟐𝟎 = 𝟐𝟑. 𝟑𝟑 $/𝑴𝑾𝒉
𝟑 𝟑

6
Also, at bus-5:

∆𝑃𝐺1 + ∆𝑃𝐺2 = 1 … (5)

2 1
∗ ∆𝑃𝐺1 − ∗ ∆𝑃𝐺2 = 0 … (6)
5 5

Solving (5) and (6) simultaneously, we get:

1 2
∆𝑃𝐺1 = 𝑀𝑊 and ∆𝑃𝐺2 = 𝑀𝑊. So,
3 3

𝟏 𝟐
𝑳𝑴𝑷𝟓 = ∗ 𝟏𝟎 + ∗ 𝟐𝟎 = 𝟏𝟔. 𝟔𝟕 $/𝑴𝑾𝒉
𝟑 𝟑

7
Problem 4:
2
𝐶1 (𝑃𝐺1 ) = 0.001𝑃𝐺1 + 2.5𝑃𝐺1 + 450
2
𝐶2 (𝑃𝐺2 ) = 0.0025𝑃𝐺2 + 2𝑃𝐺2 + 250

𝑊3 (𝑃𝐷3 ) = 4.25𝑃𝐷3 + 500

First, we form the susceptance matrix:
−10 0 10
[𝐵] = [ 0 −5 5 ]
10 5 −15
Hence, we can write the DC load flow equations as:
[𝑃] = −[𝐵][𝛿]
𝑃𝐺1 − 2 −10 0 10 𝛿1
[𝑃𝐺2 − 1.5] = − [ 0 −5 5 ] [𝛿2 ]
−𝑃𝐷3 10 5 −15 𝛿3
Considering bus-1 as a reference bus (𝛿1 = 0):
𝑃𝐺1 − 2 0 10 𝛿
[𝑃𝐺2 − 1.5] = − [−5 5 ] [ 2]
𝛿
−𝑃𝐷3 5 −15 3
So, the power flow equations using 100 MVA base will be:

𝑃𝐺1 − 200 = −1000𝛿3 … (1)

𝑃𝐺2 − 1500 = 500𝛿2 − 500𝛿3 … (2)
−𝑃𝐷3 = −500𝛿2 + 1500𝛿3 … (3)
Hence, the optimization problem will be to maximize the social welfare defined as:

𝐽 = 𝑊3 (𝑃𝐷3 ) − 𝐶1 (𝑃𝐺1 ) − 𝐶2 (𝑃𝐺2 )

In other words, the problem can be stated as the minimization of the function −𝐽.

We can form the lagrangian as follows:

2 2
𝐹 = 0.001𝑃𝐺1 + 2.5𝑃𝐺1 + 450 + 0.0025𝑃𝐺2 + 2𝑃𝐺2 + 250 − 4.25𝑃𝐷3 − 500 + 𝜆1 (−1000𝛿3 − 𝑃𝐺1 + 200)
+ 𝜆2 (500𝛿2 − 500𝛿3 − 𝑃𝐺2 + 1500) + 𝜆3 (−500𝛿2 + 1500𝛿3 + 𝑃𝐷3 )

The KKT conditions for optimality are obtained as follows:

𝜕𝐹
= 0 = 0.002𝑃𝐺1 + 2.5 − 𝜆1 … (4)
𝜕𝑃𝐺1
𝜕𝐹
= 0 = 0.005𝑃𝐺2 + 2 − 𝜆2 … (5)
𝜕𝑃𝐺2

8
 𝜕𝐹
= 0 = −4.25 + 𝜆3 … (6)
𝜕𝑃𝐷3
𝜕𝐹
= 0 = 500𝜆2 − 500𝜆3 … (7)
𝜕𝛿2
𝜕𝐹
= 0 = −1000𝜆1 − 500𝜆2 + 1500𝜆3 … (8)
𝜕𝛿3
𝜕𝐹
= 0 = −1000𝛿3 − 𝑃𝐺1 + 200 … (9)
𝜕𝜆1
𝜕𝐹
= 0 = 500𝛿2 − 500𝛿3 − 𝑃𝐺2 + 1500 … (10)
𝜕𝜆2
𝜕𝐹
= 0 = −500𝛿2 + 1500𝛿3 + 𝑃𝐷3 … (11)
𝜕𝜆3
From equation (6), we get: 𝜆3 = 4.25 $/𝑀𝑊ℎ

From equation (7), we get: 𝜆2 = 4.25 $/𝑀𝑊ℎ

From equation (8), we get: 𝜆1 = 4.25 $/𝑀𝑊ℎ

From equation (4), we get: 𝑃𝐺1 = 875 𝑀𝑊

From equation (5), we get: 𝑃𝐺2 = 450 𝑀𝑊

From equation (9), we get: 𝛿3 = −0.675 𝑟𝑎𝑑

From equation (10), we get: 𝛿2 = −0.075 𝑟𝑎𝑑

From equation (11), we get: 𝑃𝐷3 = 975 𝑀𝑊

So,

𝑃13 = (𝛿1 − 𝛿3 ) ∗ 𝑏13 ∗ 100 = 675 𝑀𝑊

𝑃23 = (𝛿2 − 𝛿3 ) ∗ 𝑏23 ∗ 100 = 300 𝑀𝑊
With 500 MW line capacity, line 1-3 is congested. So, a new constraint has to be introduced as follows:

𝑃13 = (𝛿1 − 𝛿3 ) ∗ 𝑏13 ∗ 100 ≤ 500 so,

−1000𝛿3 − 500 ≤ 0
Hence, a new lagrangian is formed as follows:

𝐹𝑛𝑒𝑤 = 𝐹𝑜𝑙𝑑 + µ13 (−1000𝛿3 − 500)

2 2
𝐹𝑛𝑒𝑤 = 0.001𝑃𝐺1 + 2.5𝑃𝐺1 + 450 + 0.0025𝑃𝐺2 + 2𝑃𝐺2 + 250 − 4.25𝑃𝐷3 − 500 + 𝜆1 (−1000𝛿3 − 𝑃𝐺1 + 200)
+ 𝜆2 (500𝛿2 − 500𝛿3 − 𝑃𝐺2 + 1500) + 𝜆3 (−500𝛿2 + 1500𝛿3 + 𝑃𝐷3 ) + µ13 (−1000𝛿3 − 500)

9
The KKT conditions for optimality are obtained as follows:
𝜕𝐹
= 0 = 0.002𝑃𝐺1 + 2.5 − 𝜆1 … (12)
𝜕𝑃𝐺1
𝜕𝐹
= 0 = 0.005𝑃𝐺2 + 2 − 𝜆2 … (13)
𝜕𝑃𝐺2
𝜕𝐹
= 0 = −4.25 + 𝜆3 … (14)
𝜕𝑃𝐷3
𝜕𝐹
= 0 = 500𝜆2 − 500𝜆3 … (15)
𝜕𝛿2
𝜕𝐹
= 0 = −1000𝜆1 − 500𝜆2 + 1500𝜆3 − 1000µ13 … (16)
𝜕𝛿3
𝜕𝐹
= 0 = −1000𝛿3 − 𝑃𝐺1 + 200 … (17)
𝜕𝜆1
𝜕𝐹
= 0 = 500𝛿2 − 500𝛿3 − 𝑃𝐺2 + 1500 … (18)
𝜕𝜆2
𝜕𝐹
= 0 = −500𝛿2 + 1500𝛿3 + 𝑃𝐷3 … (19)
𝜕𝜆3
𝜕𝐹
= 0 = −1000𝛿3 − 500 … (20)
𝜕µ13
From equation (14), we get: 𝝀𝟑 = 𝟒. 𝟐𝟓 $/𝑴𝑾𝒉

From equation (15), we get: 𝝀𝟐 = 𝟒. 𝟐𝟓 $/𝑴𝑾𝒉

From equation (20), we get: 𝛿3 = −0.5 𝑟𝑎𝑑

From equation (17), we get: 𝑷𝑮𝟏 = 𝟕𝟎𝟎 𝑴𝑾

From equation (13), we get: 𝑷𝑮𝟐 = 𝟒𝟓𝟎 𝑴𝑾

From equation (12), we get: 𝝀𝟏 = 𝟑. 𝟗 $/𝑴𝑾𝒉

From equation (18), we get: 𝛿2 = 0.1 𝑟𝑎𝑑

From equation (16), we get: µ13 = 0.35 $/𝑀𝑊ℎ

From equation (19), we get: 𝑷𝑫𝟑 = 𝟖𝟎𝟎 𝑴𝑾

10
Problem 5:
𝜌𝐴𝑠𝑒𝑙𝑙 = 0.5𝑃𝐺𝐴 + 20

𝜌𝐵𝑠𝑒𝑙𝑙 = 0.2𝑃𝐺𝐵 + 10

𝜌𝐶𝑠𝑒𝑙𝑙 = 0.4𝑃𝐺𝐶 + 25
𝑏𝑢𝑦
𝜌𝑋 = 200 − 0.5𝑃𝐷𝑋
𝑏𝑢𝑦
𝜌𝑌 = 167 − 0.135𝑃𝐷𝑌
𝑏𝑢𝑦
𝜌𝑍 = 252 − 0.412𝑃𝐷𝑍

Area-1 Area-2
A B
Y Pmax = 200 X
MW

Pmax = 100
MW
Area-3
C
Z

a. To find the market settlement with transmission constraints ignored:

𝑇𝑜𝑡𝑎𝑙 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑖𝑜𝑛 = 𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑚𝑎𝑛𝑑. So,
𝑃𝐺𝐴 + 𝑃𝐺𝐵 + 𝑃𝐺𝐶 = 𝑃𝐷𝑋 + 𝑃𝐷𝑌 + 𝑃𝐷𝑍 So,

𝜌∗ − 20 𝜌∗ − 10 𝜌∗ − 25 200 − 𝜌∗ 167 − 𝜌∗ 252 − 𝜌∗

+ + = + +
0.5 0.2 0.4 0.5 0.135 0.412

Solving for 𝜌∗ , we get:

𝝆∗ = 𝟏𝟏𝟐. 𝟓𝟒𝟗 $/𝑴𝑾𝒉 at which:

𝑷𝑮𝑨 = 𝟏𝟖𝟓. 𝟎𝟗𝟖 𝑴𝑾
𝑷𝑮𝑩 = 𝟓𝟏𝟐. 𝟕𝟒𝟓 𝑴𝑾
𝑷𝑮𝑪 = 𝟐𝟏𝟖. 𝟖𝟕𝟑 𝑴𝑾
𝑷𝑫𝑿 = 𝟏𝟕𝟒. 𝟗𝟎𝟐 𝑴𝑾
𝑷𝑫𝒀 = 𝟒𝟎𝟑. 𝟑𝟒𝟏 𝑴𝑾
𝑷𝑫𝒁 = 𝟑𝟑𝟖. 𝟒𝟕𝟑 𝑴𝑾

11
b. From part (a):
𝑃21 = 𝑃𝐺𝐵 − 𝑃𝐷𝑋 = 337.843 𝑀𝑊
𝑃13 = 𝑃𝐺𝐵 − 𝑃𝐷𝑋 + 𝑃𝐺𝐴 − 𝑃𝐷𝑌 = 119.6 𝑀𝑊

It can be seen that both lines are congested. So, the market should be split. First, we split the
market into three areas as follows:

i. Market is split into three areas:

Area-1 Area-2

A Pmax = 200
B
Y MW X
TL-2

Pmax = 100
TL-1 MW
Area-3
C
Z

Both TL-1 and TL-2 are operating on their capacity limits.

For area-2: 𝑃𝐺𝐵 = 𝑃𝐷𝑋 + 200

𝜌2 − 10 200 − 𝜌2
= + 200
0.2 0.5

So, 𝝆𝟐 = 𝟗𝟐. 𝟖𝟓𝟕 $/𝑴𝑾𝒉 at which 𝑷𝑮𝑩 = 𝟒𝟏𝟒. 𝟐𝟖𝟔 𝑴𝑾 and 𝑷𝑫𝑿 = 𝟐𝟏𝟒. 𝟐𝟖𝟔 𝑴𝑾

For area-1: 𝑃𝐺𝐴 + 200 = 𝑃𝐷𝑌 + 100

𝜌1 − 20 167 − 𝜌1
+ 200 = + 100
0.5 0.135

So, 𝝆𝟏 = 𝟏𝟐𝟓. 𝟏𝟏𝟖 $/𝑴𝑾𝒉 at which 𝑷𝑮𝑨 = 𝟐𝟏𝟎. 𝟐𝟑𝟔 𝑴𝑾 and 𝑷𝑫𝒀 = 𝟑𝟏𝟎. 𝟐𝟑𝟔 𝑴𝑾

For area-3: 𝑃𝐺𝐶 + 100 = 𝑃𝐷𝑍

𝜌3 − 25 252 − 𝜌3
+ 100 =
0.4 0.412

So, 𝝆𝟑 = 𝟏𝟏𝟔. 𝟓𝟐𝟕𝟏 $/𝑴𝑾𝒉 at which 𝑷𝑮𝑪 = 𝟐𝟐𝟖. 𝟖𝟏𝟕𝟕 𝑴𝑾 and 𝑷𝑫𝒁 = 𝟑𝟐𝟖. 𝟖𝟏𝟕𝟕 𝑴𝑾

12
 From the results obtained above, it can be seen that:
- 𝜌2 < 𝜌1 and line 1-2 was congested in the direction from area-2 to area-1. Hence, this split is
correct.
- 𝜌3 < 𝜌1 and line 1-3 was congested in the direction from area-1 to area-3. Hence, this split is
incorrect.
Hence, the market should be split into two areas as follows:

ii. Market is split into two areas:

Area-1 Area-2

A Pmax = 200
B
Y MW X
TL-2

Pmax = 100
TL-1 MW

C
Z

TL-2 is operating at its capacity limit and we will check the power flowing in TL-1 based on the
solution obtained.

For area-2: 𝑃𝐺𝐵 = 𝑃𝐷𝑋 + 200

𝜌2 − 10 200 − 𝜌2
= + 200
0.2 0.5

So, 𝝆𝟐 = 𝟗𝟐. 𝟖𝟓𝟕 $/𝑴𝑾𝒉 at which 𝑷𝑮𝑩 = 𝟒𝟏𝟒. 𝟐𝟖𝟔 𝑴𝑾 and 𝑷𝑫𝑿 = 𝟐𝟏𝟒. 𝟐𝟖𝟔 𝑴𝑾

For area-1: 𝑃𝐺𝐴 + 𝑃𝐺𝐶 + 200 = 𝑃𝐷𝑌 + 𝑃𝐷𝑍

𝜌1 − 20 𝜌1 − 25 167 − 𝜌1 252 − 𝜌1
+ + 200 = +
0.5 0.4 0.135 0.412

So, 𝝆𝟏 = 𝟏𝟐𝟐. 𝟏𝟔𝟓 $/𝑴𝑾𝒉 at which:

𝑷𝑮𝑨 = 𝟐𝟎𝟒. 𝟑𝟑 𝑴𝑾
𝑷𝑮𝑪 = 𝟐𝟒𝟐. 𝟗𝟏𝟑 𝑴𝑾
𝑷𝑫𝒀 = 𝟑𝟑𝟐. 𝟏𝟏 𝑴𝑾
𝑷𝑫𝒁 = 𝟑𝟏𝟓. 𝟏𝟑𝟑 𝑴𝑾

13
 The power flowing in line TL-1 in the figure above is then:

𝑃𝑇𝐿−1 = 𝑃𝐷𝑍 − 𝑃𝐺𝐶 = 200 + 𝑃𝐺𝐴 − 𝑃𝐷𝑌 = 72.22 𝑀𝑊

So, TL-1 is not congested.

c. For customer-X:
𝐶𝑜𝑛𝑔𝑒𝑠𝑡𝑖𝑜𝑛 𝑐ℎ𝑎𝑟𝑔𝑒𝑋 = 0 as it’s not contributing to the congestion. Hence, it’s not liable to
charges.
𝐹𝑇𝑅 𝑐𝑟𝑒𝑑𝑖𝑡𝑋 = (𝜌1 − 𝜌2 ) ∗ 50 = 1465.4 $/ℎ

𝑵𝒆𝒕 𝒄𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒑𝒂𝒚𝒎𝒆𝒏𝒕𝒔𝑿 = 𝑪𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒄𝒉𝒂𝒓𝒈𝒆𝑿 − 𝑭𝑻𝑹 𝒄𝒓𝒆𝒅𝒊𝒕𝑿 = −𝟏𝟒𝟔𝟓. 𝟒 $/𝒉

So, customer-X is earning 𝟏𝟒𝟔𝟓. 𝟒 $/𝒉.

For customer-Y:
𝐶𝑜𝑛𝑔𝑒𝑠𝑡𝑖𝑜𝑛 𝑐ℎ𝑎𝑟𝑔𝑒𝑌 = 200 ∗ (𝜌1 − 𝜌2 ) = 5861.6 $/ℎ
𝐹𝑇𝑅 𝑐𝑟𝑒𝑑𝑖𝑡𝑌 = (𝜌1 − 𝜌2 ) ∗ 150 = 4396.2 $/ℎ

𝑵𝒆𝒕 𝒄𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒑𝒂𝒚𝒎𝒆𝒏𝒕𝒔𝒀 = 𝑪𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒄𝒉𝒂𝒓𝒈𝒆𝒀 − 𝑭𝑻𝑹 𝒄𝒓𝒆𝒅𝒊𝒕𝒀 = 𝟏𝟒𝟔𝟓. 𝟒 $/𝒉

So, customer-Y is paying 𝟏𝟒𝟔𝟓. 𝟒 $/𝒉.

14
Problem 6:
a. When transmission line limits are ignored:
Generator G1 was supposed to supply all the loads since it’s the cheaper generator. However,
generator G2 has a minimum power to be generated of 50 MW. So, generator G1 will supply:
𝑃𝐺1 = 150 + 200 + 250 − 50 = 550 𝑀𝑊
Generator G1 sees the load at bus-2 as 150 MW.
And generator G2 will locally supply 50 MW to the load at bus-2: 𝑃𝐺2 = 50 𝑀𝑊

Using superposition and with equal impedances for all transmission lines:
G1 G1
250 MW 150 MW 150 MW
1 2 1 2
z z
83.33 MW z 100 MW z
166.67 MW + 50 MW
z z

3 250 MW 3

And hence, the resultant power flow is:

G1
550 MW 50 MW 200 MW
1 2
150 MW z
183.33 MW z 33.33 MW
216.67 MW

3 250 MW

When the transmission limits are ignored, any additional load will be met by generator G1. Hence,
the marginal costs at all buses will be:
𝝀𝟏 = 𝝀𝟐 = 𝝀𝟑 = 𝟐𝟎 $/𝑴𝑾𝐡

b. If the transmission lines limit of 200 MW is considered, it can be seen from the results in point (a)
that line 1-3 is congested. So, generator G2 will have to supply some power so as to restrict the
power flow in line 1-3 to 200 MW. Due to the equal transmission line impedances, the power flow
for this additional power (x) from G2 will be:

15
 G2
x
1 G1 2
z
2x/3
z
x/3

This power will be relieved from generator G1.

In point (b), line 1-3 was delivering 326.67 MW and its capacity is 250 MW. Hence,

𝑥
≥ 216.67 − 200
3

From which we get:

𝑥 = 50 𝑀𝑊

So, 𝑃𝐺1 = 550 − 50 = 500 𝑀𝑊

The power flow will then be:

G1
500 MW 100 MW G2 200 MW
1 2
150 MW z
150 MW z 50 MW
200 MW

3 250 MW

𝝀𝟏 = 𝟐𝟎 $/𝑴𝑾𝐡

𝝀𝟐 = 𝟐𝟓 $/𝑴𝑾𝐡

To get 𝜆3 , we assume a 1 MW increase in the load at bus-3 and see the impact on the generation
levels at G1 and G2 (∆𝑃𝐺1 and ∆𝑃𝐺2 ) as follows:

- To meet this 1 MW increase in load, the increase in generation levels will be:

16
 ∆𝑃𝐺1 + ∆𝑃𝐺2 = 1 … (1)

- Also, to keep the power flow in line 1-3 at its capacity limit of 200 MW, the additional power
flows in line 1-3 (from 1 to 3) from both generators due to this change in generation should
cancel each other (considering equal transmission line impedances):

2 1
∗ ∆𝑃𝐺1 + ∗ ∆𝑃𝐺2 = 0 … (2)
3 3

Solving (1) and (2) simultaneously, we get:

∆𝑃𝐺1 = −1 𝑀𝑊 and ∆𝑃𝐺2 = 2 𝑀𝑊. So,

𝝀𝟑 = −𝟏 ∗ 𝟐𝟎 + 𝟐 ∗ 𝟐𝟓 = 𝟑𝟎 $/𝑴𝑾𝒉

c. For the customer at bus-3:

𝐶𝑜𝑛𝑔𝑒𝑠𝑡𝑖𝑜𝑛 𝑐ℎ𝑎𝑟𝑔𝑒3 = 200(𝜆3 − 𝜆1 ) = 2000 $/ℎ
𝐹𝑇𝑅 𝑐𝑟𝑒𝑑𝑖𝑡3 = (𝜆3 − 𝜆1 ) ∗ 200 = 2000 $/ℎ

𝑵𝒆𝒕 𝒄𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒑𝒂𝒚𝒎𝒆𝒏𝒕𝒔𝑿 = 𝑪𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒄𝒉𝒂𝒓𝒈𝒆𝑿 − 𝑭𝑻𝑹 𝒄𝒓𝒆𝒅𝒊𝒕𝑿 = 𝟎

So, the customer at bus-3 will not pay any money because of the FTR they hold.

17
Problem 7:
𝜌𝐴𝑠𝑒𝑙𝑙 = 0.5𝑃𝐺𝐴 + 25

𝜌𝐵𝑠𝑒𝑙𝑙 = 0.2𝑃𝐺𝐵 + 10

𝜌𝐶𝑠𝑒𝑙𝑙 = 0.1𝑃𝐺𝐶 + 18
𝑏𝑢𝑦
𝜌𝐷 = 180 − 0.25𝑃𝐷𝐷
𝑏𝑢𝑦
𝜌𝐸 = 210 − 0.4𝑃𝐷𝐸
𝑏𝑢𝑦
𝜌𝐹 = 195 − 0.37𝑃𝐷𝐹

West region East region

A B Tmax =150 MW C

E F D

a. To find the market settlement with transmission constraints ignored:

𝑇𝑜𝑡𝑎𝑙 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑖𝑜𝑛 = 𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑚𝑎𝑛𝑑. So,
𝑃𝐺𝐴 + 𝑃𝐺𝐵 + 𝑃𝐺𝐶 = 𝑃𝐷𝐷 + 𝑃𝐷𝐸 + 𝑃𝐷𝐹 So,

𝜌∗ − 25 𝜌∗ − 10 𝜌∗ − 18 180 − 𝜌∗ 210 − 𝜌∗ 195 − 𝜌∗

+ + = + +
0.5 0.2 0.1 0.25 0.4 0.37

Solving for 𝜌∗ , we get:

𝝆∗ = 𝟕𝟖. 𝟑𝟏𝟒 $/𝑴𝑾𝒉 at which:

𝑷𝑮𝑨 = 𝟏𝟎𝟔. 𝟔𝟑 𝑴𝑾
𝑷𝑮𝑩 = 𝟑𝟒𝟏. 𝟓𝟕 𝑴𝑾
𝑷𝑮𝑪 = 𝟔𝟎𝟑. 𝟏𝟑𝟔 𝑴𝑾
𝑷𝑫𝑫 = 𝟒𝟎𝟔. 𝟕𝟒𝟔 𝑴𝑾
𝑷𝑫𝑬 = 𝟑𝟐𝟗. 𝟐𝟏𝟔 𝑴𝑾
𝑷𝑫𝑭 = 𝟑𝟏𝟓. 𝟑𝟕 𝑴𝑾

b. From part (a): 𝑃𝐸𝑊 = 𝑃𝐺𝐶 − 𝑃𝐷𝐷 = 196.39 𝑀𝑊 hence, the tie line is congested (its capacity is
150 MW).
So, market is split into east and west regions:

- For the east region:

𝑃𝐺𝐶 = 𝑃𝐷𝐷 + 150

18
 𝜌E − 18 180 − 𝜌𝐸
= + 150
0.1 0.25

So, 𝝆𝑬 = 𝟕𝟓 $/𝑴𝑾𝒉 at which 𝑷𝑮𝑪 = 𝟓𝟕𝟎 𝑴𝑾 and 𝑷𝑫𝑫 = 𝟒𝟐𝟎 𝑴𝑾

- For the west region:

𝑃𝐺𝐴 + 𝑃𝐺𝐵 + 150 = 𝑃𝐷𝐸 + 𝑃𝐷𝐹

𝜌𝑊 − 25 𝜌𝑊 − 10 210 − 𝜌W 195 − 𝜌W
+ + 150 = +
0.5 0.2 0.4 0.37

So, 𝝆𝑾 = 𝟖𝟐. 𝟏𝟏𝟓 $/𝑴𝑾𝒉 at which:

𝑷𝑮𝑨 = 𝟏𝟏𝟒. 𝟐𝟑 𝑴𝑾
𝑷𝑮𝑩 = 𝟑𝟔𝟎. 𝟓𝟕𝟔 𝑴𝑾
𝑷𝑫𝑬 = 𝟑𝟏𝟗. 𝟕𝟏𝟐 𝑴𝑾
𝑷𝑫𝑭 = 𝟑𝟎𝟓. 𝟎𝟗𝟒 𝑴𝑾

c. For 8% transmission losses in the tie line:

If the generation at the west region is reduced by 1 MW then, the generation in the east region
1
should be increased by 1−0.08
𝑀𝑊 = 1.087 𝑀𝑊

The constraint cost (β) is:

𝒓𝒆𝒅𝒖𝒄𝒕𝒊𝒐𝒏 𝒊𝒏 𝒕𝒐𝒕𝒂𝒍 𝒄𝒐𝒔𝒕 𝟏 ∗ 𝝆𝑾 − 𝟏. 𝟎𝟖𝟕 ∗ 𝝆𝑬

𝜷= = = 𝟎. 𝟓𝟗𝟖𝟑 $/𝑴𝑾𝒉
𝒄𝒉𝒂𝒏𝒈𝒆 𝒊𝒏 𝒄𝒐𝒏𝒕𝒓𝒂𝒊𝒏𝒕 𝒇𝒍𝒐𝒘 𝟏

So,

𝐿𝑀𝑃𝐸 = 𝐿𝑀𝑃𝑟𝑒𝑓 + (𝐷𝐹𝐸𝐸 − 1) ∗ 𝐿𝑀𝑃𝑟𝑒𝑓 + (−𝐺𝑆𝐹𝐸𝐸 ) ∗ β

Where: 𝐷𝐹𝐸𝐸 = 1 (power delivery at the same bus) and 𝐺𝑆𝐹𝐸𝐸 = 0 (east region bus is the
reference bus). So,

𝑳𝑴𝑷𝑬 = 𝟕𝟓 $/𝑴𝑾𝒉

𝐿𝑀𝑃𝑊 = 𝐿𝑀𝑃𝑟𝑒𝑓 + (𝐷𝐹𝑊𝐸 − 1) ∗ 𝐿𝑀𝑃𝑟𝑒𝑓 + (−𝐺𝑆𝐹𝑊𝐸 ) ∗ β

1
Where: 𝐷𝐹𝑊𝐸 = 1−0.08 = 1.087 (because of the transmission losses) and 𝐺𝑆𝐹𝑊𝐸 = −1 (1 MW
increase in west region generation relieves the tie line congestion by 1 MW). So,

𝑳𝑴𝑷𝑾 = 𝟖𝟐. 𝟏𝟏𝟓 $/𝑴𝑾𝒉

19
d. 𝐶𝑜𝑛𝑔𝑒𝑠𝑡𝑖𝑜𝑛 𝑟𝑒𝑛𝑡𝑎𝑙 = 𝑇 𝑚𝑎𝑥 ∗ (𝐿𝑀𝑃𝑊 − 𝐿𝑀𝑃𝐸 )

𝑪𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒓𝒆𝒏𝒕𝒂𝒍 = 𝟏𝟎𝟔𝟕. 𝟐𝟕𝟔 $/𝒉

To be paid by the west region participants.

e. For customer-D:
𝐶𝑜𝑛𝑔𝑒𝑠𝑡𝑖𝑜𝑛 𝑐ℎ𝑎𝑟𝑔𝑒𝐷 = 0 as it’s not contributing to the congestion. Hence, it’s not liable to
charges.
𝐹𝑇𝑅 𝑐𝑟𝑒𝑑𝑖𝑡𝐷 = (𝜌𝑊 − 𝜌𝐸 ) ∗ 125 = 889.396 $/ℎ

𝑵𝒆𝒕 𝒄𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒑𝒂𝒚𝒎𝒆𝒏𝒕𝒔𝑫 = 𝑪𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒄𝒉𝒂𝒓𝒈𝒆𝑫 − 𝑭𝑻𝑹 𝒄𝒓𝒆𝒅𝒊𝒕𝑫 = −𝟖𝟖𝟗. 𝟑𝟗𝟔 $/𝒉
So, customer-D is earning 𝟖𝟖𝟗. 𝟑𝟗𝟔 $/𝒉.

For customers E and F:

𝑚𝑎𝑥 (𝜌
𝐶𝑜𝑛𝑔𝑒𝑠𝑡𝑖𝑜𝑛 𝑐ℎ𝑎𝑟𝑔𝑒𝐸&𝐹 = 𝑇𝐸𝑊 ∗ 𝑊 − 𝜌𝐸 ) = 150 ∗ (82.115 − 75) = 1067.276 $/ℎ
𝐹𝑇𝑅 𝑐𝑟𝑒𝑑𝑖𝑡𝐸&𝐹 = (𝜌𝑊 − 𝜌𝐸 ) ∗ 150 = 1067.276 $/ℎ

𝑵𝒆𝒕 𝒄𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒑𝒂𝒚𝒎𝒆𝒏𝒕𝒔𝑬&𝑭 = 𝑪𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒄𝒉𝒂𝒓𝒈𝒆𝑬&𝑭 − 𝑭𝑻𝑹 𝒄𝒓𝒆𝒅𝒊𝒕𝑬&𝑭 = 𝟎

So, customers E and F will not pay any money because of the FTR they hold.

20
Problem 8:
𝜌𝐴𝑠𝑒𝑙𝑙 = 0.5𝑃𝐺𝐴 + 20

𝜌𝐵𝑠𝑒𝑙𝑙 = 0.2𝑃𝐺𝐵 + 10
𝑏𝑢𝑦
𝜌𝑋 = 200 − 0.5𝑃𝐷𝑋
𝑏𝑢𝑦
𝜌𝑌 = 167 − 0.135𝑃𝐷𝑌

𝑈𝑀𝑃 = 105.24 $/𝑀𝑊ℎ with transmission line limits ignored.

West area East area

A Pmax =200 MW B

Y X

From the data given:

𝑃𝐺𝐴 = 170.48 𝑀𝑊
𝑃𝐺𝐵 = 476.2 𝑀𝑊
𝑃𝐷𝑋 = 189.52 𝑀𝑊
𝑃𝐷𝑌 = 457.48 𝑀𝑊

So, 𝑃𝐸𝑊 = 𝑃𝐺𝐵 − 𝑃𝐷𝑋 = 286.68 𝑀𝑊

hence, the tie line is congested.
So, market is split into east and west regions:
- For the east region:
𝑃𝐺𝐵 = 𝑃𝐷𝑋 + 200

𝜌E − 10 200 − 𝜌𝐸
= + 200
0.2 0.5

So, 𝝆𝑬 = 𝟗𝟐. 𝟖𝟔 $/𝑴𝑾𝒉 at which 𝑷𝑮𝑩 = 𝟒𝟏𝟒. 𝟐𝟖𝟔 𝑴𝑾 and 𝑷𝑫𝑿 = 𝟐𝟏𝟒. 𝟐𝟖𝟔 𝑴𝑾

- For the west region:

𝑃𝐺𝐴 + 200 = 𝑃𝐷𝑌

𝜌𝑊 − 20 167 − 𝜌W
+ 200 =
0.5 0.135

So, 𝝆𝑾 = 𝟏𝟏𝟒. 𝟒𝟖𝟖 $/𝑴𝑾𝒉 at which 𝑷𝑮𝑨 = 𝟏𝟖𝟖. 𝟗𝟕𝟔 𝑴𝑾 and 𝑷𝑫𝒀 = 𝟑𝟖𝟖. 𝟗𝟕𝟔 𝑴𝑾

21
For customer-X:
𝐶𝑜𝑛𝑔𝑒𝑠𝑡𝑖𝑜𝑛 𝑐ℎ𝑎𝑟𝑔𝑒𝑋 = 0 as it’s not contributing to the congestion. Hence, it’s not liable to
charges.
𝐹𝑇𝑅 𝑐𝑟𝑒𝑑𝑖𝑡𝑋 = (𝜌𝑊 − 𝜌𝐸 ) ∗ 50 = 1081.55 $/ℎ

𝑵𝒆𝒕 𝒄𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒑𝒂𝒚𝒎𝒆𝒏𝒕𝒔𝑿 = 𝑪𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒄𝒉𝒂𝒓𝒈𝒆𝑿 − 𝑭𝑻𝑹 𝒄𝒓𝒆𝒅𝒊𝒕𝑿 = −𝟏𝟎𝟖𝟏. 𝟓𝟓 $/𝒉

So, customer-X is earning 𝟏𝟎𝟖𝟏. 𝟓𝟓 $/𝒉.

For customer-Y:
𝑚𝑎𝑥 (𝜌
𝐶𝑜𝑛𝑔𝑒𝑠𝑡𝑖𝑜𝑛 𝑐ℎ𝑎𝑟𝑔𝑒𝑌 = 𝑇𝐸𝑊 ∗ 𝑊 − 𝜌𝐸 ) = 200(114.488 − 92.86) = 4326.21 $/ℎ
𝐹𝑇𝑅 𝑐𝑟𝑒𝑑𝑖𝑡𝑌 = (𝜌𝑊 − 𝜌𝐸 ) ∗ 150 = 3244.657 $/ℎ

𝑵𝒆𝒕 𝒄𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒑𝒂𝒚𝒎𝒆𝒏𝒕𝒔𝒀 = 𝑪𝒐𝒏𝒈𝒆𝒔𝒕𝒊𝒐𝒏 𝒄𝒉𝒂𝒓𝒈𝒆𝒀 − 𝑭𝑻𝑹 𝒄𝒓𝒆𝒅𝒊𝒕𝒀 = 𝟏𝟎𝟖𝟏. 𝟓𝟓 $/𝒉

So, customer-Y is paying 𝟏𝟎𝟖𝟏. 𝟓𝟓 $/𝒉.

22
Problem 9:
𝜌𝐴𝑠𝑒𝑙𝑙 = 0.6𝑃𝐺𝐴 + 100 … (1)

𝜌𝐵𝑠𝑒𝑙𝑙 = 0.32𝑃𝐺𝐵 + 440 … (2)

𝑃𝐷 = 535 − 𝜌 … (3)

To maximize the profits of both A and B in this Cournot model of non-cooperative game and get the Nash
equilibrium solution, the profits are expressed as follows:

𝛺𝐴 = 𝜌 ∗ 𝑃𝐺𝐴 − 𝐶𝐴
𝛺𝐵 = 𝜌 ∗ 𝑃𝐺𝐵 − 𝐶𝐵
Where: 𝜌 ∗ 𝑃𝐺𝐴 is the revenue of Genco-A due to energy sales of 𝑃𝐺𝐴 at the market price 𝜌, and 𝐶𝐴 is the
cost incurred by Genco-A to generate this amount of power 𝑃𝐺𝐴 . The same applies for Genco-B.

Also, we know that:

𝑃𝐷 = 𝑃𝐺𝐴 + 𝑃𝐺𝐵 … (4)

Hence, from equations (3) & (4), we get:

𝜌 = 535 − 𝑃𝐺𝐴 − 𝑃𝐺𝐵 … (5)

So, to maximize the profits:
𝜕𝛺𝐴 𝜕𝛺𝐵
=0 =0
𝜕𝑃𝐺𝐴 𝜕𝑃𝐵
𝜕𝜌 𝑑𝐶𝐴 𝜕𝜌 𝑑𝐶𝐵
∗ 𝑃𝐺𝐴 + 𝜌 − =0 ∗ 𝑃𝐺𝐵 + 𝜌 − =0
𝜕𝑃𝐺𝐴 𝑑𝑃𝐺𝐴 𝜕𝑃𝐺𝐵 𝑑𝑃𝐺𝐵
And using equation (5): And using equation (5):
𝑑𝐶𝐴 𝑑𝐶𝐵
−𝑃𝐺𝐴 + 𝜌 − = 0 … (6) − 𝑃𝐺𝐵 + 𝜌 − = 0 … (7)
𝑑𝑃𝐺𝐴 𝑑𝑃𝐺𝐵
We should know the cost function of each Genco in order to get the maximum profits. Cost functions are
not explicitly known. However, supply function is known and is indicative to the cost function. So, we’ll
assume that it’s the cost function (though that is not entirely correct). So,
𝑦𝑖𝑒𝑙𝑑𝑠 𝑑𝐶𝐴 𝑦𝑖𝑒𝑙𝑑𝑠 𝑑𝐶𝐵
𝐶𝐴 = 0.6𝑃𝐺𝐴 + 100 → = 0.6 𝐶𝐵 = 0.32𝑃𝐺𝐵 + 440 → = 0.32
𝑑𝑃𝐺𝐴 𝑑𝑃𝐺𝐵
So, from equation (6): So, from equation (6):

−𝑃𝐺𝐴 + 535 − 𝑃𝐺𝐴 − 𝑃𝐺𝐵 − 0.6 = 0 − 𝑃𝐺𝐵 + 535 − 𝑃𝐺𝐴 − 𝑃𝐺𝐵 − 0.32 = 0
2𝑃𝐺𝐴 + 𝑃𝐺𝐵 = 534.4 𝑃𝐺𝐴 + 2𝑃𝐺𝐵 = 534.68

23
We can solve these two equations simultaneously to get:

𝑷𝑮𝑨 = 𝟏𝟕𝟖. 𝟎𝟒 𝑴𝑾
And,

𝑷𝑮𝑩 = 𝟏𝟕𝟖. 𝟑𝟐 𝑴𝑾
At which,

𝑷𝑫 = 𝟑𝟓𝟔. 𝟑𝟔 𝑴𝑾
And,

𝝆 = 𝟏𝟕𝟖. 𝟔𝟒 $/𝑴𝑾𝒉

24