Economic planning of power transmission line Essay

Nearly every point of life in 21th century requires the utilization of power. But, most electricity users do not notice that, before electric power reaches to their homes, electrical power has to travel across a complex electric power generation and distribution network systems. This complex nature of electrical power generation and distribution is usually bring out by blackouts, like those that happened over most of the North eastern United States and Canada on August. 14, and 15, 2003, which make it understandable that different processes and systems occurred in the electric power generation and the distribution needs very attentive forethought. In U.S, generation and distribution of electrical power was conventionally highly synchronize by federal government agencies, alike the Federal Energy Regulatory Committee (FERC), also by utility commissioners of different states. These administrative bodies set performance criteria and needs of electrical power generation and the distribution for the utility companies which generated and distributed electric power. For exam: these controlling authorities defines the demands for real power at different points on the electric distribution systems. In response to the defined demands, the utilities decided how much amount of electricity to produce, where to produce and how to spread it to the end users.. If we took a moment to think of the services that would not exist if electricity were not available, we would be surprised. Nearly every features of our modern lives demands electric power, from light bulbs and television sets to hospitals and automobile industries. Although we are available with the power whenever we need it, the processes and systems involved in distribute electrical power needs attentive design and sophisticated mathematical and forecasting models. Recently, because of increasing costs of energy and inconsistency in its price among various regions of the country, the legal frame work surrounding the electric-power industry has changed. This alteration has opened the door for electricity producers to compete with each other and against independent suppliers regardless of their geographic location. Although this alteration will be beneficial the consumer, electricity producer are going to face a highly unpredictable market and will need to make tough decisions related to power generation and distribution .The power industry is going through deregulation. The current picture of a single utility controlling the market in a specific region will soon vanish. Alternatively, there will be electricity producers who sell their product to a power pool; and Electricity provider who will buy electricity from this pool and in turn sell it to their customers. Although the full picture of the electricity industry after removal of imposed is not yet known, it is understandable that electricity producers need to prepare themselves for an open market for a considerable sell and buy of electric power when organize their generating units. The main reason behind removal of imposed is to decrease the high price of electricity. Beginning steps for the removal of imposed were taken in 1978 with the passage of the Public Utilities Regulatory Policy Act. This act motivate nonutility generation and required electricity producer to buy power from independent generators. The Energy Policy Act of 1992 took removal of imposed a step further by mandating open access to the transmission system for whole sellers .Currently, electric power is sold as a service that is delivered to specified points. For example, every one expects to receive electric power through a meter outside our house. We pay for this meter system regardless of its producer or which power lines it followed. That is, an electricity bill indicates the total usage of electricity in kilowatt hours (KWH) and the service price per KWH without including any other details into the pricing plan. Removal of imposed is changing this picture by separating the electric power into generation and transmission. In the future, one will pay a production cost and a transmission fee. There will be many power distributor from whom electricity may be purchased. Distributor may have different pricing schemes. For example, there might be a discount for using power off-peak periods or for signing a long-term contract with the Distributor. Power producers will compete with each other in order to sell their product(electricity) to more customer through minimizing their costs so that they can get maximum profit. The hope is that removal of impose will result in inexpensive prices and play a vital part in raising the economy by encouraging investments in electric utilities. It is expected that electricity industry will grow after deregulation as was the case with the telecommunications industry. The telecommunications industry's income increases from $81 billion to $170 billion within 10 years of deregulation. The problem of deregulation is that the utility system load is becoming increasingly unpredictable. The reason is that trading transactions can change the load pattern significantly. For example, many electricity producer may sell more than 30% of their electric power generation to other electricity producer on certain days. Demand and supply in the market are function of volatile electricity prices which depends highly on unpredictable elements such as regional weather conditions and fuel prices. For any competitive environment, there are two components: physical and commercial. In case of electricity, the physical component exists in the form of transmission lines and all electricity users have physical access to the market. The commercial component consists of the ability of buyers and distributor to execute trades over the physical network. One should also ensure that anyone who shows interest in joining this market has partial access to the physical network. Although the new environment motivate competition, power transmission will remain synchronize for the time being in order to maintain a authentic system. The transmission lines in each state or region will be controlled by an independent entity called Independent System Operator or ISO. One of the ISO responsibilities is to fix financially with the parties required in transmitting electric power. The transmission cost depends on the closeness of the distributor and the overcrowding of the transmission lines as well as other operational factors. To maintain a authentic system, ISO announced, 24 hours in advance, the load forecast on the system and asks interested distributors to submit proposal.(amount of power to be delivered at each point and pricing information). The load forecast is given for each delivery point within the physical system. Proposal are submitted to the Power Exchange which then holds an auction to determine which distributor to buy power from. For each delivery point, the power exchange chooses the minimum cost source of power, then the second minimum cost, and so on. This process is repeated many times until the forecasted load on the system is met. Note that the previous process ensures that customers' need for electricity is satisfied at a minimal cost. The bidding cost of the last distributor chosen in the bidding process is the spot-market price for power at this distribution point. The power exchange performs this process for each distribution point in the system and at each hour of the day. After agreeing on the production scheme, the ISO studies the scheme to make sure that it is realistic. i.e., it does not overreach the capacity of the transmission lines. Transmission charges are a function of the overcrowding of the power lines. These charges are computed by ISO and billed to the various parties involved in trades. Note that distributor who submit a proposal of their production with high price are end up without selling their product. On the other hand, selling power at a low price may not create enough income for a generator. It is predicted that no one can knows in advance the amount of power that competitors may bid for, electric power market will become more uncertain and risky. The hope is that competition will force electricity producer to minimize their production costs which will be beneficial to electricity users and the economy in general. The previous model also motivate individuals to invest money in the electric power market. i.e, if the cost across a certain power line are relatively high because of overcrowding, an investor could build an alternative power line in the hope of benefitting from the high traffic in that region. That result in the reduction of the transmission cost in that region and an increase in the reliability of the system. It is therefore an object of the creation to provide a tool for forecasting the spot price of electric power in a removal of imposed market and the amounts of power that may be traded in this market. The computer implemented process according to the invention forecasts the spot market prices and the trading transactions at different distribution points, providing the decision maker with probabilistic distributions for spot prices and trading so that he or she can manage risk efficiently. The computer implemented process uses weather forecast in addition to other market information to provide probabilistic distributions for the power traded and spot market prices. What discriminate our tool from others is that it provides a distribution instead of a single estimate for the spot price and the power traded. For example, the computer implemented process may provide the user with Table 1 so that he or she can hedge against uncertainty in the market.

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