December 2004

34
R. Rajaraman. “Optimal Bidding Strategies in Electricity Markets”
Example 5*: Observations
•Gen C2 gets paid its bid of $55/MWh and therefore sets the price at node C
•Therefore the intra-zonal pricing rules introduce “pay-as-bid” type features
•Optimal strategy for Gen C1 is to bid just below highest winning bid at node C, which is $55/MWh
ØAside: Note that this has the effect of increasing round 1 Zone 2 prices to $55/MWh
*Example idea based on exchange between CAISO and Harvey & Hogan,
see http://ksghome.harvard.edu/~whogan/zonal_Feb11.pdf