Electricity Pricing Model in Thermal Generating Stations under Deregulation

P. Reji, S. Ashok, and K.M. Moideenkutty (India)


Power market, Electricity price, Pricing model, Cost escalation factor, Fixed charge.


Deregulation replaces the monopoly in regulated public utilities with competitive power markets. Under deregulated power market, electricity price mainly depends on market mechanism and power demand. In this market, generators generally follow marginal pricing. Each generator fixes electricity price based on their pricing strategy and it leads to more price volatility. This paper presents a model to determine electricity price in thermal generating station under deregulation. This model can accommodate price volatility in the market. It is based on performance incentive/penalty considering plant load factor, availability of the plant and peak/ off peak demand. The model is applied to a typical thermal utility in India to determine electricity price. Results were found confirmatory.

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