Oligopolistic electrical market competition, stranded costs and uncertainty: A supply function approach.

Abstract

In a competitive scenario generation bids are sent by the utilities in order to hedge the operational risks due to uncertain demand, competitors behaviour or other factors. On the other hand, stranded costs payments are an important role in some systems, such as the Spanish one. In this paper, supply function equilibria including stranded costs payments are derived, and their likely effect on the utilities behaviour is focused. Keywords - Electricity Markets, Stranded Costs, Optimal Bidding, Market Uncertainty, Supply Functions.