Slack-bus independent penalty factor for regional spot pricing under deregulation

Recently, the deregulation has been a hot issue in electric power industries with the introduction of the bidding system to electric power markets. One of the main topics associated with the deregulation is spot pricing where the exact analysis of transmission loss and the method of calculating reliable penalty factor play an important role. Penalty factors calculated with conventional methods are highly dependent on the location of the slack bus, which brings about unfair competition to Independent Power Producers (IPPs). This paper presents a new method of calculating the exact and reliable penalty factor independent of the change of the slack bus. The proposed method is tested on IEEE 14 bus system, New England 39 bus system and OH-145 bus system. The test results show that the proposed method can give more reliable information of the penalty factors for the regional spot pricing.