Linear programming based determination of optimal bilateral real power contracts in open access

Under a deregulated environment, electricity consumers and suppliers generally establish various bilateral power transactions/contracts. The transmission company normally honors and executes these bilateral contracts within the limits permitted by the system design and operating conditions. This article describes determination of optimal bilateral contracts by using line flow factors (LFFs). An innovative approach for obtaining the set of line flow factors is presented. The line flow factors are evaluated from existing load flow information. A generalized linear programming formulation is proposed to determine the optimal bilateral real power contracts under a deregulated environment subjected to the steady-state security constraints (e.g. generation and line flow limits). It is demonstrated that the proposed methodology would be an effective tool to study the intricate relationships between the bilateral contracts and system security. Examples are presented to illustrate the use of this formulation to minimize the cost of any bilateral contract to comply with the security requirements. The results obtained show great prospects for practical application of the proposed algorithm for optimal bilateral contracts on a real-time basis.