Positioning for a Competitive Electric Industry with PG&E's Hydro-Thermal Optimization Model

Raymond B. Johnson, Alva J. Svoboda, Claudia Greif, Ali Vojdani and Fulin Zhuang
Additional contact information
Raymond B. Johnson: California Power Exchange, 1000 South Fremont Avenue, Alhambra, California 91803
Alva J. Svoboda: Pacific Gas and Electric Company, Business Consulting/Information Resource Management, PO Box 770000, San Francisco, California 94177
Claudia Greif: PG&E, Utility Electric Supply Department
Ali Vojdani: Perot Systems Corporation, 12377 Merit Drive, Dallas, Texas 75251
Fulin Zhuang: PG&E, Transmission Planning

Interfaces, 1998, vol. 28, issue 1, 53-74

Abstract: The Hydro-Thermal Optimization (HTO) system optimizes the weekly electric production schedules of Pacific Gas and Electric Company's diverse resource mix. PG&E developed HTO to reduce operating costs, forecast marginal costs, and position itself for competition. PG&E implemented the system after extensive prototyping and validation and uses HTO daily for unit commitment, hydro scheduling, energy trading, fuel forecasting, resource evaluation, and marginal cost-based pricing. PG&E estimates annual benefits of HTO conservatively at $15 million. On a broader scale, PG&E has used HTO to analyze auction protocols for a deregulated power market and demonstrated that use of HTO-like tools to administer a power auction, as is done in the UK, could result in profit distribution inequities among bidders. HTO thus enabled PG&E to support a profound change in California's restructuring of the electric industry, from the proposed UK-type pool to a decentralized decision-making framework in which bidders optimize their own operations. As a result, California's $20 billion electric-power market will realize increased efficiencies and savings for both taxpayers and consumers.

Keywords: industries; electric; production/scheduling; applications (search for similar items in EconPapers)
Date: 1998
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Citations: View citations in EconPapers (2)

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