The New Form Of The Electric Industry

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Abstract--The Norwegian parliament decided to restructure the electric power market following United Kingdom’s adoption of The Energy Act in 1990 to promote market competition and improve efficiency. Nord Pool was founded in 1993 as a pool for electric power exchange and became the world’s first integrated exchange platform to trade electric power contracts. This paper presents a summary of the several milestones in the development of the Nordic power market into its present form. The financial derivative market, the day-ahead market, the intraday market and the major market participants in Nord Pool have been elaborated along with the mechanism used by Nord Pool to determine the spot price through market auctions. Also issues on limitations in available transmission capacity and congestion management in the form of price areas and buybacks have been discussed.

Index Terms— deregulation, transmission system operator, congestion management, available transmission capacity, day-ahead market, price areas, buy-back bids.
I. Introduction
THE early form of the electric industry, evolved around 1880 A.D. when electric lighting system became prevalent. At this time, there was a significant competition between electric utilities for customers. However, since the early 1900’s a general consensus developed that it is cheaper and economical to produce power at large scale, and hence the electric power industry changed to a natural monopoly structure. With a monopoly market
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