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Integrated Model of Fuel Supply Control for Short-term Electric Generation

Scheduling with Emission Constraints and Take-or-pay Contracts

J. De La Cruz-Soto, Member IEEE G. Guitirrez-Alcaraz, Member IEEE

Universidad Tecnolgica de Nayarit Instituto Tecnolgico de Morelia
Javier.delacruz@utnay.edu.mx ggutier@itmorelia.edu.mx

Abstract stability and to mitigate the conflict of access to critical

resources [3]. Uppsala protocol proposes to convene a
Short-term generation scheduling to control convention of nations to consider this matter in order
greenhouse gas emissions is of crucial importance for to reach an agreement with the following objectives:
todays restructured electricity industry. This paper
presents a multi-period supply chain model, fuel - Profiting shortages, so that oil prices maintain a
supply network and generation and transmission of reasonable relationship with production costs.
electricity for short-term scheduling with T-O-P - Allow poor countries to make their imports.
contracts and restriction on emissions of CO2 under a - Avoid destabilizing financial flows arising from
centralized decision-making scheme. Numerical excessive oil prices.
examples are provided. - Encourage consumers to avoid waste.
- Stimulate the development of alternative energy
1. Introduction
The effort to mitigate greenhouse gas emission
A literature survey reveals that some models
really got underway in 1992 with the United Nations
incorporate CO2 emissions in economic dispatch (ED).
Conference on Environment and Development
For example, in [4] the authors presents an
(UNCED), in Rio de Janeiro, known as the Earth
optimization problem in terms of dual variables, know
Summit, which was a turning point in international
as dual function. The dual function is efficiently by
negotiations on environmental issues and development
solving for each thermal unit a nonlinear mixed-integer
held at the Rio Declaration on Environment and
optimization problem. The authors developed a
Development, where 172 governments adopted three
computer program for the problem of short-term
major agreements on climate change that would govern
scheduling of thermal units considering emission
future work: 1) a global plan of action to promote
constraint, using Lagrangian relaxation and a dynamic
sustainable development, 2) defining the rights and
programming approach was developed. Two study
obligations of states and 3) guiding more sustainable
cases are presented, where the calculation of CO2
management of the world's forests [1].
emissions quadratic curves are used independently of
In 1997 the governments of member countries of
the input-output curves of the generating units. The
the Framework Convention on Climate Change of the
case studies reported a base case with no emission
United Nations (UNFCCC) agreed to the Kyoto
constraints and a second case with CO2 emission
Protocol to achieve a 5% reduction in emissions of
global greenhouse gas emissions above 1990 levels for
[5] analyzes the influence of ED by cap-and-trade
the period 2008-2012 [2].
constraints in which emission affection factors are
Regulatory policies on emissions of CO2 are
deduced to model ED with flexible emission
largely linked to the rules stated in the Kyoto Protocol.
constraints. Both piecewise continuous and continuous
However, alternative proposal are also key, such as the
fuel cost curves are considered, and lambda-iteration
Uppsala Protocol of 2004. this protocol considers
method through sorted tables is used to solve this
production rates and reserves of non-renewable energy
model. CO2 emissions are calculated using the
sources by emphasizing the depletion of these sources.
quadratic curve of the generating units.
It mentions a peak in discoveries of oil fields in 1960
In [6] the emission-constrained dispatch problem is
and a peak in production in the first decade of the
formulated as a nonlinear constrained minimization
twenty-first century. It also includes the advisability of
problem. The solution is a continuous relationship
planning an orderly transition to a new global
between cost and annual emission for CO2. The model
environment of reduced supply and to financial
shown that the power system should be operated at the
same value of the Lagrangian multiplier. Emissions offer. After calculating the curves for all consumers, a
and costs are calculated through a convex polynomial single-product auction can be easily simulated.
approximation. Another study developed in Brazil [12] proposes a
A mathematical model presented in [7] describe a model that considers a set of NG power plants supplied
large-scale long-term generation scheduling in an by a gas pipeline system. The objective function is to
electricity market environment; with the bidding minimize the costs of power generation, NG
strategies of generation units under different load production and/or acquisition and transmission.
levels and maintenance constraint. Emission and System requirements, such as electric load demand,
energy constraints are included in the model. CO2 power generation limits, NG flow pressure limits at
emissions are calculated from conversions to the input- pipeline network and take-or-pay (T-O-P) contracts are
output curve of the generating units. represented in the formulation.
There are also models such as [8] that propose This paper considers a multi-period supply chain
integrating optimal electricity and natural gas (NG) model, fuel supply networks and generation and
expansion in planning. The problem is formulated as a transmission of electricity for short-term scheduling
mixed-integer linear multistage optimization model with T-O-P contracts and restrictions on emissions of
where the objective function is to minimize the CO2 under a centralized decision-making scheme.
integrated gas-electricity systems generation The paper is organized as follows: Section 2
investment and operational costs subject to hydro and describes the components of the integrated energy
thermal power plant, electricity and NG system, the importance of fuel diversification in a
interconnection, gas well reserve and capacity model of integration, the contracts in the electricity
constraints. The link between the systems is the NG- sector, the context of CO2 emissions and the contracts.
fired power plants that are connected directly to NG Section 3 illustrates a mathematical model. A
pipelines. numerical example with three cases is provided in
The approach presented in [9] proposes to solve the Section 4. Conclusions are presented in Section 5.
OPF problem in a distributed way based on the
concept of energy hubs, where each hub, also 2. Integration of Fuel Supply and CO2
referred to as a control area, is controlled by its Emission
respective control agent. The objective function is to Supply capacity of a power system depends on the
minimize the total energy costs of all sources and/or subsystems of generation, transmission and
imports from other systems. The costs are modeled as distribution, and on the subsystems to transport the raw
quadratic functions of the consumed fuels. The OPF energy used to produce electricity. These raw energy
variables comprise the state variables of the electricity forms include coal, NG and oil. Currently, most of the
and NG system and the hub. models in the literature focus only on integrating the
In [10] the authors show that a long-term NG transportation system with the electricity sector
perspective on fuel diversity is a resource-planning [8]-[12].
problem, where load factors are introduced into the The activities of present energy supply chain are
mean-variance analysis for long-term electricity organized via markets as shown in Fig. 1.
generation. The optimization model is described in
terms of per energy unit (MWh) thus allowing load FUEL & TRANSPORTATION MARKETS

factor terms to be explicit in the mean-variance ELECTRICITY MARKET

computations. The model runs with varying input Coal

G1 T

assumptions such as variance of fuel prices that ROADS

provide numerical results and mean-variance efficient G2

frontiers that find the model to behave intuitively and

Coal I

tend to validate the method.

A methodology for pricing flexible NG supply N

N. Gas

contracts to determine their value according to the PIPELINES

risk profile of the buyer is proposed in [11]. The N

authors describe the experiments carried out by the

Brazilian gas authorities to assess the impacts of the

creation of a flexible gas market. The approach Fig. 1 The integrated energy system
adopted constructs a willingness-to-contract
(demand) curve for each consumer that indicates the
desired volume to be purchased for each contract price
A. CO2 Emission used by environmental regulators to allow a certain
The marketing of the bonds of CO2 will be done amount of emissions without receiving a penalty.
through an emissions trading market. Currently there When a thermal unit is subject to restrictions on
are several markets for emissions all over the world CO2 emissions will generally reduced capacity to
such as: European Climate Exchange (ECX), generate the maximum allowed by the amount of
Insurance Futures Exchange (IFEX), Montreal Climate emissions, though the restriction will depend on the
Exchange (MCeX) and the Chicago Climate Exchange type of fuel used per unit. Figure 2 (a) depicts a 450
(CCX). From the latter we will briefly describe how MW thermal generations unit output, upper curve,
transactions are conducted [13]. which it is reduced to 248 MW by considering
The Chicago Climate Exchange (CCX) has emission constraint, Figure 2(b) shows the restriction
mechanisms for contracts to carry out the transactions in terms of CO2 emissions, then this unit to a
and deals with CO2 emissions. Each contract has a size maximum power for an hour, would require 484.6
of 100 metric tons of CO2 transaction methods in the Bond of CO2 which can be obtained through 5
CCX are: contracts of 100 metric tons. In making this acquisition
1. CCX offers an internet-based, electronic of the unit will be issuing bonds more than 3 times the
trading system for submission of bids and amount of emissions allowed.
offers for anonymous, cleared agreements
executed on price and time priority. 3. Mathematical Model
2. Electronic bilateral agreements between A mathematical model for scheduling thermal
members. generating units with generators under a T-O-P
3. Pre-negotiated block trades and cash contract, fuel transportation networks and emission
transactions may be negotiated at any time, constraint in a multi-period framework can be
but must be reported to CCX in accordance formulated as:
with its rules [14].
u T I J

It is worth to mention that there are other variations Min Cost = Cu ,t ( Pgu ,t ) + tci ci + tg j g j (1)
n=1 t =1 i=1 j =1
to trade bonds in the CCX, however in this paper we u
consider bilateral agreements between members. Pg
n =1
u ,t = PD,t ; t = 1,..., T

12000 f T
$ / hr

10000 n,t ( Pgn,t ) qTOT =0

n=1 t =1
PguMin Pgu PguMax
Pik, j Pik, j Max ; i, j N
2000 tci tciMax ; i I

j J (7)
5 100 150 200 250 300 350 400 450 tg j tg Max
j ;
(a) MW
tc = TAC
CO2 ton / hr

600 i =1

500 J (9)
j =1
j = TAG

300 (10)
Eu ,t EuMax
,t + Ebu ,t

where u represents the number of generating units,
50 100 150 200 250 300 350 400 450
f is the number of generators with fuel restrictions, N
(b) are nodes of power system, T is the number of periods
Fig. 2 Maximum generation due to CO2 emissions of studies, I is the number of lines of coal
transportation, J is the number of lines of natural gas
The need to purchase CO2 bonds for a generating transportation, Cu,t is cost per MBtu of unity u in
unit is based on capacity, fuel type and the approach period t, Pgu,t represents generated power by the unit u
in period t, tci is the amount of coal transported by the
line i, tg.j is Amount of natural gas transported by the
line j, ci are shipping costs of fuel in the line i, g.j are
shipping costs of fuel in the line j, PD,t is Power
demand in period t, qu,t indicates fuel consumption of
the unit u in period t, Pk is power transmitted by the
line k, TAC is the total amount of transported coal,
TAG is the total amount of transported natural gas, Eu,t
is a quadratic curve of where are obtained CO2
emission of unit u at period t, Ebu,t indicates buy of
CO2 bonds of unit u of period t.
The objective function is to minimize total costs of
generating electricity and total cost of transshipping
fuels. The total amount of electricity generated
satisfying demand at each period is represented by
constraint (2). Constraint (3) indicates the total amount
of fuel that the unit under the T-O-P contract must Fig. 3. 5-nodes short-term generation scheduling with unit 1 T-O-P
consume. The operative, upper and lower, limits of contract
generation units are represented in constraint (4).
Transmission lines maximum power limit is The fuel transportation networks characteristics are
represented by constraint (5). Constraints (6) and (7) given in Tables I and II.
are upper bounds of fuel transportation networks (road,
railroad, rivers and pipelines). Constraints (8) and (9) COAL TRANSPORT NETWORK DATA
represent the balance between transport fuel and fuel Element Transport Cost unit transported Transport capacity
consumed by the generation plants that use NG and ($) (tons / day)
coal. Constraint (10) represents the CO2 emission 1 Road 8.0 5,000
bounds of the generations unit. 2 River 10.0 4,000
3 Road 9.0 3,000
4 Railroad 7.0 4,000
4. Numerical Example 5 Railroad 13.0 2,000
This section presents three numerical cases of the 6 Road 13.0 4,000
model above described. The first case does not
consider CO2 emission constraints. In the second case, TABLE II
a maximum level of emissions per day per each NG PIPELINES DATA
individual generating unit is assumed. The third case Element Cost unit transported transport capacity
considers the purchase of CO2 bonds to relax a ($) (m3 / day)
1 0.00014 1,500,000
penalized unit. Additionally generator 1 (G1) must use
2 0.00012 1,500,000
or pay for consuming of 1200 tons of coal specified in 3 0.00013 1,000,000
the T-O-P contract, and generator 2 (G2) must 4 0.00015 1,000,000
consume 11,000 m of water. 5 0.00053 1,500,000
The five-node electric system [15] is considered, to 6 0.00053 1,500,000
which we have added fuel transportation networks:
pipelines, railroads, roads, and river, see Fig. 3. All
The generation units data is shown in Table III.
transmission lines are assumed to have a capacity of
The quadratic polynomials represent the emissions of
360 MW each one, except the line connecting node 1
CO2 for each generating unit was taken from [4], the
to node 2 which has a transmission capacity of 90
emissions given by the following expression.
The optimization problem is solved using MINOS
solver through GAMS [16].
Eu ,t = + Pgu ,t + Pgu2,t (11)

The input-output curves of the generating units are

in terms of MBtu per hour with the exception of Unit 2
which is hydroelectric, which given by the following
Cu ,t = a + bPgu ,t + cPgu2,t (12) THERMAL EQUIVALENCE
Fuel Thermal Equivalence

TABLE III Natural Gas 27.49208 m3/MBtu

Input / Output Emission curve Coal 0.054054 ton/MBtu
Unit min max
a b c PGi PGi Fuel A. Case 1
(MW) (MW) The total operating cost of $1,563,368.85 includes
1 225 8.47 0.0025 50 350 25.8 -0.52 0.007 Coal
generation production costs and transportation costs.
2 250 4.40 0.0045 10 150 - - - Water1
3 400 5.00 0.0025 50 450 25.3 -0.53 0.004 Oil The solution meets G1 T-O-P contract and water in
4 350 6.40 0.0065 50 450 30.1 -0.39 0.004 Coal G2.
5 729 6.20 0.0081 50 350 31.6 -0.63 0.004 N.G. Figure 4 shows the lines that were active for
6 550 5.80 0.0035 40 250 34.3 -0.68 0.004 N.G.
1 periods of 24 days, i.e. according to the optimization
input / output parameters in (cubic meters / hr)
model is more economical to use these lines of
Characteristics of demand for the 24 day period are transportation to demand conditions in this case.
shown in table IV.
Periods Node 2 Node 3 Node 4 Total
(hrs) (MW) (MW) (MW) (MW)
period-1 200 300 100 600
period-2 210 310 100 620
period-3 220 320 110 650
period-4 230 350 140 720
period-5 270 400 230 900
period-6 400 500 300 1200
period-7 395 490 295 1180
period-8 390 470 290 1150
period-9 385 465 290 1140
period-10 385 460 285 1130
period-11 375 455 280 1110
period-12 370 450 280 1100
period-13 360 420 270 1050 Fig. 4. 5-nodes short-term generation scheduling with G1 under T-O-
period-14 360 430 270 1060 P contract: case A
period-15 380 460 290 1130
period-16 450 610 350 1410 The results of fuel quantity transported as well as
period-17 550 680 430 1660
period-18 570 700 440 1710 active transportation networks are presented in Tables
period-19 560 710 430 1700 VII and VIII.
period-20 530 670 400 1600
period-21 430 470 330 1230 TABLE VII
period-22 380 370 290 1040 COALS NETWORK: CASE A
period-23 230 350 140 720 Coal Quantity transported
period-24 200 300 100 600 Network (tons)
1 1200.0
Table V shows the expected prices of fuel. The fuel 2 837.75
prices are randomly assigned, and the price of water 4 4000.0
has been taken from [18].
Natural gas pipelines Quantity transported
Fuel Price
(m )
Natural Gas 0.2800 $/m3
1 1442038.19
Oil 80.000 $/barrel
3 1000000.00
Coal 58.590 $/ton
6 264174.06
Water 0.0028 $/m3

Table VI reports thermal equivalence [17].

Transmission lines 1 and 4 of the transmission Table X shows the emissions of each generation
network of coal and line 3 of the transmission network unit throughout the day, i.e. is the sum of the
of NG remained at maximum capacity. contributions of CO2 emissions from each period.
Table IX reports the power generating output per
B. Case 2
period. The last row shows the total amount of power
produced. In this case there are restrictions on CO2 emissions
per generation unit and per day, emissions are
TABLE IX calculated again and throw the surplus per unit, these
Next we assume centralized decision-,making for
Period G-1 G-2 G-3 G-4 G-5 G-6
(hrs) (MW) (MW) (MW) (MW) (MW) (MW) issuing bonds between two generating units in the
1 50.00 10.00 50.00 400.00 50.00 40.00 same system. The negative amount in excess bonds
2 50.00 10.00 50.00 420.00 50.00 40.00 represents those received by the units. The criteria for
3 50.00 10.00 50.00 450.00 50.00 40.00 performing these exchanges via the optimization
4 50.00 10.00 50.00 450.00 50.00 110.00 model are considering the quantities of permitted
5 50.00 10.00 50.00 450.00 90.00 250.00
emissions for each unit an assigning the code
6 126.19 39.87 127.50 450.00 206.45 250.00
7 117.23 37.27 121.95 450.00 203.55 250.00
optimization in a way that will reduce total production
8 103.80 33.37 113.63 450.00 199.20 250.00 costs.
9 99.32 32.07 110.86 450.00 197.76 250.00
10 94.85 30.77 108.08 450.00 196.31 250.00
11 85.89 28.16 102.54 450.00 193.41 250.00
12 81.41 26.86 99.76 450.00 191.96 250.00
13 59.03 20.36 85.90 450.00 184.71 250.00
14 63.51 21.66 88.67 450.00 186.16 250.00
15 94.85 30.77 108.08 450.00 196.31 250.00 Transferred bonds
CO2 ton / day

16 201.99 71.35 193.34 450.00 243.32 250.00
17 186.94 132.93 315.69 450.00 324.45 250.00
18 184.30 145.16 340.00 450.00 340.54 250.00
19 187.17 142.18 334.16 450.00 336.49 250.00
20 189.98 118.28 286.56 450.00 305.18 250.00
21 139.62 43.77 135.82 450.00 210.80 250.00
22 54.55 19.06 83.12 450.00 183.26 250.00
23 50.00 10.00 50.00 450.00 50.00 110.00
24 50.00 10.00 50.00 400.00 50.00 40.00 1 2 3 4 5 6
Total 2420.6 1043.8 3105.6 10670.0 4289.8 4880.0 Generators unit

Fig. 5. Bonds surplus transferred to unit 4

From Table IX we can see that units 4 and 6 are
operating at maximum capacity in most of the time, The dark part in each bar represents the emissions
because they are cheaper than units 3 and 5, but not of CO2 over the 24 periods. Segments clearly show the
necessarily that unit 1, since it is subject to restrictions bonds of CO2 available for each generation unit, in
on fuel consumption, hydraulic units generally provide Figure 5 shows that the 1,3 and 5 units remain
significant amounts of energy in an ED, however the operating well below the limit set by the restriction on
restrictions in reservoirs causes produce less energy as emissions, which have surplus in CO2 bonds, the unit
in the case of Unit 2. 2 has only excess in CO2 bonds because is a hydraulic
unit. A unit 4 is transferred surplus bonds for the rest
TABLE X of the units have lower production costs.
Generation unit Emission TABLE XI
1 1534.84 Unit Emission limit Emission Case 2 Bond surplus
2 0.00 (CO2 ton) (CO2 ton) (CO2 ton)
3 1379.90 G-1 3360.00 1423.02 1936.98
4 15556.70 G-2 1440.00 0.00 1440.00
5 1939.26 G-3 4320.00 1579.32 2740.68
6 2127.20 G-4 4320.00 12209.10 -7889.10
G-5 3360.00 1817.43 1542.57
G-6 2400.00 2171.13 228.87
Total 19200.00 19200.00 0.00
In Table XI shows the CO2 emissions per 2 50.00 10.00 50.00 277.40 90.66 141.93
generation unit for 24 periods of day. From the same 3 50.00 10.00 50.00 289.02 98.44 152.55
4 50.00 10.00 54.77 314.27 115.34 175.63
Table it can be seen that unit 4 violates its emission
5 60.72 10.00 97.26 363.35 148.19 220.49
limit. but under the assumption of a scheme under 6 108.93 36.72 164.04 440.49 199.82 250.00
centralized decision-making take place bond issues 7 105.95 31.79 159.91 435.73 196.63 250.00
between the same units of the system, the negative 8 101.48 24.39 153.72 428.57 191.84 250.00
amount in excess bond represents bond received by 9 99.99 21.93 151.65 426.19 190.24 250.00
units of the same system. This is also observed in 10 98.50 19.46 149.59 423.80 188.65 250.00
11 95.52 14.53 145.46 419.03 185.46 250.00
Figure 5.
12 94.03 12.07 143.40 416.65 183.86 250.00
The criteria for performing these exchanges through 13 84.55 10.00 130.27 401.48 173.71 250.00
the optimization model as they were together the 14 86.53 10.00 133.00 404.65 175.83 250.00
quantities of permitted emissions for each unit and 15 98.50 19.46 149.59 423.80 188.65 250.00
assign the code optimization in a way that will reduce 16 148.17 101.62 218.38 450.00 241.84 250.00
total production costs. 17 186.25 150.00 306.73 450.00 317.03 250.00
So here is a chart that illustrates the behavior of 18 185.07 150.00 332.59 450.00 342.33 250.00
19 187.55 150.00 326.59 450.00 335.87 250.00
CO2 emissions from each generating unit. 20 187.53 150.00 275.74 450.00 286.73 250.00
Despite the distribution of bonds between the units 21 113.40 44.11 170.23 447.65 204.61 250.00
cheaper penalty still exists in emissions since the 22 82.57 10.00 127.53 398.32 171.59 250.00
amount of emissions is equal to the emissions 23 50.00 10.00 54.77 314.27 115.34 175.63
permitted and there are no surplus bonds as shown in 24 50.00 10.00 50.00 269.66 85.48 134.86
Table XI. In case 3 simulating the acquisition of bonds Total 2425.2 1026.1 3645.1 9413.98 4513.6 5385.9
of CO2 in order to remove the restriction on emissions
and reduce production costs
Total operating cost is $1,599,284.71. Restrictions Generators 1 and 2 have no significant differences
on emissions of CO2 produce a significant increase in in offices throughout the day made with respect to case
operating costs, as well as a change in the 1. Furthermore the generator 4 is a decline in energy
configuration of the active lines of transportation fuel delivered at the end of the 24 periods as a result of the
with respect to Case 1. Tables XII and XIII show the restriction on CO2 emissions; this energy is supplied
configuration of the transmission of fuel. by the units 3, 5 and 6.

C. Case 3
Coal Quantity transported The power output and CO2 emissions for each unit
Network (tons) are the same as those shown in case 1 in tables X and
1 1200.0 XI. However to reach the optimal solution shown in
2 195.7 case 1, are required to issue bonds for 11,256 tons of
4 4000.0
CO2, then in this case required 113 contracts with a
surplus of 44 tons of CO2 for the permissible period of
TABLE XIII 24 hours of the day.
NATURAL GAS PIPELINES: CASE 2 The amount was selected because it is the bonds are
Natural gas Quantity transported needed to obtain the optimal generation of case 1 for a
pipelines (m3/day)
2 1481613.22
given price of 2 $ / ton CO2 is the most economical
3 1000000.00 solution. Then the total cost of generation is $
4 355037.23 1,563,652.19, configurations in the transport of fuel
4 413602.24 remaining as shown in Tables XVI and XVII.

Due to the emission constraint, generating units are TABLE XVI

re-dispatched as shown in Table XIV. COALS NETWORK: CASE 3
Coal Quantity transported
Network (tons)
CASE 2 2 837.75
Period G-1 G-2 G-3 G-4 G-5 G-6 4 4000.00
(hrs) (MW) (MW) (MW) (MW) (MW) (MW)
1 50.00 10.00 50.00 269.66 85.48 134.86
[2] Unit Nations Kyoto Protocol to the United Nations
TABLE XVII Framework Convention on Climate Change, United
NATURAL GAS PIPELINES: CASE 3 Nations Framework Convention on Climate Change,
Natural gas pipelines Quantity transported unfccc.int, 1998 [On line]. Available:
2 1442038.19
3 1000000.00
[Accessed: March 2009].
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Javier de la Cruz-Soto received his B.S. Electrical Engineering
from Instituto Tecnolgico de Sonora in 2007 and M. S. in Electrical
Engineering in 2009 from Instituto Tecnolgico de Morelia, Mxico.
Currently is a full time lecturer in the Industrial Electromechanical
Division of Universidad Tecnolgica de Nayarit
Guillermo Gutirrez-Alcaraz (IEEE: M 99) has been with the
Department of Electrical Engineering, Instituto Tecnologico de
Morelia, Morelia Mexico, since 1996. His main areas of interest are
operation and control of electric power and distribution systems,
pricing of electricity services and electric power deregulation.

Paper Accepted for presentation at the IEEE

Workshop CERMA 2009 conference, September,
Cuernavaca - Mxico.