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Hesamzadeh M.R.,KTH Royal Institute of Technology | Biggar D.R.,The Australian Competition and Consumer Commission | Hosseinzadeh N.,Swinburne University of Technology | Wolfs P.J.,Curtin University Australia
IEEE Transactions on Power Systems | Year: 2011

This paper proposes a new mathematical structure for evaluating the economic efficiency of transmission investment in a liberalized electricity market. The problem faced by a transmission planner is modeled using the concept of social welfare from economics. The behavior of generators is modeled as the Nash equilibrium of a strategic game. The Nash solution concept is reformulated as an optimization problem and a new concept - the Stackelberg-Worst Nash equilibrium - is introduced to resolve the problem of multiple equilibria. The proposed structure can take into account the effects of a transmission augmentation on both market power and strategic generation investment. Accordingly, the optimal solution to the transmission planner's problem may allow additional transmission capacity both to reduce market power and to defer investment in the generation sector. A methodology is proposed to decompose the benefits of a transmission augmentation policy into the efficiency benefit, competition benefit, and the deferral benefit. The outcomes of the proposed approach to transmission augmentation are compared with the outcomes of two other approaches to transmission augmentation using a simple three-bus network example. © 2006 IEEE.

Hesamzadeh M.R.,KTH Royal Institute of Technology | Biggar D.R.,The Australian Competition and Consumer Commission | Hosseinzadeh N.,Swinburne University of Technology
Energy Policy | Year: 2011

Wholesale electricity market regulators have long sought a simple, reliable, transparent indicator of the likely impact of wholesale market developments on the exercise of market power. Conventional indicators, such as the Pivotal Supplier Indicator (PSI) and the Residual Supply Index (RSI) cannot be extended to apply to meshed transmission networks, especially when generating companies hold a portfolio of generating units at different locations on the network. This paper proposes a generalisation of these standard measures termed the "Transmission-Constrained Pivotal Supplier Indicator (TC-PSI)". The TC-PSI of a generating company is defined as the maximum must-run generation for any subset of generating plant while allowing for strategic operation of other plant in the portfolio. We illustrate the use of the TC-PSI using a five-node model of the Australian NEM. © 2011 Elsevier Ltd.

Hesamzadeh M.R.,KTH Royal Institute of Technology | Galland O.,KTH Royal Institute of Technology | Biggar D.R.,The Australian Competition and Consumer Commission
International Journal of Electrical Power and Energy Systems | Year: 2014

In a typical liberalised wholesale power market, an optimisation process ensures the economically efficient utilisation of the controllable resources every few minutes. But electricity networks are subject to constant shocks to the available generation, load, or transmission assets. The response to these shocks is through a variety of ad hoc mechanisms which do not involve an optimisation process and therefore cannot achieve economically efficient utilisation of the available assets. But the higher the cost of responding to contingencies ex post the greater the need there is to distort the ex ante operation of the power system. In cases where the power system cannot respond at all to a particular contingency ex post, the power system must often be operated ex ante as though the contingency has already happened. This significantly reduces the efficiency with which the available assets can be utilised ex ante. In this paper the concept of short-run economic dispatch is introduced and mathematically modelled. The concept of short-run economic dispatch is formulated through three stages: (1) the initial steady-state equilibrium, (2) transition to a new steady-state equilibrium, and (3) final steady-state equilibrium. These three stages model the state of power system before, during, and after contingency occurred. The derived mathematical model is a linear programming problem. The approach is illustrated using the IEEE 24-node example system. © 2014 Elsevier Ltd. All rights reserved.

Biggar D.,The Australian Competition and Consumer Commission
Journal of Transport Economics and Policy | Year: 2012

What is the primary rationale for the regulation of airport take-off and landing charges? The conventional economic response focuses on the potential to exercise market power, resulting in the economic harm known as deadweight loss. But this conventional view does a poor job of explaining the observed actions of regulators and the concerns of airport users. In this paper, I argue that the primary rationale for regulation of airports is not the minimisation of deadweight loss, but the protection and promotion of sunk complementary investments by airport users. This approach explains the key patterns of airport regulation that we observe in practice.

Moiseeva E.,KTH Royal Institute of Technology | Hesamzadeh M.R.,KTH Royal Institute of Technology | Biggar D.R.,The Australian Competition and Consumer Commission
IEEE Transactions on Power Systems | Year: 2015

With an increasing penetration of wind power, there is likely to be an increasing need for fast-ramping generating units. These generators ensure that no load is lost if supply drops due to the uncertainties in wind power generation. However, it is observed in practice that, in a presence of network constraints, fast-ramping generating units are prone to act strategically and exercise market power by withholding their ramp rates. In this paper we model this gaming behavior on ramp rates. We assume a market operator who collects bids in form of marginal costs, quantities, and ramp rates. He runs a ramp-constrained economic dispatch given the generators' bids, forecasted demand, and contingencies. Following the game-theoretic concepts, we set up a multi-level optimization problem. The lower-level problem is the ramp-constrained economic dispatch and the higher-level represents the profit maximization problems solved by strategic generators. The whole problem is formulated as an equilibrium problem with equilibrium constraints (EPEC). The outcome of the EPEC problem is a set of Nash equilibria. To tackle the multiple Nash equilibria problem, the concept of the extremal-Nash equilibria is defined and formulated. We model the concept of extremal-Nash equilibria as a single-stage mixed-integer linear programming problem (MILP) and demonstrate the application of this mathematical framework on an illustrative case and on a more realistic case study with tractable results. © 1969-2012 IEEE.

Biggar D.,The Australian Competition and Consumer Commission
Australian Journal of Agricultural and Resource Economics | Year: 2010

It has long been recognised that the mechanism for funding irrigation infrastructure in Australia may be incompatible with efficient trade in the rural water market. If the revenue received by an irrigation operator is dependent on the volume of water entitlements held in the operator's region, out-of-region permanent water sales threaten the operator's revenue stream, potentially leading to higher charges on remaining irrigators, encouraging an inefficient 'rush for the exit'. In response, irrigation operators have imposed restrictions on permanent water trade, such as exit fees and termination fees, to protect their revenue stream. Previous economic analysis has suggested that exit fees, in particular, are a barrier to efficient trade in the water market and should be abolished. In contrast, this paper argues that allowing irrigators to cancel their water delivery rights without fees or charges leads to inefficient trade in the water market, hinders efficient on-farm investment in sunk complementary assets and leads to inefficient network rationalisation decisions. Instead, the revenue stream of irrigation operators should be insulated from water trade decisions, through high termination fees, tying irrigation charges to the land, or tagging the obligation to pay delivery charges to the new owner of the traded water. © 2010 The Author. AJARE © 2010 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Asia Pty Ltd.

Hesamzadeh M.R.,KTH Royal Institute of Technology | Biggar D.R.,The Australian Competition and Consumer Commission
IEEE Transactions on Power Systems | Year: 2013

Around the world, electricity market regulators and competition authorities are struggling to find ways to reliably assess the likely market impact of mergers of generators. Conventional indicators of market power fail to capture key aspects of the exercise of market power in wholesale electricity markets. On the other hand, full-scale computation of Nash equilibria has historically been time consuming, non-transparent, and typically results in multiple Nash equilibria. In this paper we propose two methodological advances: an efficient approach to computing ex-tremal- Nash equilibria in a wholesale power market with market power and the application of this approach in the assessment of wholesale market mergers. The extremal-Nash equilibria are those equilibria which have the highest or the lowest social cost to the society. The resulting formulation is a Mixed Integer Linear Program which efficiently finds the full set of extremal-Nash equilibria. The continuum of these extremal-Nash equilibria over a range of demand conditions describes the upper and lower envelopes of the Equilibria Band. To illustrate the advantages of the proposed approach, two case studies are explored, involving the New South Wales region of the Australian National Electricity Market, on the one hand, and the IEEE 14-Bus Test System, on the other. © 2012 IEEE.

Hesamzadeh M.R.,KTH Royal Institute of Technology | Biggar D.R.,The Australian Competition and Consumer Commission
IEEE Transactions on Power Systems | Year: 2012

This letter proposes a new approach to the computation of extremal-Nash equilibria in a wholesale power market with transmission constraints. The approach uses linearization techniques to formulate the extremal-Nash equilibrium problem as a single-stage mixed-integer linear programming problem which can be solved with standard software. Through the introduced concept of extremal-Nash equilibria, the derived structure can efficiently locate all Nash equilibria of the game. We show that this approach offers significant performance improvements over existing approaches to computing Nash equilibria. © 2012 IEEE.

News Article | December 12, 2016

The Australian Competition and Consumer Commission has launched legal action against the manufacturers of “flushable” wet wipes over allegations that they falsely claimed the products would break down in the sewerage system. The ACCC filed separate actions against Kimberly-Clark Australia and Pental Products in the federal court on Monday on the grounds that the label “flushable” had misled customers to believe that thewipes could be safely flushed down the toilet, just like toilet paper. Unlike toilet paper, said the ACCC chairman, Rod Sims, the wipes did not disintegrate when flushed and could clog the sewer. “Australian water authorities face significant problems when non-suitable products are flushed down the toilet as they contribute to blockages in household and municipal sewerage systems,” Sims said. Water authorities in New South Wales have blamed disposable wet wipes for causing “fatbergs” – big clumps of non-flushable items that coalesce with fat and oils to form sewer-blocking clogs. In February a one-tonne fatberg took out the pumping station near Lake Macquarie and had to be partially removed by hand, bucket by bucket. “Wet wipes are responsible for around 80% of all sewer blockages in Hunter Water’s system,” the corporation’s spokesman, Nick Kaiser, told Fairfax Media at the time. In June the consumer group Choice blamed the fatbergs on wet wipes that had been marketed as “flushable”, saying that despite manufacturers changing the formula to make the wipes disintegrate more readily they still held together after “hours of testing”. Choice gave “flushable” wipes a Shonky award in 2015, saying claims the product could be safely flushed away were false and misleading. That award tipped off the ACCC’s investigation. The ACCC claims that between May 2011 and May 2013, Kimberly-Clark advertised its Kleenex Cottonelle Flushable Cleansing Cloths as being “completely flushable”, “able to be flushed in the toilet” and able to “break down in sewerage system or septic tank”. It has also alleges that the products were falsely advertised as being made in Australia. Its allegations against Pental are that between February 2011 and August 2016 it advertised its White King Power Clean Flushable Toilet Wipes as a “flushable toilet wipe” and claimed they were “made from a specially designed material, which will disintegrate in the sewage system when flushed, just like toilet paper”. In a statement to Fairfax Media, Kimberley-Clark Australia said it would fight the allegations on the basis that “our claims that these products are flushable are accurate”. “These products and the current Kleenex Cottonelle Flushable Wipes meet or exceed the requirements set out in [internationally recognised] flushability guidelines, which are the only widely accepted guidelines for assessing flushability,” it said. Pental said it had inherited the packaging from another company and removed the claims about the product disintegrating like toilet paper after conducting its own review in 2014. “This was well prior to any ACCC investigation,” it said. “Pental is therefore disappointed that the ACCC has decided to issue proceedings, despite Pental’s proactive approach in removing the claims of concern to the ACCC and the fact that other larger multinational companies continue to sell similar products labelled as ‘flushable’”.

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