Identifying Regional Behavior Impacts of Electricity Generation in Electricity Market with SSNIP and Granger Test

A brief glace at the electricity market and considering the methods of supervising its exploitations in different countries illustrate that this market had been managed monopolistically by governments for several years. Regarding restructuring and evolution in the electricity markets happened in many countries in recent years, it is necessary to achieve methodologies in which some trends like market power could be analyzed (Heydari K. 2003). Then decision makers can easily make some decision to prevented unfair behaviors in electricity market and direct it to a pure competitive condition. A competitive market is characterized as: 1. When a quantity of production of a producer reduced, simply, another producer could replace that. It means that there is an appropriate reservation in the network. 2. New producers could enter to the market easily. 3. The numbers of competitors are enough. It means that they sell their production according to the market price and it also mean that it is them that put the price and no company could change the price by changing the quantity of its production. 4. Market and production information are available as free for sellers and buyers. Although the attempt to achieve a completely competitive market has not been succeed but it improved the condition of this market considerably. In this way presenting the proper definition of the market, recognizing present markets and relationship between these markets is necessary. Without it, any assessment regarding the market power and changing prices could result confusion in market activities. Furthermore because of particular characteristic of electricity to be non-storable product in large scale, electricity market has to be controlled and monitored by the governments to detect and prevent exercising any market power. In order to achieve this goal, there are some controls and antitrust activities which are done inside and outside of electricity market. A group of techniques are also employed for analysis of prices relation and model design for finding market’s boundaries by Granger and SSNIP test. In this chapter, the conceptions concerning market definition, market power, SSNIP test (as a mechanism for market defining and a good tool for those who provide prices in order to identify related markets they are engage it) and granger test (as a statistical technique using for defining dependent and independent markets and relations between these markets) are