Overview of Electricity Market Monitoring

IntroductionThe monitoring of the electricity market and preventing incorrect usage behavior are well-known issues in the competitive electricity market (see for example Marulanda et al., 2006; Nagypal et al., 2015; Strielkowski and Lisin, 2016; Nagaj, 2016) that are well-embedded into the strategy of sustainable energy development (Streimikiene et al., 2016). The monitoring of the electricity market plays a key role in the free electric energy market (Kasperowicz, 2011; Lisin et al., 2016). Supervisory actions are important for the System Operator and the Regulatory Commissions in order to ensure the efficient market performance. For Federal Energy Regulatory Commission in USA (Haymes, 2000), the market monitoring has been identified as a standard market design component and a basic function in the deregulated electricity market. According to Rahimi et al. (2003) and London Economics et al. (2007), the electricity market monitoring could be organized as an internal system or an institution in the Independent System Operators (ISO) structures, as well as could function also outside of the ISO structures and can provide service for ISO or other recipients (Goldman and Lesieutre, 2004).Furthermore, the availability of a well-developed monitoring system would also help agents to optimize their bidding strategies (David and Wen, 2000; Dun-nan et al., 2006; Pires Manso et al., 2015). Currently agents are concentrating on increasing their efficiency in order to maximize profits through a complicated system of product and sales management. Due to the fact that the process of decision making is very complex, whereas complete information is often unavailable, the electricity market monitoring appears to be difficult (London Economics, 2007). Therefore, if the market monitoring system functions properly, the transparency and reliability of the information concerning the electricity market dynamics may be ensured.The main activities of market monitoring as described in Rahimi et al. (2003), London Economics et al. (2007), (Dehdashti, 2005) and (Guler et al., 2005) include: 1) Detection of attempts to exercise market power and fraudulent behavioral, 2) Monitoring of market performance, 3) Identification of market design imperfection, 4) Transmission and generation blackout controlling, 5) Market participants' behavioral monitoring (activities and transactions).After an in-depth analysis of the existing literature devoted to exploring the issue of electricity market monitoring, it is possible to state that the information regarding the general methods of monitoring are available. However, there is a deficit of information related to the monitoring techniques focused on economical parameters of Spanish electricity market. Furthermore, the conducted analyses of the market structure and of the available source data related to Spanish power system have proven that that there is a need for a modification or a creation of new methods and indices, which shall be applied in order to correctly monitor the economical parameters of Spanish electricity market.This paper firstly introduces the concept and functions of the electricity market monitoring system (section I). Subsequently, the main methods and indices applied to the monitoring (market power, market performance and behavioral monitoring) are outlined (section II). Section III outlines the particularities of Spanish market. Subsequently, section IV presents conclusions.1. The global overview of the monitoring systemThe result of the extensive analysis of the existing literature on market monitoring is represented graphically in Figure 1.The Figure 1 presents the market monitoring framework: the elements and the correlation between them. This extensive analysis is based inter alia on the following sources: London Economics et al. (2007), Goldman and Lesieutre (2004), Dun-nan et al. (2006), Chakrabarti et al. (2008), Newbery (2004), Asgari et al. …