In PWP-056, Bushnell develops a modeling framework for analyzing competition
between multiple firms that each possess a mixture of hydroelectric and
thermal generation resources. Based upon the Cournot concept of oligopoly
competition, the model searches for a sub-game perfect Cournot equilibrium
of a multiperiod hydro-thermal scheduling problem. Using this modeling
framework, Bushnell examines the potential impact of strategic hydro scheduling
in the electricity markets of California and the Pacific northwest.
He finds that some firms may find it profitable to allocate considerably
more hydro production to off-peak periods relative to peak periods. This
strategy is a marked contrast to the optimal hydro-schedules that would
arise if no firms were acting strategically.