Load Serving Entity's Decision Making in Electricity Markets

Load Serving Entity (LSE) is a new player in the electricity market, emerging due to deregulation and restructuring of power supply systems. It supplies electricity to the consumers that do not participate directly in the Wholesale Electricity Market (WEM). It performs the role of intermediator between consumers and generators/ producers of electricity by procuring electricity from WEM and selling it to consumers Electricity procurement incurs cost and electricity selling generates revenue. The difference between revenue and cost is profit. This profit margin is generally narrow . LSE maximizes this difference by minimizing procurement cost and maximizing revenue. Hence, LSE adopts a decision making process for optimal procurement and sale price decisions with an aim to minimize cost and maximize revenue. Evolving competition in the electricity markets comes up with opportunities and challenges for LSEs. Concerns of effective and strategic decision making have been raised to exploit benefits from opportunities while managing/ handling associated challenges. This is driving enormous interest of research community towards strategic decision making.