The introduction of competition into the electricity supply industry has fundamentally changed the way it works. In light of these changes this book provides a clear and comprehensive explanation of the basic principles underpinning the design and operation of modern competitive electricity markets. Assuming no prior knowledge of economics, Fundamentals of Power System Economics discusses the organization of markets for electrical energy as well as the operational and investment decisions that companies participating in these markets must make. ÍNDICE:Preface. Introduction. Why Competition? Dramatis Personae. Models of Competition. Open Questions. Further Reading. Problems. Basic Concepts from Economics. Introduction. Fundamentals of Markets. Concepts from the Theory of the Firm. Types of Markets. Markets with Imperfect Competition. Further Reading. Problems. Markets for Electrical Energy. Introduction. What is the Difference between a Megawatt-hour and a Barrel of Oil? The Need for a Managed Spot Market. Open Electrical Energy Markets. The Managed Spot Market. The Settlement Process. Further Reading. Problems. Participating in Markets for Electrical Energy. Introduction. The Consumer?s Perspective. The P roducer?s Perspective. Perspective of Plants with Very Low Marginal Costs. The Hybrid Participant?s Perspective. Further Reading. Problems. System Security and Ancillary Services. Introduction. Describing the needs. Obtaining Ancillary Services. Buying Ancillary Services. Selling Ancillary Services. Further Reading. Problems. Transmission Networks and Electricity Markets. Introduction. Decentralized Trading over a Transmission Network. Centralized Trading over a Transmission Network. Further Reading. Problems. Investing in Generation. Introduction. Generation Capacity from an Investor?s Perspective. Generation Capacity from a Customer?s Perspective. Further Reading. Problems. Investing in Transmission. Introduction. The Nature of the Transmission Business. Cost-bas