  Traditional electric energy markets do not explicitly model generator
contingencies. To improve the representation of resources and to enhance the
modeling of uncertainty, existing markets are moving in the direction of
including generator contingencies and remedial action schemes within market
auction models explicitly. This research contributes to the market design realm
by providing detailed analysis of impending changes, it provides insightful
guidance in understanding the market implications, and it provides
recommendations on necessary changes to ensure a fair and transparent market
structure. A primal (and the corresponding dual) formulation that accounts for
the proposed changes to the auction model is provided to enable a theoretical
analysis of the anticipated changes including the effect on market prices,
settlements, and revenues. The derivation of the prices and the dual
formulation are based on leveraging duality theory from linear optimization
theory. A comparison to existing market structures is also included. The
primary impact of the proposed changes includes the addition of a new
congestion component within the traditional locational marginal price, which
reflects the influence of congestion during the post-contingency states for the
modeled critical generator contingencies.
