  We consider a general power market with price-sensitive consumer bids and
non-convexities originating from supply (start-up and no-load costs, nonzero
minimum output limits of generating units, etc.) and demand. The convex hull
(minimum-uplift) pricing method produces the set of power prices that minimizes
the total uplift payments to the market players needed to compensate their
potential profits lost by accepting the centralized dispatch solution. All
opportunities to supply (consume) any other output (consumption) volumes
allowed by market player individual operational constraints are considered as
foregone in the convex hull pricing method. We modify the convex hull pricing
algorithm by defining for each market player a modified individual feasible set
that is utilized in the lost profit calculation. These sets are based on the
output (consumption) volumes that are economically and technologically feasible
in the centralized dispatch. The new pricing method results in the generally
different set of market prices and lower (or equal) total uplift payment
compared to the convex hull pricing algorithm.
