  We introduce a stochastic model that describes the quasi-static dynamics of
an electric transmission network under perturbations introduced by random load
fluctuations, random removing of system components from service, random repair
times for the failed components, and random response times to implement optimal
system corrections for removing line overloads in a damaged or stressed
transmission network. We use a linear approximation to the network flow
equations and apply linear programming techniques that optimize the dispatching
of generators and loads in order to eliminate the network overloads associated
with a damaged system. We also provide a simple model for the operator's
response to various contingency events that is not always optimal due to either
failure of the state estimation system or due to the incorrect subjective
assessment of the severity associated with these events. This further allows us
to use a game theoretic framework for casting the optimization of the
operator's response into the choice of the optimal strategy which minimizes the
operating cost. We use a simple strategy space which is the degree of tolerance
to line overloads and which is an automatic control (optimization) parameter
that can be adjusted to trade off automatic load shed without propagating
cascades versus reduced load shed and an increased risk of propagating
cascades. The tolerance parameter is chosen to describes a smooth transition
from a risk averse to a risk taken strategy...
