The Effects of Power Plant's Fuel Prices Adjustment on Electricity Prices in a Restructured Market: System Dynamics Approach

Following the rise of the fuels that power plants consume in the deregulated market، an increase in the electricity prices would be expected. This article tries to study the effects of power plants’ fuel prices adjustment on the amount of increase in electricity prices in the market. The components of the deregulated power market were modeled in the systems dynamics method with the aim of finding a reasonable answer to the question of this research. The model encompasses three parts، namely demand، price and production run through powersim software. The change in the prices of fuels delivered to power plants is considered as the policy variable of the model. The results of running the model illustrated that it is anticipated that the price of electricity will reach 409 rials in a kilowatt per hour by the end of the period providing that the power plants’ fuel prices are not adjusted. If the prices of fuels delivered to power plants are adjusted، the power market prices will reach 556 and 585 rials in a kilowatt per hour by the end of the period، assuming that the price growth may be by 5 or 8 percent، respectively. In the final part of the paper، the effect of economic growth increase as well as that of value added taxation on power market is analyzed in the framework of a suggestion model. Therefore، in such a case، assuming a 6 and 8 percent price growth، the prices of power market will reach 611 and 641 rials in a kilowatt per hour by the end of the period.