This paper demonstrates a method to how reserve capacity and cost allocation could be determined in a pool-based and disaggregated market model. The method considers both the spinning reserve and interruptible loads as the operating reserve services. In the proposed market, generators and consumers (including participation of interruptible loads) submit offers and bids to the independent system operator. Firstly, the energy market is cleared according to GENCOs' offers and customers' energy requirements. To make; the more competitive market, interruptible customers participate in reserve market and supply operating reserve. It is assumed that the operating reserve market structure cleared in two-stages. Based on the reliability evaluation of the generators, market operator (MO) clears the reserve market. According to the contribution of generation units to the system expected energy not supplied, reserve cost of this level is allocated among them. In the second section of the reserve market clearing, customers can choose their desired reliability requirements. The independent system operator is cleared reserve market such that the required reliability levels of the customers are met. Reserve cost associated with this part is allocated among customers that are willing to have a higher reliability level than the standard level. To determine the share of each consumer from a shortage in the real time operation, Deficiency Factor is introduced. Finally, numerical results are presented to illustrate the impact of the reserve cost allocation and effectiveness of participations’ demand side on the operating reserve market.
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