This article proposes a mathematical-based framework for power system stabilizer service pricing/valuation in an electricity market. For this purpose, the excitation system service, in response to operating point change, is modeled as load. Such modeling allows the valuation of excitation system service by means of the marginal price cost. The proposed method captures the normalized rotor angle and voltage deviations indices to value the automatic voltage regulator-power system stabilizer dynamic service. Development of such load-based model for stability service gives rise to an appropriate financial compensation mechanism for the generators, in return for their services. The proposed modeling provides an opportunity to modify the independent system operator objective function. Modification of the independent system operator objective function is done by adding two new terms regarding active and reactive powers, explaining the automatic voltage regulator–power system stabilizer service, and several new related constraints. The proposed modeling scheme could also successfully address the power system stabilizer robustness valuation in the market. Efficiency of the proposed strategy/objective function has been verified on two test systems in an electricity market. Simulation results reveal that the proposed method appropriately separates power system stabilizer service from the generation re-dispatch in response to operating point change.
