Generation control and ED minimize the current cost of energy production and transmission within the range of available controls. Energy management is a supervisory layer responsible for economically scheduling production and transmission on a global basis and over time intervals consistent with cost optimization.

For example, water stored in reservoirs of hydro plants is a resource that may be more valuable in the future and should, therefore, not be used now even though the cost of hydro energy is currently lower than thermal generation.

The global consideration arises from the ability to buy and sell energy through the interconnected power system; it may be more economical to buy than to produce from plants under direct control. Energy accounting processes transaction information and energy measurements recorded during actual operation as the basis of payment for energy sales and purchases.

Energy management includes the following functions:
. System load forecast: Forecasts system energy demand each hour for a specified forecast period of 1 to 7 days.

. Unit commitment: Determines start-up and shut-down times for most economical operation of thermal generating units for each hour of a specified period of 1 to 7 days.

. Fuel scheduling: Determines the most economical choice of fuel consistent with plant requirements, fuel purchase contracts, and stockpiled fuel.

. Hydro-thermal scheduling: Determines the optimum schedule of thermal and hydro energy production for each hour of a study period up to 7 days while ensuring that hydro and thermal constraints are not violated.

. Transaction evaluation: Determines the optimal incremental and production costs for exchange (purchase and sale) of additional blocks of energy with neighboring companies.

. Transmission loss minimization: Recommends controller actions to be taken in order to minimize overall power system network losses.

. Security constrained dispatch: Determines optimal outputs of generating units to minimize production cost while ensuring that a network security constraint is not violated.

. Production cost calculation: Calculates actual and economical production costs for each generating unit on an hourly basis.

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