Multi-level Modeling of Optimal Development and Pricing in the Gas Industry

  • Nikolay I. Ilkevich Melentiev Energy Systems Institute of Siberian Branch of Russian Academy of Sciences, Irkutsk
  • Tatyana Dzyubina
  • Zhanna V. Kalinina Melentiev Energy Systems Institute of Siberian Branch of Russian Academy of Sciences
Keywords: multi-level modeling, gas supply system, mathematical models, optimal development, pricing issues


This paper studies hierarchical modeling of the optimal development of facilities of multilevel gas supply systems (GSSs), given the general issues of their aggregation and contributes corresponding development and pricing models. The models for the comprehensive development of GSSs are considered at three hierarchical levels: 1) structure optimization and investment processes; 2) optimization of seasonal gas consumption, reliability analysis and synthesis; 3) optimization of parameters of a facility with its reliability factored in, as illustrated by the main gas pipeline. Three pricing models are proposed: determination of retail prices and tariffs for natural gas for certain categories and groups of consumers; determination of wholesale gas price components for federal subjects of Russia; determination of supply and demand equilibrium between natural gas suppliers and consumers. The development and pricing models were put to test to calculate the optimal volume of gas production and transportation taking into account seasonality of consumption and reliability of GSSs equipment performance, as well as to set natural gas prices for federal subjects of Russia.