Abstract
This article presents a new algorithm for analyzing the effects of wind generation uncertainties on short-term power system operation. Monte Carlo simulation is used to obtain a set of wind generation scenarios, and then the scenario reduction algorithm is applied to obtain a reduced set of scenarios. These reduced scenarios are then incorporated into the unit-commitment problem formulation with a locational marginal price based electricity market settlement and a dispatch model to examine the effects of wind generation on electricity market prices, load cleared, social welfare, and system capacity.