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As the electric utility industry moves to Regional Transmission Organizations, there are more opportunities for merchant plants in selling wholesale energy to electric utilities. Two alternative bidding regimes are considered: (i) pay-as-bid and (ii) pay with market-clearing bid. With stochastic price-sensitive demand, we show that pay-as-bid has greater average price, but lower price variance than does market-clearing price. Copyright © 2013 John Wiley & Sons, Ltd.