Power market is one of the important issue concerning the reform of the modern electricity. With the separation of power plants and electric nets as well as the gradual foundation of electricity markets, that being an independent power provider, how to realize, analyze and control generating costs and bid according to the costs exactly and validly is still a bran-new field in research.Firstly, the methods of analyzing the costs of power systems were presented. Based on the analysis of characteristics of one-part tariff and two-part tariff, it was concluded that pricing the fixed cost and variable cost separately in the form of capacity and energy, energy price participating in competition.Then, costs analysis about hydro units and thermal units were introduced. The start-up costs of units must be considered as a part of variable costs. This paper presents how to consider much costs and models for calculating of them during the unit's start-up process. Besides, two methods of allocating the units' start-up cost, i.e., the average allocation method and the load allocation method, were given so that amending bidding curve.Finally, on the basis of analyzing component characteristics of the start-up costs, this paper proposed the mathematical model solved by dynamic programming approach with generators' start-up costs taken into consideration. Through computation with an example, it is proved that this method is right and effective.
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