In this project we consider a combined model of a hydro-electric storage and production facility and of the day-by-day electricity bid market, involving day-ahead bids of the energy producers. This coupled model has been introduced in [LWM13]. The production facility consists of a number of interconnected water reservoirs. Electricity can be produced from these reservoirs by releasing water from a reservoir situated at higher elevation to one at lower elevation. It can also be stored in the form of potential energy by pumping water from a reservoir at lower elevation to one at higher elevation. The energy conversion efficiency of these processes is lower than 100%, however, and running the water in a cycle leads to a certain loss. The reservoirs are filled by rain and other natural processes, which are modeled as a stochastic process. This process is also coupled to the stochastic process modeling the electricity price. When exploiting the reservoirs, the operator has to meet certain constraints such as not exceeding the capacity of each turbine and not emptying a reservoir completely. Currently the reservoirs are assumed to be ordered linearly, as depicted in the figure below.