Financial impacts of congestion relief measures under different congestion management schemes

Abstract

This paper aims at evaluating the financial benefits brought about by congestion relief measures under deregulated environment. Two representative congestion mechanisms is investigated: one taking into account transmission constraints and one not. The first mechanism presented is a typical example of market settlement mechanism taking fully into account power transmission constraints, locational marginal pricing (LMP), which is widely adopted by various regional markets in the USA and some other countries in the world. The second mechanism presented, is a contrasting pricing mechanism that employs a "congestion uplift" which is an additional premium that all consumers should pay on top of the system marginal price. This pricing mechanism is widely used in some European countries, e.g. England and Spain. These two pricing mechanisms result in different quantity of congestion charges