Review of Methods to Calculate Congestion Cost Allocation in Deregulated Electricity Market

Abstract

With maturing deregulated environment for electricity market, cost of transmission congestion becomes a major issue for power system operation. Uniform Marginal Price and Locational Marginal Price (LMP) are the two practical pricing schemes on energy pricing and congestion cost allocation, which are based on different mechan-isms. In this paper, these two pricing schemes are introduced in detail respectively. Also, the modified IEEE-14-bus system is used as a test system to calculate the allo-cated congestion cost by using these two pricing schemes.