Line impact cost concept to calculate congestion costs in deregulated electricity market

Congestion in lines forces electricity markets to operate with a costlier generation schedule. It is essential to charge the loads responsible for congestion appropriately. This paper proposes a method to allocate congestion costs to loads and calculate incremental congestion costs. This method quantifies the impact of congested lines on optimal generation costs by computing a newly proposed Line Impact Cost for each congested line. Using these Line Impact Costs, total system congestion cost is apportioned to each congested line. Using topological load distribution factors, congestion cost associated with each congested line is apportioned to each load. The sum of such costs for a load, one from each line, represents the congestion cost for that load. This paper also analyzes the relationship between Incremental Congestion Cost and the electrical distance separating loads and congested fines bringing out an empirical relation between them. Performance of the proposed method and its results on a 7-bus and the modified IEEE RTS-79 systems are reported and discussed.