Variation index to measure transmission congestion impact in LMP-based electricity market

Transmission congestions are one of the key elements affecting electricity market performance, and abnormal high price and local market power are often correlated with the congestions. A variation index is proposed to assess the impact of individual transmission congestion on the electricity market, and it reflects individual transmission congestion´s ability to cause price difference across the power grid weighted by either generation or load. Unlike congestion cost measurement which nets off the impact of generation and load and may give inaccurate indication of the congestion impact, the proposed congestion variation index focuses on the un-netted price deviation effects of the congestions. Therefore, a few key congestions can be readily identified among a potentially large number of congestions by the rank of the index, and these key congestions can provide the basis for wide applications such as market performance assessment, market power mitigation, economic transmission expansion, etc.