Short run marginal cost calculation in restructured power system

In many of the developing country restructured power system plays a vital role in electricity market. This paper presents a concept of short run marginal cost in restructured power systems. SRMC is one of the wheeling charge computation methods. How it minimizes the cost of power in a system and how short run marginal cost is efficient in restructured power market are discussed here. This paper also explains about the optimal power flow methods and transmission pricing methodologies. This could be analysed by transaction of power between the many buses. SRMC is determined by using bus incremental cost obtained by interior point algorithm (OPF) in Matlab software. This can be examined with IEEE 14 bus reliability test system.