Pricing transmission congestion to alleviate system stability constraints in bulk power planning

The quantity of power traded in the wholesale energy market went from almost nothing in 1994 to over 800 TWh in 2000 but there has been relatively little investment in transmission infrastructure during that time. Consequently, the transmission system is becoming increasingly more constrained resulting in reduced import capability, heavily loaded lines, and stability problems. Any effort to reduce transmission congestion may provide benefits in customer choice and economic efficiency in power operation, but it will also provide new challenges for bulk-power system reliability. As generation continues to increase in localized areas, export limits will be encountered initially in the form of thermal constraints on transmission lines. Continuing to add generation into a constant effective system impedance will threaten a system stability limit. The focus of this paper is on developing proper pricing signals that may encourage generator operation in ways favorable to power system security. The well-developed locational marginal pricing concept is adopted as a basis and expanded to include constraints associated with system stability.