844
Congestion Management of Power Systems under
Deregulated Operation
P. Raja, K. S. Swarup
Abstract-- Power System Deregulation and Restructuring has
introduced competition in generation and forced the electric
utilities to transform into independent generation, transmission
and distribution companies. Transmission Congestion
Management is concerned with the controlling of the
transmission system so that transmission limits are observed.
This paper presents the formulation of the optimal power flow
and its application for transmission congestion management.
Two case studies of 3 Bus system and 11 zone system are
considered to illustrate congestion management under
deregulation. Congestion cost due to transmission constraints
and line losses are calculated Calculation of wheeling charges
using transmission pricing methods is described in detail.
Index Terms-- Power System Deregulation, Transmission
Congestion Management.
I. INTRODUCTION
Electric power industry has been dominated by large utilities
that have an overall authority over all activities in generation,
transmission and distribution of power, referred to as
vertically integrated utilities. During the nineties, many
electric utilities and power network companies world-wide
have been forced to change their ways of doing business,
from vertically integrated mechanism to open market system.
This kind of process is called as Deregulation or
Restructuring.
The first step in the restructuring process has been the
separation of the transmission activities from the electricity
generation activities. The subsequent step was to introduce
competition in generation activities by various models [2]
such as Monopoly, Purchasing Agency, Wholesale
Competition and Retail Competition. Implementation of the
transmission management [1] is quite complex in itself, as it
involves the management of various issues like congestion,
transmission tariff and transmission losses.
Among the various models used in the restructured operation
of power systems, Purchasing Agency and Bilateral
Transaction models have been considered. The load is
considered as non-price elastic in the Purchasing Agency
model and price elastic in the bilateral transaction model. In
P.Raja is with Department of Electrical & Electronics Engineering, PSNA
College of Engineering, Dindgul., TN.
K. Shanti Swarup and K. Ramar are with Department of Electrical
Engineering, Indian Institute of Technology, Madras
(swarup@ee.iitm.ernet.in)
NATIONAL POWER SYSTEMS CONFERENCE, NPSC 2002
and K. Ramar
this Purchasing Agency model generating companies provide
their capabilities and generator cost coefficients, while the
distributing companies provide their requirements to the
Independent System Operator (ISO) who in turn gives the
power scheduling.
In this paper the problem of congestion management in
deregulated environment is solved using Optimal Power Flow
method. Congestion cost due to transmission constraints and
line losses are calculated. Computation of wheeling charges,
to be paid to parties ( whose transmission lines are being used
for the wheeling power between the seller and buyer) is an
important study in restructured operation. Simulation
examples are illustrated for a 3 bus system and 11 zone 12
bus system.
II. CONGESTION MANAGEMENT
Three methods are in existence to accomplish the task of
managing the congestion in a transmission system. They are
Optimal Power Flow model, Price Area Congestion control
model and U.S Transaction based model. Each maintains the
power system security but differs in its impact on the
economics of the energy market. Optimal power flow model
is most complex, arguably the most accurate and effective
congestion management method for strongly networked
transmission system. A full optimal power flow includes the
effects of reactive power, transformer taps and phase shifters
that can affect congestion.
III. FORMULATION OF THE OPF
Objective Function
The objective function used in OPF is the minimization of the
generation costs. That means this optimization problem will
give the minimum cost of generation in the output. The
objective function based on generation operating cost can be
expressed as,
NG
J = ∑ C (P )
i =1
i i (1)
where
NG = Number of Generators
Ci(P i) = Fuel cost function
The minimization of eqn 3.1 will be subjected to equality and
inequality constraints.
INDIAN INSTITUTE OF TECHNOLOGY, KHARAGPUR 721302, DECEMBER 27-29, 2002 845

Equality Constraints Congestion Cost

The network equations obtained from the basic Kirchoff’s
Laws governing the loop flow and nodal balances as follows:
In the Purchasing Agency model, the generating companies
send a cost function and those wishing to purchase the load
Pi − PDi = ∑ Vi V j Yi , j cos(θ i , j + δ i − δ i ) ∀ will send their requirements to the ISO. The ISO has a
j complete transmission model and can do an OPF calculation.
i=1…….,N; i ∉ slack (2)
The zone prices determined by OPF are used in the following
manner.
Qi − QDi = −∑ Vi V j Yi , j sin(θ i , j + δ j − δ i ) ∀
j
- Generators are paid the zone price for energy.
- Loads must pay the zone price for energy.
i=1…….,NL (3)
If there are no lines that are congested, then the zone price for
where
all zones will be equal. In that case, any increase in load may
be met by an increase in generation in another zone or by an
V - Bus voltage increase in other generators in many zones. The generators
δ - Angle associated with V that would increase to supply the next increment of load are
Yi,j - Element of bus admittance matrix the lowest cost generators, which are still free to move up,
PD, QD - Real and Reactive power demand (i.e.) the generators not at their maximum output.
NL - Number of PQ buses
When congestion occurs, zone prices across the system are
Inequality Constraints: different. This because the increase in load in a zone may not
Generating Limits come from the lowest cost generators due to the fact that a
contingency or interface limit prevents the generation from
Pi Min ≤ Pi ≤ Pi Max ∀ i ε NG (4) increasing. The transmission losses also have been considered
to calculate the congestion cost. With no congestion the
following holds true:
QiMin ≤ Qi ≤ QiMax ∀ i ε NG (5)
where
max th
∑ λ PD
zones
i i = ∑ λ PG
zones
i i (8)
Pi - Max Real Power Gen at i bus
Pimin - Min Real Power Gen at i th bus
Qimin - Min Reactive Power Gen at ith bus That is, all the money of the money collected by the pool
Qimax - Max Reactive Power Gen at i th bus from the loads goes to pay the generators.

Bus Voltage Limits ∑ λ PD

zones
i i ≠ ∑ λ PG
zones
i i (9)

Vi Min ≤ Vi ≤ Vi Max ∀ i=1…., NL (6)

where
where

Vimax – Maximum voltage at i th bus λi - Zone price $/MW.

Vimin – Minimum voltage at i th bus
Power Flow Limits:
Pi , j ≤ PMax
i, j ∀ Yi,j≠0 (7)
where
Pi,jmax – Maximum Power flow limit between the buses i and
j.
In the Optimal Power Flow method, the Lagrange Multiplier
associated with each constraint represented by the power flow
equations is the derivative of the total cost with respect to
increase in the zone’s power. The derivative is considered as
the instantaneous price of the next small increment in power
or simply the zone price in $/MW.
PDi - Real power demand at i th zone
PGi – Real power generation at i th zone
Case Study I: 3 Bus System
To illustrate the congestion management and the congestion
cost calculation a 3-zone and 11zone system are taken for the
analysis. The three-zone system having one generator at each
zone and the third zone is having one load of 200MW.
In this 3-zone system, first and second zones are having the
maximum generating capacity of 200MW. The third zone is
having the maximum generation of 150MW and 200MW
load. Among the three cost coefficients of the first generator
is less compare to other two.
846 NATIONAL POWER SYSTEMS CONFERENCE, NPSC 2002

Tables 1 and 2 show bus data and the branch for the three Costs are further increased, as the wheeling party has to
zone system The seller and buyer data are provided in tables reschedule its own generation, due to the wheeling power.
3 and 4 respectively. The important issues pertaining to power wheeling is the
sharing of benefits, between the buyer and seller, from these
transactions and the pricing of the power transaction. In this
TABLE 1 research, the Purchasing agency model is considered for the
study of restructuring. Congestion management and wheeling
SYSTEM DATA FOR THREE ZONE SYSTEM.
charge computation are the two main topics described in this
Zone Total Total Generator Cost Coefficients work. Congestion costs, due to the congestion management,
Gen. Dem- are calculated by considering the transmission losses.
Wheeling charges are also calculated by using two different
and
methods and compared.
G D A B C

MW MW $ $/MW $/MW2

1 200 0 0 10 0.004

2 200 0 0 15 0.006

3 150 200 0 16 0.008

TABLE 2
TRANSMISSION NETWORK DATA
Resistan Reactance Line
Line Number ce In P.U. Capacit
In P.U y (Mw)
From To

1 2 0.03 0.001 50
1 3 0.03 0.001 100
2 3 0.03 0.001 50
Fig. 1. 3-Zone System without line Limits and Losses
TABLE 3
SELLER DATA
Zo Actual Gen. Collected
ne Generat- Capacity Zone Money Figure 1 shows the 3 zone system without lime limits and
ion (Mw) Price ($) without losses.
(Mw) ($/Mw)
1 200.00 200.00 11.600 2320.00
2 0.00 200.00 11.600 0.00
3 0.00 150.00 11.600 0.00

Total
200.00 2320.00

TABLE 4
BUYER DATA
Zone Demand Money
Number (Mw) Zone Price Paid
($)
($/Mw)
3 200.00 11.600 2320.00

IV. WHEELING CHARGES

Wheeling is the transmission of real power and reactive
power from a seller to a buyer through a transmission
network of a third party. The third party, which carries the Fig. 2. 3-Zone System without Line Limits and With Loss
power is called the wheeling utility. Since it has to bear the
cost of losses from such transactions, it should be paid for its
service [1]. Figure 2 shows the optimal power flow solution of the 3 zone
system without line limits and with losses.
Figure 3 show the solution of OPF with line limits and losses.
INDIAN INSTITUTE OF TECHNOLOGY, KHARAGPUR 721302, DECEMBER 27-29, 2002 847

Figure 4 shows the diagram for the 11 zone system

considered. The data for the 11 zone system is provided in
[2].The system comprises of 12 generators at 11-zones. There
are two transactions in addition to the ‘native’ load. The total
system demand is 11500MW. The transmission network is
also responsible for the generation dispatch functions with a
cost-minimization objective.

Figure 5 shows the 11 zone system modeled as a 12 bus

system in power world simulator.

Fig. 3. 3-Zone System with Line Limits and Without Loss

Table 3 shows that the minimum cost generator one is started

to generate 200MW to match the load of 200MW at zone
three. The load can buy the generation from the lowest cost
generation, because no line is having the line limits. From the
above results the congestion cost can be calculated as
follows: In this case, there is no limit to carry the power from
one zone to another zone. Due this all the zone prices are the
same 11.600 $/MW. So the congestion cost is equal to zero.

Incremental Cost Based Pricing of Transmission Network

The incremental cost based pricing of the transmission
network can be further classified in to two types, namely
1. Short Run Marginal Cost Based Pricing
2. Long Run Marginal Cost Based Pricing
The short run marginal cost of a transmission system i s the
cost incurred on supplying the additional one MW of power
in a transaction. This can be calculated from the difference
Fig. 5. 12 Bus 11 Zone System in Power World Simulator.
in marginal costs at the supply bus and the delivery bus.
This requires complete network representation of the
system. The transaction price can be determined by
multiplying the power transaction with the marginal cost to V. CONCLUSIONS
evolve SRMC based price. The results of transmission congestion management study
Transaction price = (power transaction) x (short run under deregulated environment is presented in this paper. The
marginal cost) study was performed for a 3 zone and 11 zone system
respectively. The zone prices across the system are different
In this project the first method is considered for pricing the under congestion. Congestion management and wheeling
transmission network. charge computation are the two main topics considered in this
Case Study II: 11 Zone System work. The amount each utility contributes towards wheeling
are calculated.

VI. REFERENCES
[1]. Kankar Bhattacharya, Math H.J Bollen, Jaap E. Daalder, ‘Operation of
Restructured Power Systems”, Kluwer Academic Publishers”, Boston, 2001.
[2]. Richard D. Christie, et-al, “Transmission Management in the
Deregulated Environment”, Proceedings of the IEEE, Vol. 88, No. 2,
February 2000, pp. 170-195.
[3]. Paul R. Gribik et-al, “ Transmission Management and Pricing with
Multiple Seraprate Energy Forward Markets”, IEEE Transactions on Power
Systems, Vol. 14, No. 3, August 1999, pp. 865-876.
[4]. P. Raja, “Congestion Management Studies in Deregulated Power
Systems”, M.Tech Thesis, Department of Electrical Engineering, Indian
Institute of Technology, Madras, January 2001.

Fig. 4. 11-Zone System with 1000 Mw Transaction