Congestion rents and FTR evaluations in mixed-pool-bilateral systems

Minghai Liu, George Gross

Research output: Contribution to journalArticlepeer-review


Evaluation of key metrics for congestion management, including the congestion rents and the financial transmission rights (FTR) payoffs, requires the efficient allocation of transmission services and the calculation of appropriate locational marginal prices (LMPs). This requirement is particularly acute when there are bilateral transactions coexisting with the centralized pool markets. We propose a new formulation for this purpose, which captures explicitly the contribution of the bilateral transactions to the social welfare. The proposed formulation effectively integrates the pool market and the bilateral transactions on a consistent basis and results in the more efficient allocation of the transmission resources than the conventional tool. We assess analytically the capabilities of the proposed formulation and solution and quantify the improvements in the evaluations over those done using the conventional approach. Such improvements are also illustrated using simulation results on a wide range of test systems including the IEEE 118-bus network.

Original languageEnglish (US)
Pages (from-to)447-454
Number of pages8
JournalInternational Journal of Electrical Power and Energy Systems
Issue number8
StatePublished - Oct 2008


  • Congestion management
  • Congestion rents
  • Financial transmission rights (FTR)
  • Locational marginal prices
  • Mixed-pool-bilateral systems

ASJC Scopus subject areas

  • Energy Engineering and Power Technology
  • Electrical and Electronic Engineering

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