A New User-Oriented Method for Congestion
Cost Allocation
Hui Jiang, You-qing Zhou, Jian-chun Peng
Absfmd--The existing transmission congestion cost allocation
methods are almost based on DC flows. The interaction between
P-Q is generally neglected due to its complexity. In addition, the
congestion cost is allocated just to consumers (nodal loads). To
improve the accuracy and equitablity of the existing methods, a
new user-oriented congestion cost allocation method is proposed.
A novel definition of using portion of a power element by a
particular generator is presented based on direct AC flow tracing.
The system congestion cost is allocated to +dative lines, and then
to individual generators according t o their contributions to
system congestion. At last, the congestion cost a consumer has to
pay is determined by its active components absorbed from
individual generators. The proposed method eliminates not only
the merchandising surplus, but also the mutual compensations. It
gives correct economic signals to both generators and consumers.
'The P-Q interaction is taken into account accurately. Simulation
results show that the proposed method is powerful and effective.
Index Terms--congestion management, load flow tracing, nodal
price, optimal power flow
I. ' GTRODUCTION
More and more transactions are utilizing transmission
system in a deregulated environment. The role of transmission
system became centra[. In open access, suppliers and
consumers independently arrange power transaction with each
other according to their own need, and the power flow are
quite different to that in bundled environment, However, the
capacity of the system is limited by physical constraints and
reliability requirements. In the case where not all proposed
transactions are able to accommodate simultaneously. The
congestion management play important role.
Many approaches for the congestion cost allocation and
pricing have become topics of intense discussion ''1-T31, There
are two ways for congestion pricing are usually used: nodal
pricing and buy-back pricing., As discussed in [I], in power
pool, the nodal price consider the congestion at nodes. It
provide signals both to generators and consumers, and it is
economically efficient. But the nodal pricing results in a
merchandising surplus for the PO, it means the monies
collected from consumer payments are in excess of the monies
paid to generators. It is unfair to consumers. Buy-back (uplift)
pricing is introduced as a practical alternative, The congestion
This work was supported by Hunan Province natural science funds of
China
Hui Jiang, You-qing Zhou and Jian-chun Peng are all with the College of
Electrical & Infoniiation Engineering, Hunan University. Changsha 4 10082.
P. R China (e-mail jcpeng@public.cs .hii.cn).
0~7803-7459-2/021$17.00 IC) 2002 IEEE
cost is shared on a pro-rata basis only by consumers, the
congestion price is formed by a uniform price uplift that is
added to the unconstrained market clearing price (UMCP), a
uniform price uplift does not consider the effects on
transmission network which is caused by different consumers
It can not give the correct signals to the consumers. Recently
Aumann-Shapley pricing approach is proposed in [3], it
belongs to buy-back pricing. The method is based on marginal
cost and eliminates the merchandising surplus. It assures
economic efficiency. It is the same as buy-back pricing (uplift)
approach that the congestion cost is only shared by consumers,
It is not reasonable and results in the generators do not care for
the operation condition. All researches about congestion
pricing before all based on direct current power flow which
neglected network losses and reactive power. In the paper,
based on alternative current power flow considering network
losses and reactive power., a new user-oriented method for
congestion cost allocation and pricing is proposed. The
method is not restrict to power pool mode but can be extended
to bilateral mode.
11. CONGESTION COST
The power pool model is studied in the following discussion,
In power pool, the pool operator (PO) should computes the
unconstrained power flow and unconstrained market clearing
price(UMCP),the model for solving the optimal active power
dispatch can be described as follows:
MinF' = iF,(P,)
I=I
S.t. G(P,,D , ) = 0 : I I'
O<PIP,,, : y ;
0 5 Q 5 Qinax :Y y" (4)
where is the total cost of generators in unconstrained
problem. F,(P,) is the cost function of generation at bus i. It is
assumed that no strategic bidding takes place in power pool
and generator bids their actual costs. n is the total number of
network node. Equation (2) represents the total power balance
of the system. The vector 1 is Lagrange multiplier
corresponding to equation (2) and represents the unconstrained
market clearing price (UMCP), which is the same for all buses.
The vector P represents bus active generating. PI,,, is its
upper vector. The vector Q represents bus reactive generating.
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 e,,,, is its upper vector. y 2: , y are Lagrange multiplier
vectors corresponding to ( 3 ) and (4), respectively.
If the unconstrained active power dispatch results in
violations in branch capacity constrains, the PO must adjust
the schedule to relieve congestion by solving the following
' OPF problem:
Min F(' =iF,(P,)
/=I
S.t. G(x) = 0 :I. '
I z Is Z m a x /1 '
0 i P I PI,,, :y p'
02Q Qinax :Yy'
Vmin i V 2 Vmax
where fl is the total cost of generators in constrained problem
(6) is ac power flow equation, where Lagrange
multiplier A" represent the vector of constrained nodal market
clearing price, which are, in general, are different at every
node. Constraint (7) represents the branch capacity constrains
and vector I Z I represents the transmission capacity for lines.
Z,, is its upper vector. Constraints (8) and (9) are the same
as (3) and (4). Vectors ,uc , y ,,' , y qc are dual factors
corresponding to (7) and (8) and (9), respectively.. Vector V
represents the bus voltage. VI,,, is its lower vector . V,,, is its
upper vector. The congestion cost AF can be calculated as
follows:
M = F ~-' F~
(1 1)
111. USING PORTION OF A POWER ELEMENT BY
PARTICULA GENERATOR
The define of using potion of a power element is very
important, it is the basis of congestion cost allocation, In
existing methods the using portion of branch incurred by a
generator is determined by the contribution of the active power
flow. When the reactive power is much smaller than the active
power in power network, the allocation method based on the
define before which neglect the reactive power flows is a
reasonable and defensible approximation, however, the
interaction between reactive power and active power should be
taken into account, especially in low power factor transmission
network. In fact the capacity of transmission line is mainly
limited by the thermal capacity limit, which is determined by
the power losses. So it is more accurate using the contribution
uf = L;/ I
n
c LiI
h=l
Where
U:l represents using potion of element I incurred by
generator m
L t l represents active loss component in branch I caused by
generator m
According to [5], we have:
n
LP,/ =t-I(a,/ x a h l +bml i b h l ) m=1,2,3,...n (13)
h=l h=l
aml , bml represent active and reactive current components
flowing into branch I from generator m. n is the total number
of system generators.
Because the active power losses is the function of active
current and reactive current, the new definition not only takes
the interaction between active and reactive powers into
account, but also eliminates the nonconsistency of the using
portions determined by the existing definitions based on
different ends for a real power element.
IV. CONGESTION COST ALLOCATED TO EACH
GENERATOR
In present reports, the congestion cost always allocated to
the consumers only, the effects causing by the generators such
as the generators power and location are not taken into account,
which resulted in some nodes price is much higher, in addition,
the present methods are almost based on the DC flow,
neglecting the network loss and reactive power. It is unfair. In
the section, based on AC flow, a new method is proposed to
allocate the congestion cost not only to consumers but also to
generators. The total congestion cost is allocated to each
congested lines first using the constraint allocation factors['].
Based on the new definition of using potion of a power
element by a particular generator, the total congestion cost is
normalized to generators. The congestion cost is split into two
parts: consumer -side and generator-side share proportionally.
On the consumer-side, the congestion cost then allocate to
individual load according to the relative contribution of each
generator to loads.
A . Congestion cost allocated to active lines
We first define constraint allocation factor for constraint I
(line L') aI as follows:
PIG)
=r
"1 (14)
CPlG
/=I

of power loss to determine the using potion, which has a more Then, the congestion cost allocated to line 1 ( AFI ) is
clear physical mean. AFl = AF x al (15)
Using potion of a power element incurred by a generator is
Where pl is dual factor for constraint I (line I) corresponding
defined as the ratio of the active power loss on the element
h
incurred by the generator to the total active power loss on the to (7). It is obvious that C a , = 1 . Notation b is the total
element. /=I
number of the system lines.

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B. Congestion cost normalized to each generator $Dkm < P, , the curtailment
It is easy to obtain:
According to the new definition, the active loss allocation is k=l
the basis of congestion cost allocation, For congested line I, n
(P, - Dkm.) is active power losses.
the congestion cost allocated to it is AFl . The congestion cost k=l
-, Definition: the proportion of the active power component
component Tii contributed to line 1 by generator m is:
absorbed by the load at bus k from generator rn to the total
TZ, = U f , h F , (16) generator rn supplying to load is pkm
Summation of T f / to all branches yields the total Dmk
Pkm =n
congestion cost ( T," ) for generator m: c
h=l
Dhrn
b
n
T," = CU,$AFl (17)
l=I For generator m, we can obtain Pkm= 1 .
k=l
The congestion cost normalized to each generator side then
As described in section 3, the congestion cost corresponding
hrther allocated to the generator and consumers or between
two sides of transactions on a pro-rata basis which they all to generator m that consumers should pay is Tf, , we can
agree with. allocated the cost to each load in proportional of the active
power component absorbed by the load from generator m..
C. Congestion cost allocated to each generator
For load k, assume the congestion cost corresponding to
Assume the ratio of the congestion cost allocated to
generator rn to the total congestion cost normalized to generator rn is C&
b
generator rn is p . Then the congestion cost C i allocated to C&=Pkmqi, " D " k x ( l - p ) x C u : i A F [ (22)
/=I
generator rn is Dhrn
h=l
Cj = pT," (1 8)
Summation of C& to all generators yields the total
Assume the difference between T," and 'C: is T:, .
congestion cost C,d that the load k should pay
T:, = T A - C,f, =(I - p)T: (19)
Then the difference should be allocated to bus loads to
m=l
which generator rn supplies electricity.
It is obvious that the summation of C; to all generators VI. NUMERICAL RESULTS
yields p A F l . The section presents an illustrative example based on a five-
bus test system to show the results using different congestion
V. CONGESTION COST ALLOCATED TO EACH cost allocation methods. The five-bus test system is depicted in
CONSUMER Fig. 1.
The congestion cost can allocate to each consumer by the
contributions of consumer incurred by individual generator. 100+j48 100+j20.3 180+j82
The section focuses on discussing which consumer contributes
to the congestion and how much it should pay.
In [4],[5], the principals of contributions of individual
generators to complex power losses and flows are discussed. N

Based on the complex power flow tracing, the algorithm is

given to determine the contributions of individual complex
.+
-.
-
N
power sources to loads.
For active load Dk at bus k, assume the contribution
I"/ 2.62+j10.62
incurred by generator rn is Dk, . We can obtain: I I

2~~ = D ,
m=l
For generator rn, the power from generator m absorbed by
n Fig I 5-bus system
loads is D, ,
k=l
An hour period is considered in the simulation. Assume the
system operation state remains consistent The nodal demands
(MVA) and branch impedances (n)are shown in Fig.1. There
are two generators GI1,GI2at bus 1, and two generators GSI,

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G52 at bus 5. The electricity prices of each generator are as The paper presents a new method for congestion cost
foI Iows . allocation based on Lagrange multiplier. The congestion cost
Gii: 5($/MWh), G12: IS($/MWh), is allocated to both generators and consumers that have
G5i: IO($/MWh), G52: 20:($/MWh). contributions to the system congestion. As a result, it is
The upper limits of generating are meaningful economically and intuitively. Compared with the
PGI I m a x = l 5(MW), PGiZrnax=l 5(MW) existing methods, it is more reasonable and it eliminates not
PC351max=1 5(MW), PG52rnax=115(MW) only the merchandising surplus, but also the mutual
The unconstrained schedule results in overload of line 1-2 and compensations. The P-Q interaction is taken into account
5-4. The upper limits of both lines are: directly and accurately. The new method has clarity physical
I.zmax= 105.8(MVA), ZS-4max= 1 60.6(MVA).
Z mean. It is fair enough and easy to practice. It is not restricted
In the constrained schedule line 1-2 and 5-4 flow limits are to power pool, but can be extended to bilateral mode.
binding (,I& =63.3531, L,L~-; = 0.2544). The congestion cost
is$65.3(=$4075.3-$40 10).
VIII. REFERENCES
Theory of branch complex power components proposed in
Thomas W G. On Transmission Congestion and Pricing IEEE
[4-51 is used to obtain the load components (contributions of Transactions on PWS. 1999.14(1):pp 241-248.
generators to loads), and then the congestion cost allocation is H.Singh,S.Y.Hao,and Alex Papalexopoulos.Traiismission Congestion
calculated using the presented method. The results of Management in Competitive Electricity Markets.IEEE Transaaction on
PWS. 1998.13(2).pp 672-679
congestion costs allocation to both generators and consumers
Anastasios G.Bakirtzis,Aumann-Shapley Transmission Congestion
are listed in table I and 11, respectively. For convenience of PricingJEEE Power Enineering Review.2001 3:pp 67-69.
comparison, the results of two alternatives are also listed in Jian-chun Peng, Hui Jiang. Contributions of Individual Generators to
both tables. One is called nodal pricing method. The other is Complex Power Losses and Flows-Part 1 : Fundamental Theory IEE
Proc.-Gener. Trunsm.Dislrib., 2002.3 149(2):pp 182-185
called buy-backhplift method. Under buy-backiuplift, the total Jian-chun Peng, Hui Jiang. Contributions of Individual Generators to
congestion cost is first split into two parts, generator side and Complex Power Losses and Flows-Part 2: Algorithm and Simulations.
consumer side share equally. On each side, the congestion cost IEE Proc.-Gener. Trunsm. Disrrib., 2002 3, 149(2) pp 186-190
is then allocated to individual participators according to their
active power. IX. BIOGRAPHIES
Hui Jiang is a lecture of Electrical Energy Systems i n
Hunan University, Changsha P R China She
GI I GI2 Gj I Gj2 obtained her BSc in Power Engineering from
Presented Method 15 755 14 179 2 126 0 590 Chongqing University in 1990, and MSc in Electrical
Nodal Pricing 575 517 5 0 0 Engineering from Hunan University in 1999 Now,
Buv-Back 9 795 8 816 10988 3051 she is pursuing her doctor degree Her interests
include electricity market, power system economic
operation, and computer applications in power
systems
Dz D3 D4
Presented Method 12 8632 12 8630 6 9238 You-qing Zhou IS Professor of Electrical Energy Systems in Hunan
Nodal Pricing 3147 43 891 73 994 932 University, Changsha, P R China , His interests include new transmission
Buv-Back 8 5921 8 5921 15 4658 system, and power system automation

The results in Table I and II show that the nodal pricing Jian-chun Peng IS Professor of Electrical Energy
method can result in merchandizing surplus ($6061.3), while Systems in Hunan University, Changsha, P R
China ,He obtained his BSc and MSc from
the presented method and buy-backiuplift ones can not. It is Chongqing University in 1986 and 1989,
obvious that the active power output of generator G5,is 129 respectively, and PhD from Hunan University in
MWh, occupying 33.65% of the total system generation, and is 1998, all in Electrical Engineering His interests
the biggest of all. However, using the presented method, the include electricity market, power system economic
operation, power system stability and control, and
congestion cost that generator G 5 ,has to pay for is almost the
computer applications in power systems
least, occupying only 6.5% of the total. On consumer side, the (Jianchunpeng@hotmakom)
electric energy absorbed by D4 is 180 MWh, occupying
47.37% of the total system load, and is the biggest of all. But
the congestion cost it has to pay for is $6.9238, occupying
5.3%, is the least of all. It is because the results are based on
the contributions of generators to the system congestion, while
under buy-back method, the congestion cost is allocated
proportionally to participators active power.

VII. CONCLUSIONS

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