Market mechanism for transmission reliability

This paper proposes a mechanism for transmission reliability considering line congestion, real power losses and MVA line flows for each bilateral transaction in a deregulated market environment. Transaction reliability is evaluated by means of a series of power flows used to determine the contribution that each transaction makes to the system and applying penalties to the transactions that violate system´s constraints. A day ahead load forecast is used to create a bilateral transactions matrix (BTM) by means of an algorithm developed by the authors which is used as the transactions schedule for WIST, an application software for power system analysis; then penalties based on contracts arc calculated. This process constitutes the market mechanism proposed in this paper and is helpful for the independent system operator (ISO) to understand the effects of bilateral transactions and create rules for a reliable transmission system operation that benefits all participants in the electricity market.