Coupling market clearing with congestion management to prevent strategic bidding

The potential for strategic bidding in deregulated electricity markets is well known. Earlier work has highlighted the role of congestion in such strategies. The authors examine a model in which a supplier can create congestion problems in a noncongestive system even when he is the not the low cost supplier of the system. If that supplier has several units located at different buses in the grid, it can profit from creating congestion under some auction mechanisms actually in use or under consideration. An integrated auction prevents profitable gaming, but requires the simultaneous handling of market clearing and system dispatch, raising concerns about the neutrality of the system operator. This paper provides a practical demonstration of the integrated auction, and compares it to other mechanisms