Separability and Independence of Congestion and Reliability: Theory and Simulations

One policy aim under electric-industry restructuring has been to replace the centralized utility planning process (integrated resource planning) with regional planning for network investments, and decentralized decision-making for merchant investments. Through specific policies such as encouraging market-based merchant transmission and the proposed establishment of National Interest Transmission Corridors under the Energy Policy Act of 2005, congestion and reliability have been treated as separable and independent system attributes. This paper brings together separate pieces of research in (S. Blumsack et al., 2006) to explore the proposition that transmission investments can be divided into those which relieve congestion and those which enhance system reliability. Using the DC power flow model with linear ATC, we derive some explicit necessary and sufficient analytical conditions under which the separability and independence assumptions hold. These include (i) the network is series-parallel; (ii) demand is completely price- inelastic; (iii) all customers value reliability identically; and (iv) the grid operator does not discriminate among customers when forced to physically ration consumption. Simulations using the IEEE 118-bus test system are presented which demonstrate the close dependence of reliability and congestion, except at very low levels of demand.