Effects of remedial actions on LMPs

Locational marginal pricing (LMP) has been deployed by several wholesale markets in United States. Standard market design (SMD) proposed by FERC has also adopted LMP as the foundation for the open market power industry, LMP values are influenced by system operating conditions. If system is unconstrained, LMP values are flat throughout the network. When system is constrained, because of congestion or abnormal voltages, LMP values differentiate at various locations. Their values reflect the increased cost to deliver energy from marginal units to load buses. For speed and simplicity, most LMP models include merely constraints of transmission congestion and consider the generator unit real power output rescheduling as the only way to alleviate transmission congestion. However, in typical power systems there are other types of remedial actions (RAs) that can be applied to alleviate or eliminate system constraints. These RAs include shunt capacitor/reactor switching, transformer tap/phase shifter adjustment, etc. Remedial actions can affect LMPs by virtue of their effect on system active constraints. In this paper, we examine the effectiveness of remedial actions in smoothing LMP values. We propose an LMP computational models that includes RA effects as well as congestion and voltage constraints. The formulation of the problem is based on the single phase quadratized AC power flow model. The problem is linearized using the efficient co-state method leading to a standard linear program which is solved with standard techniques. An example power system is used to demonstrate the proposed framework. LMP values with and without RAs are computed and compared. Results show that effect of RAs on LMP is noteworthy and appropriate RAs can effectively flatten LMP values.