Decentralized approach to intermarket congestion management

When transmission bottlenecks affect dispatches and prices of neighboring Regional Transmission Organization (RTO) markets, intermarket congestion management and coordination are needed to mitigate congestion and to compute economically efficient prices in the day-ahead markets. This paper discusses and proposes two decentralized processes with which each RTO administers its energy market and also acts as a transmission coordinator to achieve feasible and efficient use of congested transmission by all markets in the region (interconnection). With this arrangement, a new decomposition technique is introduced without breaking a network model at the RTO´s geographical boundaries. The paper then presents two decentralized congestion management formulations to model markets interactions in the interconnection. The coordination between market operators and transmission operators is based on the use of congestion price signals or allocated megawatt capacities, as well as their sensitivity information. The proposed solution ensures not only feasible schedules but also efficient and consistent congestion path prices for the final schedules in the entire interconnection. Numerical examples are given to illustrate the application of the proposed models.