| Summary: | In power system operation, congestion refers to an event where a transmission line becomes overload. Under pool-based electricity market, congestion is solved by re-dispatching the generation output at a cost known as congestion cost. This cost is then allocated to the electricity market participants as security charges. In the current markets, the allocations of congestion cost are based on either the participants' MW demand or their location in the system. It does not reflect the participants' contribution towards congestion problem. Furthermore, it allocates the cost entirely to the loads while the generators are not charged. This paper proposes a new approach for allocating the congestion cost, which is based on each participant's contribution towards congestion problem. The one that cause more problem will be charged more and vice versa. The cost is also shared between generators and loads. The approach is illustrated using a simple three bus system and tested on the IEEE-30 bus and IEEE-118 bus system.
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