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Competitive market driven large interconnected power systems are now being operated near maximum capacity due to environmental and operational pressure. In this context, we have to consider both economy and security of the stressed power system network. Transmission congestion caused due to the stressed operation of the power systems, affects the Locational Marginal Pricing (LMP). Presently, a large amount of distributed generations (DG) are being installed near load centers due to several technical, economical and environmental benefits. One of the important issues is the optimal placement of the DG for the transmission congestion mitigation and the social welfare maximization. In this paper, we have discussed the impacts of DG on the transmission congestion and the social welfare maximization. The LMP ranking based scheme for DG placement in the grid is presented and illustrated using a Power World™ network model.