Locational market power screening and congestion management: experience and suggestions

The existing New England electricity market follows a uniform pricing system: inframarginal generators are paid a uniform clearing price while constrained-on generators are paid bid prices subject to a locational market power screen. In this paper, we first report the operation experience of this approach during the market's first two years. We then briefly review the New England power system (NEPOOL) locational pricing proposal being implemented. Two new approaches for locational market power screening are presented. The first one is based on a zonal network model and the second is based on a nodal transmission model. Both approaches are being evaluated by an independent consultant and are be to recommended to NEPOOL. Test results of both approaches are included.