Congestion management in an electricity market is introduced in this paper and a new method of allocating congestion cost to transactions is proposed. The proposed method is a two-step process, in which the total congestion cost is firstly allocated to congested facilities and then to each transaction involved. The cost of relieving a congested facility allocated to each transaction is proportional to the power flow change on the congested facility caused by the transaction. The more the power flow change is on the congested facility caused by the transaction, the deeper the degree of involvement by the transaction. Therefore, cutting down the magnitudes of such transactions contributes to relieving congestion. Test results on a 5-bus system indicate that the proposed method can reflect reasonably the degree of involvement by each transaction in the congestion and provide correct price signals contributing to relieving congestion.
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