4 Congestion

Congestion occurs when available least-cost energy cannot be delivered to some loads because transmission facilities do not have sufficient capacity to deliver the energy. When the least-cost, available energy cannot be delivered to load in a transmission-constrained area, higher cost units in the constrained area must be dispatched to meet that load. The result is the price of energy in the constrained area will be higher than in the unconstrained area because of the combination of transmission limitations and higher cost local generation. Congestion rent is the difference between rent payments made by load and exports and revenues received by generation and imports.

Congestion Rents on Interties

Figure 7 below illustrates the IFM congestion rents on interties. The hourly congestion rent is calculated as the shadow price ($/MWh) of the intertie constraint multiplied by the flow limit (MW) on the intertie constraint. The daily congestion rent is the sum of the hourly congestion rents collected on the intertie constraint for all hours of the trading day.

The cumulative total congestion rent for interties in September decreased to $1.09 million from $5.22 million in the previous month. Majority of the congestion rent in September accrued on Malin intertie (94 percent). The congestion rent on Malin intertie was $1.03 million in September from $2.10 million in the previous month.

Figure 7: IFM (Day-Ahead) Congestion Rents by Intertie

Congestion Rents on Transmission Lines and Transformers

Figure 8 illustrates IFM congestion rents by transmission lines and transformers. The hourly congestion rent is calculated as the shadow price ($/MWh) of the constraint multiplied by the flow limit (MW). The daily congestion rent is the sum of the hourly congestion rents collected on the transmission constraint for all hours of the trading day.

Figure 8: IFM (Day-Ahead) Congestion Rents by Transmission Lines and Transformers

Congestion Rents on Nomograms

Figure 9 illustrates IFM congestion rents by nomogram. The hourly congestion rent is calculated as the shadow price ($/MWh) of the nomogram constraint multiplied by the flow limit (MW). The daily congestion rent is the sum of the hourly congestion rents collected on the nomogram constraint for all hours of the trading day.

Figure 9: IFM (Day-Ahead) Daily Congestion Rents by Nomogram

Congestion Rents on Nodal Group Constraints

Figure 10 illustrates IFM congestion rents by nodal group constraints. The hourly congestion rent is calculated as the shadow price ($/MWh) of the constraint multiplied by the flow limit (MW). The daily congestion rent is the sum of the hourly congestion rents collected on the constraint for all hours of the trading day.

Figure 10: IFM (Day-Ahead) Daily Congestion Rents by Nodal Group Constraints