1658
3, AUGUST 2004
Congestion-Driven Transmission Expansion in
Competitive Power Markets
G. B. Shrestha, Senior Member, IEEE, and P. A. J. Fonseka, Student Member, IEEE
Abstract—A framework for transmission planning in a
deregulated power market environment is discussed. The level
of congestion in the network is utilized as the driving signal
for the need of network expansion. A compromise between the
congestion cost and the investment cost is used to determine the
optimal expansion scheme. The long-term network expansion
problem is formed as the decoupled combination of: 1) the master
problem (minimization of investment costs subject to investment
constraints and the Benders cuts generated by the operational
problem (power pool) and 2) the operational problem, whose
solution provides congestion details and associated multipliers. A
proper power-pool model is developed and solved for congestion
cost, congestion revenue, and transmission shadow prices. Linear
programming is utilized to solve the investment subproblem, while
the quadratic programming technique has been used to solve the
operational problem. The algorithm has been developed for the
complete planning process, which provides the expansion schemes
for the planning horizon. The technique has been applied to
illustrate the network planning study for a modified IEEE 24-bus
test system.
Index Terms—Locational marginal prices (LMP), network ex-
pansion planning, network congestion, power pool, social cost and
benefit, network investment.
I. INTRODUCTION
I N DEREGULATED electricity markets, the transmission
network is the interface where buyers and sellers interact
with each other. Any form of transmission constraints or
bottlenecks in the transmission network will prevent perfect
competition between market participants. This ultimately gives
rise to market power and leads to price hikes above the marginal
costs. Therefore, effective transmission system operation and
planning becomes very important for proper operation of
competitive power markets. In the United States, FERC has
begun initiatives to create a few large regional transmission
organizations (RTOs) and it has included “transmission plan-
ning” as one of the eight minimum functions of an RTO: “One
of the main missions of RTO is to modernize and expand the
transmission system” [1].
It is desirable that generation be placed as close as possible to
the demand center. In practice, demand centers are physically
located in urban areas where generation capacity additions are
difficult. This results in suboptimal placement of generation
with possible transmission congestion and load pockets with
Manuscript received February 2, 2004.
The authors are with the Power Market Research Group, Nanyang Techno-
logical University, Singapore (e-mail: egovinda@ntu.edu.sg).
Digital Object Identifier 10.1109/TPWRS.2004.831701
0885-8950/04$20.00 © 2004 IEEE
IEEE TRANSACTIONS ON POWER SYSTEMS, VOL. 19, NO.
high price volatility. Transmission congestion or constraints
will restrict flow of power from low cost nodes to high value
nodes creating supply–demand price imbalances. The presence
of congestion on one circuit produces price differentials not
only across this circuit, but also across many other noncon-
gested circuits as well. In short, congestion means more trade
is desired than what can be supported by available transmission
facilities. Congestion need not imply a serious reliability
problem or a network-overload problem. It simply means that
the particular line cannot support the particular trading pattern.
Thus, in addition to the network operation criteria used in tra-
ditional approaches to transmission planning, network conges-
tion becomes an important yardstick to evaluate the network ad-
equacy in competitive markets. Minimization of production cost
and the cost of loss of load in transmission planning models are
being challenged by the social cost minimization (i.e., produc-
tion cost-consumer benefit) and/or congestion-cost minimiza-
tion. In this regard, secondary information such as congestion
cost, congestion revenue, and transmission shadow prices gen-
erated from power-pool dispatch algorithms provide vital sig-
nals for network expansion algorithm.
Although a transmission network in a competitive market
may be managed by a nonprofit transmission administrator (TA)
or a for-profit transmission company (TransCo) or transmission
market, the network should be planned and expanded not to ex-
ceed an “acceptable level” of congestion in the network over
the planning period. The “acceptable” or the “optimal” level
of congestion has to be based on the balance between the con-
gestion-cost saving and the network expansion investment cost
to alleviate such congestion. We propose a network-expansion
methodology based on this strategy for PoolCo power markets.
Formulation of power-pool operation with double-sided bid-
ding for both generation, as well as demand, is a prerequisite
for the development of the proposed approach; it is presented in
Section II of this paper. The issues of LMP, congestion details,
and other important concepts relevant to power-pool operation
and network expansions are also discussed.
The purpose of this paper is to present a framework for net-
work expansion planning, taking in to consideration the conges-
tion-cost saving and upper bound of congestion revenue, which
are presented in Section III. This has been investigated using
two methods: 1) finding the optimum expansion schedule for
economic justification of network investment cost with conges-
tion-cost saving and 2) finding the optimum network expansion
schedule for maximum allowed congestion revenue (which is
“hedgeable” limit with financial rights).
SHRESTHA AND FONSEKA: CONGESTION-DRIVEN TRANSMISSION EXPANSION IN COMPETITIVE POWER MARKETS 1659

The planning framework consists of different modules con-

sisting of investment cost minimization, network operation op-
timization, and modeling and forecasting of generation and de-
mand bids, which are all inter-related over the planning horizon.
Although some of these modules are presented by simple func-
tions in this paper, they can be easily extended to more elaborate
representations without affecting the proposed planning frame-
work. A simple network-planning example is presented in Sec-
tion IV to illustrate the proposed methodology. The Conclusions
are summarized in Section V. Fig. 1. Supply- and demand-side bid representation.

II. FORMULATION OF POWER-POOL OPERATION

The mathematical formulation of the pool operation in the
double-sided auction market is presented in this section. This 2) Demand Function: Similarly, the demand curve for a
becomes the operational problem of our investment-planning consumer is represented by its linear demand curve
problem. The independent system operator (ISO) and/or power
exchange (PX) perform this market-clearing process consid-
ering the bids submitted by GenCos, DistCos, and transmission
constraints. The purpose is to determine the market cleared gen- where
eration/demand quantities, spot prices (LMP), and congestion intercept (reservation price ) in $/MWh;
charges for the network, while minimizing the total social cost slope in $/MW h;
for one time period . price is willingness to pay in $/MWh;
We use the following terminology: demand in megawatts.
time-period index (in 1-h steps); The main attributes consumer’s surplus and con-
supplier index (total number of suppliers, ); sumer benefit of a particular consumer can be deduced
consumer index (total number of consumers, ); from Fig. 1, where
branch index (total number of branches, );
bus index (total number of bus nodes, ).
(2)
A. Generation and Demand Bids
In a PoolCo model, each market participant (GenCo and The active power flow in branch is represented as a linear
DistCo) submits an hourly price bid in the form of marginal function of supply and demand, . The supply,
cost or marginal benefit functions [dollars per megawatt hour demand. and line-flow limits have their maximum and minimum
($/MWh)]. In strategic bidding, suppliers and consumers may limits , and . In terms of line capacity.
not bid their true marginal cost or benefit functions. For the and .
purpose of planning, it is reasonable to assume that system
B. Objective Function
operator can estimate their average behavior, which reflects
their true cost or benefit functions. The supply (GenCo) bids Minimization of total social cost (total apparent production
are assumed to be linear with an upward slope and consumer cost minus total apparent consumer benefit) is set as the objec-
(Distco) bids are assumed to be linear with a downward slope, tive [2], [3], [5]. This is functionally equivalent to maximization
as shown in Fig. 1, [2], [4]. of social welfare
1) Supply Function: For a particular supplier , the price and
quantity supplied is represented as (3)

subject to the following constraints:

where power balance (ignoring network power losses)
intercept (reservation price ) in $/MWh;
slope in $/MW h; (3.a)
price at which is willing to supply in $/MWh;
supply in MW.
The supply bid of Fig. 1 illustrates the supplier’s surplus supply, demand, and line-flow limits
and apparent production cost at the oper-
ating point , where (3.b)
(3.c)
(1) (3.d)
1660 IEEE TRANSACTIONS ON POWER SYSTEMS, VOL. 19, NO. 3, AUGUST 2004

Equations (3) and (3.a)–(3.d) may be combined to form the [7]. Generally, this includes the cost of line losses and the “con-
Lagrange function using Lagrangian multipliers (which gestion revenue”. In a lossless model, the congestion revenue
are interpreted as dual prices or shadow prices) (TR) becomes

(7)

for hour .
This may be expressed in a simpler expression

(8)

where represents the branch transmission shadow price

(congestion price or path cost).
The congestion cost (TC), which is the loss of social ben-
efit due to congestion, can be expressed as the difference be-
tween net benefits under following two dispatch procedures: 1)
without considering line capacity limits and 2) considering line
capacity limits (9)
(4)

C. Locational Marginal Prices and Congestion Details

Karush–Kuhn–Tucker (KKT) first-order optimal conditions (9)
for the above Lagrangian function with respect to and
yield LMPs for suppliers and consumers , respec-
D. Economic Signals for Network Expansions
tively.
For suppliers, The difference between locational prices represents conges-
tion charges that generation at low-priced location pay to supply
power to customers at high priced locations [9]. However, the
spread of LMPs is not an exact measure of identifying the
system bottlenecks. Compared to LMP dispersion, transmission
shadow prices provide more basic signals for network upgrades.
The long-term variations of congestion revenue will indicate
(5)
the overall network performances. Excessive fluctuations of
congestion revenue will motivate network users to purchase
and for consumers, congestion rights to reduce the effect of network congestion
on their transactions. However, in LMP-based markets, the
redistribution of these network revenues remains an issue yet
to be adequately addressed [10]. On the other hand, it will not
always be possible to hedge the congestion completely with fi-
nancial rights. If there exists an “unhedgeable” component due
(6) to network inadequacy, there is no clear way of handling this
issue. The ultimate solution for persisting network congestion
is network expansion.
If is the branch-node sensitivity matrix [or power transfer If the Transco is government owned nonprofit utility or pri-
distribution factors (PTDFs)] for the transmission network, then vately owned profit-oriented entity (ITC), the revenue accumu-
lation caused by this excessive congestion can be used for net-
work expansion to alleviate the unhedgeable congestion. In this
regard, transmission shadow prices indicate the social benefit in-
where refers to the bus number to which the th supplier or the crement for unit increment of constrained capacity or how much
th consumer is connected. The spatial variations of LMPs are congestion cost can be avoided for unit capacity increment. Stoft
given by (5) and (6) with respect to suppliers and consumers. [11] shows a break-even analysis for congestion-cost saving and
The market settlement as per these LMPs will result in a marginal investment cost, with some practical congestion costs.
“merchandizing surplus” [8], which is termed in different cita- However, due to economy of scale and “lumpiness” of transmis-
tions “short-term transmission rent” or “network revenue” [6], sion investments, transmission shadow prices and marginal in-
SHRESTHA AND FONSEKA: CONGESTION-DRIVEN TRANSMISSION EXPANSION IN COMPETITIVE POWER MARKETS
Fig. 2. Proposed framework for network expansion.
vestment costs alone will not result adequate capacity upgrades.
Therefore, it is necessary to take into consideration the total
congestion revenue and its fluctuations above the “hedgeable”
limits. In Section III, we present a framework for transmission
expansion considering these two situations separately.
1) Network expansion, where network investment cost is
justified by the congestion-cost savings.
2) Network expansion, based on containing the maximum
congestion revenue below an acceptable upper bound.
III. LONG-TERM NETWORK EXPANSION
Long-term network planning involves a series of studies to
determine the time and location of new transmission facility ad-
ditions. This determines the expansion plan, which minimizes
network investment cost and system operational costs due to
network inadequacy. In vertically integrated environments, the
system operational cost mainly stands for the out-of-merit gen-
eration cost due to network bottlenecks. In competitive markets,
this operational cost is the social cost (cost of congestion) or loss
of social benefit due to network limitations.
The overall formulation of the long-term discounted network
investment cost and congestion-cost minimization problem can
be written as
(10)
subject to constraints (3.a)–(3.d) and
(10.a)
1661
where
number of circuits added for branch in year
;
investment Cost ($/circuit) of branch ;
hourly time domain;
yearly time domain;
expansion limits;
base year;
discount rate;
planning horizon.
This is a hard mixed-integer nonlinear optimization problem,
which represents the long-term investment cost minimization
with long-term congestion-cost saving. However, modeling of
the problem for future planning is a complex task and is vul-
nerable to a huge amount of uncertainty. In competitive markets
especially, hourly market settlements and their price details are
highly volatile, and accounting for these details in yearly invest-
ment models is mathematically complex.
Despite these difficulties, the literature in decomposition al-
gorithms such as Bender’s Decomposition [12] have shown their
capabilities in handling these forms of formulations [13], [15].
This requires decomposition of the formulation into master and
operational problems (slave). We decompose network expan-
sion scheduling problem and dispatch algorithm (power-pool
model) to form the master and operational problem, which share
the decisions and cuts toward an acceptable solution.
The long-term formulation in completely decoupled format is
shown in Fig. 2. This framework consists of the following three
subproblems.
A. Expansion Scheduling Investment (Master) Problem
This determines the expansion schedule for each year
based on the investment criteria. Two network-expansion
methodologies using two different criteria (i.e., congestion-cost
1662
minimization and congestion-revenue minimization) are devel-
oped using Bender’s Decomposition techniques.
Thereafter, the network performance under two methods of
investment management are compared. In the first approach, the
investment cost justified by the congestion-cost (TC) saving is
implemented with feasibility cuts included in the Bender’s Algo-
rithm. In the second, network expansion to contain the conges-
tion revenue (TR) within a specified ceiling is implemented with
infeasibility cuts included in Bender’s Algorithm. The second
approach perhaps appears to be a more regulated option, but this
avoids insufficient investment, which can result if the regulator
adheres to strict economic criteria.
The formulation of expansion scheduling problem based on
these two expansion criteria are given by (11) and (12) respec-
tively. These are subproblems of the overall cost minimization
problem (10). It is optimized using the linear programming (LP)
model for the scheduling period using annuatized quantities, as
follows:
(11)
where is the hours per year (i.e., 8760) or total subtime pe-
riods analyzed per year, and Benders iteration index. The
feasibility cut is determined by analyzing a set of scenarios rep-
resenting the annual load duration curve (LDC). This provides
the annual expected congestion cost and the expected
values of transmission shadow prices . This is com-
pared with annuatised investment costs
(12)
where is the maximum allowed congestion level.
The infeasibility cut is formulated for worst-case scenarios
representing higher congestion revenues (e.g., during system
peak). The multiplier , which governs the congestion
revenue, can be defined as
(13)
IEEE TRANSACTIONS ON POWER SYSTEMS, VOL. 19, NO. 3, AUGUST 2004
This is derived from the objective function of the dispatch algo-
rithm (i.e., .
B. Power-Pool Operational (Slave) Problem
This is the social-cost minimization problem (dispatch
algorithm) for a network specified by the network expansion
schedule and the inputs given for generation and demand
bids. The power-pool model formulated in Section II with
double-sided auction is solved as the operational problem in
order to obtain the auxiliary information required for network
expansion module.
The formulation is re-arranged in the format shown in (14)
and it is solved using a quadratic programming (QP) algorithm
(14)
The solution yields market-cleared generation & demand
quantities and LMPs. It also provides all the dual multipliers
(Lagrange multipliers) in (4). For network-planning studies,
the significant dual multipliers, congestion charges (TC), and
congestions revenue (TR) would be particularly useful to form
the Benders cuts to be used in the investment minimization
problem. This is performed number of runs representing load
variations as per LDC for congestion-cost approach. In the
congestion-revenue approach, single or a few worst cases
representing system peak conditions are simulated.
C. Supply and Demand Bid Forecasting (Input)
For minimization of investment, it suffices to solve the invest-
ment or the expansion problem in yearly intervals. In traditional
network expansion, even the operational problem needs to be
solved only in yearly intervals to ensure that the network satis-
fies the required operating criteria under the peak load condi-
tions. However, the proposed framework requires calculation of
the congestion details, which varies each hour with the supply
and demand conditions. Therefore strictly speaking, the opera-
tional problem needs to be solved for each hour throughout the
year in order to calculate the expected values of congestion cost
and transmission shadow prices.
In addition to the computational problems, this requires the
representation of all supply and demand bids for each individual
hour. This is obviously a huge burden. This requirement may,
however, be softened by taking advantage of possible hourly and
seasonal patterns of the bids. For planning purposes, it may be
possible to use typical hours in a day (peak, off-peak), typical
days (weekdays, weekend days), and a few seasons (summer,
winter) to substantially reduce this requirement, yet have rea-
sonable estimate of the required attributes over the whole year.
In this preliminary study, we have adopted a constant bid-
ding pattern from each bidder for a particular year to repre-
sent typical supply and demand bids by linear equations. The
hourly variations of demand were simulated with the load dura-
tion curve (LDC), in order to estimate the expected congestion
cost and shadow prices . The bids for the
subsequent years are forecasted simply by incremental changes
SHRESTHA AND FONSEKA: CONGESTION-DRIVEN TRANSMISSION EXPANSION IN COMPETITIVE POWER MARKETS 1663

in the constants of the linear bids. As the network expansion de-

pends on this representation, a network planner (RTO or ISO)
needs to foresee this bidding forecast with some accuracy in
order to arrive at realistic network expansion schedules.

D. Solution Algorithm
The above proposed network expansion procedures are
implemented using Bender’s Decomposition algorithm for the
two methodologies separately. The congestion-cost-saving ap-
proach carries the feasibility cut (representing average values)
and the congestion-revenue approach carries the infeasibility
cut (representing peak conditions).
In practice, the capacity upgrades are discrete in nature (by
circuits), then the master problem becomes an integer program-
ming (IP) problem, which should be handled with IP techniques.
For the purposes of this , the capacity upgrades were considered
for both continuous and discrete (line additions) situations. The
Bender’s Decomposition algorithm described below will solve
the master problem (LP) and operational problem (QP) with the
corresponding decisions and Bender cuts. The Benders cut is a
feasibility cut for congestion-cost criteria and an infeasibility cut Fig. 3. IEEE 24-bus RTS.
for the congestion-revenue approach depending on the choice of
the two approaches. TABLE I
INITIAL BIDDING DETAILS

1 Set time index

2 Set iteration index
3 Solve the investment subproblem for the period and obtain
the network solution
4 Solve the operational subproblem for the period with the
network solution .
Generate the relevant Benders cut to the master problem for
iteration level .
5 Solve the investment subproblem for time period again
with the Benders cut generated in step (4) and update .
6 Check for Convergence
a. Congestion-Cost Approach
The change in objective value of master problem is less
than the tolerance given for two consecutive iterations ,
if convergence satisfied go to step (7) else ,
go to step (4).
b. Congestion Revenue Approach
If no infeasibility cuts were generated or , then
go to step (7) else ,
go to step (4).
IV. ILLUSTRATIVE EXAMPLES
7 If go to step (8), else
go to step (2). The developed network expansion methodology was applied
8 Stop. to determine the optimal expansion schedule for the modified
IEEE 24-bus reliability test system (RTS) [16]. The network
diagram is shown in Fig. 3, which has 14 generating compa-
In the congestion-cost-saving method, the investment cost is nies (Gencos) and 17 distribution companies (Distcos). Initial
automatically justified in the formulation of the problem itself. bidding details corresponding to the peak hour of the base year
However, in the congestion-revenue hedging approach, the max- are shown in Table I. However, this is assumed to rep-
imum allowed congestion level is not strictly justified with resent the entire year for the network-expansion study.
the investment cost. This limit is fixed by the transmission or- Therefore, the bidding details should correspond to system peak
ganization and it is the maximum hedgeable congestion level. conditions for that particular year.
The choice of the proper level of congestion is not fully ad- As mentioned in Section III-C, forecasting of bidding details
dressed in this paper, and is a topic for further investigations. for the future years becomes quite involved and is extremely
1664
TABLE II
GROWTH RATES FOR BID PARAMETRS
Fig. 4. Capacity upgrades—congestion-cost method.
sensitive. This aspect is not fully addressed in this paper. We
have adopted a simple model for the future supply and demand
bids in order to demonstrate the application of the proposed
algorithm. The planning horizon is taken as eight years. The
growth in bids are represented by annual growth rates for in-
tercepts and the maximum and minimum demand bids,
shown in Table II. An increase in the maximum generation limit
is introduced in discrete steps. For this test application, we
have assumed that the maximum generation capacity bid in-
creases in the third and the sixth year by a factor of 1.5 and
2.5, respectively. Elaborate models to represent the growths in
demand and generation bids can be easily included without af-
fecting the proposed methodology.
Network technical details are as given in the Appendix.
The line costs were estimated with the specific cost $1000 per
MW-mile, line length, and the capacities given. The economic
life of transmission investments were assumed as 25 years. The
discount rate was taken as 10% for the eight-year network
planning study.
A. Network Expansion With Congestion-Cost Method
The results of the planning exercise where the capacity addi-
tion cost was balanced by the congestion-cost saving is shown
in Fig. 4. If it were possible to increase the capacity of the line
in a continuous scale with the increase in the congestion cost, it
is found that three lines, namely lines 23, 28, and 7, would be
upgraded over the years as indicated by the solid lines. Such ca-
pacity additions would reduce system congestion and therefore
the congestion cost. It should be noted that that network would
still have some congestion after these line upgrades such that
the congestion costs balances the cost of these upgrades.
However, line capacities can only be added in discrete steps
(circuits) in practice and such gradual increase in line capacities
IEEE TRANSACTIONS ON POWER SYSTEMS, VOL. 19, NO. 3, AUGUST 2004
Fig. 5. Capacity requirements—congestion-revenue method.
TABLE III
NETWORK ADDITION SCHEDULES (DISCRETE) (LINES ADDED IN
THE RESPECTIVE YEAR)
are not possible. Under such discrete capacity-addition condi-
tions, it is found that one circuit is added in each of the lines
23 and 28 in year 4 and year 6, respectively. The congestion
level is expected to be quite significant prior to the circuit ad-
ditions when the capacity additions are discrete. This problem
may be alleviated in the congestion-revenue containing method
discussed next.
B. Network Expansion With Congestion-Revenue Method
The results of network capacity expansion exercise to keep
the congestion revenue within a certain value are shown in
Fig. 5. If it were possible to increase the line capacities in a
continuous scale, it was found that a steady increase in line
capacities were necessary in lines 23, 28, and 7. The figure also
shows that capacity addition requirements would be lower for
higher levels of congestion revenue. Although the results of
Figs. 4 and 5 show similar general trends, it should be noted that
congestion-revenue containment method cannot automatically
balance the investment against the revenue.
When the capacity upgrades are made discrete circuit addi-
tions, the time-ordered line additions for a congestion revenue
of $1000/h are shown in Table III as Case B1. One circuit was
added in lines 23 and 28 in years 1 and 3 and one circuit each in
lines 7, 19, and 30 in year 6.
It is found that additional circuits were needed in lines 19
and 30 compared to the continuous upgrades. This is because
SHRESTHA AND FONSEKA: CONGESTION-DRIVEN TRANSMISSION EXPANSION IN COMPETITIVE POWER MARKETS
TABLE IV
ORIGINAL VALUES
of the the network topology changes due to line additions cause
additional congestion, which were not congested initially.
When the allowable congestion limit was raised to (
$/h) in Case B2, it is found that the addition of circuits in lines
28 and 07 are delayed by one year in the expansion scheduling
due to the relaxation of congestion level.
It should be noted that in continuous capacity upgrade study,
the same set of transmission bottlenecks are identified by both
approaches and each method has its own advantages. The con-
gestion-cost approach has the advantage of a simultaneous eco-
nomic feasibility check but had a larger computational burden,
while the congestion-revenue method lacks a simultaneous eco-
nomic feasibility check but is computationally relaxed.
V. CONCLUSION
A technique of transmission planning for a deregulated power
market has been presented. It utilizes the level of congestion in
the transmission network as the indicators for the need of addi-
tional transmission lines. The procedure can be applied to for-
mulate expansion schemes, which are sets of time-ordered in-
vestment decisions for the network planner. Theoretical devel-
opment of the procedure, along with the necessary algorithms
and the implementation of the procedure in a test system, have
been presented.
Two different network-planning criteria are presented,
namely congestion-cost saving and congestion-revenue con-
taining. It has been demonstrated through the illustrative
example that the congestion-cost-saving approach is theoreti-
cally sound but it might lead to insufficient investments keeping
significant levels of congestion. In the congestion-revenue con-
taining approach, adopting higher levels of congestion could
reduce the investment cost over a planning period. Therefore, it
seems plausible that a combination of the two criteria may be
combined for a more practical expansion strategy for an “op-
timal congestion”. This strategy is currently being investigated.
It should be noted that the example presented is only for il-
lustrative purposes. Further studies are being conducted to in-
corporate more detailed consideration of the generation and de-
mand bids, and the higher levels of uncertainties in their fore-
cast. More realistic data for congestion cost, investment cost,
and other cost parameters is be required to conduct more real-
istic planning studies.
APPENDIX
NETWORK DATA
Network details are as per [16], except the MVA capacities
of the lines, were reduced from the original values as given in
Table IV.
1665
REFERENCES
[1] E. N. Krapels, “Stimulating new transmission investments,” Electricity
J., vol. 15, no. 3, pp. 76–80, Apr. 2002.
[2] C. A. Berry, B. F. Hobbs, W. A. Meroney, R. P. O’Neil, and W. R.
Stewart, “Analyzing strategic behavior in transmission networks,” in
IEEE Power Engineering Society Winter Meeting, New York, 1999.
[3] B. F. Hobbs, C. B. Metzler, and J. S. Pang, “Strategic gaming analysis
for electric power systems: An MPEC approach,” IEEE Trans. Power
Syst., vol. 15, pp. 638–645, May 2000.
[4] J. D. Weber and T. J. Overbye, “An individual welfare maximization
algorithm for electricity markets,” IEEE Trans. Power Syst., vol. 17, pp.
509–506, Aug. 2002.
[5] F. Scheweppe, M. Caramanis, R. Tabors, and R. Bohn, Spot Pricing of
Electricity. Boston, MA: Kluwer, 1988.
[6] I. J. Perez-Arriaga, F. J. Rubio, J. F. Puerta, J. Arceluz, and J. Marin,
“Marginal pricing of transmission services: An analysis of cost
recovery,” IEEE Trans. Power Syst., vol. 10, pp. 546–553, Feb. 1995.
[7] H. Rudnick, R. Palma, and J. E. Fernandez, “Marginal pricing and
supplement cost allocation in transmission open access,” IEEE Trans.
Power Syst., vol. 10, pp. 1125–1142, May 1995.
[8] F. Wu, P. Varaiya, P. Spiller, and S. Oren, “Folk theorems on transmis-
sion access: Proofs and counter examples,” in University of California
Energy Institute Working Paper, PWP-023, Feb. 1995.
[9] P. L. Joskow and J. Tirole, “Transmission rights and market power on
electric power networks,” RAND J. Econom., vol. 31, no. 3, pp. 450–487,
Autumn 2000.
[10] J. Bushnell and S. Stoft, “Electric grid investment under a contract
network regime,” in University of California Energy Institute Working
Paper, PWP-034, Jan. 1996.
[11] S. Stoft. (2002) Transmission planning in a market environment.
APEC Conference, Mexico City, Mexico. [Online]. Available:
http://www.stoft.com/e/lib/papers/Stoft-2002-Tmsn-Invest-Mrkt.pdf
[12] J. F. Benders, “Partitioning procedures for solving mixed variables
programming problems,” Numerische Mathematik, vol. 4, pp. 238–252,
1962.
[13] V. A. Levi and M. S. Calovic, “A new decomposition based method
for optimal expansion planning of large transmission networks,” IEEE
Trans. Power Syst., vol. 6, pp. 937–943, Aug. 1991.
[14] R. Romero and A. Monticelli, “A hierarchical decomposition approach
for transmission network expansion planning,” IEEE Trans. Power Syst.,
vol. 9, pp. 373–380, Feb. 1994.
[15] S. Haffner, A. Monticelli, A. Garcia, J. Mantovani, and R. Romero,
“Branch and bound algorithm for transmission system expansion plan-
ning using a transportation model,” IEE Proc. Generation, Transmis-
sion, and Distribution, vol. 147, no. 3, pp. 149–156, May 2000.
[16] Reliability Test System Task Force of Probability Methods Sub-
committee, “IEEE reliability test system,” IEEE Trans. PAS-98, pp.
2047–2054, 1979.
G. B. Shrestha (S’88–M’90–SM’92) received the B.E. (Hons.) degree in
electrical engineering from Jadavpur University, Jadavpur, India, in 1975, the
M.B.A. degree from the University of Hawaii in 1985, the M.S. degree in
electrical power engineering from Rensselaer Polytechnic Institute, Troy, NY,
in 1986, and the Ph.D. degree in electrical engineering from Virginia Tech,
Blacksburg, in 1990.
Currently, he is an Associate Professor at Nanyang Technological University,
Singapore. His main area of interest is power-system operation and planning.
P. A. J. Fonseka (S’03) received the B.Sc. degree in electrical engineering from
the University of Moratuwa, Sri Lanka, in 1995 and the M.Eng. degree in electric
power systems management from the Asian Institute of Technology, Thailand,
in 2000. He is currently pursuing the Ph.D. degree in electrical engineering at
Nangyang Technological University, Singapore.