Congestion management techniques in the UK and US - Approaches and Results

Against the background of differing regulatory environments, market arrangements, and commercial incentives, this paper describes and contrasts the different approaches to congestion management adopted in the United States and England & Wales. In England & Wales, the regulatory framework allows for the successful management of system congestion by a single for-profit system operator and transmission owner (TSO) in a fully liberalized market environment. The paper describes how the introduction of commercial incentives on the TSO has driven the development of innovative solutions to congestion management issues. The authors go on to show how new tools and techniques that have been developed have delivered significant reductions in congestion costs, with the resulting savings shared between the TSO and consumers. In contrast, the United States has adopted varying regional approaches to congestion management, with several regions framed within a locational marginal pricing (LMP) market. The paper describes how the separation of system operation from transmission ownership functions, through the establishment of independent system operators (ISO) and regional transmission organizations (RTO), has important effects on the methods and results of congestion management. The paper concludes by questioning whether the current model that has been adopted in much of the US is able to deliver optimised congestion management solutions, and the option of moving to a consolidated "for-profit" fully incentivized model that combines transmission ownership and operation is proposed