Definition
A condition that occurs when the transmission system cannot accommodate all desired power flows simultaneously due to physical constraints, causing LMPs to differ between sending and receiving locations. Congestion imposes economic costs because cheaper generation in one area cannot reach customers where more expensive generation must be dispatched instead. Managing congestion is a primary function of RTO/ISO energy markets.
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Topic Deck
Markets & Pricing
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Source
FERC Pro Forma OATT / LGIP