Fixed transmission rights for zonal congestion management

Declaring that engineering studies and experience are the criteria to defining zonal boundaries, or to define a zone based on the fact that it is a densely interconnected area and paths connecting these densely interconnected areas are interzonal lines, will render insufficient and fuzzy definitions. The zone definition is given a certain criterion based on the locational marginal price (LMP). This concept is used to define zonal boundaries and to decide whether any zone should be merged with another zone or split into new zones. The paper combines zonal and fixed transmission rights (FTR) schemes to manage congestion, This combined scheme is utilised with LMPs to define zonal boundaries more appropriately. The scheme presented gains the best features of the FTR scheme, which ale providing financial certainty, maximising the efficient use of the system and making users pay for the actual use of congested paths.