Assessment of transmission congestion for major electricity markets in the U.S.

February 2001

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This paper details the estimated congestion rent collected by the Independent System Operators (ISO) since their inception in different electricity markets. The electricity markets analyzed are: New York Power Pool, California Power Exchange, and Pennsylvania-Jersey-Maryland (PJM) power pool. The paper describes the significant assumptions underlying the calculations and attempts to delineate the implications of the assumptions. It is observed that the congestion rent calculations are practically accurate for the California Power Exchange since most of the data pertaining to the inter-zonal transmission power flow and the inter-zonal price differential is readily available. On the contrary, the congestion rent estimation for the New York ISO involves significant assumptions. However, it can be shown that the results are reasonably accurate. The efforts for the similar calculations for the congestion rent for PJM electricity power markets proved to be futile. It would not be unfair to comment that when compared to its peer electricity markets, PJM severely lacks transparency in terms of disclosing information pertaining to the transmission congestion rent calculations.

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