Congestion Pricing

As substantial numbers of new electric generation facilities are added to the U.S. grid, transmission congestion can be expected to correspondingly intensify, particularly in the high-growth urban areas already experiencing serious congestion problems. This increasing transmission congestion will present new risks to electric power project developers and their lenders. When generation resources encounter congested paths in their regional transmission grids, the resultant barriers can thwart the achievement of the market prices that both developers and lenders either contract for or optimistically anticipate. Just as traffic congestion on U.S. highways threatens to constrict the nation's economic development, electric transmission constraints threaten to complicate the development of new generation assets. Assessing these power congestion risks and the need to design action programs to mitigate these risks is the subject of this article.