Fixed transmission rights for zonal congestion management

Declaring that engineering studies and experience are the criteria to defin ing zonal boundaries, or to define a zone based on the fact that it is a de nsely 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 t o decide whether any zone should be merged with another zone or split into new zones. The paper combines zonal and fixed transmission rights (FTR) sch emes to manage congestion. This combined scheme is utilised with LMPs to de fine zonal boundaries more appropriately. The scheme presented gains the be st features of the FTR scheme, which are providing financial certainty, max imising the efficient use of the system and making users pay for the actual use of congested paths.