Abstract—Transmission congestion is a challenging problem in power system operation. Independent system operators (ISO) usually have to re-dispatch generation units to alleviate congestion. This results in significant additional costs for customers. In this paper, a new method for equitable allocation of congestion costs, especially when more than one line is congested, is proposed. The method is based on a new index, referred to as severity index. This index is used for allocating the cost of congestion to different congested lines, in cases where more than one line is congested. The index considers both technical and economical effects of congestion on power system and it is very useful to allocate load contribution in transmission costs. Therefore, it can be easily used for allocating congestion costs to different loads. The Proposed method is implemented and evaluated on IEEE 14-bus system by calculating the cost allocated to each customer. The proposed method has been compared with nodal pricing approach. Simulation results show that the equity and accuracy parameters are observed in the proposed approach.

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