A unit running for transmission congestion is subject to what?

When a unit is running for transmission congestion, it is often subject to price cost capping. This means that the price for which the generation unit can sell its electricity is capped to prevent excessively high prices, which can occur during periods of congestion in the transmission system. The cap is typically put in place to help manage the economic impact on the market and ensure that consumers are not subjected to unreasonably high costs at times when transmission constraints affect supply availability. By controlling the price, the market can better balance supply and demand while still ensuring that the generation unit can cover its operational costs.

Price cost capping is a crucial element of market design, particularly in systems like PJM (Pennsylvania-New Jersey-Maryland Interconnection), where congestion can be a frequent issue due to varying demand and the limitations of the transmission infrastructure. This mechanism also helps encourage efficient dispatch of generation resources in response to real-time conditions on the grid, as well as fostering investment in infrastructure improvements to alleviate future congestion.