Locational Marginal Pricing Example

Generator B

Bid = $30

Load 1 Incremental Demand

is supplied by Generator A

LMP = $20

Load 3 Incremental Demand

is supplied by Generator A

LMP = $20

Load 2 Incremental Demand

is supplied by Generator A

LMP = $20

No transmission constraint -

Able to transfer power

from Generator A to Load 2

Generator A

Bid = $20

Unlimited ability

to transfer power

from Gen. A to Load 3

Load 1

Load 3

Load 2

UNCONSTRAINED Case