  The implementation of electricity markets based on locational marginal
pricing in a multi-settlement process has allowed wholesale competition, with
pricing mechanisms that incentivize the optimal allocation of generation,
transmission, and demand-response resources. While efficiency and reliability
gains have been achieved in the US at a regional level, the lack of adequate
inter-regional coordination mechanisms has limited broader gains. The
shortcomings of cross-border coordination of electricity markets become more
apparent as the industry transitions towards higher penetration of renewable
resources, which tend to be concentrated in certain regions of the country,
usually distant from load pockets. In addition to allowing market participants
to respond to economic signals beyond the market region where their assets
reside, a coordinated market solution would allow the extension of market
mechanisms such as financial transmission rights and capacity contracts to
cover transactions across borders; thereby, reducing price uncertainty around
the investment in new generation resources. This paper presents a distributed
solution to the unit commitment problem that allows for full coordination of
the market clearing process across interconnected electricity markets.
