This paper proposes a new algorithm for addressing the congestion problem in the network through generation and demand rescheduling. A demand response market based programming is developed for demand rescheduling by capturing the benefit of retailers. In the proposed algorithm two tasks are implemented by the ISO for controlling network security and spark prices. In the case of any network defect, generator re-dispatching is conducted by the ISO and in the case of any spark price, retailers’ demands in specific buses decrease via some economic signals, sent by the ISO. Having such economic signalsthe retailers then participate in a demand response trade with demand response aggregators (DRAs) to optimize their incomes and next to resubmit their demands to the ISO. A Stackelberg game is employed to capture the interplay among retailers, the leaders, and DRAs, the followers. Retailers choose their strategies, the amount and price of required demand response. Then, DRAs compete based on the retailers’ strategies to maximize their payoffs and to choose their strategies, the demand response sale amount. An IEEE bus test network with 14 buses is considered to demonstrate the feasibility of the proposed method. The paper demonstrates that the proposed method enables to alleviate the congestion problem while the retailers’ incomes increase.
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