Abstract: Congestion management is necessary in electricity market, when the transmission network is unable to accommodate the transactions required in that particular system. If the congestion management is not taken care, then the system operating limits will not be in the prescribed limit. In competitive markets, the congestion management is more complex than the ordinary system and it leads to more disputes among the power suppliers as well as consumers. In order to overcome these limitations, each utility manages the congestion, by following certain physical or financial mechanisms. The ATC of power system network gives the status of unutilized power at any time and depends on many factors due to the thermal, voltage and stability considerations. The main factors which will decide the ATC are system load level, load distribution in network, power transfer between areas, and the limit imposed on the transmission network etc. This information will be helpful for power marketers, sellers and buyers to participate in the commercial activities.For this, severity index is considered to identify the most critical transmission line in a given system. Later, the effect of ATC under normal and contingency conditions is analyzed on IEEE-6 bus & Indian -24 bus test system with supporting numerical and graphical results.

Keywords: ATC; contingency condition; direct method;