A procedure to generate a list of benefits and optimal ca- pacity combinations for transmission path upgrades is suggested. Opti- mal upgrading of transmission can be identified from such a list. The benefits computed are a measure of congestion in the system. Introduction: With the advent of deregulation and the impend- ing formation of regional transmission organizations (RTO), several issues are yet to be resolved. Under the RTO scenario, the possibility of forming a "for profit" independent transmission company (ITC) is considered. Several organizational and technical issues associated with RTO are being considered by the FERC. While there are several such issues, this paper addresses two: a global measure for congestion and methods of identifying transmission upgrades in the deregulated transmission mar- ket. The two issues are interrelated. In regard to the first issue of con- gestion measure, note that almost all markets in the U.S. have, or are on the verge of using, locational marginal pricing (LMP) to price conges- tion. LMP signifies the marginal cost of supplying the next unit of en- ergy at that network location (node). The owners of any injected energy into the network are paid the LMP at the node of injection, and energy withdrawals are charged the LMP at the node of withdrawal. For discussion purposes, let us ignore losses and generation redispatch "out of merit" in order to honor voltage, stability, or other considerations. Then, without any flow restrictions on lines, the LMP at all locations will be the same with values equal to the cost of the mar- ginal generator. With binding flow limitations that require generation redispatch, there will be a difference between the LMP at different nodes. Under such a circumstance, the collections from load withdrawls will be greater than the payment toward injections. Most of this surplus will be paid out to holders of hedging instruments such as financial transmission or transmission congestion rights. Nonetheless, part of this surplus may be retained by the ITC, if the "for profit" de- scription of such an enterprise permits such retention. (In addition to this retention, or instead of it, there may be other incentives in transmis- sion tariff to permit a return on investment.) If partial retention of such collections is permitted, the ITC is obli- gated to maintain congestion—for if the congestion were removed at all hours by increasing transfer capacities, there would be less profit! This is not to say that removal of congestion in all hours is either advisable or economic. It may cost more to increase the transfer capabilities to re- move congestion than the resulting savings in energy dispatch costs. Thus, there exists a relationship between an overall measure of conges- tion and the identification of optimal economical transmission up- grades commensurate with the permitted goals (subject to regulatory oversight) of the ITC. This paper first examines certain global measures for congestion from market parameters. Subsequently, a method to establish a candi- date list of transmission upgrades vis-a-vis benefit is proposed. Ways of identifying "optimal" upgrades from such a list are discussed. Both these endeavors require the use of optimal load flow (OPF) solutions similar to those used in dispatch algorithms.