en 1-Restructuring Restructuring Research Paper Research Paper This paper develops a method for nodal pricing and market clearing mechanism considering reliability of the system. The effects of components reliability on electricity price, market participants’ profit and system social welfare is considered. This paper considers reliability both for evaluation of market participant’s optimality as well as for fair pricing and market clearing mechanism. To achieve fair pricing, nodal price has been obtained through a two stage optimization problem and to achieve fair market clearing mechanism, comprehensive criteria has been introduced for optimality evaluation of market participant. Social welfare of the system and system efficiency are increased under proposed modified nodal pricing method. Nodal Pricing,Locational Marginal Pricing (LMP),Cost Allocation,Market Clearing,Market Participant Evaluation, 165 173 http://ijeee.iust.ac.ir/browse.php?a_code=A-10-515-10&slc_lang=en&sid=1 A. R. Soofiabadi soofiali8@gmail.com 180031947532846003422 180031947532846003422 No Semnan University A. Akbari Foroud aakbari@semnan.ac.ir 180031947532846003423 180031947532846003423 Yes Semnan University