Abstract: A method for determining a market clearing price in an electricity market, subject to a plurality of constraints, comprising the steps of defining an objective function relating the MCP and constraints in terms of a nonlinear programming expression, applying Lagrangian relaxation to the nonlinear programming expression to form a Lagrangian dual function; adding penalty terms to the Lagrangian dual function to form an augmented Lagrangian dual function; resolving the augmented Lagrangian dual function using a surrogate optimization framework comprising repeating, until stopping criteria are satisfied, the steps of forming one or more supply sub-problems and an MCP sub-problem; optimizing the MCP sub-problem while keeping all other variables at their latest available values; optimizing at least one of the one or more supply sub-problems while keeping all other variables at their latest available values; updating multipliers used to relax constraints; determining the MCP in accordance with the resolved augmented