Congestion management is one of critical tasks in electric power markets. Although congestion management using a centralized optimal power flow may give an efficient solution, it lacks enough transparency in a competitive power market for its participants about congestion related costs. On the other hand, clearing the market and mitigating congestion separately may not result in an efficient solution from cost viewpoint. In this paper, a two-stage method using a modified Benders decomposition technique is proposed for congestion management in hybrid electricity markets including pool and bilateral transactions. An innovative convergence criterion and a new type of the sub-problem are proposed in using Benders decomposition in congestion management. The proposed method not only gives the efficient solution, but also provides enough transparency about congestion cost. Results of testing the method on the New-England test system are presented and discussed in detail. The results confirm the efficiency of the proposed congestion management method. (c) 2012 Elsevier Ltd. All rights reserved.