This paper describes a new approach for optimal supply curve bidding (OSCB) using Benders decomposition in competitive electricity markets. The inclusion of physical unit constraints and transmission security constraints will assure a subsequent feasible solution for the problem. We decompose the problem into a base-case OSCB (without unit and network constraints) and subproblems for checking the feasibility of unit and network constraints. For a given base-case OSCB schedule, line flow violations are minimized by adjusting units’ generation and phase shifters. In case transmission violations cannot be removed, additional linear constraints are introduced in the master problem in the form of price signals for rescheduling OSCB. An IEEE 24-bus system is used to demonstrate the effectiveness of the proposed approach.