Why doesn't PSSE recognise _i?

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the _i is a special variable that PSSE adds to the Python environment when you are running scripts from inside PSSE. Here is a list of the other special variables: _i, _f, _s and _o

It is confusing to me why this variable is added without needing to import it.

When running your Python from outside of PSSE, you'll need to import the _i.

from psspy import _i

Otherwise your program will stop with a NameError which means: Python cannot find where this variable has been defined.