Important Dates and Materials

• February 4 | Information Session registration

Purpose

To engage with stakeholders to explore an FTR market framework that will provide appropriate congestion risk management in the context of the Restructured Energy Market (REM) and Optimal Transmission Planning (OTP). This consultation will identify the different structures of an FTR market framework and assess the trade-offs between each framework to develop a recommended path forward.

Background Information

Financial Transmission Right (FTR) markets allow for value creation through the trade of rights to congestion rent in a future period. The exchange of FTRs takes place between FTR Buyers (those purchasing the stream of congestion rent) and FTR Sellers (those selling the stream of congestion rent). FTR markets are financial: they do not restrict or influence the physical dispatch of power from physical assets in the electricity market.

The risk of congestion and the potential need for tools to manage that risk arises from three related factors:

• Planning a system that allows for congestion: the Optimal Transmission Plan (OTP) leads to a system that values congestion in terms of economic efficiency, or impact on total surplus. This optimal level of congestion manifests in the real-time energy market as price separation.
• Price separation from Locational Marginal Pricing (LMP): Changes from the Restructured Energy Market (REM) allow for the real-time price of energy to reflect the impact of congestion/constraints on the system. This difference in price paid to consume energy and price paid to produce energy is calculated as congestion rent.
• An FTR market could improve overall market efficiency: The exchange of FTRs enables efficient risk allocation when the agreed upon price benefits both the seller and buyer of the FTR.