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113 / 179

$ Millions

Funding Shortfall

120,986,381

67,308,566

46,090,218

RT Carve-Out Rebates

912,992

75,614

110,577

DA Option B Rebates

5,313,226

5,400,369

2,334,606

DA Carve-Out Rebates

27,881,919

13,762,361

13,065,882

FTR Funding

601,653,600

495,348,832

304,341,831

Transmission Congestion

2008

2009

$90

2009 State of the Market Report

$60

$210

$180

$150

$120

Figure 52: Payments to FTR Holders 2007 – 2009: All Hours

2007

$30

$0

J F M A MJ J A S O N D J F M A M J J A S O N D J F M A MJ J A S O N D

2007

2008

2009

One of the sources of FTR shortfalls is the use of “radial constraints” in the day-ahead market. The Midwest ISO imposes radial constraints from the transmission network to individual generator buses to limit the day-ahead modeled flow to the generator buses when excessive virtual loads are submitted at them. These radial constraints are used because virtual load bids at these locations can result in infeasible day-ahead model solutions. This is because the market software reflects the low voltage facilities at the unit site (i.e., where the step-up transformer that brings the power onto the higher-voltage network is modeled). Of course, such radial constraints are unnecessary in the real-time market because such infeasibilities cannot exist (because power never flows out to a generator location since there is no physical load there). The radial constraints ensure that the day-ahead market will solve, but they can cause congestion that would never exist in the real-time market. Because these constraints were not generally reflected in the FTR market in 2009, more FTRs could sink at the generator locations than the radial constraints would support in the day-ahead model. This led to FTR shortfalls and potential manipulation opportunities.

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