X hits on this document

669 views

0 shares

0 downloads

0 comments

124 / 179

2009 State of the Market Report

Transmission Congestion

F.

FTR Auction Prices and Congestion

As discussed in Subsection B above, the Midwest ISO administers a market for FTRs that allows participants to hedge the costs of congestion in the market. This subsection evaluates the performance of the FTR market. The Midwest ISO auctions the majority of transmission rights through seasonal and monthly auctions. A small percentage of rights are allocated directly to holders of Option B and Carve-Out FTRs. Prior to June 2008, most FTRs were allocated based upon physical usage of the system on an annual basis. Since June 2008, the majority of transmission rights have been auctioned (or self-scheduled via ARRs) on a seasonal basis.

A key indicator of the liquidity of the FTR markets is the profitability of FTR purchases. FTR profits are the difference between the costs to purchase the FTR and the payout on the FTR based upon the congestion in the day-ahead market. In a liquid FTR market, the profits should be low because the market-clearing price for the FTR should reflect the expected value of congestion payments to the FTR holder. Our next analysis evaluates the profitability of FTRs purchased in the seasonal FTR auctions and the monthly FTR auctions. Figure 60 and Figure 61 show FTR profitability for seasonal and monthly FTRs, respectively, for the last three years.

Figure 60: FTR Profitability Seasonal Purchases, 2007 – 2009

Profitability ($ Millions)

$80 $60 $40 $20 $0

  • -

    $20

  • -

    $40

  • -

    $60

  • -

    $80

Profitability in Off-Peak Hours Profitability in Peak Hours Average Profitability

$0.40 $0.20 $0.00

  • -

    $0.20

Profitability ($/MWh)

Mar-May

Jun-Aug

Sep-Nov

Dec-Feb

Mar-May

Jun-Aug

Sep-Nov

Dec-Feb

Mar-May

Jun-Aug

Sep-Nov

Dec-Feb

2007

2008

2009

Page 91

Document info
Document views669
Page views669
Page last viewedWed Dec 07 14:59:31 UTC 2016
Pages179
Paragraphs5369
Words52656

Comments