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2009 State of the Market Report

Transmission Congestion

due to transmission outages associated with a number of upgrade projects. This resulted in congestion that was not reflected in the FTR prices, which is not surprising because the FTRs are sold ahead of the month. Typically, FTR prices will respond with a lag. In this case, however, the FTR prices did not respond because participants understood that the outages were transitory and the elevated congestion levels were unlikely to persist.

Figure 66: Comparison of FTR Auction Prices and Congestion Value Michigan Hub, 2007 – 2009: Peak Hours

Value Relative to Cinergy Hub ($/MWh)

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DA Congestion Auction Price

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2008 2009

Overall, these results for Michigan Hub indicate reasonably good convergence between FTR prices and the value of day-ahead congestion. Convergence can be challenging on the Michigan interface because the congestion frequently switches direction. In addition, Michigan congestion is often impacted by loop flows around Lake Erie. When the Phase Angle Regulators (“PARs”) on the Midwest ISO-to-IESO interface are fully operational, convergence should improve. Of the four PARs currently designed to control the interface; one is in operation, two more are available but not in operation, and the fourth is being repaired. Additional agreements are still needed on PAR operation and scheduling.

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