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2009 State of the Market Report

Transmission Congestion

Figure 67: Comparison of FTR Auction Prices and Congestion Value Michigan Hub, 2007 – 2009: Off-Peak Hours

$40

Value Relative to Cinergy Hub ($/MWh)

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DA Congestion Auction Price

07 08 09 J F M A M J J A S O N D J F M A M J J A S O N D

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2009

G.

Market-to-Market Coordination with PJM

The next series of analyses evaluate the “market-to-market” process between the Midwest ISO and PJM, which is specified in the JOA between the RTOs. The market-to-market process is used by the Midwest ISO and PJM to coordinate the relief of transmission constraints that both systems affect. A market-to-market constraint is a constraint on a Midwest ISO-PJM coordinated flowgate located in either of the RTOs. When a market-to-market constraint is activated, the monitoring RTO that is responsible for coordinating reliability for the constraint provides its shadow price and the quantity of relief requested (the desired reduction in flow) from the other market. The shadow price measures the marginal cost of relieving the constraint.

When the reciprocating RTO receives the shadow price and requested relief, it incorporates these values in its real-time market to provide as much of the requested relief as possible at a cost less than the shadow price. From a settlement perspective, each market is entitled to its FFE on each of the market-to-market constraints. Settlements are made between the RTOs based on its actual

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