Financial Transmission Right

What is a Financial Transmission Right?

A Financial Transmission Right (FTR) is a financial instrument that entitles the holder to receive compensation for Congestion Costs that arise when the transmission grid is congested in the Day-Ahead Energy Market, and differences in Day-Ahead Locational Marginal Prices (LMPs) result from the dispatch of generators to relieve the congestion. Each FTR is unidirectional and is defined in megawatts from a point of receipt (where the power is injected onto the New England grid) to a point of delivery (where the power is withdrawn from the New England grid). For each hour when there is congestion on the New England Transmission System between the receipt and delivery points specified in the FTR, the holder of the FTR is awarded a share of the congestion charges collected for that hour. FTRs are financial entitlements to the Day-Ahead Locational Marginal Price Congestion Component differences for the associated receipt and delivery points. They do not represent a right for physical delivery of power. Market Participants can submit bids for FTRs in ISO administered Auctions, which take place annually and monthly. FTRs are acquired for bids that clear in an Auction.

In what document(s) do I find details about Financial Transmission Rights?

Primary provisions for the settlement of Financial Transmission Rights are included in, but not limited to Market Rule 1, ISO New England Manual for Financial Transmission Rights Manual M-06 and ISO New England Manual for Market Rule 1 Accounting Manual M-28.

Who can expect to incur a Financial Transmission Right Credit or Charge?

FTR Auction

The FTR Auction cleared bids for FTRs can result in either charges to the FTR holder to own the FTR, or credits to the FTR Holder to own the FTR. The net of these charges and credits is the total Auction Revenue. The Auction Revenue is distributed to Market Participants via the Auction Revenue Right determination. Market Participants holding FTRs will be charged or credited for the net amount of their cleared FTR positions.

Transmission Congestion Allocation

The ISO determines a target allocation for each hour for each FTR by multiplying the MW amount of the FTR by the difference of the Day-Ahead Congestion Components between the point of delivery and the point of receipt. Positive target allocations (credits) result when the Congestion Component at the point of delivery is greater than at the point of receipt. Negative target allocations (charges) result when the Congestion Component at the point of delivery is less than at the point of receipt. The hourly positive and negative allocations are summed separately, and the financial settlement of the target allocations takes place after the conclusion of the month. Market Participants holding FTRs that have positive target allocations will be credited, and Market Participants holding FTRs that have negative target allocations will be charged. Note that positive target allocations may not be fully funded in a given month. The percentage funding for each month is shown in the FTR Monthly Summary report, posted at Other Markets Data Congestion Revenue Summary. Also see ISO New England Manual for Financial Transmission Rights M-6 for calculation details. Market Participants with FTRs that were not fully paid for positive target allocations will be allocated any excess Transmission Congestion Revenue at the end of the calendar year, in proportion to, but not greater than the unpaid positive target allocations. Market Participants that paid Transmission Congestion Costs in the calendar year will be allocated any excess Transmission Congestion Revenue remaining after the payment described above.

Related Standard Settlements

N/A

Related Billing Adjustments

N/A

Bill Detail

The monthly bill contains line items for FTR Auction charges/credits entitled "FTR Long Term Off-Peak Auction", "FTR Long Term On-Peak Auction", "FTR Monthly Off-Peak Auction", "FTR Monthly On-Peak Auction". The monthly bill display contains a line item for FTR transmission congestion allocation entitled "FTR Transmission Cong Alloc". The monthly bill contains a line item entitled "Excess Transmission Cong Rev", issued each January.

Reports

Daily Financial Position Report

BL_DAILYPOSITION
Daily financial position including all market service settlements and miscellaneous billing adjustments generated on a daily basis; and, issued to all active customers registered as a Participant or Non-Participant.

Hourly FTR Target Allocations Report

SD_HRFTR Summary of the Pool and Participant's positive and negative target allocations by hour, issued upon settlement of Market Day.

Monthly FTR Target Allocations Report

SD_MTFTR Summary of the Pool and Participant's monthly congestion payment, adjusted for Transmission Congestion Revenue shortfalls, issued upon settlement of Market Month.

Related Calculation Summary


Financial Transmission Right Calculation Summary

FERC EQR

N/A

Additional Related Materials


Other Markets Data Financial Transmission Rights

Other Markets Data Congestion Revenue Summary

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