The purpose of an FTR is to protect the firm user from increased cost due to transmission congestion. So, FTRs are a purchased right that can hedge against congestion charges incurred on a specified transmission path.
Remember, congestion charges arise when the PJM transmission system is congested and differences in LMPs result from PJM redispatching generators out of merit order to relieve that congestion.
The number of FTRs granted to transmission customers by PJM is limited by the capability of the PJM transmission system (i.e., transmission is a scarce resource).
FTRs are a financial right to receive rebates of congestion charges between two points on the PJM system.
