What Are FTRs?
Fixed Transmission Rights are …
a financial contract that entitles holder to a stream of revenues (or charges) based on the hourly energy price differences across the path
Notes:
Read the definition of Fixed Transmission Rights.
- 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.