By - Jon Brown

Financial Transmission Rights (FTRs/CRRs/TCRs)
January 25-26, 2017 | Washington, DC

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Overview

Financial transmission (FTR), and congestion revenue rights (CRRs and TCRs) facilitate mandatory, competitive, open transmission access. While the use of FTRs and CRRs is more or less a customary practice among physical market participants, their increasing use as a purely financial instrument has introduced additional options for the efficient operation of the wholesale power marketplace.

Several market conditions are pushing FTR and CRR practices into more than just a hedging exercise. ISOs and RTOs, along with market participants, are constantly adjusting to ever-changing regulatory and oversight requirements associated with trading practices, credit and risk.  In addition, there are many questions about the impacts to congestion management and FTR/CRR/TCR markets that are being felt as weather, environmental regulations and accelerating renewable energy penetration compound transmission congestion on the system.

This conference will discuss how these trends are affecting transmission congestion instruments operating in the wholesale electricity markets in 2017. It will also consider what system operators, market economists and design consultants as well as market participants are doing to adjust their practices accordingly. And it will examine what’s under development now that could influence future market conditions and measures.

Learning Outcomes

  • Review updates to processes and auctions in all U.S. FTR/CRR/TCR markets
  • Identify what trading organizations can do to proactively manage swaps manipulation risks
  • Analyze the primary purpose of FTRs in allocating balancing congestion
  • Discuss if there is an ideal set of time-based congestion products for the market, and which ones work best together
  • Examine the impact of ISO modeling practices on market participant FTR bidding strategies and revenue
  • Assess how to manage risk through cleared futures
  • Examine improvements enacted to, and proposed for, the ARR/CRR allocation process

Credits

EUCI has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET).  In obtaining this accreditation, EUCI has demonstrated that it  complies with the ANSI/IACET Standard which is recognized internationally as a standard of good practice. As a result of their Authorized Provider status, EUCI is authorized to offer IACET CEUs for its programs that qualify under the ANSI/IACET Standard.

EUCI is authorized by IACET to offer 1.0 CEUs for this conference and 0.3 CEUs for each workshop.

Requirements For Successful Completion Of Program

Participants must sign in/out each day and be in attendance for the entirety of the conference to be eligible for continuing education credit.

Instructional Methods

This program will use a combination of PowerPoint presentations, case studies and panel discussions.

Agenda

Wednesday, January 25, 2017

12:30 – 1:00 p.m.  Registration

1:00 – 1:15 p.m. :: Introduction and Overview

1:15 – 3:15 p.m. :: FTRs – The Markets’ Year in Review

Each of the U.S. transmission system operators will provide a synopsis of how its transmission congestion market adjusted its operations and what impacts this produced.

CAISO
ERCOT
ISO New England (ISO-NE)
Mid-Continent ISO (MISO)
New York ISO (NYISO)
PJM Interconnection (PJM)
Southwest Power Pool (SPP)

3:15 – 3:45 p.m. :: Networking Break

3:45 – 5:00 p.m. :: Implications of FERC Order (EL16-6-001) RE: PJM Cross-subsidies Relating to ARR and FTR Holders

This session will be an open forum to discuss the implications for PJM operations, the impact on market participants and the ramifications for other system operators, markets and their market participants re:

  • Allocation of balancing congestion
  • FTR portfolio netting
  • ARR allocation
  • Retired paths

Thursday, January 26, 2017

7:30 – 8:00 a.m. :: Continental Breakfast

8:00 – 9:00 a.m. :: Risk Management Options for Energy Portfolios
  • Energy Futures Industry Overview
  • Price Risk Management
  • Credit Risk Management
  • Liquidity Risk Management
  • Potential Exchanging of FTRs for Futures
9:00 – 10:00 a.m. :: Keeping Current with FTR Mark to Market (MTM) Best Practices
  • Requirements to mark-to-market FTRs
  • Nuances of each ISOs current contract types for MTM
  • Are there multiple, correct ways to establish mark-to-market values?
  • Compensation mechanisms
  • Relationship to FTR under-funding

10:00 – 10:30 a.m. :: Morning Break

10:30 a.m. – 12:00 p.m. :: Influence of Non-Traditional (Renewable and Distributed) Generation  and Storage Resources on Congestion Processes and Markets

As the retirement of traditional baseload generation and supply resources accelerates, the transmission system and paths that formed around these supply assets are less correlated to the congestion patterns around which many FTRs are allocated.  This discussion will consider how these shifting congestion patterns are affecting transmission paths and allocations, as well as these market consequences:

  • Where are the market disruptions?
  • How can these disruptions be mitigated?
  • Who are the stakeholders affected by these disruptions?
  • What role do FTRs/CRRs/TCRs play as financial instruments of choice for market participants to hedge around baseload retirements?
  • What additional rights can be allocated to market participants over time as generation is retired?
  • Should there be recovery mechanisms to account for the re-distributed transmission flow?

12:00 –  1:15 p.m. :: Group Luncheon

1:15 – 2:30 p.m. :: The Future of FERC Enforcement and Its Implications on Broader FTR/CRR Portfolio & Transaction Management

A recent FERC white paper summarized the agency’s past and present anti-manipulation enforcement efforts, including several cases where market participants are alleged to have used intentionally-uneconomic physical or virtual transactions to benefit the value of their FTRs/CRRs.  A second white paper provided insights regarding what the agency considers to be effective (and ineffective) measures for anti-manipulation compliance.  This panel will address the issues raised by these papers as they apply to future FERC enforcement efforts, and will discuss perspectives concerning how enforcement priorities may change under the new administration.  The topics covered will include:

  • How the FERC’s current enforcement posture impacts the trading of other instruments by clients with large speculative FTR/CRR portfolios
  • Whether the FERC is providing market participants with a consistent picture of the behavior it deems manipulative versus legitimate
  • Whether the compliance expectations expressed by the Commission are reasonable for market participants to attain
  • How the new administration may affect the Commission’s future enforcement of its anti-manipulation rule
2:30 – 3:30 p.m. :: Congestion Revenue Auctions: Critical to the Markets, or a Contrivance?

The CAISO Dept of Market Monitoring has proposed the evaluation of fundamental changes to the CRR auction.  In a white paper recently issued, it has proposed alternative auction designs that eliminate the sale of residual transmission capacity in the CRR auction.  The main driver of this proposal, namely the issue of CRR (FTR) auction profitability, has been brought up in several other markets.  Regularly transmission capacity in the auctions is sold for cents on the dollar.  Since in most cases the congestion revenues that go to fund these inexpensive FTRs would otherwise go to transmission customers, ISOs are effectively making transmission customers unwilling sellers of congestion rights.   This panel will address the questions associated with concerns raised by the CAISO DMM as they relate to that and all the markets, including:

  • Should FTR auctions be eliminated or redesigned?
  • Are auctions competitive?  Can competitiveness improve?
  • Are the benefits derived by ratepayers from FTR auctions worth their cost?
  • Are there viable mechanisms for transmission customers to establish their willingness to sell transmission capacity in the form of congestion rights?

3:30 – 3:45 p.m. :: Afternoon Break

3:45 – 5:00 p.m. :: Will FTR/CRR/TCR Deficiency Funding Issues Ever Be Resolved to the Satisfaction of All?

Full funding of FTRs is an objective, though not a requirement, in all markets. However, revenue inadequacy is a recurring issue in several markets, caused when FTRs are “oversold”, which creates balancing congestion, thereby reducing the funds available to pay FTR holders. These FTR holders are paid less when FTR revenues, including balancing congestion, are reduced. Could it be that the very basis for the creation of congestion products no longer applies? This panel will focus on symptoms, as wells as solutions, to the underfunding issues.

5:00 p.m. :: Program Adjourns

Workshops

Pre Conference Workshop:  FTR 101
Post Conference Workshop: How Congestion Pricing Works


FTR 101

Wednesday, January 25, 2017

8:00 – 8:30 a.m. :: Registration and Continental Breakfast

8:30 – 11:45 a.m. :: Workshop Timing

11:45 a.m. :: Lunch on your own

Overview

This workshop will explain the key concepts of nodal markets as they relate to FTRs, as well as provide a base of knowledge to make the ensuing FTR conference more understandable. The topic of FTRs will be introduced with a brief discussion of the motivation for nodal electricity markets and centralized dispatch. The purpose of FTRs within nodal markets and their financial form will be examined.

The auction process for buying and selling FTRs will be presented with an overview of how each of the different ISOs has a slightly different implementation (and a slightly different name) for FTRs and auctions. These fundamental FTR concepts will be reinforced by the presentation of historical scenarios from the perspective of both hedging and speculative market participants. An overview of some of the changes and topics of concern for FTRs over the past few years will be introduced, in support of the greater details and nuances developed through the remainder of the conference.

Learning Objectives

  • Analyze the purpose and components of FTRs and the motivation for nodal electricity markets
  • Review the process for FTR auctions and ARR allocations
  • Compare and contrast different ISO implementations of FTRs
  • A gain workshop based experience of decision process for both hedging and speculative market participants
  • Review current hot topics with FTRs

Agenda

  • Brief basics review of nodal markets and LMP
  • Walk through of general FTR/CRR/TCR auction and ARR allocation process
  • Comparison of ISO FTR/CRR/TCR implementations
  • Hedging market participant scenario
  • Speculative market participant scenario

 


How Congestion Pricing Works

Friday, January 27, 2017

8:00 – 8:30 a.m. :: Registration and Continental Breakfast

8:30 – 11:45 a.m. :: Workshop Timing

Overview

This workshop focuses on developing the skills required to successfully utilize fundamental congestion analysis results as a tool for improving financial performance in FTR markets. This includes understanding of:

  • The market clearing mechanisms that result in congestion pricing
  • The data required to model congestion
  • The challenges of dealing with uncertainty and limited information and methods to address them
  • The type of information that can and cannot be extracted from congestion models

Learning Outcomes

  • Identify the advantages and limitations of congestion analysis
  • Review what types of tools and information is needed to set up a congestion study
  • Discuss how the objective of congestion studies drives modeling methods and assumptions
  • Review how analysts can deal with very large amounts of uncertain and incomplete data
  • Assess how to understand and analyze congestion study results
  • Discuss how to effectively use congestion analysis as part of an FTR strategy

Agenda

  • Background: The introduction of locational electricity pricing
  • Review of basic concepts
    • Optimization
    • Power systems modeling: unit commitment and economic dispatch
    • Decision making under uncertainty
  • Modeling uncertainty
    • Unknown vs. uncertain data
    • Tools for characterizing and modeling uncertainty
  • Unit commitment and economic dispatch models for FTR analysis
    • Objectives: what can we learn from a congestion model?
    • Input data
    • Information needed to set up a congestion model
    • Dealing with the unknown: reasonable modeling assumptions
    • Setting up a congestion model: putting the pieces together
    • Running a simulation and validating results
  • Output analysis
    • Fitting congestion study results into our ARR/FTR strategy

Speakers

Guillermo Bautista Alderete, ‎Manager – Market Validation & Quality Analysis, California ISO (CAISO)

Carrie Bivens, Manager – Forward Markets, ERCOT

Ron Coutu, Strategic Market Advisor – Business Architecture and Technology Group, ISO New England (ISO-NE )

Zakaria Joundi, Manager – FTR and Pricing Administration, Mid-Continent ISO (MISO)

Pradip Ganesan, Market Product Specialist – Energy Market Design, New York ISO (NYISO)

Asanga Perera, Manager of Market Simulation, PJM Interconnection (PJM)

Ty Mitchell, Supervisor – Congestion Hedging, Southwest Power Pool (SPP)

Veronica Bosquez, Vice President – Congestion Management, Customized Energy Solutions (CES)

Sergio Brignone, FTR Senior Trader, Vitol

Mark Gilrain, Chair of MISO FTR Working Group and Director – FTR Trading, BETM

Shaun Ledgerwood, Principal, The Brattle Group

Mak Nagle, Senior Director – Transmission and Business Development, Apex Clean Energy

Harry Singh, Vice President – US Power Trading, Goldman Sachs

Demetri Karousos, Managing Director – Market Administration & Surveillance and Chief Risk Officer, Nodal Exchange

David Applebaum, Partner, Akin Gump

Todd Mullins, Managing Partner – Washington office and Chair – Energy Enforcement Practice Group, McGuireWoods

Abram Klein, Managing Partner, Appian Way Energy Partners

Howard Haas, Chief Economist, Monitoring Analytics

Location

Grand Hyatt Washington
1000 H Street NW
Washington, DC 20001

To reserve your room, please call 1-202-582-1234 or book online here.
Please indicate that you are with the EUCI group to receive the group rate.

Room Rate:

The room rate is $239.00 single or double plus applicable taxes.

Room Block Dates:

A room block has been reserved for the nights of January 24 – 26, 2017.

Rate Available Until:

Make your reservations prior to January 3, 2017. There are a limited number of rooms available at the conference rate. Please make your reservations early.

Register

Event Standard RateAttendees
Proceedings package US $ 395.00
Sponsor
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