Financial Transmission and Auction Revenue Rights
(FTRs/CRRs/TCRs/ARRs)
January 29-30, 2018
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 and complexities 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 2018.   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 North American FTR/CRR/TCR markets
  • Identify how FTR markets are truly beneficial to physical participants
  • Discuss FERC and CFTC agencies’ enforcement of their market manipulation and disruptive trading practice rules over the past year
  • Examine the impact of ISO model building and outage selection practices on market participant FTR bidding strategies and revenue
  • Assess how to manage risk through cleared futures
  • Examine proposed CRR auction process proposed for California ISO
  • Evaluate what the forfeiture rule is intended to resolve, what’s the real issue and whether it is really needed
  • Compare FTRs with non-FTR congestion management measures

Credits

AP_Logo

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 1.2 CEUs for this conference and 0.3 CEUs for each workshop.

Instructional Methods

PowerPoint presentations and case studies will be used in program.

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.

Agenda

Monday, January 29, 2018

12:30 – 1:00 p.m. :: Registration

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


1:15 – 3:15 p.m. :: Updates and Upcoming Plans/Proposals from All North American ISOs re: Their FTR Auctions, Markets and Processes

North American transmission system operators will provide a synopsis of how its transmission congestion market adjusted its operations and what impacts this produced.

  • California ISO (CAISO)
  • ERCOT
  • Independent Electricity System Operator (IESO)
  • ISO New England (ISO-NE)
  • Midcontinent ISO (MISO)
  • New York ISO (NYISO)
  • PJM Interconnection (PJM)

3:15 – 3:30 p.m. :: Afternoon Break


3:30 – 5:00 p.m. :: FERC, CFTC and Private Enforcement Update

This panel will discuss the agencies’ enforcement of their market manipulation and disruptive trading practice rules over the past year.  Further, it will discuss the potential for additional liability through private enforcement actions brought under the antitrust laws.  Topics will include:

  • Summary of FERC and CFTC enforcement actions and open public investigations
  • Discussion of potential future liability under the antitrust laws
  • Possible changes to the agencies’ enforcement postures due to the new administration
  • The increased need for proactive compliance programs and internal trade surveillance

Shaun Ledgerwood, Principal, The Brattle Group

Terence Healey, Partner, Sidley Austin LLP

Tim Helwick, Special Counsel – Division of Analytics and Surveillance, Federal Energy Regulatory Commission (FERC) 

Chloe Cromarty, Compliance Manager, Mercuria Energy Trading  

5:00 – 6:00 p.m. :: Networking Reception


Tuesday, January 30, 2018

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


8:00 – 9:00 a.m. :: Are FTR Markets Benefitting Physical Participants (Traditional Utilities, Public Power, Competitive Retail Load and Merchant Generation)?

  • Hedging strategy examples
  • Renewable energy, DER and storage resources

Scott Harvey, Consultant, FTI Consulting

Howard Haas, Chief Economist, PJM Interconnection

Abram Klein, Managing Partner, Appian Way Energy Partners


9:00 – 10:00 a.m. :: Market Monitoring (DMM) Proposal that Would Re-Set Design of Congestion Revenue Rights (CRR) Auction in CAISO

  • Where are the dollars flowing in the CAISO congestion market? What is the impact on ratepayers in California?
  • Should the ISO continue auctioning CRRs under the current design?
  • What improvements could be made to the current design?
  • If the current proposal for auction re-design is not enacted, should other CRR market adjustments be considered?  If so, what?  If not, why?

Kallie Wells, Senior Consultant, Resero Consulting and Western Power Trading Forum

Ryan Kurlinski, Manager – Analysis and Mitigation Group Market Monitor, California ISO (CAISO)

Gillian Biedler, Energy Resource Analyst, Northern California Power Agency

Guillermo Bautista Alderete, Director – Market Analysis & Forecasting, California ISO (CAISO)

10:00 – 10:15 a.m. :: Morning Break


10:15 – 11:15 a.m. :: Credit Rules Around FTRs

  • How should the ISOs properly model future transmission upgrades in FTR auctions?
  • How do the ISOs approach collateralizing FTR risk today? What’s working and what could be done better?
  • Is it appropriate for ISOs to forecast future congestion as a means of setting collateral levels? If so, should they share this information publicly?
  • Lessons from exchanges: Should ISOs consider raising minimum capitalization requirements and mark-to-market margining?

Carrie Bivens, Manager – Forward Markets, ERCOT

Asanga Perera, Manager – Market Simulation, PJM Interconnection

Matthew Tate, Managing Director, DC Energy


11:15 a.m. – 12:15 p.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
  • Credit challenges across the ISO FTR markets
  • The case for a coordinated solution

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

Noha Sidhom, CEO, TPC Energy, LLC 

12:15 – 1:15 p.m. :: Group Luncheon


1:15 – 2:15 p.m. :: FTR Forfeiture Rules: Are They Effective Manipulation Deterrents?

  • How is it working?
  • Is it an improvement from previous procedure?
  • PJM Response to FERC EL 14-37-000
  • Are the right FTRs getting mitigated?
  • Is it an improvement from previous procedure?
  • Parsing false positives and false negatives

Asanga Perera, Manager – Market Simulation, PJM Interconnection

Scott Harvey, Consultant, FTI Consulting

Roxie Ward, FTR Trader, BioUrja


2:15 – 3:15 p.m. :: Virtual Market and Price Convergence

  • Do the markets need an hourly congestion product (e.g., UTC in PJM, PTP in ERCOT)?
  • What are the benefits of virtuals trading?
  • Is price convergence the primary or only measure of success?
  • At what level of locational granularity should trading be allowed to yield the optimum outcome(s)?
  • Converting monthly FTRs to daily FTRs
  • ERCOT a model to emulate?
  • Use of virtuals to support hedging contracts

Howard Haas, Chief Economist, Monitoring Analytics

Wesley Allen, President, Red Wolf Energy Trading

3:15 – 3:30 p.m. :: Afternoon Break


3:30 – 4:30 p.m. :: FTR Model Building and Outage Selection Process

  • Transmission modeling as it relates to FTR model
  • New equipment into service
  • Project slippage and scheduling uncertainty
  • Over-estimating congestion when it does come online
  • Criteria for outage selection in building the monthly model file (e.g., picking one set of outages to apply to whole)

Carrie Bivens, Manager – Forward Markets, ERCOT

Robert Pike, Director – Market Structure and Product Management, New York ISO (NYISO)


4:30 – 5:30 p.m. :: Are FTR Auction, Allocation Timelines and Durations Satisfying the Hedging Needs of Retail Access and POLR Sellers?

Are the FTR durations available for sale in auctions long enough to meet the hedging needs of retail access and provider of last resort (POLR) sellers? Does FTR auction timing work for retail and POLR sellers? Do balance of period auctions provide a sufficiently liquid market for rebalancing congestion hedges?

Sergio Brignone, FTR Senior Trader, Vitol

Kallie Wells, Senior Consultant, Resero Consulting and Western Power Trading Forum

5:30 p.m. :: Conference Adjourns

Workshops

Pre Conference Workshop

Post Conference Workshop


FTR Trading Fundamentals & Tools

Monday, January 29, 2018

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.   Useful tools and techniques for building FTR valuations will be examined, as well as numerical illustrations of an FTR in the money and out of the money, an explanation of drivers behind each, and considering the objectives of these market participants: trading/financial cos, generators and load.

Learning Outcomes

  • Identify and review the price formation mechanisms in nodal markets
  • Review the purpose of financial transmission rights (FTRs) within nodal markets and their financial form
  • Examine the causes of transmission congestion and the relationship to FTRs
  • Sources of info and software to forecast LMP and congestion
  • Discuss the modelling approaches and the tools available for FTR valuation
  • Assess FTRs in the money and out of the money, and an explanation of drivers behind each

Agenda

7:45 – 8:15 a.m. :: Registration and Continental Breakfast

8:15 – 8:30 a.m. :: Overview and Introductions

8:30 – 11:45 a.m. :: Program Content

(includes 15 min morning break)

11:45 a.m. :: Workshop Adjournment

  • Discuss the Fundamentals of Nodal Pricing
  • Review the Elements of FTR Markets
    • Types
    • Period
    • Settlement
    • Etc
  • Transmission and Generation Modeling as it Relates to FTR model
    • Shift factors
    • Line outage distribution factors
    • Etc.
  • Useful Tools and Techniques for Building FTR Valuation
  • Sources of Information and Software to Forecast LMP and Congestion
  • Impact on Congestion Pricing of Expected Market Changes
    • New generation
    • Retirements
    • New transmission
    • Changes in the fuel prices markets
    • Etc.
  • Numerical Illustrations of an FTR in the Money and Out of the Money, and Explanation of Drivers Behind Each, and Considering These Market Participant Objectives
    • Trading/Financial cos
    • Generators
    • Load

Instructor

Assef Zobian, Founder & President, Cambridge Energy Solutions, LLC

Dr. Assef Zobian is Founder and President of Cambridge Energy Solutions, LLC, which provides information and software tools to assist market participants in analyzing the electricity markets on a locational basis, forecast and value transmission congestion, and to understand the fundamental drivers of short- and long-term prices. He is an electrical engineer with more than a dozen years’ experience in power systems technology, economics, and planning.  Prior to founding CES-US, Dr. Zobian was Vice President of Tabors Caramanis & Associates (TCA), where he worked on some 30 different generation and transmission asset and rights valuations with a total value of more than $20 billion. He led the team to define the structure and tariff for the first for-profit Transmission System Operator (TransCo) in the US.  Before joining TCA, Dr. Zobian was a consultant at Putnam, Hayes & Bartlett, where he worked on developing models for least-cost economic dispatch for secure and economic operation of electric power systems and methods to compute the associated marginal costs of real power.  He earned his MS and Ph.D. from the Massachusetts Institute of Technology. He also has BS and ME degrees from the American University of Beirut.


Framework-Based Approach to Building an Effective Trade Surveillance System and Compliance Program

Wednesday, January 31, 2018

Overview

Market participants who engage in trading activity, especially using FTRs and virtuals, find it increasingly imperative to develop trade surveillance systems as a key component of demonstrating a “culture of compliance” with respect to the Federal Energy Regulatory Commission’s (FERC’s) anti-manipulation rule.  What market participants require is a blueprint for how to design and implement a practical system from the ground up that incorporates those best practices.

This workshop will summarize the FERC guidelines, then provide an example of a logical approach to building such systems using a framework developed for analyzing manipulative behavior.  The approach presented is consistent with the “effective practices” outlined in two FERC staff white papers published in late 2016, and can be implemented to develop trading compliance procedures in line with those recommended by the FERC.  (This approach is also broadly applicable to other trade surveillance applications, such as for the Commodity Futures Trading Commission (CFTC).)  It will demonstrate how the effective practices identified by the FERC’s Office of Enforcement coalesce into a simple set of flags and screens that can serve as the basis of a trade surveillance program.  The workshop subsequently describes an approach to trading compliance, which diagrams a logical framework to identify and understand manipulative behavior.  Finally, case studies will illustrate the coordination of a real-time surveillance system with a firm’s trade submission platform to exhibit the trade-off between improved profitability and compliance risk.

Learning Outcomes

  • Review and provide a summary of salient surveillance and compliance best practices from two recent FERC white papers
  • Create a framework for analyzing market manipulation
  • Examine effective trade surveillance measures and forensic trade surveillance using the framework
  • Assess the trade-off between improved profitability and compliance risk coordination of a real-time surveillance system with the firm’s trade submission platform
  • Evaluate examples of how trade surveillance systems can help companies to avoid enforcement concerns and increase profitable trading opportunities

Agenda

7:45 – 8:15 a.m. :: Registration and Continental Breakfast

8:15 – 8:30 a.m. :: Overview and Introductions

8:30 – 11:45 a.m. :: Workshop Timing


Basis of Surveillance and Compliance Framework

  1. Summary of two recent FERC white papers offering substantive guidance for companies seeking to develop effective compliance programs

Trade Surveillance Measures

  1. Documentation of legitimate and manipulative trades
  2. Trade monitoring and surveillance
  3. Surveillance “Flags”
  4. Surveillance “Screens”
  5. The need for audits

Compliance Process

  1. A framework for analyzing market manipulation
  2. Avoiding triggers, nexus and targets
  3. Forensic trade surveillance using the framework
  4. Data concerning the accumulation, liquidation and/or settlement of the instruments traded in the market participant’s portfolio(s) over time (i.e., “rolled up” transactions data, pre-categorized as potential manipulation triggers or targets)
  5. Intelligence concerning the market and out-of-market payment mechanisms that influence or are influenced by trading those instruments
  6. Prioritizing potential nexuses that have been or are likely to be the subject of enforcement activity
  7. Flags and screens
  8. Pitfalls
  9. Vetting and improving surveillance screens
  10. Scaling the sensitivity of the flags and associated screens
  11. Regular updates to surveillance tools
  12. Regular performance audits of the screens and their reporting systems
  13. The trade-off between improved profitability and compliance risk coordination of a real-time surveillance system with the firm’s trade submission platform

Market Manipulation Case Studies and Avoidance Best Practices

  1. Examples of how trade surveillance systems can help companies to avoid enforcement concerns and increase profitable trading opportunities

Instructors

Christopher J. Polito

CHRISTOPHER J. (C.J.) POLITO is an associate in the Energy practice group in the Washington, D.C. office Mr. Politoof Sidley Austin.  He represents clients on a variety of regulatory, enforcement, compliance and transactional matters involving the U.S. wholesale electricity and natural gas markets. Mr. Polito has extensive experience representing clients in regulatory proceedings and investigations before the Federal Energy Regulatory Commission (FERC), the Commodity Futures Trading Commission (CFTC) and state energy regulatory agencies. He regularly advises energy traders and marketers on physical and financial wholesale power transactions, mergers and asset acquisition approvals, regional energy market rules and tariff requirements, power purchase and sale agreements, and issues related to the design and operation of wholesale energy and capacity markets. Mr. Polito also advises energy companies, marketers, financial institutions, private equity funds and institutional investors and advisors on regulatory requirements under the Federal Power Act, the Natural Gas Act, the Public Utility Holding Company Act, and the creation and implementation of robust compliance programs.  Prior to joining Sidley, he practiced at an international law firm focusing on regulatory and commercial issues in the area of energy law.


John Tsoukalis, Senior Associate, The Brattle Group

John Tsoukalis is a senior associate at The Brattle Group with educational training in economics and experience in electricity sector economics and regulation. He has experience helping utilities with strategic planning initiatives on a broad range of topics, including integrating and evaluating emerging technologies and utility services; transmission development; participation in regional wholesale power markets; and assessing the regulatory and market risks associated with certain strategy bidding behaviors. His work experience includes performing a nodal production cost simulation of a regional wholesale power market, evaluating generation and transmission assets, developing strategic plans for integrating new technology, analyzing resource investment opportunities, and estimating the impact of dynamic rate designs.  Mr. Tsoukalis is also engaged with utility clients to determine their regulatory exposure due to bidding practices in the wholesale electricity markets. He has helped develop tests to detect the presence of uneconomic behavior and to assess the potential price distortion caused by this behavior. He is assisting several clients in defending against investigations or enforcement actions for allegedly manipulative behavior. Mr. Tsoukalis has supported the development of testimony to assist regulatory agencies with their design of appropriate tariff provisions to properly allow for adequate cost recovery while identifying and mitigating potentially manipulative behavior.  In addition, he has also garnered experience analyzing developments in the transmission sector, including regional transmission planning regimes, recent regulatory changes involving competitively sourced investment, and the changing drivers of transmission investment growth.

Speakers

Wesley Allen, President, Red Wolf Energy Trading

Carrie Bivens, Manager – Forward Markets, ERCOT

Guillermo Bautista Alderete, Director – Market Analysis & Forecasting, California ISO (CAISO)

Gillian Biedler, Energy Resource Analyst, Northern California Power Agency

Sergio Brignone, FTR Senior Trader, Vitol

Chloe Cromarty, Compliance Manager, Mercuria Energy Trading

Howard Haas, Chief Economist, PJM Interconnection

Scott Harvey, Consultant, FTI Consulting

Terence Healey, Partner, Sidley Austin LLP

Tim Helwick, Special Counsel – Division of Analytics and Surveillance, Federal Energy Regulatory Commission (FERC)

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

Abram Klein, Managing Director, Appian Way

Ryan Kurlinski, Manager – Analysis and Mitigation Group Market Monitor, California ISO (CAISO)

Shaun Ledgerwood, Principal, The Brattle Group

Asanga Perera, Manager – Market Simulation, PJM Interconnection

Robert Pike, Director – Market Structure and Product Management, New York ISO (NYISO)

Noha Sidhom, CEO, TPC Energy, LLC 

Matthew Tate, Managing Director, DC Energy

Roxie Ward, FTR Trader, BioUrja

Kallie Wells, Senior Consultant, Resero Consulting and Western Power Trading Forum

Location

Hyatt Regency Crystal City
2799 Jefferson Davis Hwy
Arlington, VA 22202

To reserve your room, please call 1-703-418-1234
Please indicate that you are with the EUCI group to receive the group rate.

Click here to book online

Room Rate:

The room rate is $159.00 single or double plus applicable taxes.

Room Block Dates:

A room block has been reserved for the nights of January 28 – 30, 2018.

Rate Available Until:

Make your reservations prior to January 7, 2018. There are a limited number of rooms available at the conference rate. Please make your reservations early.

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