By - Jon Brown

Financial Transmission, Congestion and Auction Revenue Rights (FTRs/CRRs/TCRs/ARRs)
January 29-30, 2020 | Washington, DC

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Overview

Financial transmission (FTR)/congestion revenue rights (CRRs and TCRs) and auction revenue rights (ARRs) facilitate mandatory, competitive, open transmission access. While the use of these measures is a customary practice among physical market participants, it’s their use as financial instruments that seems to draw the most attention with regard to the efficient operation of the wholesale power marketplace.

Several market conditions are pushing FTR and ARR practices into more than just hedging tools. 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, competing perspectives are advocating adjustments to the ARR and FTR/CRR/TCR markets process, as weather, environmental regulations, accelerating renewable energy penetration and shifts in national energy policy influence how system operators deal with monetizing transmission congestion impacts.

This conference will discuss how these trends are affecting transmission congestion instruments operating in the wholesale electricity markets in 2020.   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
  • Discuss FERC, CFTC and private compliance, surveillance 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
  • Compare FTRs with non-FTR congestion management measures
  • Assess whether FTR markets would significantly benefit from re-design and, if so, in what form(s)
  • Identify credit policies that could reduce vulnerabilities and undue risk exposure as lessons learned from the “GreenHat” case
  • Evaluate the accuracy of auction right allocations and market administration
  • Examine if technical or system limitations are reducing the efficiency or performance of the FTR auction(s)
  • Assess if the day ahead market (DAM) products are functioning in a way so as to converge the DAM and RT markets

Credits

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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 1.1 CEUs for the conference, 0.3 CEUs for the pre-conference workshop and 0.7 CEUs for the post-conference workshop.

 

Requirements for Successful Completion of Program 

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

Instructional Methods 

PowerPoint presentations and case studies will be used for this course. 

Agenda

Wednesday, January 29, 2020

12:30 – 1:00 pm :: Registration

1:00 – 1:15 am :: Welcome and Overview


1:15 – 3:00 pm :: Updates and Upcoming Plans/Proposals from North American ISOs re: Their Transmission Congestion Auctions, Markets and Processes

(includes 15 min break)                                     

North American transmission system operator staff and proxies will provide a synopsis of how their particular transmission congestion markets have adjusted operations and what impacts this has produced.

3:00 – 3:20 pm :: Afternoon Break


3:20 – 5:00 pm :: FTR Regulatory Update: The Compliance Implications of Past and Proposed Changes to the FTR Markets

Several RTOs are changing or have proposed changes related to FTRs, one proposing to do away with them except through bilateral contracts.  This panel will discuss some of those changes and their potential implications on policy, hedging, compliance and enforcement.  Topics will include:

        • Summary of recent and recently proposed changes to the FTR programs in PJM and the CAISO
        • A discussion of the efficiency ramifications of these changes and their policy implications
        • Perspective on how these changes may affect hedging and speculative trading in the affected RTOs
        • Input as to how these changes might affect FERC’s surveillance/enforcement posture and industry compliance

Moderator:

Shaun Ledgerwood, Principal, The Brattle Group

Panelists:

Sean Collins, Director – Division of Analytics and Surveillance, Federal Energy Regulatory Commission (FERC)

Chloe Cromarty, Head – US Power & Gas Compliance, Mercuria Energy Trading

Arnold Quinn, Senior Director FERC-Jurisdictional Markets, Vistra Energy (invited)

5:00 – 6:00 pm :: Networking Reception


Thursday, January 30, 2020

7:45 – 8:15 am :: Continental Breakfast


8:15 – 10:00 am :: How Closely Linked Is/Should Be FTR Market Design to Energy and Capacity Market Design?  Where is the Linkage/Leakage?

        • The connection between PJM price formation reform and FTR market updates
        • Considering the applicability of CAISO auction reforms to other congestion markets?
        • Are there allocation/auction measures working well in certain ISOs that are transferable to other ISOs?
        • As the level of intermittent resource output and storage deployment rises, are ISOs considering changes to congestion allocation/auction requirements to deal better with system volatility and transmission availability?
        • How can market monitors, ISOs, and the FTR engender more confidence in prevailing FTR practices?
        • The impact of FTR practices as perceived by consumers

Scott Harvey, Consultant, FTI Consulting

Howard Haas, Chief Economist, Monitoring Analytics

Guillermo Bautista Alderete, Director – Market Analysis & Forecasting, California Independent System Operator (CAISO)

Abram Klein, Managing Partner, Appian Way Partners

Devin Hartman President and CEO, Electricity Consumers Resource Council (ELCON)

10:00 – 10:20 am :: Morning Break


10:20 am – 12:00 pm :: Penetrating the ARR/FTR Data Black Box

A cornerstone principle of wholesale electricity markets is that the system design should allow for efficient, unbiased operation.  Clear rules and unambiguous administration contribute to maximum transparency and optimum price formation.  When it comes to the allocation and auction of congestion revenue rights, however, many of the systems operating in North American markets don’t seem to measure up to other aspects of market design.  Why is that?  Is there a path forward that would improve this facet of market performance?  Shouldn’t market participants be able to re-create results of the market?  This panel will examine whether changes can be implemented that do a better job of:

  • Ensuring availability and quality of ISO data
  • Accelerating the timing for receipt of data, so that it conveys sufficient value
  • Improving data transparency, allowing for efficient re-formulation and analysis
  • Disclosing the constraints being modeled in the market
  • Specifying, from a user’s (member’s) standpoint, what data is required and in what format it is needed
  • Availability and quality of DAM data for FTR valuation

Moderator:

Narsi Vempati, Senior Vice President, Nexant

Panelists:

Donald House, Supervisor – Congestion Revenue Rights, ERCOT

Nicholas Shaffer, Chief Technology Officer, TPC Energy

Ty Mitchell, Power Trader, Evergy

12:00 – 1:00 pm :: Group Luncheon


1:00 – 2:45 pm :: FTR Credit Policies: Is the Perfect the Enemy of the Good?

      • Lessons (still being) learned from “GreenHat” default and other zero-cost position policies
      • Applicability of general commodity market credit rules
      • Adjustments to ISO/RTO governance and credit policies
      • Trading outside the electricity market construct on a separate exchange?
      • The prospects for third-party clearinghouse(s) in multiple markets
      • ISO customer due diligence and collateral requirements
      • Who is qualified/allowed to purchase FTRs?
      • Given renewed interest in revising RTO credit policies, is it time to revisit Order No. 741?

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

Sharon Midgley, Senior Manager – Wholesale Market Development, Exelon

Noha Sidhom, CEO, TPC Energy Fund

2:45 – 3:00 pm :: Afternoon Break


3:00 – 4:45 pm :: Properly Correlating FTR Outcomes with Costs Related to Supplemental Transmission Projects and Other Transmission Congestion Reduction Measures

        • How frequently should (historical) resources be re-mapped to ensure appropriate auction revenue rights allocations?
        • How significant a role in congestion pricing is the lack of transparency regarding the scheduling of outages?
        • Should other ISOs follow ERCOT’s practice that allows for the purchase of an FTR options contract at every path that is available for a traditional FTR contract?
        • Transmission modeling as it relates to FTR model
        • Re: transmission development to reduce congestion, was FERC 1000 the fix or the fault?
        • 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)

Mike Borgatti, Vice President – RTO Services & Regulatory Affairs, Gabel Associates

Steve Lieberman, Director – PJM Regulatory Affairs, American Municipal Power

Andrew Stevens, Managing Director, Direct Energy

4:45 pm :: Conference Adjourns

Workshops

Pre-Conference Workshop

Post Conference Workshop


FTR Trading Fundamentals & Tools

Wednesday, January 29, 2020

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.   The workshop will also consider numerical illustrations of an FTR in the money and out of the money with an explanation of drivers behind each, and consideration of the objectives of these different market participants: financial traders, generators, and load serving entities.

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
  • Assess FTRs in the money and out of the money, and an explanation of drivers behind each

Agenda

7:45 – 8:15 am :: Registration and Continental Breakfast

8:15 – 8:30 am :: Overview and Introductions


8:30 – 10:00 am :: Program Content

  • Transmission and Congestion
    • Kirchhoff’s Laws
    • Shift factors
  • Fundamentals of Nodal Pricing
    • Basic LMP constructs and relationship to congestion
  • Why FTRs?
  • Elements of FTR Markets
    • Auctions
    • Period
    • Settlement
    • Overview of processes in different ISOs

10:00 – 10: 15 am :: Morning Break


10: 15 – 11:45 am :: Program Content

  • Congestion Funding
    • Flow of congestion funding
      • Where does the congestion money come from?
      • How it gets paid out
    • Revenue adequacy
  • 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, Explanation of Drivers Behind Each, and Consideration of Different Market Participant Objectives
    • Financial traders
    • Generators
    • Load serving entities

11:45 am :: Workshop Adjournment

Instructor

Maheen Bajwa, Director – Power & Utilities, FTI Consulting

Maheen Bajwa is a Director in the Power & Utilities practice at FTI Consulting and is based in Boston, MA. She specializes in economic analysis, the construction of financial models, and large, complex datasets.  She has been involved in the evaluation of historical FTR profitability and collateral requirements at two ISOs.  Ms. Bajwa has developed FTI’s in-house model designed to estimate the cost of capital for various US utilities and a framework for identifying M&A opportunities, as well as worked on projects involving energy policy reform and cost of service modeling.  Her economic consulting experience has also included matters related to renewable energy such as negative wholesale electricity pricing and retail rates for distributed generation, wholesale electricity market design, and the analysis of utility customer usage and demand data in the context of a rate design dispute.  Ms. Bajwa holds a Master’s Degree in Economics from the London School of Economics and Political Science and a Bachelor’s Degree in Economics from Vassar College.


Benefitting from the use of an FTR Market Simulator

Friday, January 31, 2020

Overview

Each ISO provides data to allow market participants to gain insight into its FTR market and to simulate historical auctions as well as to assess upcoming auctions.  Certain data such as prior bids and offers are provided following sufficient time lag.  Of course, proprietary data are blocked and upcoming bids and offers are unknown. 

This workshop will explain the complete data needed for market participants to obtain insights into the FTR markets, framed within what ISOs provide. Strategies to provide remedies for missing data will be presented and discussed.

The key concepts of FTR markets will be explained and a base of knowledge will be provided regarding how to utilize data provided by the ISOs to simulate historical auctions and allocations as well as how to better prepare for an upcoming auction as either a speculator or hedger.

Learning Outcomes

  • Review the types and forms of data used by North American FTR/TCR/TCC/CRR markets
  • Discuss the interaction of these data types (e.g. phase-shifting transformers) and their impacts upon market clearing
  • Assess the sensitivity of allocation and auction results to less-than-complete data sets
  • Examine the differences in data set-up between single-period monthly auctions and multi-period (co-optimized) seasonal auctions
  • Evaluate differences between Auction Revenue Rights (ARR) allocation and Financial Transmission Rights (FTR) auction problem definitions and solution methodology
  • Explore the outcomes of allocations and auctions and determine causes of significant impacts upon clearing
  • Examine the impacts of scheduling ARRs into the FTR auction
  • Identify impacts of outages and other network model changes upon allocation and auction clearing as well as upon expected settlement return from the Day-Ahead market
  • Consider the impacts of potential market rule changes
  • Assess increase in network capacity for incremental upgrades

Agenda

7:45 – 8:15 am :: Registration and Continental Breakfast

8:15 – 8:30 am :: Overview and Introductions


8:45 – 10:00 am :: Program Content

  • The simulation of FTR markets
  • Obtaining data

10:00 – 10:20 am :: Morning Break


10:20 – 11:45 am :: Program Content

  • Differences in the ISOs from the perspective of the simulation
    • TOUs
    • Coupled (co-optimized multi-period) versus uncoupled optimization
    • PTP options and obligations
    • Multi-round auctions and multi-stages of allocations
    • Linear versus non-linear network models
    • Accommodation of phase-shifting transformers and DC lines
    • Modeling uncompensated loop flow
    • ARR results
    • Existing positions (MW rights held from prior auctions)
    • Bid and offer curves versus price/quantity bids
    • Data not provided by the ISO

11:45 am – 1:00 pm :: Group Luncheon


1:00 – 2:40 pm :: Program Content

  • Benefits of running a simulator
    • Assess the remaining capacity before the auction or allocation
    • Obtaining all shift factors
    • Determining interactions of supplied portfolios
    • Other strategizing
  • Basic data requirements for a transmission rights auction or allocation
    • Network model, contingency cases, monitoring, outages
    • Pricing node definitions and participation factors
    • Uncompensated loop flow definitions

2:40 – 3:00 pm :: Afternoon Break


3:00 – 4:45 pm :: Program Content

  • Preparation for an auction
  • Reproducing posted auction results
  • Interpreting results

4:45 pm :: Workshop Adjournment

Instructor

Joseph Bright, Vice President – Grid Management, Nexant Inc.

Mr. Joseph Bright has been heavily involved for over 20 years in the development of Nexant’s iHedge software including analysis and development of the solution engine, training and client support.  Since 2002, he had an integral role in the on-site deployment of Independent System Operator FTR markets as well as in the ongoing maintenance and support due to changes in market rules and increases in software capability.  Mr. Bright trains and supports all ISOs as well as numerous market participants in the use of Nexant’s iHedge FTR Market Simulator.  Prior to deregulation, he developed electric power grid solution and optimization software for Power Computer Applications Corporation (PCA) before its acquisition by Nexant in 2000.  This software is being used by hundreds of grid energy controls centers throughout the world.  He earned his BSEE and MSEE degrees from Purdue University.

Speakers

Guillermo Bautista Alderete, Director – Market Analysis & Forecasting, California Independent System Operator (CAISO)

Mike Borgatti, Vice President – RTO Services & Regulatory Affairs, Gabel Associates

Sean Collins, Director – Division of Analytics and Surveillance, Federal Energy Regulatory Commission (FERC)

Chloe Cromarty, Head – US Power & Gas Compliance, Mercuria Energy Trading

Howard Haas, Chief Economist, Monitoring Analytics

Devin Hartman President and CEO, Electricity Consumers Resource Council (ELCON)

Scott Harvey, Consultant, FTI Consulting

Donald House, Supervisor – Congestion Revenue Rights, ERCOT

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

Abram Klein, Managing Partner, Appian Way Partners

Shaun Ledgerwood, Principal, The Brattle Group

Steve Lieberman, Director – PJM Regulatory Affairs, American Municipal Power

Sharon Midgley, Senior Manager – Wholesale Market Development, Exelon

Ty Mitchell, Power Trader, Evergy

Arnold Quinn, Senior Director FERC-Jurisdictional Markets, Vistra Energy (invited)

Nicholas Shaffer, Chief Technology Officer, TPC Energy

Noha Sidhom, CEO, TPC Energy Fund

Narsi Vempati, Senior Vice President, Nexant

Andrew Stevens, Managing Director, Direct Energy 

Location

Omni Shoreham

2500 Calvert St NW

Washington, DC 20008

Reserve your room:

please call 1-202-234-0700

Room Block Reserved For:

Nights of January 28 – 30, 2020

Room rate through EUCI:

$179.00 single or double plus applicable taxes
Make your reservations prior to December 28, 2019.

Register

Please Note: Confirmed speakers do not need to register and are encouraged to participate in all sessions of the event. If you are a speaker and have any questions please contact our offices at 1.303.770.8800

EventEarly Bird Before
Friday, January 10, 2020
Standard RateAttendees
Financial Transmission, Congestion and Auction Revenue Rights (FTRs/CRRs/TCRs/ARRs)US $ 1295.00 US $ 1495.00

This event has the following workshops:

FTR Trading Fundamentals & ToolsUS $ 495.00
US $ 595.00
Benefitting from the use of an FTR Market SimulatorUS $ 895.00
US $ 995.00

Take advantage of these discounts!

  • Attend the Conference and both workshops and pay US $ 2,495.00 per attendee (save US $ 190.00 each)
  • Attend the Conference and any 1 workshop and save US $ 95.00 per attendee

Register 3 Send 4th Free!

Any organization wishing to send multiple attendees to these conferences may send 1 FREE for every 3 delegates registered. Please note that all registrations must be made at the same time to qualify.

Cancellation Policy

Your registration may be transferred to a member of your organization up to 24 hours in advance of the event. Cancellations must be received on or before December 27, 2019 in order to be refunded and will be subject to a US $195.00 processing fee per registrant. No refunds will be made after this date. Cancellations received after this date will create a credit of the tuition (less processing fee) good toward any other EUCI event. This credit will be good for six months from the cancellation date. In the event of non-attendance, all registration fees will be forfeited. In case of conference cancellation, EUCIs liability is limited to refund of the event registration fee only. For more information regarding administrative policies, such as complaints and refunds, please contact our offices at 303-770-8800

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