Secondary market for transmission and the supporting infrastructures

In this paper we discuss the infrastructure important for proficient management of the network, namely the secondary markets for transmission rights. Following the restructuring process the participants in the electric power industry are engaging in complex market activities to meet their electricity needs. Many market participants enter into forward (delivery) contracts for energy. The forward price may be described as the spot market price for delivery of a commodity at a fixed time in the future. As a counterpart to the forward contract marketplace for energy, the secondary market for transmission provides the necessary mechanism for supporting the market activities so that the change in value is readily conveyed to all of the market participants of the forward contracts for transmission portion of electric services in the form of the intermediate term transmission contracts. Here the market participants may be the holders of the physical transmission rights, the holders of the financial transmission rights and/or the bidders in the spot market. With the introduction of the secondary markets for transmission rights we can compare the workings for the transmission rights in the form of the intermediate term transmission contracts proposed in this paper with the transmission congestion contracts (TCC) and the flowgate rights.