Abstract FTR/CRR market design and development market participant’s perspective

This paper presents the purpose of the FTR market is to provide a mechanism to manage congestion risk as well as improve the economic signaling for new transmission development. FTRs do not represent a right for physical delivery of power. They only represent the right to compensation for congestion costs over a specified path. Some market participants use FTRs to hedge against congestion charges for their use over the transmission system. Other market participants do not have market positions and use FTRs simply for investment. Both types of participants are essential to the efficiency of the FTR market as they create liquidity in the market and decrease the risk that the auction costs exceed the auction benefits.