Introduction of option financial transmission rights into the New England market

This paper investigates three potential risks associated with the introduction of option financial transmission rights (FTRs) into the New England market. The risks include: revenue inadequacy, infeasibility of monthly FTR auction solutions and an increase in computer run time. Since revenue inadequacy of the congestion revenue fund is the most significant risk, a revenue inadequacy test was conducted. The test included six hypothetical scenarios of converting obligation bids into option bids. Test results suggest that with the introduction of option FTRs into the New England market the congestion revenue fund would not be adversely impacted. Tables and graphs are presented in the paper to illustrate results.