Complementarity-based models for financial transmission rights

In this paper, complementarity-based models of markets for financial transmission rights (FTRs) are proposed. Models for obligations, options, and joint obligations and options are presented; such models are based upon equilibrium conditions which are casted as linear complementarities. Within this formulation, manipulation of FTRs prices is introduced by means of conjectured price-response functions. Market outcomes comparisons are carried out under different scenarios of manipulation of congestion prices for both obligations and options. The models are illustrated by three- and five-node power systems using a linearized DC network approximation.