Congestion revenue rights valuation and procurement-A load serving entity perspective

The paper presents various aspects of the valuation and procurement process of the financial transmission rights (FTRs)/congestion revenue rights (CRRs) from a market participant perspective. The emphasis is placed on the load service entities that are prepared to operate in the new LMP-based market in California. The paper presents the major design elements of the CRR market in California and analyzes some CRR valuation and procurement alternatives necessary for successful participation in organized wholesale competitive electricity markets based on LMPs. The paper focuses on the CRR valuation in the California ISO allocation process and presents the major elements of long-term market simulation methodologies required for CRR valuation purposes, as well as an assessment methodology of the likelihood of CRR awards. Representative numerical results from the application of the proposed methodologies on the actual California system are also presented.