Market-based transmission expansion and regional planning: an idea whose time has come

This article presents the market-based transmission expansion and regional planning. The foundation for market-based planning is readily found within the construct of the standard market design proposed by the Federal Energy Regulatory Commission. A set of financial transmission rights (FTRs) works in concert with the locational prices to provide price certainty to market participants between any two locations on the grid. The core elements of locational marginal pricing and financial transmission rights provide the transparent market signals to those investors and innovators who wish to capture the economic value of the grid through their expansion and enhancement efforts. Regions are already realizing the benefits of market-driven expansion and enhancement through the use of locational marginal pricing (LMP) and financial transmission rights (FTRs).