An improved simultaneous feasibility test to alleviate revenue inadequacy in FTR markets

Abstract

Financial transmission rights (FTRs) are financial instruments that aid participants in hedging against uncertainty in congestion cost. FTRs are funded by congestion rent from the physical market. ISOs ensure financial revenue adequacy by running a simultaneous feasibility test (SFT) to guarantee that available funds cover FTR payments. However, the ability of SFT to guarantee this revenue adequacy is contingent upon a static system topology. Consequently, topology changes in real time could cause revenue inadequacy. Past literature focuses on addressing this issue by policy modifications to real-time topology control. This paper attempts to resolve the revenue inadequacy issue by proposing modifications directly to the SFT.