The New York Transmission Congestion Contract Market: Is It Truly Working Efficiently?

Bartholomew, Emily S.; Siddiqui, Afzal S.; Marnay, Chris; Oren, Shmuel S.

doi:10.1016/j.tej.2003.09.006

Cited by 17 publications

(9 citation statements)

References 10 publications

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“…Based on these results, the efficiency for the 1 and 12-month contracts in the NYISO market can be questioned. Our findings for the six-month contract are less clear, but are closer to suggesting efficiency than the findings of Bartholomew et al (2003) for an earlier period (2000)(2001).…”

Section: B Tcc's Predictive Abilitycontrasting

confidence: 69%

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Efficiency and Profit in the NYISO Transmission Congestion Contract Market

Hadsell¹,

Shawky²

2009

The Electricity Journal

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Section: B Tcc's Predictive Abilitycontrasting

confidence: 69%

“…Thus, hedging with TCCs appears useful. Bartholomew et al (2003) were the first to study the efficiency of TCCs in New York's wholesale electricity market. 5 They examine six-month contracts traded on NYISO in 2000 and 2001.…”

Section: Introductionmentioning

confidence: 99%

Efficiency and Profit in the NYISO Transmission Congestion Contract Market

Hadsell¹,

Shawky²

2009

The Electricity Journal

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“…Namely, there is a clear need for a more holistic investigation of EPAD pricing in terms of historical performance. An example of possible extension, in line with [59,62], is to study risk premia in relation to the price of a hedge (high prices) as well as the number of zonal interfaces between geographical areas (distant locations). Such analysis could reveal whether long-term transmission rights function well only for intra-zonal and adjacent areas or also for more remote areas, as well as whether market participants can receive effective hedge also for the more extreme expected spot outcomes.…”

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

On Long-Term Transmission Rights in the Nordic Electricity Markets

2017

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Abstract:In vein with the new energy market rules drafted in the EU this paper presents and discusses two contract types for hedging the risks connected to long-term transmission rights, the financial transmission right (FTR) and the electricity price area differentials (EPAD) that are used in the Nordic electricity markets. The possibility to replicate the FTR contracts with a combination of EPAD contracts is presented and discussed. Based on historical evidence and empirical analysis of ten Nordic interconnectors and twenty bidding areas, we investigate the pricing accuracy of the replicated FTR contracts by quantifying ex-post forward risk premia. The results show that the majority of the studied FTR contain a negative risk premium, especially the monthly and the quarterly contracts. Reverse flow (unnatural) pricing was identified for two interconnectors. From a theoretical policy point of view the results imply that it may be possible to continue with the EPAD-based system by using EPAD Combos in the Nordic countries, even if FTR contracts would prevail elsewhere in the EU. In practice the pricing of bi-directional EPAD contracts is more complex and may not always be very efficient. The efficiency of the EPAD market structure should be discussed from various points of view before accepting their status quo as a replacement for FTRs in the Nordic electricity markets.

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“…In discussing the landscape for merchant transmission investment in Europe, [23] notes that financial transmission rights (FTRs) would be beneficial for dealing with externalities and providing hedging capabilities for investors. Yet, empirical analyses of markets for FTRs in the USA have shown inefficiencies, e.g., divergent forward and spot prices for congestion rents, to exist in their operations, especially in congested regions [24].…”

Section: B Literature Reviewmentioning

confidence: 99%

Transmission and Wind Investment in a Deregulated Electricity Industry

Maurovich-Horvat

Boomsma

Fleten

et al. 2015

IEEE Trans. Power Syst.

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Adoption of dispersed renewable energy technologies requires transmission network expansion. Besides the transmission system operator (TSO), restructuring of electricity industries has introduced a merchant investor (MI), who earns congestion rents from constructing new lines. We compare these two market designs via a stochastic bi-level programming model that has either the MI or the TSO making transmission investment decisions at the upper level and power producers determining generation investment and operation at the lower level while facing wind power variability. We find that social welfare is always higher under the TSO because the MI has incentive to boost congestion rents by restricting capacities of transmission lines. Such strategic behavior also limits investment in wind power by producers. However, regardless of the market design (MI or TSO), when producers behave à la Cournot, a higher proportion of energy is produced by wind. In effect, withholding of generation capacity by producers prompts more transmission investment since the TSO aims to increase welfare by subsidizing wind and the MI creates more flow to maximize profit.Index Terms-Market design, mathematical programming with equilibrium constraints (MPEC), transmission, wind power.

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The New York Transmission Congestion Contract Market: Is It Truly Working Efficiently?

Cited by 17 publications

References 10 publications

Efficiency and Profit in the NYISO Transmission Congestion Contract Market

Efficiency and Profit in the NYISO Transmission Congestion Contract Market

On Long-Term Transmission Rights in the Nordic Electricity Markets

Transmission and Wind Investment in a Deregulated Electricity Industry

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