Abstract
In this paper, we will consider the problems of Revenue Adequacy (RA) and Hedging to Risk (H2R), faced by the Independent System Operators (ISOs) and holders of Financial Transmission Rights (FTRs) (or, Congestion Revenue Rights, or CRRs as they are variously known), respectively. It is well known, that the main driver for these two problems is the difference in the topology of the network that is used while solving the FTR auction and allocation process, to that used in the Day-Ahead (DA) or Real Time (RT) market dispatch calculations. As we will see in this paper, that the problems of RA and H2 $R$ form a set of conflicting requirements, especially when situations corresponding to changing network topologies are considered. We will, therefore, in the present work, propose a newer type of FTR such that both the above-mentioned problems are averted. We will also present the revised auction mechanism of this new FTR, in order to incentivize both the ISOs and the potential holders to sell and purchase them, respectively.
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