Platts each month compiles and analyzes data from the seven financial transmission rights auctions held each month by regional transmission organizations. FTRs are a hedging tool to protect market participants from the risk of congestion on the grid between specific points, which is reflected in higher prices. Generally, companies that want to protect themselves against day-ahead congestion costs buy positive or prevailing-flow contracts that pay out if there is congestion. Also sold in auctions are negative or counterflow contracts, for which FTR holders receive a payout in the auction but are required to pay if there is congestion in the day-ahead market. Several ISOs also allow participants to sell back their existing FTR contracts in the auctions. Auction activity can be described in terms of the total volume and price of FTRs cleared in the auction, as well as in terms of positive and negative flow FTRs, and the net volume and value of contracts sold—net positive contracts (positive and zero-priced FTRs purchased by market participants and negative FTRs sold by market participants) minus net negative contracts (negative FTRs purchased by market participants and positive and zero-priced FTRs sold by market participants).
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