FTR underfunding leaves PJM power traders out of pocket

Energy firms in the eastern US are upset about the underfunding of financial transmission rights (FTRs) in the PJM power market, saying it has made FTRs useless as a hedging tool. But even though its price tag has exceeded $1 billion, the problem shows no signs of abating. Alexander Osipovich reports

The world's biggest power market has a problem. For over a decade, PJM – the wholesale electricity market that serves 13 eastern US states and the District of Columbia – has allowed market participants to trade financial transmission rights (FTRs), instruments that allow companies to hedge against the costs of congestion on the PJM grid. But in recent years, PJM's mechanism for funding payments to FTR holders has broken down, and that has many market participants upset, including both hedgers