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Abstract

This paper surveys the markets for financial transmission rights (FTRs) around the world. FTRs are used to hedge the costs associated with transmission congestion. Currently these rights are in use in PJM, New York and New England. A variant of financial transmission rights, which has both a physical and a financial aspect, was introduced in California in 2000. Similarly, flowgates were introduced in Texas in 2002. FTRs are also planned for introduction in New Zealand. The features of the FTRs and the design of the different FTR markets are described. The paper focuses on how FTRs can be acquired, their advantages and disadvantages, and their market performance.

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