Definition
A financial contract that entitles its holder to receive (or obligates them to pay) the difference in LMP between two specified points on the transmission grid — effectively hedging against congestion costs. FTRs are awarded in auctions conducted by RTOs/ISOs and do not grant physical rights to transmission capacity, but they allow load-serving entities and market participants to manage their exposure to congestion price volatility.
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Topic Deck
Markets & Pricing
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Source
FERC Pro Forma OATT / LGIP