Definition
A virtual transaction in PJM that allows a market participant to bid on the price spread between two nodes — a source and a sink — in the day-ahead market, settled against the real-time locational price difference. Unlike INCs and DECs which bet on DA vs. RT at a single node, a UTC bets on whether the RT congestion spread between two nodes will exceed the DA congestion spread paid. The profit formula is: PnL = ((RT_sink − RT_source) − (DA_sink − DA_source)) × MW. UTCs are analogous to Financial Transmission Rights (FTRs) but settle against real-time rather than day-ahead prices, making them a tool for spatial arbitrage and RT congestion hedging.
Topic Deck
Markets & Pricing
Source
FERC Pro Forma OATT / LGIP