PJM Markets Certification Exam (Market Optimization
Workshop PPs)
Residual Zone: - ANSWER An aggregate comprising all the load buses in the fully
metered EDC territory, less all load that has been designated to be priced at a specific
non-zonal (or nodal) location
How are the prices for Residual Metered Load aggregates determined? - ANSWER By
weighting each load bus LMP by that bus's residual metered load aggregate distribution
factor
True or False? Security constrained economic dispatch minimizes load payments -
ANSWER False
True or False? If we remove all transmission constraints, loads will pay less - ANSWER
False - I don't know why
Auction Revenue Rights - Definition: - ANSWER Entitlements assigned annually to Firm
Transmission Service Customers that entitle the holder to a claim for an allocation of the
"revenues" (or charges) from the Annual FTR Auction
FTRs Definition: - ANSWER Financial instruments granted to winners of the FTR
Auctions which give holder a rights to stream of revenues (or charges) derived from the
hourly Day Ahead congestion price differences across the path
Under the converging conditions, PJM collects (More or Less) from the loads than it
pays to the generators? - ANSWER More
Upon which does the Economic Value of FTRs depend? - ANSWER DA Congestion
Component of LMP
,Which of the FTR Auctions are multi-rounds? - ANSWER Annual and Long-Term
Name two conditions which give the FTR Obligations value? - ANSWER Hourly
Congestion Value is positive
FTR same direction as congested flow
Can an FTR Option have a negative economic value? - ANSWER No (If value calculated
is negative, economic value equals zero)
FTR Congestion Charge and FTR Credit Equations: - ANSWER Congestion Charge =
MWh * (Day-ahead Sink Congestion Price - Day-ahead Source Congestion Price)
FTR Credit = MW * (Day-ahead Sink Congestion Price - Day-ahead Source Congestion
Price)
Name two issues to the system that causes under collecting of congestion revenue to
fund FTRs? - ANSWER Transmission outages and derates
FTRS are financial instruments used to: - ANSWER Hedge congestion costs
What are 4 market mechanisms where FTRs can be obtained? - ANSWER Annual FTR
Auction, Long Term FTR Auction, Monthly FTR Auction, or Secondary Market - (bilateral
transactions)
Economic Value of ARRs is based on? - ANSWER LMPs from the Annual FTR Auction
(defined from source to sink)
What are the three things a holder can do with an ARR - ANSWER • Self-schedule the
ARR into the Annual FTR Auction on the same path as ARR
• Reconfigure the ARR by bidding into the Annual FTR Auction for a FTR on a different
, path or different product
• Hold the allocated ARR and collect the revenue resulting from the FTR auction
To whom are ARRs assigned? - ANSWER Firm Transmission Service Customers
ARRs can be issued only as an: - ANSWER Obligation (Obligations can be benefit or
liability)
ARRs must be: - ANSWER Simultaneously feasible
What is a Simultaneous Feasibility Test? - ANSWER Test to ensure that all subscribed
transmission entitlements are within the capability of the existing transmission system
and ensure the PJM Energy Market is revenue adequate under normal system
conditions
True or False? The Simultaneous Feasibility Test is a system reliability test intended to
model actual system conditions - ANSWER False
Not a system reliability test AND Not intended to model actual system conditions
ARRs must be simultaneously feasible in order for Annual FTR Auction revenues to be
adequate to cover: - ANSWER ARR Target Allocations
FTRs should simultaneously be feasible so that the overall congestion charges collected
from the Day Ahead and Balancing Markets would be enough to cover - ANSWER FTR
Target Allocations
True or False? If Line A-B Flow > Line A-B Rating, due to 2 FTRs, they are both
simultaneously feasible - ANSWER FALSE
True or False? If DA Congestion Charge > Total FTR Target Allocation, because of 2
FTRs, both are simultaneously feasible - ANSWER TRUE (At least financially)
Workshop PPs)
Residual Zone: - ANSWER An aggregate comprising all the load buses in the fully
metered EDC territory, less all load that has been designated to be priced at a specific
non-zonal (or nodal) location
How are the prices for Residual Metered Load aggregates determined? - ANSWER By
weighting each load bus LMP by that bus's residual metered load aggregate distribution
factor
True or False? Security constrained economic dispatch minimizes load payments -
ANSWER False
True or False? If we remove all transmission constraints, loads will pay less - ANSWER
False - I don't know why
Auction Revenue Rights - Definition: - ANSWER Entitlements assigned annually to Firm
Transmission Service Customers that entitle the holder to a claim for an allocation of the
"revenues" (or charges) from the Annual FTR Auction
FTRs Definition: - ANSWER Financial instruments granted to winners of the FTR
Auctions which give holder a rights to stream of revenues (or charges) derived from the
hourly Day Ahead congestion price differences across the path
Under the converging conditions, PJM collects (More or Less) from the loads than it
pays to the generators? - ANSWER More
Upon which does the Economic Value of FTRs depend? - ANSWER DA Congestion
Component of LMP
,Which of the FTR Auctions are multi-rounds? - ANSWER Annual and Long-Term
Name two conditions which give the FTR Obligations value? - ANSWER Hourly
Congestion Value is positive
FTR same direction as congested flow
Can an FTR Option have a negative economic value? - ANSWER No (If value calculated
is negative, economic value equals zero)
FTR Congestion Charge and FTR Credit Equations: - ANSWER Congestion Charge =
MWh * (Day-ahead Sink Congestion Price - Day-ahead Source Congestion Price)
FTR Credit = MW * (Day-ahead Sink Congestion Price - Day-ahead Source Congestion
Price)
Name two issues to the system that causes under collecting of congestion revenue to
fund FTRs? - ANSWER Transmission outages and derates
FTRS are financial instruments used to: - ANSWER Hedge congestion costs
What are 4 market mechanisms where FTRs can be obtained? - ANSWER Annual FTR
Auction, Long Term FTR Auction, Monthly FTR Auction, or Secondary Market - (bilateral
transactions)
Economic Value of ARRs is based on? - ANSWER LMPs from the Annual FTR Auction
(defined from source to sink)
What are the three things a holder can do with an ARR - ANSWER • Self-schedule the
ARR into the Annual FTR Auction on the same path as ARR
• Reconfigure the ARR by bidding into the Annual FTR Auction for a FTR on a different
, path or different product
• Hold the allocated ARR and collect the revenue resulting from the FTR auction
To whom are ARRs assigned? - ANSWER Firm Transmission Service Customers
ARRs can be issued only as an: - ANSWER Obligation (Obligations can be benefit or
liability)
ARRs must be: - ANSWER Simultaneously feasible
What is a Simultaneous Feasibility Test? - ANSWER Test to ensure that all subscribed
transmission entitlements are within the capability of the existing transmission system
and ensure the PJM Energy Market is revenue adequate under normal system
conditions
True or False? The Simultaneous Feasibility Test is a system reliability test intended to
model actual system conditions - ANSWER False
Not a system reliability test AND Not intended to model actual system conditions
ARRs must be simultaneously feasible in order for Annual FTR Auction revenues to be
adequate to cover: - ANSWER ARR Target Allocations
FTRs should simultaneously be feasible so that the overall congestion charges collected
from the Day Ahead and Balancing Markets would be enough to cover - ANSWER FTR
Target Allocations
True or False? If Line A-B Flow > Line A-B Rating, due to 2 FTRs, they are both
simultaneously feasible - ANSWER FALSE
True or False? If DA Congestion Charge > Total FTR Target Allocation, because of 2
FTRs, both are simultaneously feasible - ANSWER TRUE (At least financially)
