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FTR market operation service provider

The FTR manager is the market operation service provider responsible for creating inter-island financial transmission rights (FTRs), allocating FTRs to industry participants, and undertaking other activities associated with operating, promoting and developing the FTR market over time. EMS is contracted as the FTR manager.

This involves a number of tasks. The FTR manager has to developed and the Authority has approved a draft FTR allocation plan, which contains the FTR auction rules, and the design of FTRs and the FTR grid. The FTR manager is expected to regularly update the FTR allocation plan (subject to consultation and Authority approval) to further develop the FTR market over time.

The FTR manager creates obligation and option FTRs between 2 hubs, Otahuhu in the North Island, and Benmore in the South Island. The quantity of FTRs offered relates to the forecast capacity of the national transmission grid between these 2 hubs. The FTR manager allocates the FTRs to industry participants by regular auctions. The FTR manager registers parties who wish to participate in FTR auctions. Prior and during each auction the FTR manager checks with the clearing manager that the amount of security each party holds is sufficient to validate their bids. The FTR manager manages the FTR register, in which all FTR holdings will be publicly listed.

An equally important role is calculating the proportion of the loss and constraint excess that can be allocated to settling inter-island FTRs. The FTR manager does the calculation and supplies the information to the clearing manager, who uses that portion of the loss and constraint excess and the auction proceeds to settle payments to FTR holders each month.

The Code that enables the establishment of the FTR market came into force on 1 October 2011, and the regulation establishing the FTR manager as a market operation service provider is in force from 1 June 2012. The FTR market is currently in establishment phase, and the FTR manager is expected to start the first FTR auction in early June 2013. More information on the market development and establishment is available.

Matters relating to financial transmission rights are set out in Part 13 and Part 14 of the Code.

Back to top Last updated on 6 May 2013