Capture NYISO TCC Auction Awards Quickly

Are you struggling to get your NYISO Transmission Congestion Contracts (financial transmission rights) auction awards into your profit and loss and risk metrics? Do you spend a lot of time manually integrating this data into your calculations?  

We have a solution.

What Are Transmission Congestion Contracts in NYISO, and How Do They Work?

The New York Independent System Operator (NYISO) is a wholesale electricity market that “monitors the reliability of the state’s power system and coordinates the daily operations to distribute electricity supply.” In this capacity, it offers Transmission Congestion Contracts (TCCs) to the market. 

These TCCs enable energy buyers and sellers to hedge transmission price fluctuations, or to speculate in the market. In other wholesale markets, TCCs are called financial transmission rights (FTRs).  

TCCs are financial instruments similar to futures contracts – you buy them at a fixed price in a NYISO TCC auction, and they settle during the contract month at a floating price. The ISO awards these TCCs in both monthly auctions and fall/spring annual auctions.  

The Challenges of TCC Award Delays

Currently, there’s a lag between when the awards are available to a participant in the NYISO TCC portal and when they are publicly available to the market. For monthly auctions it’s three business days; for annual auctions it’s up to several months’ delay (depending on the auction round).  

This can create issues. Being able to timely capture your TCC trades is important due to:

• A large volume of the TCC capacity awarded in the fall/spring annual auctions, where the majority of the FTR award data is significantly delayed
• Position information needed by the front office to analyze/position for the next auction round
• A NYISO requirement that you perform timely risk and mark-to-market (MtM) calculations on your TCC positions.

What to Know about NYISO Spring/Fall TCC Volumes

NYISO releases the majority of its TCC volume in the fall/spring annual (A and 6 Month) auctions. 

You can see the auction types – M for monthly, A for annual, 6 Month is also part of the annual auction schedule).  

For example, the green bars show the settlement month of July 2023. This chart shows the auctions in which volume was cleared for that month. You can see that the majority of the volume is awarded during the spring (annual) auction.

Yellow represents a fall time period of October. Again, we see the majority of the volume is traded in that spring auction.  

With the volume the fall/spring annual auctions offer, ensuring that your TCC awards are reflected in your positions quickly for your front office is important to prepare the team for upcoming auction rounds.  

The Challenges of Missing Position Information

View the upcoming NYISO TCC Spring Annual Auction Calendar. You can see the auction contains eight rounds, each separated by a week. Any delay in knowing your awarded positions and knowing the updated valuation of your positions can impact your positioning for subsequent rounds. With the majority of the volume traded in these annual auction periods (spring/fall) these position and valuation changes can be significant, and may impact your trading decisions.  

This is why the front office needs timely NYISO TCC position information when it’s available in the NYISO TCC portal.  

In addition, the middle and back office need timely NYISO TCC positions to fulfill the NYISO requirements around risk and MtM reporting.

NYISO Requires Timely Risk and MtM Reporting

The Federal Energy Regulatory Commission (FERC) Order 741/741A, and the NYISO Tariff requires that each year an officer of your company certifies that it has an effective risk policy, which includes mark-to-market valuation and risk measurement of your FTR portfolio.  

NYISO aims to ensure that market participants have strong risk management practices. It expects that they have written risk management policies, procedures, and controls that an independent risk management function approves. These should include credit, liquidity, and market risks.

ISOs and Regional Transmission Organizations (RTOs) also say that market participants have to have organizational structures with clearly defined roles and responsibilities splitting trading and risk management functions. This ensures that those enforcing the risk management policies, who likely have oversight responsibilities, are not executing trades.

Plus, ISO and RTOs mandate that market participants in FTR auctions have at least weekly measurement of FTR mark-to-market (or mark-to-auction) exposure and FTR risk calculations. To learn more about these requirements and how Yes Energy can help you meet them, check out these blog posts:

• The Challenges of Mark-to-Market for FTR Positions

• What You Should Know About Calculating FTR Risk

To meet these requirements in a timely manner, you’ll need a solution to collect the delayed NYISO TCC awards and make sure you integrate them into your position reporting, risk metrics, and MtM calculations.  

Ensure Timely NYISO TCC Collection, Position Reporting, and Compliance 

Yes Energy can capture your NYISO private TCC awards when they’re available in the NYISO TCC portal so you can provide timely position, risk and MtM reporting to your organization.

This is available in our Position Management™ solution, which provides the nodal power market middle office with a turnkey, consolidated solution for oversight of your trading activities. We handle the timely deal capture of your virtual, spread, and FTR portfolios. Using an industry-standard risk methodology, you can be confident you’re getting accurate values for your reporting and decision-making needs. 

This is all delivered to your team through automated email reporting, a visual middle office dashboard (see below), and easy-to-integrate data API.

Figure 1: Position Management FTR VaR (Value at Risk) chart

With Position Management, you gain an independent source of deal capture and risk calculations, reducing the risk of manual mistakes or interference in your energy trading risk management processes. The foundation of the solution is Yes Energy’s data management activities, which include secure trade capture and managing price capture/changes, node remappings, and inevitable ISO changes.

Learn more about Position Management today, or schedule a demo to see how this solution can help solve your middle office challenges with virtual, spread, and FTR trading! 

About the author: Stephanie Staska is the director of trade and risk products at Yes Energy. She has worked in energy risk management and compliance for the past 20 years, including time at Twin Cities Power, Cargill, and Split Rock Energy. Stephanie received her MBA and her bachelor’s degree in actuarial science and mathematics from the Carlson School of Management at the University of Minnesota. She also enjoys traveling and spending time with her family.