Review on PJM's Ancillary Products of Auction Revenue Rights

Financial hedging is a very important tool for risk management in energy market. As the energy market leader, PJM had many years of experiences in its Financial Transmission Rights (FTRs) market which is a financial hedging market. Auction Revenue Rights (ARR), an underlying product of FTRs are allocated every year. PJM also allocated different types of incremental ARR to fulfill this product. This paper will describe the basic structure of ARR and FTRs process in PJM. The different ARR products are also presented. Some of the products relate closely to PJM's Regional Transmission Expansion Planning (RTEP) process.