Commissioner

Caroline D. Pham

Chairman

Rostin Behnam

Commissioner

Christy Goldsmith Romero

Commissioner

Kristin N. Johnson

Commissioner

Summer K. Mersinger

February 28, 2023 Energy and Environmental Markets Advisory Committee
Global Markets Advisory Committee

Opening Remarks
Global Markets Advisory Committee

Panel 1: Financial Transmission Rights

Jackie Roberts, West Virginia Public Service Commission

Joe Bowring, Monitoring Analytics

Demetri Karousos, Nodal Exchange, Inc.
Financial Transmission Rights (FTRs) and how 

electrification and increased renewable and intermittent 

energy production could affect the electric grid and the 

FTR market.

Setting the table

Commodity Futures Trading Commission

Energy and Environmental Market Advisory Committee

February 28, 2023

Jackie Roberts

Federal Policy Advisor

Public Service Commission of West Virginia
DISCLAIMER

The Public Service Commission Speaks 

only through its Orders.

Any Opinions Presented here are not 

attributable to the PSC WV.
The Transition to Low Carbon Generation 

in PJM

FERC, NERC, the DOE in its draft Transmission Study just

released, and PJM are all concerned about the transition

to low carbon generation and its effect on the grid. With

significant base load generation retiring and replacement

generation being predominantly intermittent generation,

there are significant concerns with grid reliability.
Energy Transition in PJM: Emerging 

Characteristics of a Decarbonizing Grid

The composition and performance characteristics of the

resource mix will ultimately determine PJM’s ability to

maintain reliability. PJM’s installed capacity is about 180,000

MW, and there are about 160,000 MW in the interconnection

queue, of which about 80,000 MW are intermittent

generation.

The next few slides were released by PJM last week and

summarize the retirements and new generation expected

through 2030.
Forecasted Retirements (2022–2030)

0 5 10 15 20 25 30

Coal, Natural Gas,

This 40 GW Other,* represents

21% of PJM’s current

192 GW of installed generation

www.pjm.com | Public 8 PJM©2023

Policy

Economic

Total Forecasted Retirement Capacity (GW)

2022 Announced

*Other includes diesel, etc.
Deactivations & Announced Retirements (2011-2026)

Capacity (MW)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Coal 

Natural Gas 

Oil/Diesel 

Nuclear 

Others

www.pjm.com | Public 9 PJM©2023
Forecasted Policy Retirements (2022–2030)

2022 2023 2024 2025 2026 2027 2028 2029 2030

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0 0

5,000

10,000

15,000

20,000

25,000

30,000

Dominion Integrated 

Resource Plan

NJ CO2 Rule 

Company ESG

Commitment

EPAGood Neighbor 

Rule

EPA Coal Combustion 

Residuals

EPA Effluent Limitation 

Guidelines

IL Climate & Equitable 

Jobs Act

Coal,

Natural 

Gas,

Other,*

Running Total (MW): 24,033

www.pjm.com | Public 10 PJM©2023

Total Policy Retirement

Capacity (MW)

Annual Policy Retirement 

Capacity (MW)

*Other includes diesel, etc.
PJM Forecasted New Entry (2022–2030

2022 2023 2024 2025 2026 2027 2028 2029 2030

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0

5,000

10,000

15,000

20,000

25,000

30,000

30,610 MW 35,000

[107,426 MW]

15,113 MW

[55,844 MW]

Annual Added Capacity (MW)

Total Added Capacity

[Nameplate]

Expanded 

Queue

Queue

Queue:

Thermal 

Renewable

Storage

Expanded Queue:

Thermal 

Renewable

Storage

www.pjm.com | Public 11 PJM©2023
Load Growth Forecasts

www.pjm.com | Public 12 PJM©2023
Forecasted Reserve Margin

2023 2024 2025 2026 2027 2028 2029 2030

MW

200,000

140,000

Resource 

Requirement

190,000

180,000

170,000

2023 Forecast

160,000

150,000

Electrification

www.pjm.com | Public 13 PJM©2023
FTRs and the energy transition

Financial Transmission Rights are expected to be integral

in the transition to low carbon generation. Significant

proposed generation will require transmission expansion

because of its remote location to the grid. Congestion will

definitely increase in certain areas of the grid.

PJM comments in the DOE draft, National Transmission

Needs Study, February 24, 2023 (at p. 116):

Current utility plans for transmission development in the

Mid-Atlantic do not meet anticipated needs.
FTRs and the Energy Transition, cont.

What are FTRs? 

Financial Transmission Rights:

financial instruments awarded to bidders in the FTR

Auctions that entitle the holder to a stream of revenues

(or charges) based on the hourly Day Ahead congestion

price differences.
Who Can Participate in FTR Markets?

FTRs are a commodity that is not connected to the sale and

delivery of electricity. There is no requirement that

participants in these markets own generation or

transmission, and many participants are financial traders.

PJM designs these markets and sets the collateral

requirements for market participation, subject to the

oversight of FERC. Shortfalls in collateralization become

the responsibility of load (the retail electric customers).
Jurisdiction

Because of the concurrent jurisdiction of the CFTC and FERC,

RTOs and ISOs requested an exemption of FTRs from CFTC

oversight (except for fraud and manipulation). This was found

to be in the public interest and granted by the CFTC.
In the exemption Order, the CFTC defined 

FTRs:

A transaction, however named, that entitles one party to receive, and

party to pay, an amount based solely on the difference between the

price for electricity, established on an electricity market administered by

a Requesting Party, at a specified source (i.e., where electricity is

deemed injected into the grid of a Requesting Party) and a specified sink

(i.e., where electricity is deemed withdrawn from the grid of a

Requesting Party). The term “FTR” includes Financial Transmission

Rights, and Financial Transmission Rights in the form of options (i.e.,

where one party has only the obligation to pay, and the other party only

the right to receive, an amount as described above).

In the Matter of the Application for an Exemptive Order Under Section

4(c) of the Commodity Exchange Act by various RTOs, ISOs, February 7,

2012
Given the importance of FTRs in the

emerging low carbon markets, who

should oversee FTR hedging: the CFTC

or FERC?
Congestion and FTRs

Joe Bowring

PJM Independent 

Market Monitor

CFTC 

Environmental Market 

Advisory Committee

February 28, 2023
Simple System Example: Congestion

©2023 22

100 MW

Gen:

A

Load: 0

A B

100

B

Load: 150

Gen: 50

www.monitoringanalytics.com
Simple System Example: Congestion

©2023 23

100 MW

Gen:

A

Load: 0

A B

Gen MC = $5 Gen MC = $15

100

B

Load: 150

What are the LMPs at A and B? Gen: 50

www.monitoringanalytics.com
Simple System Example: Congestion

©2023 24

100 MW

Gen:

A

Load: 0

A B

Gen MC = $5 Gen MC = $15

100

B

Load: 150

What are the LMPs at A and B? Gen: 50

LMP = $5 LMP = $15

100 MW flow from A to B

Line AB constrains the flow from A to B

Gen at B is needed to meet some of load.

www.monitoringanalytics.com
Simple System Example: Congestion

©2023 25

100 MW

Gen:

A

Load: 0

A B

Gen MC = $5 Gen MC = $15

100

B

Load: 150

What are the LMPs at A and B? Gen: 50

LMP = $5 LMP = $15

100 MW flow from A to B

Line AB constrains the flow from A to B

Gen at B is needed to meet some of load.

A Constraint B

LMP $5 ----> $15

Zone A Zone B

Load MW 0 150

Marginal Price of Power $5.00 $15.00

(LMP x MW) Zone A

Load Charges $0.00

Generation Credits $500.00

Total Credits/Charges ($500.00)

Zone B

$2,250.00

$750.00

$1,500.00

Total

$2,250.00

$1,250.00

$1,000

Congestion= Load Charges – Gen Credits

www.monitoringanalytics.com
Simple System Example: Congestion

©2023 26

A Constraint B

LMP $5 ----> $15

Zone A Zone B

Load MW 0 150

Marginal Price of Power $5.00 $15.00

Zone B

$2,250.00

$750.00

$1,500.00

Total

$2,250.00

$1,250.00

$1,000

Congestion= Load Charges – Gen Credits

(LMP x MW) Zone A

Load Charges $0.00

Generation Credits $500.00

Total Credits/Charges ($500.00)

www.monitoringanalytics.com
FTR Basics

• Congestion is paid by load.

• Congestion is the difference between what load pays 

and generation receives in an LMP system with 

transmission constraints.

• Congestion should be returned to load in order to 

ensure that introduction of LMP does not create a 

wealth transfer.

• The purpose of FTRs is to return congestion to load.

©2023 www.monitoringanalytics.com 27
FTR Logic

• If implemented correctly:

• FTRs are a perfect hedge for load against congestion. 

• There is no such thing as underfunding.

• Payments equal congestion, exactly.

©2023 www.monitoringanalytics.com 28
ARRs and FTRs

• Two parts of current design

• ARRs

• FTRs

• Goal of ARR design:

• A mechanism to assign congestion rights to load.

• Goal of FTR design:

• A mechanism to permit load to sell its rights to congestion.

• Load can sell the rights to an uncertain level of congestion for a 

fixed payment.

©2023 www.monitoringanalytics.com 29
Issues with the ARR/FTR Design

• Load does not have the rights to congestion revenues 

under the current design. Property rights not defined.

• Load not allowed to sell FTRs.

• Load cannot set the sale price of the rights to 

congestion revenues in the FTR auction under the 

current design.

• Load does not receive all auction revenues.

• Congestion is not defined by the bill.

• Load cannot receive rights to all congestion under the 

current design.

©2023 www.monitoringanalytics.com 30
Issues with the ARR/FTR Design

• ARR rights assigned on an historic generation to load path 

basis do not align with actual network use.

• Realized and available offset varies widely among customers 

• Not all congestion paid by load can be claimed by ARR 

holders.

• Self scheduling all allocated ARR rights would have returned 

less than 62 percent of congestion in the last four planning 

periods (17/18, 18/19, 19/20, 20/21)

• FTRs are available on paths that do not include physical 

load and where load does not pay congestion. 

• Over 50 percent of FTR MW are generator node to generator 

node

©2023 www.monitoringanalytics.com 31
Proposed FTR Auction Approach

• When congestion is defined and the rights to congestion are 

assigned, a market mechanism is needed to permit load to 

sell its rights to congestion

• That market mechanism could be the FTR auction(s)

• The FTR auction should allow load to sell their congestion 

rights.

• FTR auction design can take many forms

• The FTR auction design can look a lot like the current design

• The FTR auction design can include paths

• The FTR design cannot pay out more than actual congestion

• FTR auctions could be operated by a third part exchange

©2023 www.monitoringanalytics.com 32
ARR and FTR Total Congestion Offset ($M) for 

Load: 2011/2012 through 2021/2022

©2023 www.monitoringanalytics.com 33

Planning 

Period

ARR 

Credits

Unadjusted 

FTR Credits

Day Ahead 

Congestion

Balancing + 

M2M 

Congestion

Total 

Congestion

Surplus Revenue 

Pre 2017/2018 

Rules 

Surplus Revenue 

2017/2018 Rules 

Post 

2017/2018 

Rules 

Total 

ARR/FTR 

Offset

Percent 

Offset

Current 

Revenue 

Received

Percent 

Offset

New 

Revenue 

Received

New 

Offset

Cumulative 

Revenue Offset

2011/2012 $515.6 $310.0 $1,025.4 ($275.7) $749.7 ($50.6) $35.6 $113.9 $775.0 103.4% $585.5 78.1% $663.8 88.5% $775.0 103.4%

2012/2013 $356.4 $268.4 $904.7 ($379.9) $524.8 ($94.0) $18.4 $62.1 $530.7 101.1% $263.2 50.2% $306.9 58.5% $530.7 101.1%

2013/2014 $339.4 $626.6 $2,231.3 ($360.6) $1,870.6 ($139.4) ($49.0) ($49.0) $826.5 44.2% $556.3 29.7% $556.3 29.7% $826.5 44.2%

2014/2015 $487.4 $348.1 $1,625.9 ($268.3) $1,357.6 $36.7 $111.2 $400.6 $872.2 64.2% $678.4 50.0% $967.8 71.3% $872.2 64.2%

2015/2016 $641.8 $209.2 $1,098.7 ($147.6) $951.1 $9.2 $42.1 $188.9 $860.2 90.4% $745.5 78.4% $892.3 93.8% $860.2 90.4%

2016/2017 $648.1 $149.9 $885.7 ($104.8) $780.8 $15.1 $36.5 $179.0 $813.1 104.1% $729.6 93.4% $872.1 111.7% $813.1 104.1%

2017/2018 $429.6 $212.3 $1,322.1 ($129.5) $1,192.6 $52.3 $80.4 $370.7 $694.2 58.2% $592.8 49.7% $883.1 74.1% $592.8 49.7%

2018/2019 $531.6 $130.1 $832.7 ($152.6) $680.0 ($5.8) $16.2 $112.2 $655.87 96.4% $525.3 77.2% $621.3 91.4% $621.3 91.4%

2019/2020 $547.6 $91.9 $612.1 ($169.4) $442.7 ($1.6) $21.6 $157.8 $637.9 144.1% $491.7 111.1% $627.9 141.8% $627.9 141.8%

2020/2021 $392.7 $179.9 $899.6 ($256.2) $643.4 ($43.2) ($0.0) ($0.0) $529.31 82.3% $316.4 49.2% $316.4 49.2% $316.4 49.2%

2021/2022 $390.8 $324.4 $1,516.9 ($326.9) $1,190.0 ($71.4) ($9.1) ($9.1) $643.9 54.1% $379.3 31.9% $379.3 31.9% $379.3 31.9%

Total $5,280.9 $2,850.8 $12,954.9 ($2,571.5) $10,383.4 ($292.7) $303.9 $1,527.1 $7,839.0 75.5% $5,864.1 56.5% $7,087.3 68.3% $7,215.4 69.5%

* ten months of 2021/2022 planning period

Revenue

Pre 2017/2018 

(Without Balancing)

2017/2018 (With 

Balancing)

Post 2017/2018 (With 

Balancing and 

Surplus) Effective Offset
ARR/FTR Zonal Congestion Offset 2021/2022 

($M)

©2023 www.monitoringanalytics.com 34

Zone ARR Credits

Adjusted 

FTR Credits

Balancing+ 

M2M Charge

Surplus 

Allocation Total Offset

Day Ahead 

Congestion

Balancing 

Congestion M2M Payments

Total 

Congestion Offset

ACEC $3.1 ($0.0) ($3.7) $0.0 ($0.6) $14.7 ($3.2) ($0.5) $11.0 (5.8%)

AEP $35.7 $58.3 ($45.1) $0.0 $48.9 $218.8 ($39.2) ($5.9) $173.7 28.2%

APS $26.0 $28.8 ($21.8) $0.0 $32.9 $119.9 ($19.5) ($2.3) $98.1 33.6%

ATSI $17.4 $0.6 ($21.7) $0.0 ($3.6) $107.3 ($18.6) ($3.1) $85.6 (4.2%)

BGE $75.0 $3.5 ($11.9) $0.0 $66.7 $56.3 ($10.4) ($1.5) $44.4 150.2%

COMED $35.0 $5.3 ($30.7) $0.0 $9.6 $146.0 ($26.3) ($4.4) $115.3 8.3%

DAY $4.4 $0.9 ($5.8) $0.0 ($0.5) $24.4 ($5.0) ($0.8) $18.6 (2.8%)

DOM $24.2 $171.2 ($68.8) $0.0 $126.6 $277.6 ($63.7) ($0.6) $213.3 59.4%

DPL $31.7 $12.3 ($8.6) $0.0 $35.4 $58.3 ($7.7) ($5.1) $45.4 77.9%

DUKE $20.7 $1.2 ($8.8) $0.0 $13.1 $36.0 ($7.6) ($1.2) $27.2 48.1%

DUQ $4.9 $0.1 ($4.3) $0.0 $0.7 $16.2 ($3.6) ($0.9) $11.7 5.8%

EKPC $3.2 $0.0 ($4.9) $0.0 ($1.7) $20.8 ($4.3) ($0.6) $16.0 (10.4%)

EXT $0.6 $0.0 ($7.5) $0.0 ($6.9) $22.3 ($7.5) $0.0 $14.8 (46.7%)

JCPLC $1.7 $0.0 ($9.1) $0.0 ($7.4) $38.1 ($8.1) ($1.1) $29.0 (25.5%)

MEC $6.6 $2.2 ($9.0) $0.0 ($0.3) $34.5 ($8.3) ($0.7) $25.5 (1.1%)

OVEC $0.0 $0.0 ($0.3) $0.0 ($0.3) $1.2 ($0.3) $0.0 $0.9 (36.6%)

PE $8.7 $9.6 ($7.0) $0.0 $11.3 $39.9 ($6.2) ($0.8) $33.0 34.3%

PECO $17.1 $0.3 ($14.9) $0.0 $2.5 $68.2 ($13.1) ($1.8) $53.2 4.7%

PEPCO $19.2 $5.4 ($10.8) $0.0 $13.8 $50.2 ($9.5) ($1.3) $39.4 35.1%

PPL $27.7 $12.7 ($15.1) $0.0 $25.2 $85.1 ($13.2) ($1.9) $70.0 36.1%

PSEG $27.9 $2.9 ($16.6) $0.0 $14.1 $76.0 ($14.6) ($2.0) $59.4 23.8%

REC $0.2 $0.0 ($0.6) $0.0 ($0.3) $5.3 ($0.5) ($0.1) $4.7 (6.9%)

Total $390.9 $315.2 ($326.9) $0.0 $379.2 $1,516.9 ($290.2) ($36.6) $1,190.0 31.9%
Offset Available to Load if all ARRs Self Scheduled

©2023 www.monitoringanalytics.com 35

SS FTR

Bal+M2M 

Charges

Congestion

+M2M Offset SS FTR

Bal+M2M 

Charges

Congestion

+M2M Offset SS FTR

Bal+M2M 

Charges

Congestion

+M2M Offset

ACEC $2.6 ($2.1) $3.7 15.6% $1.8 ($2.7) $5.5 (16.4%) ($0.1) ($3.7) $11.0 (34.5%)

AEP $62.7 ($28.2) $81.9 42.1% $77.3 ($38.1) $110.9 35.3% $112.7 ($45.1) $173.7 39.0%

APS $31.2 ($10.4) $31.9 65.1% $42.0 ($14.8) $45.2 60.3% $85.7 ($21.8) $98.1 65.1%

ATSI $27.9 ($13.9) $36.8 38.1% $30.7 ($19.5) $50.6 22.1% $30.1 ($21.7) $85.6 9.9%

BGE $53.7 ($6.7) $15.3 308.0% $79.7 ($9.1) $24.8 284.2% $107.1 ($11.9) $44.4 214.5%

COMED $40.6 ($19.8) $65.2 31.9% $69.6 ($28.5) $78.3 52.4% $51.1 ($30.7) $115.3 17.7%

DAY $5.6 ($3.9) $9.7 17.4% $8.0 ($5.3) $11.0 24.9% $6.5 ($5.8) $18.6 3.5%

DOM $32.8 ($16.9) $59.2 26.9% $117.0 ($37.9) $87.9 90.0% $239.8 ($68.8) $213.3 80.2%

DPL $27.3 ($8.7) $17.4 107.3% $56.4 ($6.7) $36.2 137.4% $64.4 ($8.6) $45.4 122.7%

DUKE $30.5 ($6.0) $14.9 164.2% $40.9 ($8.4) $17.4 187.2% $35.7 ($8.8) $27.2 99.2%

DUQ $8.1 ($3.2) $5.1 95.2% $8.9 ($4.0) $6.2 79.7% $3.9 ($4.3) $11.7 (3.1%)

EKPC $4.1 ($2.9) $7.4 16.8% $6.6 ($4.2) $8.4 29.3% $7.1 ($4.9) $16.0 13.7%

EXT $0.9 ($2.2) ($1.7) 74.3% $0.3 ($13.8) $11.0 (122.3%) $1.2 ($7.5) $14.8 (42.5%)

JCPLC $2.3 ($4.6) $9.2 (25.5%) $0.9 ($6.1) $12.9 (40.2%) $8.8 ($9.1) $29.0 (1.1%)

MEC $0.8 ($4.2) $8.7 (38.5%) $8.0 ($5.3) $16.5 16.5% $27.7 ($9.0) $25.5 73.3%

OVEC NA $0.1 $0.5 NA NA ($0.3) $0.9 NA NA ($0.3) $0.9 (36.6%)

PE $11.2 ($3.8) $10.8 69.1% $13.5 ($6.5) $16.4 42.8% $27.3 ($7.0) $33.0 61.7%

PECO $16.8 ($8.2) $13.4 63.8% $14.0 ($10.9) $24.9 12.4% $16.1 ($14.9) $53.2 2.2%

PEPCO $23.2 ($6.1) $13.7 124.3% $37.3 ($8.3) $20.5 141.7% $45.5 ($10.8) $39.4 88.2%

PPL $39.2 ($8.5) $20.5 149.9% $43.7 ($11.5) $30.8 104.5% $133.8 ($15.1) $70.0 169.6%

PSEG $21.3 ($8.9) $18.4 67.2% $43.2 ($13.9) $25.0 117.0% $88.9 ($16.6) $59.4 121.7%

REC $0.2 ($0.3) $0.6 (22.6%) $1.0 ($0.6) $2.1 21.0% $2.5 ($0.6) $4.7 40.2%

Total $443.0 ($169.4) $442.7 61.8% $700.9 ($256.2) $643.4 69.1% $1,095.7 ($326.9) $1,190.0 64.6%

* First ten months of the 2021/2022 planning period

19/20 Planning Period 20/21 Planning Period 21/22 Planning Period*
Monitoring Analytics, LLC

2621 Van Buren Avenue

Suite 160

Eagleville, PA 

19403

(610) 271-8050

MA@monitoringanalytics.com

www.MonitoringAnalytics.com

©2023 www.monitoringanalytics.com 36
Financial Transmission Rights (FTRs)

Energy & Environmental Markets Advisory 

Committee Meeting

February 28th, 2023
Confidential

Seven markets currently publish nodal Locational Marginal Prices (LMP) of electricity and 

offer Financial Transmission Rights (FTR) auctions for their markets based on congestion 

spreads

© 2023 38

Map source: ISO/RTO Council
Confidential

Locational Marginal Price (LMP)

LMP = Energy + Congestion + Loss*

Energy is the price that comes from optimal dispatch in an ideal 

grid with no congestion or loss

• Same for all locations within an RTO/ISO at any given time

Congestion represents the cost of network capacity constraints in 

the grid resulting from “out of merit order” generation dispatch

• Varies by location

Loss represents the cost of electrical loss in the system, and is 

largely a function of the distance from generation to load

• Varies by location

*In ERCOT, Loss is not included in the LMP

RTOs/ISOs simultaneously derive LMPs for all their pricing locations for both their Day 

Ahead scheduling market as well as their Real Time dispatch markets

39
Confidential

Background: what is an FTR1?

© 2023 40

 An FTR is a financial forward spread contract that exists in FERC markets that settles to 

the difference in prices between two locations (often referred to as the source and sink)

 FTRs are created in periodic (i.e., monthly) auctions that allow the RTO/ISO to pre-sell, 

on behalf of the transmission capacity owners, the congestion revenues they will collect 

on the network (thereby exchanging the variable price for a fixed price)

 More specifically, FTR auction markets exist for two purposes:

o Distribute congestion revenue

o Provide transmission capacity owners the ability to hedge congestion

1. FTRs in this presentation refer to the similar locational spread contracts offered by the 7 organized markets; however, the nomenclature 

differs among the entities for these similar contracts: Financial Transmission Rights (PJM, ISO-NE, MISO); Transmission Congestion Contracts 

(NY-ISO); Congestion Revenue Right (ERCOT, CAISO); Transmission Congestion Right (SPP)
Confidential

FTRs create a fixed for floating exchange of cash flows that exposes the ISO to forward 

price and credit risk

41

• Market participants, hedge funds, 

speculators

• Willing to provide the fixed price 

hedge by bidding on FTRs in 

exchange for anticipated profits 

from the variable daily congestion 

exposure

• This fixed for floating exchange of 

cash flows creates forward price 

and credit risk for the ISO

• Daily purchase and sale of electricity in 

the ISO 

• Congestion = the difference between what 

a factory or utility may pay for power (e.g., 

$46/MWh) and what a generator receives 

for that power (e.g., $38/MWh)

• “Owners” of the 

transmission capacity

• Receive a fixed price 

hedge for their assets 

from each FTR auction

• Collects and distributes payments

• In the case of non-payment, 

socializes default among market 

participants 

FTR Holder/Trader

Holder of 

Auction 

Revenue

Rights

ISO-NE

Day Ahead Market

Variable Day Ahead 

Congestion $8

Fixed 

FTR $6

Variable Day Ahead 

Congestion $8

Fixed 

FTR $6

(receives/pays difference)

FTR payment mechanism

© 2023
Confidential

The FTR markets continue to grow both through new geographies and organically; growth 

in 2021 over 2020 was 8.5%

© 2023 42

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

TWh

SPP

ERCOT

CAISO

NYISO

ISONE

MISO

PJM
Confidential

FTRs are a significant part of the United States power markets

© 2023 43

ISO/RTO Nodal Spot Markets

Day Ahead and Real Time Power

Physical 

Forward 

Contracts

ISO/RTO 

“Financial 

Transmission 

Rights”

(congestion spread 

markets managed by 

the ISO/RTO regional 

organized markets) 

Cleared 

Futures 

Contracts

 Nodal 

Exchange

 ICE 

 CME

Non-cleared 

Financially 

Settled

Swaps

Settle to 

ISO/RTO 

Spot Markets

Settle to ISO/RTO 

Spot Markets 

(except ICE Mid C)

Settle to 

ISO/RTO

Spot Markets

5.4K TWh 2021 Futures

14.5K TWh Paths 2021 0.8K TWh 2021 Options

Market Size 

Unknown

3.0K TWh ISO/RTO Physical Load in 20211

4.1K TWh Total US Physical Load in 2021

~5K TWh 2020

1. Approximation based on ISO/RTOs serve ~72% of U.S. population and 2021 generation was about 4,116 TWh

Source: Nodal Exchange analysis and compiled estimates for FERC/PUC regulated markets from the U.S. Energy Information 

Administration, FERC, Platts and the RTOs/ISOs; estimates for CFTC regulated markets from ICE, CME and NFX

FERC/PUC

(Federal Energy Regulatory 

Commission or state Public 

Utility Commission)

CFTC 

(Commodity Futures 

Trading Commission)

Regulator Key
Confidential

RTO/ISOs are uniquely capable of running the regional FTR auctions, which serve a critical 

role in organized power markets

© 2023 44

• The FTR auctions run by the 

ISOs/RTOs represent a one-tomany matching, with the 

RTO/ISO serving as the 

counterparty to all FTRs

• The auction takes into account 

the system capacity constraints 

and solves for both the total 

awards and the individually 

awarded FTR prices based on a 

simultaneous feasibility test

• The expertise required to ensure 

feasible results is a core 

competence of the RTO/ISO in 

their role as grid operator

• Due to the physical nature of the 

grid and the role as the grid 

operator, only the RTO/ISO can 

create FTRs which are needed 

for hedging market risk

FTR auctions allow market participants to hedge the value of transmission capacity 

across the electricity market area

FTR buyers 

bid on 

potentially 

millions of 

FTR paths

RTO/ISO offers 

into the auction 

simultaneously 

feasible capacity 

and ends up as 

counterparty to 

every FTR path
Confidential

Each RTO/ISO has its own approach to FTR risk management; some components of these 

methodologies are summarized below

© 2023 45

1. CAISO Response to Order to Show Cause of the CAISO Corporation under EL22-62: https://elibrary.ferc.gov/eLibrary/filedownload?fileid=574D348A-2E9D-C967-90C3-841616100000

2. Response of SPP, Inc. to July 28, 2022 Order to Show Cause under EL22-65: https://elibrary.ferc.gov/eLibrary/filedownload?fileid=F3FC8541-740A-C9CC-906B-841620F00000

3. Answer of ISO-NE Inc. under EL22-63: https://elibrary.ferc.gov/eLibrary/filedownload?fileid=CA7A039C-A0EF-CB1F-9324-84159AE00000

4. Answer of NYISO, Inc. to the July 28, 2022 Order to Show Cause under EL22-64: https://elibrary.ferc.gov/eLibrary/filedownload?fileid=03C684D6-CA3C-CD34-9E2A-8415B3E00000

5. MISO Credit for FTR and ARR Obligations: https://www.misoenergy.org/markets-and-operations/market-participation/credit/#2978Tab2

6. Revisions to PJM’s FTR Credit Requirement: https://elibrary.ferc.gov/eLibrary/filedownload?fileid=AADD92CF-4388-C3EA-9F7D-812B53800000

7. ERCOT Congestion Revenue Rights Protocols, section 7.5.5.3: https://www.ercot.com/files/docs/2021/08/01/07-020123_Nodal.docx:

RTO/ISO Reference Value for Margin Calculation Mark-toAuction

Volumetric 

Minimum

CAISO 5th percentile value based on the most current 36 months of historical 

data No None

SPP

75th percentile of the positive flow value, 90th percentile of the opposite 

flow value, depending on mean price No $0.10/MWh

ISONE Proxy price based on 36 month rolling look back and using the 

standard deviation of the historical FTR path congestion components Yes None

NYISO Certain values use historical data to account for volatility Yes None

MISO Higher of the 50th percentile value and 75th percentile value for each 

pricing node calculation on a rolling twelve-month basis Yes $0.05/MWh

PJM

Historical simulation value based on 97th percentile value from history 

of 2008 to present Yes $0.10/MWh

ERCOT Path specific adder based on the 99th percentile of average day-ahead 

market price from the last 3 years Yes None
Confidential

The FERC, RTO/ISOs and FTR market participants are actively examining these varying 

FTR risk management approaches

© 2023 46

 FERC Show Cause Orders: EL22-62-000 (CAISO), EL22-63-000 (ISONE), EL22-64-000 (NYISO), 

EL22-65-000 (SPP)

o FERC has issued orders for the RTO/ISOs listed above to show cause why their risk management 

approaches are not unjust and unreasonable in the absence of:

• Mark-to-auction mechanisms for the calculation of market participants’ FTR collateral 

requirements

• Volumetric minimum collateral requirements for FTR market participants 

 FERC Notice of Proposed Rulemaking (NOPR) (RM22-13-000)

o Would allow electric power market operators to share credit-related information among themselves 

so they can more accurately assess market participants’ credit risks

o FERC recognized that market participants also transact in markets that are not FERC-jurisdictional, 

and requested comments on possible frameworks that would allow information sharing amongst 

both sides

o Sharing credit-related information could improve RTO/ISO ability to accurately assess market 

participant risk and could enable them to respond to credit events more quickly and effectively

1. FERC news release: https://www.ferc.gov/news-events/news/ferc-tackles-credit-risk-measures-nopr-show-cause-order

2. Show cause order: https://www.ferc.gov/media/e-2-el22-62-000

3. NOPR: https://www.ferc.gov/media/e-1-rm22-13-000
Confidential

CFTC exemptive relief of FTR markets does not conflict with RTO/ISO exploration of novel 

risk management solutions 

© 2023 47

 CFTC order dated April 2, 2013 exempts RTO/ISOs and their market participants from the provisions of the 

Commodity Exchange Act and CFTC regulations (except anti-fraud and anti-manipulation provisions) with 

respect to the FTR markets

 This is an appropriate regulatory solution for FTRs given the unique nature of the FTR market, but should 

not preclude RTO/ISOs from exploring suitable risk management solutions for their markets, including 

solutions involving CFTC-jurisdictional entities
Confidential

Improved risk management of FTRs supports moving toward a carbon-free future

© 2023 48

 Renewable generation development (e.g., solar, wind, nuclear as a bridge to renewables) requires 

financing

 FTRs provide granularity: participants can bid on generator paths that might be hard to find a counterparty 

for outside the FTR market, offering a trusted hedging approach that ultimately lowers the cost of financing 

renewable generation projects

o RTO/ISOs can award FTRs on any permitted path as long as all awards are simultaneously feasible 

given capacity constraints

o In other markets, a counterparty would likely charge a premium to trade the specific path of interest, 

providing the same hedge at higher cost

 A robust risk management solution supports the continued viability of the FTR markets offering granular, 

long-term products for effective, low-cost hedging
Thank you
Global Markets Advisory Committee

Panel 2: Electric Vehicles and the Effect on Metals Markets 

Dan Bowerson, Alliance for Automotive Innovation

George Pullen, CFTC DMO Product Review 
Transportation Electrification’s Impact 

on CFTC-regulated Metals Markets

Dan Bowerson, Senior Director, Energy & Environment

CFTC Energy and Environmental Markets Advisory Committee

February 28, 2023
Our Members

52
What are customers buying?

53

Source: https://www.autosinnovate.org/posts/papers-reports/Get%20Connected%20Electric%20Vehicle%20Quarterly%20Report%202022%20Q3.pdf
What are customers buying?

54

Larger Vehicles = Larger Batteries

Source: https://www.autosinnovate.org/posts/papers-reports/Get%20Connected%20Electric%20Vehicle%20Quarterly%20Report%202022%20Q3.pdf
1 Tailpipe, 3 Agencies, 6 Regulations

California

Advanced Clean Cars

(ACC I) 

GHG, 2021-25MY

(GHG, Fuel Economy)

Adopted 2012

LEV III, 2015-25MY

(Criteria Emissions)

Adopted 2012

ZEV, 2015-25

(Criteria Emissions, GHG, 

Fuel Economy)

Adopted 2012

U.S. EPA

GHG, 2023-26MY

(GHG, Fuel Economy)

Adopted Dec, 2021

Tier 3, 2017-25MY

(Criteria Emissions)

Adopted 2012

NHTSA

CAFE, 2024-26MY

(Fuel Economy)

Adopted Apr 2022

55

August 2022 

Update to 

ACC 2.0
California ACC II – ZEV Mandate

56

7% 7%

35%

43%

51%

59%

68%

76%

82%

88%

94%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

National ** 2022CY ZEV ~ 6.8%

California** 2022CY ZEV ~ 19.3%

* See, https://www.coxautoinc.com/wp-content/uploads/2023/02/Jan-2023-Kelley-Blue-Book-Average-Transaction-Price-data-tables.pdf

** Thru, Sep 2022, See https://www.autosinnovate.org/resources/electric-vehicle-sales-dashboard

1 EV:2 Gas

1 EV:1 Gas

3 EV:1 Gas
57

WA*

OR

CA

MT

ID

NV*

AZ

UT

WY

CO

NM*

TX

OK

KS

NE

SD

ND

MN*

IA

MO

AR

LA

MS

AL

GA

FL

SC

TN

NC

IL

WI MI

OH

IN

KY

WV VA*

PA

NY

ME

VT

NH

NJ

DE

MD

Washington D.C.

MA

CT

RI

AK

HI

16 Existing ZEV States*

 CA

 CO

 CT 

 MA

 MD

 ME

 MN*

 NJ

 NM*

 NY

 NV*

 OR

 RI

 VA*

 VT

 WA*

ZEV States (~ 35% of U.S. Market) 

Steve Douglas 

sdouglas@autosinnovate.org

Most of these states will need 

to officially adopt ACC II or 

revert to Federal standards.
1 Tailpipe, 3 Agencies, 6 Regulations

California

Advanced Clean Cars

(ACC I) 

GHG, 2021-25MY

(GHG, Fuel Economy)

Adopted 2012

LEV III, 2015-25MY

(Criteria Emissions)

Adopted 2012

ZEV, 2015-25

(Criteria Emissions, GHG, 

Fuel Economy)

Adopted 2012

U.S. EPA

GHG, 2023-26MY

(GHG, Fuel Economy)

Adopted Dec, 2021

Tier 3, 2017-25MY

(Criteria Emissions)

Adopted 2012

NHTSA

CAFE, 2024-26MY

(Fuel Economy)

Adopted Apr 2022

58

March 2023 

Update*

March 2024

Final

* President Biden EO 14037 set a 

goal of 50% ZEV by 2030.
Possible Combined U.S. EV Requirement

59

7%

35%

43%

51%

59%

68%

76%

82%

88%

94%

17%

25%

34%

42%

50%

57%

64%

71%

78%

85%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Possible U.S. ZEV Requirements

CA + CA States POSSIBLE Federal

President Biden 

EO 14037 goal
80 Million EVs ~ 6 Billion kWh (6 TWh) of batteries*

60

1.1 1.4

2.6

3.8

5.0

6.3

7.5

8.6

9.6

11

12

13

5

9

14

20

28

36

46

56

68

81

0

2

4

6

8

10

12

14

0

10

20

30

40

50

60

70

80

90

2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Cummulative EVs Sold (Millions)

Year

Annual U.S. EVs Cummulative

* Assumes 75 kWh/vehicle
We Are Not Alone

61
Europe & China Gas Cars 2035

• February 14, 2023: EU Parliament approves law banning gas and 

diesel cars by 2035

• October 2020: China will require 50% EVs by 2035 (other 50% HEVs)*

• EU = U.S. New vehicle sales 

• China ~ 1.3 x U.S. New Vehicle sales

• (EU + China + U.S.) 2035 ~ 2.7 x current U.S. demand

62
Minimum: U.S. + EU + China

216 Million EVs ~ 16 Billion kWh (16 TWh) of batteries*

63

* Assumes 75 kWh/vehicle

3 4

7

10

14

17

20

23

26

29

32

3

6

13

24

37

54

75

98

124

152

184

218

0

5

10

15

20

25

30

35

40

0

50

100

150

200

250

2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Annual EV Sales 

Cummulative EVs Sold (Millions)

Year

EU/US/China Annual EU/US/China Cummulative

2022CY sales**

China 6.3 million

U.S. 1.1 million

EU 2.7 million

** www.ev-volumes.com
California Heavy-Duty ZEV Mandate (Class 2B-8)*

64

13-Feb-2023: CARB proposed requirement. 

https://ww2.arb.ca.gov/sites/default/files/2023-02/acfpres230213_ADA.pdf
The Race to Electrify Everything

65
The Global Competition to Electrify Everything

Critical Battery Minerals

• Lithium

• Graphite

• Cobalt

• Nickel

• Manganese 

• Copper

• Aluminum

66

Large OffRoad 

Vehicles

Traditional 

(phones, 

laptops)

Small OffRoad (e.g., 

lawn & 

garden)

Stationary 

Source 

Energy 

Storage

e-Bikes, 

Scooters

HeavyDuty 

Vehicles

Light-Duty 

Vehicles

Image source: https://www.wsj.com/articles/electrification-of-everything-11620843173

Test for Electrification: Does It Move? Or even if it doesn’t...
Conditions Necessary For a Successful 

Transformation

67
Conditions for EV Transformation

Residential infrastructure

• Equitable charging for those not living in a single-family home

Hydrogen fuel roll out in CA and beyond

• Woefully lacking – 53/54 public H2 stations are in CA

Public infrastructure (NEVI, PUC, public, etc.)

• $7.5B in NEVI is a good starting point, more continues to be needed.

Battery production facilities and battery critical mineral supply chain

• Over $100B committed to investing in domestic battery and EV production*

Incentives – federal (IRA) and state

• 30D split with battery component and critical mineral content requirements

• EV cost continues to be a challenge

* Source: https://www.autosinnovate.org/committees/communications/The%20Future%20Is%20Electric%20Infographic_copy_1 68
Today’s Battery Supply Chain*

Source: *J. Miller, H. Dempsey (2022, August 10), Carmakers’ battery plans in peril as raw material costs soar. Financial Times, 69

https://www.ft.com/content/b4002e49-07ce-41d8-9d3b-b6ed55af798c
Inflation Reduction Act (IRA)

70
Inflation Reduction Act

Manufacturing and Supply Chain

• 45X Manufacturing tax credits ($30.6 billion 

budget score)

• Advanced Technology Vehicle 

Manufacturing loans ($3 billion)

• Domestic manufacturing conversion grants 

($2 billion)

• Defense Production Act to spur onshoring 

of critical minerals ($500 million)

Infrastructure

• 30C Alternative Fuel Refueling Property 

Credit ($1.7 billion budget score)

• 48C Advanced Energy Project Credit ($6.3 

billion budget score)

71

Customer Incentives

• 30D Clean Vehicle Tax Credit ($7.5 billion budget score)

• Up to $7,500 per vehicle

• Removes per manufacturer cap on credits

• Requires N. American production

• Adds income and MSRP limits

• N. American battery and component manufacturing 

requirements

• Critical mineral sourcing / processing restrictions

• 45W Qualified Commercial Vehicle Tax Credit ($1.3 

billion budget score)

• Light vehicles qualify for up to $7,500 per vehicle

• Commercial lessors of personal vehicles can 

qualify

• 25E Previously-Owned Clean Vehicle Tax Credit ($1.3 

billion budget score)
North American 

“Assembly”?

Yes

No

MSRP?

- $80k for vans, 

pickups and SUVs 

- $55k for cars

Yes

No

AGI less than?

- $300k joint 

- $225k head of 

household

- $150k for single

Yes

No

No 

tax 

credit

No 

tax 

credit

No 

tax 

credit

40% of value of critical 

minerals* extracted or 

processed in the U.S. or 

in a country which the 

U.S. has a Free Trade 

Agreement, or recycled 

in North America?

Yes

50% of the value of 

battery components** 

contained in the battery 

manufactured or 

assembled in North 

America?

Yes

Retail – New EV Tax Credit (30D)

2023CY w/ Treasury Guidance

Notes:

1. The above is Auto Innovators staff interpretation of legislative language and issuance of Treasury draft guidance to 

no later than December 31, 2022

2. MSRP and AGI are not indexed to inflation. AGI is calculated for two tax periods (purchase year + prior tax year)

3. Critical Minerals: Calculated as the value of the critical minerals contained in such a battery as certified by OEM

4. Battery Components: Calculated as the value of components contained in such a battery as certified by OEM

5. Excluded entities:

• Starting January 1, 2024, no components contained in a battery of such vehicle can be manufactured or 

assembled by an entity of concern.

• Starting January 1, 2025, no applicable critical minerals contained in a battery can be extracted, processed, 

or recycled by a foreign entity of concern

6. Aggregate battery capacity must be greater than 7 kWh

7. Transfer of Credit not available to auto dealer until January 2024

*Critical Minerals:

• Before CY2024 – 40%

• 2024 – 50%

• 2025 – 60%

• 2026 – 70%

• After 2026 – 80%

**Battery Components:

• Before CY2024 – 50%

• 2024-2025 – 60%

• 2026 – 70%

• 2027 – 80%

• 2028 – 90%

• After Dec. 31, 2028 – 100%

$3,750 tax 

credit

$3,750 

tax credit
North 

American 

“Assembly”?

Yes

No

MSRP?

- $80k for vans, 

pickups and 

SUVs 

- $55k for cars

Yes

No

AGI less than?

- $300k joint 

- $225k head of 

household

- $150k for 

single

Yes

No

No 

tax 

credit

No 

tax 

credit

No 

tax 

credit

50% of value of critical 

minerals* extracted or 

processed in the U.S. or 

in a country which the 

U.S. has a Free Trade 

Agreement, or recycled 

in North America?

Yes

60% of the value of 

battery components** 

contained in the battery 

manufactured or 

assembled in North 

America?

Yes

Retail – New EV Tax Credit (30D)

2024CY

Notes:

1. All of the above is Auto Innovators staff interpretation of legislative language and pending Department of Treasury 

draft guidance to be issued no later than December 31, 2022

2. MSRP and AGI are not indexed to inflation. AGI is calculated for two tax periods (purchase year + prior tax year)

3. Critical Minerals: Calculated as the value of the critical minerals contained in such a battery as certified by OEM 

4. Battery components: Calculated as the value of components contained in such a battery as certified by OEM

5. Excluded entities:

• Starting January 1, 2024, no components contained in a battery of such vehicle can be manufactured or 

assembled by an entity of concern. This makes a vehicle placed in service after 12/31/2023 ineligible 

• Starting January 1, 2025, no applicable critical minerals contained in a battery can be extracted, processed, 

or recycled by a foreign entity of concern

6. Aggregate battery capacity must be greater than 7 kWh

7. Transfer of Credit to auto dealer available starting January 2024

*Critical Minerals:

• Before CY2024 – 40%

• 2024 – 50%

• 2025 – 60%

• 2026 – 70%

• After 2026 – 80%

**Battery Components:

• Before CY2024 – 50%

• 2024-2025 – 60%

• 2026 – 70%

• 2027 – 80%

• 2028 – 90%

• After Dec. 31, 2028 – 100%

ZERO battery 

components from 

an entity of 

concern

No

No 

tax 

credit

Yes

$3,750 tax 

credit

$3,750 

tax credit
North 

American 

“Assembly”?

Yes

No

MSRP?

- $80k for vans, 

pickups and 

SUVs 

- $55k for cars

Yes

No

AGI less than?

- $300k joint 

- $225k head of 

household

- $150k for 

single

Yes

No

No 

tax 

credit

No 

tax 

credit

No 

tax 

credit

60% of value of critical 

minerals* extracted or 

processed in the U.S. or 

in a country which the 

U.S. has a Free Trade 

Agreement, or recycled 

in North America?

Yes

60% of the value of 

battery components** 

contained in the battery 

manufactured or 

assembled in North 

America?

$3,750 tax 

credit

Yes

$3,750 

tax credit

Retail – New EV Tax Credit (30D)

2025CY

Notes:

1. All of the above is Auto Innovators staff interpretation of legislative language and pending Department of Treasury 

draft guidance to be issued by the end of December 2022

2. MSRP and AGI are not indexed to inflation

3. Critical minerals are calculated as the critical minerals contained in such a battery as certified by the manufacturer

4. Battery components are calculated as the value of components contained in such a battery as certified by the 

manufacturer

5. Excluded entities (China, Russia, Iran, North Korea):

• Starting Jan. 1, 2024, no components contained in a battery of such vehicle can be manufactured or 

assembled by an entity of concern. This makes a vehicle placed in service after 12/31/2023 ineligible

• Starting Jan. 1, 2025, no applicable critical minerals contained in a battery can be extracted, processed, or 

recycled by a foreign entity of concern. Vehicle placed in service after 12/31/2024 is ineligible. 

6. Aggregate battery capacity must be greater than 7 kWh

*Critical Minerals:

• Before CY2024 – 40%

• 2024 – 50%

• 2025 – 60%

• 2026 – 70%

• After 2026 – 80%

**Battery Components:

• Before CY2024 – 50%

• 2024-2025 – 60%

• 2026 – 70%

• 2027 – 80%

• 2028 – 90%

• After Dec. 31, 2028 – 100%

ZERO critical 

minerals and ZERO 

battery 

components from 

an entity of 

concern

No

No 

tax 

credit

Yes
Dan Bowerson

Senior Director, Energy & Environment

dbowerson@autosinnovate.org
• Multiple new 100% EV brands

• Audi no new ICE designs

• Volkswagen no new ICE designs

• BMW 90% of market categories BEV available

Automaker Announcements, Goals, and 

Aspirations

76

2020 

to 

2024

2025 

to 

2029

2030 

to 

2034

2035 

to 

2039

2040 

to 

2044

2045 

to 

2050

• Ford $29 billion investment by 2025

• Mini all new models EV

• GM $27 billion investment by 2025

• GM 40% of models EV; 20 EVs in N.A.

• Cadillac 100% EV available

• Jaguar 100% EV

• Bentley 100% plug-in

• Jeep 100% plug-in available

• Toyota 60 new hybrid/electric/fuel cell vehicles

• Volvo 50% of global sales EVs 

• Ford 100% BEV (Europe)

• Cadillac potential 100% BEV

• JLR electric available on all

• Daimler 100% EV production

• Mazda some level of electric on all models

• Bentley 100% BEV

• Volvo 100% BEV

• Kia EVs 40% of production

• Subaru hybrid/electric available across models

• Polestar climate neutral

• GM 100% BEV

• Volvo carbon neutral

• Daimler carbon neutral

• GM carbon neutral

Carbon neutral / near- or net-zero: 

Ford, Nissan, VW, Honda, Mazda, 

Toyota, Mitsubishi

Source: Compilation of public 

announcements, media articles, etc. 

Does not include all announcements.

All signs point towards industry-wide 

electrification
Minerals needed for 281 TWh of Li-Ion Batteries*

77

Mineral Kg per kWh Million Metric Tons for 281 TWh

Graphite 0.87 244 

Aluminum 0.58 164 

Nickel 0.48 136 

Copper 0.33 94 

Steel 0.33 94 

Manganese 0.17 47 

Cobalt 0.13 37 

Lithium 0.10 28 

Iron 0.08 23 

*Based on the sales-weighted average of EV batteries in 2020. See 

https://elements.visualcapitalist.com/the-key-minerals-in-an-ev-battery/

CFTC will cover
Supply Chain – Still A Challenge

78

Sources: 

• Benchmark Minerals Intelligence, “Can North America Build a Battery Supply Chain?” (Nov. 17, 2022) https://source.benchmarkminerals.com/article/can-north-america-build-a-battery-supply-chain

• Benchmark Minerals Intelligence, “More than 300 new mines required to meet battery demand by 2035”, https://source.benchmarkminerals.com/article/more-than-300-new-mines-required-to-meet-battery-demand-by-2035

CFTC will cover
Division of Market Oversight: 

Product Review Branch 

Electrified Vehicle Market 

Derivatives Summary

EEMAC Meeting February 28, 2023
The analyses and views expressed here are those of the authors and do not 

necessarily reflect the views of the Commission or CFTC staff.

This presentation is for its intended audience only.

8

0
Macro: EV Sales Growth

81

• 10M+ BEVs & PHEVs 

sold in 2022 which was 

14% of all new auto 

purchases

• 26.5M EVs are on the 

roads or 1.8% of the 1.4B 

total autos

• 807,180 BEVs sold in 

2022 which was 5.8% of 

all new auto purchases

• 2.2M BEVs are on the 

road or 0.78% of the 

290M+ total autos

Worldwide

USA
Macro: EVs & Hybrids

82

• Hybrids (HEV Hybrid 

Electric Vehicles) – brake 

charging electric

• Others
Supply and Demand: EV Markets

83

Price Average: 

 EV $66,000 new (2022)

 ICE $48,000 new 

 ICE $31,000 used car

Demand:

 Air Pollution Regs 

 HOV Lane Rules

 Tax Credits (State & Fed) 

 Charging Station Options 

 Urbanization

 Marketing 

Tesla

65%

Hyundai/Kia

7%

GM

7%

Ford

7%

Other

14%

USA Supply:

Staff Generated based on public data 
EV Manufacturers & Derivatives

84

Types of Financial Risk

Foreign Exchange Interest Rates Counterparty Credit Raw Material Prices
EV Manufacturers & Derivatives

85

Major Types of Financial Risk Continued

Raw Materials 

–Financial vs. Physical Settlement

How a Derivatives Market Develop?

 Spot/Cash

 Forwards

 Swaps

 Futures

 Other Sub categories of derivatives 

(indexes, options, etc.)
EV Manufacturers & Derivatives

86

Materials Commodities Exchange 

Contract

Plastics Natural gas, Oil, Ethane, Propane, Ethylene & Propylene YES

Steel Hot-Rolled Coil Steel, Iron, Manganese YES

Aluminum Aluminum YES

Rubber Rubber and Natural Rubber TOCOM

Graphite Graphite NO

Copper Copper YES

Cobalt Cobalt (Fastmarkets Index) YES

Lithium Hydroxide Carbonate (Fastmarkets Index) YES & LME

Lanthanides REM/REE Elements 57-71 + Sc, Y NO
EV Regulations & Policy

87

• EVs are heavily influenced by a 

regulatory quilt of agencies and 

departments both Fed & States

• Impacts to and oversight for the 

various policy touch points 

impacting EV supply and demand 

including manufacturing, 

materials, roads, charging, 

electricity and more

• Companies also often have self 

imposed goals for EVs that also 

must be taken into account
Questions

88

George Pullen

DMO-PRB

Senior Economist

gpullen@cftc.gov
Global Markets Advisory Committee

Closing Remarks
February 28, 2023 Energy and Environmental Markets Advisory Committee

Commissioner

Caroline D. Pham

Chairman

Rostin Behnam

Commissioner

Christy Goldsmith Romero

Commissioner

Kristin N. Johnson

Commissioner

Summer K. Mersinger