Bill Hogan on FTRs in NZ’s original design and early experience from the US

That Bill Hogan is a Professor of Energy Policy at Harvard University and Director of the enormously influential Harvard Electricity Policy Group is impressive. Locally, however, he has particular status as the guiding mind behind the design of New Zealand's wholesale electricity market.

One of Hogan's key recommendations in the establishment of the wholesale market was that Financial Transmission Rights ("FTRs") be created alongside it. This wasn't part of the original implementation but, 16 years later, the Electricity Authority has appointed an FTR manager with the responsibility of running our first FTR auction in May 2013.

Professor Hogan hasn't worked in New Zealand since the early 2000s but was interested and pleased to hear of this new development. He kindly agreed to talk to the podcast about FTRs and why they're so important.

Last week, Bill outlined their particularly important property of revenue adequacy. This week he talks about why NZ didn't implement FTRs in the 1990s and what we have learned about revenue adequacy from the early FTR implementations in the US.