Suppose that Firm A is located at Node A, and buys 100 MW of…
Suppose that Firm A is located at Node A, and buys 100 MW of power from Firm B, who is located at Node B. The contract is bilateral, but all the physical energy is bid into the PJM energy market; thus Firm A winds up paying the Node A LMP for the 100 MW consumed and Firm B receives the Node B LMP for the 100 MW produced. Suppose that Firms A and B sign a two-way CFD at a strike price of $50/MWh. Suppose also that Firm B has a 100 MW Financial Transmission Right from Node B to Node A. What are the total revenues for Firm B?