Members agreed last week to move forward with an initiative that could result in reduced restrictions on up-to congestion transactions.

About 70 percent of stakeholders at the Market Implementation Committee voted in favor of an issue charge to consider lifting the UTC bid cap and restrictions on the nodes that are eligible for such trades.

The measure passed over opposition from the Market Monitor and several stakeholders, who said the product is already exacerbating the underfunding of Financial Transmission Rights.

A UTC combines a day-ahead offer to sell energy at a source with a bid to buy the same quantity at a sink. The transaction is only executed if the difference between the Locational Marginal Prices at the source and sink are under a threshold set by the bidder. Current market rules limit such bids to differentials of $50 or less.

Noha Sidhom, of Inertia Power LP, proposed the review in a problem statement last month, saying the bid cap forces traders to place price insensitive bids that don’t reflect market conditions. (See PJM to Consider Relaxing UTC Rules.)

The current rules also limit such transactions to nodes historically available for interchange transactions, excluding those load buses below 69 kV and buses for generators below 100 MW. “Expanding nodes would make [UTCs] a true hedge when the market is more volatile,” Sidhom said.

The issue charge directs the MIC to consider alterations to UTCs during special sessions in the first quarter of 2014, with a FERC filing for approval of Tariff changes anticipated in July.