Monday, December 10, 2018

Mixed Ruling for Trader over PJM Repricing Events

By Rory D. Sweeney

FERC on Monday agreed with a financial trader that PJM failed to provide “all available supporting documentation” for two real-time repricing events that cost the company more than $500,000, but the commission rejected the company’s effort to obtain refunds from the RTO.

The commission said it denied Monterey MA’s request for PJM to the return to the original incorrect pricing to avoid an “absurd” result (EL18-150).

Monterey complained that it lost money on day-ahead financial positions it took after PJM revised nodal prices following events from April 1 to April 30 and June 22 to July 10 in 2016. While Monterey’s complaint was specific to those events, the company argued that PJM “frequently” revises real-time prices after the fact and “while the occurrence of these adjustments decreased in 2017, following an all-time high in 2016, the frequency of adjustments is again trending upwards, with 2018 numbers already matching or surpassing 2017 numbers.”

A financial trader in PJM’s virtual markets claims a recalculation of a real-time price at a dead bus cost it nearly half a million dollars. | Pexels

Bagley Event

In the April event, three of the four transmission lines to the BC Bagley 230-kV substation near Baltimore were out of service, according to the complaint. PJM said the fourth line was also out, creating a “dead bus replacement” situation in which the RTO calculates the nodal LMP using active nodes nearby. That recalculation switched the marginal congestion cost at the bus from negative to positive, costing Monterey $480,000.

However, Monterey argues that MISO’s state estimator shows the fourth line was still in service and that PJM’s outage reports didn’t include the line during that time. PJM failed to provide sufficient information when announcing the price reposting to explain why its data didn’t match up with data elsewhere, Monterey said.

LaSalle-Plano Event

In the second event, the LaSalle-Plano 345-kV line in Illinois was out because of forced outages on two 765-kV lines. Monterey took financial positions based on five-minute pricing signals over the previous few days, but the real-time LMPs were subsequently recalculated, costing the company $31,000.

PJM told Monterey the prices were changed because the model didn’t match how RTO staff actually operated the system.

Monterey said it sought arbitration with PJM over the event, but the RTO denied the request.

XO Energy, another financial trader, told FERC that it also lost money during the LaSalle-Plano event and supported Monterey’s request for Tariff and Manual 11 changes. XO agreed that PJM needs to be timelier in its customer response.

“Reasonable guidelines and Tariff obligations must be incorporated into these provisions to increase transparency and reduce abuse,” XO said.

FERC agreed that PJM failed to provide the amount of information required by its Tariff in connection with the Bagley event, but it also agreed with the RTO’s response that it complied with its Tariff in recalculating the LMPs. The commission therefore denied Monterey’s requests for changes, as well as its complaint about the LaSalle-Plano event.

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