New York Senator Charles Schumer has now written to the FERC Chairman asking for a full investigation. See Schumer Demands Federal Investigation Into Energy Trading Scam That Fleeced NY Consumers Of Untold Millions And Put NY-Area Power Grid At Risk Of Blackout; Schumer: Did Power Trades Cost Millions?. In his letter to FERC Chairman Kelliher, Senator Schumer said:
While the New York Independent System Operator (NYISO) has yet to determine the exact costs of these trading practices, some estimate that increased congestion and "uplift" fees have cost consumers as much as $125 million in April and May of this year alone, and as much as $240-290 million overall. Furthermore, it appears that this practice may have played at least a part in New Yorkers spiking utility bills, as well as the record bills faced by many municipal electric utilities. Given the magnitude of economic impact these trading practices appear to have caused, it is imperative that FERC determines the extent to which they are to blame and if monetary recompense can or should be exacted from the parties involved.This week, the New York State Power Authority made a supplemental filing with FERC. Request of New York Power Authority that the Commission Launch a Vigorous Investigation into the Lake Erie Loop Flow Matter under ER08-1281. NYPA, the largest power producer in the state,
operates the state owned hydro power plants at Niagara and on the St. Lawrence River, and major transmission lines. NYPA's filing points out that NYISO was slow to identify and halt the market gaming, and that NYISO in its filings sought no refund remedy from FERC to redress what has been estimated to be overcharges of $240 - $290 million or more:
[I]t is clear that New York consumers have been significantly harmed by the exploitive, and possibly illegal actions of a small group of market participants over the first seven months of 2008. * * * *The story started with the July 21, 2008 NYISO filing at FERC; to date has been covered by
[W]hile the NYISO's filing protects consumers from any additional market abuse, it does nothing to address the significant overpayments made by New York consumers for almost seven months, starting in January 2008. * * * *
NYPA along with the other New York transmission owners and many other market participants have requested that the NYISO provide additional information to enable a full understanding of the extent of the suspicious market activity and the economic harm experienced by New York consumers. We expect that the Commission also has an interest in understanding the magnitude of the problem. As NYPA understands the issue, the current market design allowed certain un-named market participants to economically benefit at the expense of New York consumers from irrational transaction schedules.
NYPA trusts that FERC will immediately initiate a full investigation into this market behavior. We find it totally unacceptable for New York consumers, already burdened by some of the highest energy prices in the country, to pay more because some small number of market players discovered and profited from a market design flaw. These profits must be returned to New York Consumers. Not doing so will further erode confidence that competitive electricity markets benefit consumers.
- the PULP Network blog: Enron-Like Gaming of NYISO Market Rules: Did it Cost New York Consumers At Least $125 Million?, (July 22, 2008), and PULP Demands Full Public Investigation by FERC of NYISO Gaming,(PULP Network, August 1, 2008).
- the Syracuse Post Standard: Schumer: Did Power Trades Cost Millions?,
- the trade publication Platts, New York ISO Moves to Cut off Loop Routing as Cost of Strategy Mounts for Whole Market (July 28)
- New York Post, and
- the Plattsburgh Press Republican, (noting that the added NYISO charges have affected municipal customers in Plattsburgh, Rouses Point, Lake Placid and Tupper Lake, and that the Mayor of Plattsburgh had demanded an investigation in March, before $150 million in additional charges were passed through by NYISO in May and June 2008).
Con Edison customers and electricity users across the state were essentially cheated of about $240 million, and New Yorkers were put at risk of a blackout, by an elaborate scheme involving the sale of power out of state. Documents filed with the Federal Energy Regulatory Commission suggest the scheme began in January and ended in July, when it was shut down by the New York Independent System Operator, which runs the state's power grid.