Friday, November 20, 2009

FERC Requires Identification of Sellers in Market Abuse Case

The NYISO petitioned FERC on September 4, 2009 asking for permission to change its market rules after an apparent instance of market abuse by sellers. The sellers have been allowed to charge "market-based rates" after FERC (routinely) found they individually lacked market power. Market based rates are not filed in advance and thus are not subject to meaningful review for reasonableness. See NYISO Admits its "Market Problem" Allows "100% Or More" Overcharges Due to "An Abuse of Market Power," Proposes Rule Change, No Refunds, PULP Network, September 5, 2009.

NYISO made two filings, a non-public version, and a public version which left out details regarding the identity of three sellers who allegedly abused the market, and requested FERC to keep the matter confidential. In a November 3, 2009 Order, FERC required disclosure of the names of the sellers, but still kept details of the episode out of the public record. NYISO has 30 days to file a version of the petition that includes the names of the sellers, so, barring stays, this should occur soon.

The duration, scope, and cost to consumers of the alleged overcharges is not known. FERC policies have fostered secrecy and delayed reporting of bids -- rate changes and rate demands -- in the NYISO day-ahead and real time markets in which much of the energy in New York is sold.

The Federal Power Act requires all wholesale electric rates demanded and charged to be just and reasonable. The traditional system still on the law books requires transparency through advance public filing of all rates and contracts and rate changes.

No comments: