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Power Trader To Pay $25,000 Under FERC Settlement
FERC approved a stipulation and consent agreement between its Office of Enforcement (Enforcement) and Saracen Energy Midwest, LP to resolve Enforcement’s investigation under Part 1b of the Commission’s regulations, 18 C.F.R. Part 1b (2015), into whether Saracen violated the Southwest Power Pool, Inc.’s (SPP) Open Access Transmission Tariff, Attachment AE, § 7.4.1(4) by submitting bids for Transmission Congestion Rights (TCRs) at Electronically Equivalent Settlement Locations (EESLs).
Saracen neither admits nor denies the violations and agrees to pay a civil penalty of $25,000
Saracen submitted the bids at issue for auctions in September and October 2014, and March and April 2015.
EESLs are two points in SPP’s TCR model that SPP determines are electrically equivalent, meaning SPP anticipates they will have a price divergence of zero. As a result, EESLs are modeled in such a way that there should never be congestion between them. Because TCRs are designed to target congestion, and EESLs should never be congested, TCRs placed at EESLs serve no legitimate purpose.
For these reasons, SPP’s tariff prohibits market participants from placing TCR bids at EESLs.
According to FERC's order, Enforcement determined that in five separate auction rounds across four different auction months, Saracen submitted TCR bids at EESLs. FERC's order states that Saracen submitted the TCR bids at issue over the course of four separate monthly auctions: August 2014 bidding for September 2014 TCRs; September 2014 bidding for October 2014 TCRs; February 2015 bidding for March 2015 TCRs; and March 2015 bidding for April 2015 TCRs.
According to FERC's order, after bidding for each of the Relevant Auctions, SPP notified the Saracen trader either by phone or email indicating that the relevant bids were submitted at EESLs, that they violated the tariff, and as such were removed from the relevant auction. Importantly, because SPP identified and removed the Relevant Bids, they never cleared and the market was not harmed.
According to FERC's order, although the trader took remedial action after receiving each removal notice, the trader nevertheless continued submitting TCR bids at EESLs. Only after receiving the fourth removal notice did the trader successfully implement all of the necessary controls and procedures sufficient to prevent submitting TCR bids at EESLs, FERC's order states
Docket IN16-7
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August 23, 2016
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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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