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FERC Orders Changes To PJM FTR Forfeiture Rule With Respect To Virtual Transactions
FERC issued an order finding that PJM’s current application of its Financial Transmission Rights (FTR) forfeiture rule to virtual transactions is no longer just and reasonable.
Under the FTR forfeiture rule, an FTR holder forfeits the profit from its FTR when it submits an INC or a DEC at or near the source or sink location of the FTR that results in a higher LMP spread in the day-ahead energy market than in the real-time energy market
PJM currently evaluates virtual transactions on an individual basis to determine if the FTR forfeiture rule should be applied.
"We find that an individual transaction approach does not accurately consider the net impact of a market participant’s overall portfolio of virtual transactions on a constraint related to an FTR position. Instead ... a portfolio approach that evaluates the net effect of a participant’s entire virtual portfolio – including Incremental Offers (INCs), Decrement Bids (DECs), and UTCs [Up-to Congestion]– accurately represents the effect of a participant’s virtual transactions on a constraint related to an FTR position," FERC said
"Although we find PJM’s current application of the FTR forfeiture rule tariff unjust and unreasonable, we have determined, in exercising our remedial discretion, that directing refunds, if any, resulting from our requirement to adopt a portfolio approach is not appropriate in the circumstances of this proceeding. As some parties have indicated, they have based market decisions on the current tariff rules that cannot now be revisited, and the Commission has not always ordered refunds when market decisions are affected. Moreover, while market participants were on notice that the FTR forfeiture rule might change, the nature of any change was uncertain. The bids, offers, and decisions market participants made could have been different had they been aware of the nature of the revised FTR forfeiture rule," FERC said
With regard to the issue of how uplift is, or should be, allocated to all virtual transactions, FERC held such issue abeyance pending the outcome of any final rule resulting from the Notice of Proposed Rulemaking (NOPR) being issued by FERC which explores uplift allocation in a broader context (see related story today)
Docket No. EL14-37
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January 19, 2017
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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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