GreenHat's Default Causes Hundreds of Millions in Stakeholder Losses

How will PJM proceed and How will it impact traders?

Regardless of how things play out in the coming year(s), the PJM GreenHat default and the changes it will trigger are certain to be top of mind for FTR traders.  To help traders manage this issue, we've researched and summarized the events leading to the default, the fall out so far and how it will potentially impact traders. Here you’ll find the overall summary and a link to have the detailed summary emailed to you.

Overall Summary

  • On June 21st, 2018, PJM learned an important lesson about its credit policy and management when one of its largest FTR portfolio investors, GreenHat Energy LLC., defaulted on its long-term FTR obligations for the ongoing 2018/2019, 2019/2020, and 2020/2021 PJM planning periods.

  • GreenHat built up a 890 million MWh portfolio posting a mere $600,000 in collateral.

  • GreenHat’s portfolio began depreciating in 2017 and subsequently pledged $62 million in sales revenue to PJM; Revenue was reportedly derived from a bi-lateral sales agreement.

  • Pledged revenue was pocketed, GreenHat increased its position exposing the portfolio to further losses.

  • Bets on historically successful positions allowed GreenHat to have low collateral requirements, but unexpected transmission upgrades helped lead to the massive default.

  • FERC, PJM and Independent Committee of Consultants are researching, analyzing and making recommendations to prevent this type of default in the future.

  • Analysis Summary

    • PJM did not have access to verify the $62 million pledge that allowed GreenHat to continue with is positions

    • PJM lacks a comprehensive clearing mechanism to mitigate rising default, requiring marketing participants and, ultimately, rate payers to do the mitigation

    • PJM has used flawed credit methodology to determine credit risk

  • Independent Committee Consultants’ Recommendations Summary - PJM should:

    • Use mark-to-auction values from more frequent auctions as the base for “variation margin”

    • Retain the 10¢/MWh minimum charge and purchase price that form the “original margin”, terminate the FTR undiversified adder due to its lack of correlation to risk

    • Define a default as the inability to grant a monthly variation margin call within two business days.

    • Enact outsourced background checks, to execute due diligence by assuring applicants employ their represented methods of risk management

    • Apply explicit rejection of membership should a background and regulatory history check fail

    • Annually update the financial qualifications and to enable PJM’s right to proceed on a participant's failure to meet those qualifications.

    • Increase its Long-term auctions to monthly or bi-monthly

    • Report with the IMM market expectations from participant risk managers, to establish position limits for FTRs based on capitalization

    • Produce internal participant risk management reports based on the frequency of participants changing portfolio positions

  • Potential Impacts of Recommended PJM Changes:

    • FTR market participants will likely need to provide collateral associated to their portfolio’s risk before submitting their bids.

    • When the Mark-to-Market value surpasses the FTR account’s available credit for auction bidding, PJM will issue a Collateral Call. The Collateral Proposal has the potential to delay auction clears and results.

    • PJM’s analysis conveys that 75% of PJM FTR participants will experience a negligible increase in credit, 11% will see an increase less than $100,000, and another 11% will see an increase under $1 million, and 4% will experience an increase over $1 million.

    • More stringent credit requirements, price formations, and Collateral Calls will heighten the entry costs associated with the PJM market, especially for smaller firms.

Yes Energy announces the release of TradeNOW!

Boulder, CO

Yes Energy announced the release of TradeNOW into their QuickSignals product.  TradeNOW is an innovative data collection technology used to deliver critical market signals to QuickSignals dashboards and QuickSignals RTD data feeds.

One trader using TradeNOW says, “You're getting Hub North a second and a half faster!? That's a really big deal!”. In many instances, the speed improvements are even greater:

  • 4.0 - 12.0 seconds faster - INDIANA.HUB (RT LMP, ExAnte, ExPost, ExPost/AnteDiff)

  • 1.0 - 3.0 seconds faster - ERCOT HB_NORTH (RT LMP - Adders Included)

  • 0.25 -0.4 seconds faster PEPCO/PENELEC (Provisional Dispatch Rates-15 Sec --Indicative of PJM Western Hub Next Tick)

TradeNOW data collection being used on the right, Legacy collection used on the left.

“Traders participating in the ICE Bal-Day market will benefit the most from this new technology. These fast paced markets require the fastest data to capture trading opportunities. Along with the release of TradeNOW, Yes Energy is increasing its investment to reducing latency across all of our data collections,” said Isaac Velander, VP of Product at Yes Energy. “We believe these investments in the fastest data possible makes QuickSignals the market leading tool for supporting real-time energy traders and asset managers.”


Yes Energy revolutionized power market data visualization with the introduction of its flagship product, PowerSignals, in 2007. Since its founding, Yes Energy has grown to be the industry leader in providing power market participants with tools to support their daily trading operations. Yes Energy collects & manages thousands of real-time & historical power market data series including (but certainly not limited to) ISO/RTO data, LMP prices, FTR auction results, transmission & generation outages, real-time generation & flow data, and load & weather forecasts. The Yes Energy trading suite provides an end-to-end solution for power traders through a combination of five products.

  • PowerSignals - Real-time and historic ISO market data transformed into insight with 1000+ users

  • QuickSignals - Monitors the market in real-time via custom dashboards, mobile, and desktop alerting tools

  • DataSignals -  Data feed of PowerSignals data directly into your workflows, spreadsheets, and other in-house solutions via an API or private database.

  • Submission Services - Submit market trades to the ISO and receive your awards directly all in one tool.

  • RiskSignals - Trader-friendly tools to optimize portfolios via profit analytics and risk models.

Yes Energy's 50 plus employees are committed to helping market participants in North American nodal power markets be more successful and more efficient. This is achieved by understanding their challenges and developing cutting edge information solutions and it is sustained by an undaunted 'can do' spirit embodied by its entire staff.

Feeding Hungry Data Models

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FEEDING HUNGRY DATA MODELS:

HOW TO ENSURE ACCURATE & CONSISTENT DATA

FOR YOUR DATA MODELS

Traders and Generation Managers rely on accurate generation & transmission flow data to make decisions. With the increasing use & reliance on automation & modeling it is ever more important to ensure the data is clean, accurate & consistent. Here is a quick overview of how our users can rely on & utilize Live Power Generation & Transmission data to make decisions and feed their models.

STEP 1: START WITH ACCURATE DATA

Live Power, Yes Energy’s data partner, monitors, calibrates and delivers real-time generation & transmission flow data at 60 second intervals. This data is closely observed and calibrated against other generation data sources. This attention to accuracy means that their real-time data closely matches sources like SCED & CEMS data (see video 1)

Video 1. Time Series Chart showing Live Power Generation along with SCED, & CEMS data for the same power plant - Rio Nogales in ERCOT. CEMS

STEP 2: ENSURE A CONSISTENT FLOW OF DATA

In addition to the data Yes Energy collects & maintains, we integrate data from our partners, helping traders see a full picture. Real-time Generation & Transmission data is only available in Yes Energy products through a subscription to Live Power data & Planned Generation Outage intelligence is provided through a subscription to IIR Energy. SCED & CEMS generation data is available as part of Yes Energy tools but for both there is a 45- 60 day reporting lag. Blending the real-time & historical generation data sources provides multiple benefits:

 

Provides users with a consistent flow of data from which to base their analysis - even if SCED or CEMS reports aren’t yet published (see video 2).

 

Video 2. SCED & CEMS Data does not have anything published past October 5th. Live Power real-time generation data (blue) continues and and indicates that this plant has come offline. IIR Energy (black line) has reported an outage for this plant. The real-time generation confirms that the plant does indeed go offline - and actually turns off a bit early and comes back on a bit late. Real-time LMP for HB_HOUSTON indicates some volatility during this time and generation appears to be a fundamental driving the market. Access to the Live Power Real-time Generation data & IIR Energy’s plant status provides this insight.

 

Allows users to set a priority level for each of these data series - setting the order in which each data source is used (see figure 1).

Figure 1. Use the NVL function with the three data sources for generation data in ERCOT - SCED, CEMS and Live Power. This function creates a data series that displays the available data sources in order of priority, ensuring that when one data series has a null value, other sources fill in the gaps.

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Provides a complete data set with which to feed models

STEP 3: FEED SOFTWARE WITH THE ACCURATE CONSISTENT DATA FROM YES ENERGY.

Video 3. Use the Data Table View in the Time Series Analysis module to export the data to Excel. This will pull all of your data series including the blended data series ensuring that your models are not fed null values.

Video 4. DataSignals users can build queries using these generation & transmission flow data series. To address null values, users can use Yes Energy’s “Best Generation Data Series”, create a coalesce statement in their modeling software or configure the data so it is customized for each generator. Then use this latest & greatest generation & transmission data to feed your power flow modeling or any other data model downstream.

INTERESTED IN LEARNING MORE?

SIGN UP TO RECEIVE A GETTING STARTED GUIDE - INCLUDING SAMPLE API CALLS, HOW TO FIND CRITICAL DATA SETS & TIPS FOR USING POPULAR DATA SCIENCE PROGRAMMING LANGUAGES:

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