Laden with caveats and limited to an 18-month period between 2000 and mid-2001, a third report on energy market manipulation was presented to FERC last week by the California Independent System Operator (CAISO). The 28-page report, “Supplemental Analysis of Trading and Scheduling Strategies Described in Enron (December 2000) Memos,” details schemes ranging from “Fat Boy” to “Ricochet” with everything in between.
The report breaks down the dollar impact of the six trading schemes identified in the Enron memos made public last year, showing that Enron Corp. affiliates and the marketing arm of BC Hydro in western Canada, Powerex, were the leading money winners, although drawing short of estimating any ill-gotten profit totals.
This report follows two others filed last year in October and January. It also follows the March 2003 FERC staff report on alleged price manipulation in the western energy markets. CAISO specifically noted that its latest analysis differs from its two earlier ones in several respects: (a) limited time frame (Jan. 1, 2000-June 21, 2001); (b) additional trading schemes — fat boy (overscheduling) and ricochet (megawatt laundering); (c) additional information from market participants; and (d) analytical refinements and corrections.
With the caveat that its analysis was limited to data and information available to the state grid operator and the limitations of its market analysis staff, the CAISO report spends most of the text, along with summary tables of the market participants estimated dollars and detailing arcane methodologies that were applied to each trading strategy.
For example, for overscheduling (“Inc’ing” or fat boy), the latest report “includes a more detailed analysis and summary of activities by all market participants in the January 2000-June 2001 time period. The analysis includes several measures of the degree of overscheduling, ranging from total hours and MWs to the approximate amount of Imbalance Energy payments received from the CAISO due to this overscheduling.” Nevertheless, CAISO added the caveat that the analysis did not “consider the market impacts of this strategy for exercising market power by withholding energy from day-ahead energy markets.”
At the top of the pre-refund period list for estimated overscheduling payments were: Enron ($216 million), Powerex ($119 million), and PG&E Energy Trading ($74 million). Mirant, Sempra Energy Trading and Coral were all near the top of the list, too, with totals of $69 million, $60 million, and $21 million, respectively.
There was no attempt made to calculate overall costs and profits for each of the market participants. For the ricochet trading strategy a table listed participants’ total megawatts estimated to fit under this strategy for the 18-month period, and in that regard two Pacific Northwest utilities and one Southwest utility were the leaders — Puget Sound Energy (288,783 MW), PacifiCorp (167,930 MW) and Arizona Public Service (110,183 MW).
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