Taking the Long Way
Much traveling going on here again, but in the meantime please check out this interesting post from Michael Giberson at Knowledge Problem which explains how cunning traders were using inventive schedules to artificially create congestion between PJM and NYISO. Estimates of the amount of money milked from the system range as high as $290 million. Ouch.
on August 7th, 2008 at 11:45 am
Thanks for reading. Technically speaking I think the $290 million figure is an estimate of the additional costs to users of the NYISO system — the net benefit to the traders using the roundabout scheduling strategy were likely much smaller. I don’t think that there is enough public information available to estimate just how much profit the traders were able to capture by using the strategy, though perhaps the NYISO market monitoring department or their independent market adviser could make such a calculation.
on August 7th, 2008 at 1:47 pm
Mike – thanks for clarifying that. However, I guess that the consumers will be wondering what happens to the money if it doesn’t go in profits to the traders. Do other people benefit as a side-effect, or is all the money lost in system inefficiencies created by the odd use of the system?
on August 13th, 2008 at 2:35 pm
[…] appears that the Senate has taken an interest in the Lake Erie Loop scam. According to Mike Giberson of Knowledge Problem, Senator Charles Schumer of New York has asked […]