Stakeholders began working through about two dozen proposals on how to handle the liquidation of financial transmission rights from a member default at a special meeting of the Markets and Reliability Committee held Sept. 7.
There will be one more special MRC meeting, on Sept. 18, before proposals with more than 50 percent support are brought before the MRC for a vote on Sept. 27. Assuming a motion passes there, it will be taken up for a vote at the Members Committee later that day.
On Monday, members received a non-binding poll that will remain open through Friday.
Respondents must answer every question: yes, no or abstain on whether they support each of the 20 plus options. Results will be sector-weighted.
PJM is using the poll to help narrow options and rank proposals to determine voting order, since the issue wasn’t already worked through a lower committee, but introduced through a problem statement and issue charge approved by the MRC for work through special MRC meetings.
Members will be able to request that specific proposals be considered at the MRC, regardless of whether it meets the 50 percent threshold.
PJM declared June 21 that GreenHat Energy, LLC was in default for not paying its $1.7 million weekly PJM invoice issued on June 5. Currently, PJM’s Tariff requires the liquidation of the defaulted portfolio at the next available auction, although PJM had previously filed for a waiver of this obligation.
At the request of members, PJM on Aug. 23 asked the Federal Energy Regulatory Commission for approval to suspend the liquidation of financial transmission rights through Nov. 30 while the members decide their preferred approach for the liquidation process for FTRs of a defaulting member.
Previously, on July 26, PJM had filed a request with FERC asking that the temporal obligation be waived such that PJM would only attempt to liquidate the FTR positions in the defaulted portfolio for one month forward in each of the FTR auctions to be conducted from July through October of 2018.
Suzanne Daugherty, senior vice president, CFO and treasurer, noted at the Aug. 23 MRC meeting that the liquidation of the August 2018 FTR positions resulted in liquidation costs that were more than six times higher than the actual portfolio net losses for the first half of August, though there is no way to project how liquidation costs might compare with actual portfolio net losses in the future.
The currently quantifiable portion of the default allocation assessment – representing actual net losses on the FTR portfolio for the months of June 2018 and July 2018 plus the costs to liquidate August 2018 positions – totals approximately $42 million.
If members choose to make revisions to the current FTR liquidation process, PJM would expect to make a FERC filing by the end of September, providing for 60 days of consideration by the commission before the liquidation suspension would expire on November 30.
If the status quo is upheld, PJM will return to liquidating the GreenHat positions at that time.