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PJM Seeks Waiver to Allow Defaulting Member to Continue Limited Market Participation
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March 9, 2011
PJM has petitioned FERC for a limited waiver to allow a defaulting PJM Member, York Generation Company, L.L.C., the limited ability to participate in PJM's energy and capacity markets until York has satisfied its outstanding payment obligation to PJM pursuant to the terms and conditions of a payment arrangement.
PJM said that the waiver is appropriate given the unique situation of the case, and given that the alternative would impel a default of York Generation's obligation as a cleared resource in PJM's Reliability Pricing Model capacity market.
Due to an inadvertent billing error that has now been corrected, certain credits were included in York Generation's invoices from PJM culminating in aggregate overpayments to York Generation of approximately $511,000. When this billing error was identified, and in accordance with PJM's stated billing procedures, adjustments in the approximate amount of $450,000 for the prior billing periods were included in York Generation's February monthly billing statement.
Additionally, when the February month-end invoice was issued, the resulting billing adjustment triggered a requirement that York Generation post additional collateral in accordance with PJM's credit policy.
York Generation informed PJM that it would not be able to satisfy the billed amount in full by the February month-end invoice due date of March 11, 2011. York also said that it would not be able to post the required additional collateral and, as such, it was notified that it was in breach of PJM's credit policy on March 8, 2011.
York Generation has agreed to satisfy its outstanding payment obligations to PJM through a combination of periodic lump sum payments and by allowing PJM to retain a portion of its expected monthly RPM revenues over the course of several months. Additionally, York Generation has agreed that it will not submit any buys in any PJM Markets during the term of the repayment arrangement and has pledged its RPM revenues as security for the amounts to be recovered in the repayment arrangement.
In total, York will be required to remit approximately $511,030, which it anticipates, based upon revenue assumptions, can be satisfied no later than October 2011.
In return, and subject to FERC granting the waiver request, PJM will allow York Generation to adhere to its must offer requirements in the Day-ahead Energy Market and participate as a PJM Market Seller.
"York Generation has agreed that it will forego its right to buy in the PJM Interchange Energy Market, the PJM Capacity Credit Market or any other market operated by PJM, thereby eliminating York Generation's incurrence of additional payment and/or collateral obligations. This will minimize any harmful effects on York Generation, PJM and PJM's Market Participants by allowing York Generation to participate in PJM’s Markets as a Market Seller on a limited basis so that it may satisfy its outstanding payment obligation to PJM and avoid to need socialize any amounts billed to York Generation to other PJM Members pursuant to PJM's default allocation rules," PJM said in support of the waiver request.
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