Hedging bets on electricity

[Robbien]

Source: Baltimore Sun

. . .

The default by Power Edge LLC, disclosed Dec. 26, is another, particularly ugly demonstration of how flawed wholesale power markets - enabled by Washington - help drive up prices for everybody now that electricity has been deregulated.

Last year PJM Interconnection, which manages the grid from New Jersey to North Carolina, pleaded with Washington for protection from Tower and other Wall Street cowboys.

PJM urged the Federal Energy Regulatory Commission to require ample collateral from financial speculators, so users wouldn't be left holding the bag in case something goes wrong. On Oct. 26 FERC refused, saying that, while it recognized the potential risk, there was no reason to hurry with strict new rules.

A few weeks later Power Edge lost badly on electricity trades and defaulted on payments to PJM. Because Power Edge is a limited liability corporation, PJM has little recourse and must spread losses among members such as BGE and other utilities, generation companies and power sellers.

. . .

Power Edge is one of several Tower affiliates set up to speculate on electricity, according to a piece last year in Power Markets Week. The entities buy "financial transmission rights," which are bets on whether or not congestion will increase costs on certain parts of the grid at certain times.



Read more: http://www.baltimoresun.com/business/bal-bz.hancock09jan09,0,5311887.column

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Power Edge hedge fund managers get million dollar bonus checks while homeowners pick up hedge fund losses on their bets.

[flashl]

1. We couldn't see that one comming?

The naysayer were labeled as obstructionist to the 'free market'. And, we can just ignore that 'incident' following California’s electric deregulation and Enron.

[pattmarty]

2. This is turning to total bullshit.

This country is turning into a giant cash cow for speculators and investors. Next it will be water & sewer, then who knows hospitals? Talk about the greed of the 80's, this is the cutthroat new millennium. Every fucking thing now has a price on it and it's totally disgusting. When & who will finally stop this financial pillage & rape of America?

[flashl]

3. Sorry to say ...

1) there is a 'global water consortium' working on the microeconomics to 'manage' fresh water and
2) we now have medical FICOs and venture capitalist headed for the hospitals.

[Tyler Durden]

4. The Great Lakes are OFF LIMITS.

Up here in Michigan, we own GUNS and we practice by going Deer Hunting every year.

Can't help with the hospitals. Sorry.

[UpInArms]

5. we cannot kick this freakin' contra-government mal-administration

to the curb fast enough.

There won't be a country left by the time they lift everything from 1600 Pennsylvania Ave.

[Parche]

6. That Is Shocking News