In 2018, GreenHat Energy LLC defaulted on one of the largest FTR portfolios in PJM’s history, causing a projected loss of $185 to $430 million. PJM hired independent consultants to investigate the GreenHat default. In their report, the consultants were extremely critical of PJM’s ability to manage the financial risk in its FTR markets.
This report recommends several organizational changes focused on improving PJM’s risk oversight. This includes:
Establishing the position of Chief Risk Officer over financial markets
Creating the Financial Risk Mitigation Senior Task Force (FRMSTF) to evaluate the updates to market rules and participant facing changes
Increasing the number of long term auctions for better transparency into contract valuations
Adding Mark-to-Auction valuations for intra-auction collateral changes
Changing protocols to include more stringent Risk Management requirements for Market Participants
Increasing due diligence requirements for all new (and potentially current) Market Participants
Yes Energy can help you increase transparency and improve upon your current FTR risk management processes, while also making sure you stay ahead of any changes PJM might make in the wake of this incident.
Better Understand FTR Metrics around Risk, Credit, and Valuation:
RiskSignals (UI Only) traders can create, edit, and run our pre-built models and then export reports
Access to these models can be allocated to traders, risk managers and any other reporting role in your organization, increasing transparency for everyone involved.
Provide a Documented and Replicable Third Party Risk Assessment System
A fully automated reporting solution produced by Yes Energy provides a third-party risk assessment system that includes:
Pre-Submission and Post-Clearance Automated Risk Reports
Pre-Submission and Post-Clearance Automated Credit Reports
Mark-to-Market Reporting for forward positions
Access to Risk Tools and Automated Reporting Tools for all FTR Transactions:
Get access to both of these tools across your organization - the User Interface and “set it and forget it” automated reporting for pre and post submission reports.