Greenhat Fallout: Is Your Company Ready?

Miss our last blog post on the GreenHat Default? See our GreenHat Summary.

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

• Credit

• Worst Week

• VaR

• Mark-to-Market

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.