PJM pitches credit-policy reforms to better monitor credit risk, avoid financial defaults

摘要

New credit-risk evaluations that PJM Interconnection proposed last week would be rolled out to the grid operator’s financial transmission rights market first in an effort to more quickly protect market participants with the greatest default exposure. The credit risk-management policy reforms (ER20-1451) build on extensive review, analysis, and stakeholder discussions that followed a significant default in PJM’s FTR market by GreenHat Energy. PJM members bore the cost of GreenHat’s inability to meet its financial obligations, through a default allocation assessment that had reached $155.1 million for GreenHat positions held through February 2020 in addition to a $17.5 million settlement payout to resolve issues with the manner in which PJM handled the June 21, 2018 default. Tariff and operating agreement changes proposed Tuesday seek to amend market rules and practices that allowed a trader to amass such a large and highly risky position. The changes update and enhance procedures for monitoring and mitigating credit risk in PJM’s markets, with the intent of reducing and better managing the risk of financial defaults, PJM said in its filing with the Federal Energy Regulatory Commission.