Joseph Bowring, President of Monitoring Analytics, LLC, the Independent Market Monitor (IMM) for the PJM Interconnection, the regional transmission organization for the Mid-Atlantic states, has sent the RTO running back to Valley Forge with its tail between its legs, after having forced PJM to concede defeat in a dispute over the release and Internet posting of confidential bid and offer pricing data in the form of Excel spreadsheets relating to a recent Base Residual Auction (BRA) for the PJM capacity market, known as the Reliability Pricing Model (RPM), as was conducted in May 2009, for the 2012-2013 delivery year.

The issue was whether PJM had done enough to “aggregate” and “mask” the released data, so that clever market participants could not thumb through the spreadsheets with a discerning eye and figure out the exact price points contained in buy and sell bids submitted by rival utilities or generation capacity suppliers.

As of April 9, 2010, the Federal Energy Regulatory Commission (FERC) had not yet issued a decision in the case, initiated when PJM announced the release of bid data in a tariff compliance filing. See, PJM Compliance Filing, FERC Docket ER09-1063, filed March 18, 2010. But after first releasing the bid and offer data on March 19, and then facing a motion to cease and desist filed by the IMM on March 24, PJM finally relented on April 6, though it continued to insist that the released bid data did not any include unit-specific pricing bids, as the IMM had alleged.

Nevertheless, in an effort to end what it called an “unnecessary distraction,” PJM said first that it would refrain from posting any bid data on its web site for next RPM base auction (the May 2010 BRA for the 2013/14 delivery year), thus in effect conceding the IMM’s point. And moreover, in an effort to save face, PJM said it would refuse to take down the allegedly compromised data from the May 2009 auction, as that data would now be more than 10 months old anyway, and so would fall under FERC’s safe harbor rule, mandated in a December 2009 order, that allows PJM to release confidential RPM bid data with impunity after a four-month lag. See, Supplemental Answer of PJM Interconnection, Rendering Moot Motion to Cease and Desist of PJM’s Independent Market Monitor, FERC Docket ER09-1063, filed April 6, 2010.

The main problem concerned the Southwest MAAC Locational Deliverability Area (LDA), encompassing the retail service territories of PEPCO and Baltimore Gas & Electric, in which, as the IMM pointed out, there are a very small number of large generation units and owners, and thus few bidders both offering capacity supply and bidding to purchase capacity to serve load. PJM’s released RPM bid data for SW MAAC data had given out various pairs of data showing the total Megawatts (MW) of supply offered at specific prices — e.g., 629.7 MW offered at $13.24/MW-day. (To access the released bid data, go to the PJM web site for RPM Auction User Information. Then scroll down to the 2012/1013 delivery year, and click on “2012/2013 BRA Aggregated Supply Curve Data.” Once within the Xcel file, click on the “SWMAAC” tab.

Because PJM previously had released a comprehensive list of generating units eligible to supply capacity in the SW MAAC RPM auction, the IMM had argued that enterprising bidders, after backing out their own bids obviously known to them, would be able easily in many cases to figure out which bidders and which units had bid what quantities and at what prices, in order to make up the total shown in a given data pair in PJM’s released data.

Various consumer advocates and state regulatory agencies had joined in supporting the IMM’s cease and desist motion, inferring that if supply bidders could discern actual bid patters by competitors, they might be able to use the information to drive up the RPM capacity auction price, perhaps through manipulation or collusion.

“This problem,” the IMM had argued, “is exacerbated in a small LDA like SWMAAC, where there is a small number of large generation owners.

“The small number of large generation owners increases the probability of being able to correctly match offers with units and owners.” See, Motion for Leave to Answer of Independent Market Monitor, FERC Docket ER09-1063, filed April 1, 2010. See also, Motion to Cease and Desist of Independent Market Monitor, FERC Docket ER-1063, filed March 24, 2010.