By Rich Heidorn Jr.

The cost of GreenHat Energy’s default could rise by $250 million to $300 million if PJM is forced to unwind settlements of the company’s financial transmission rights portfolio, PJM Chief Financial Officer Suzanne Daugherty said Thursday. That could push the total cost of the company’s collapse to at least $430 million, Daugherty said.

PJM said it will seek a stay of FERC’s Jan. 30 order rejecting a waiver of the RTO’s liquidation rules and requiring it to resettle five months of FTRs that the commission said should have been liquidated sooner (ER18-2068).

In an email to members, Daugherty said the commission’s ruling would have a dire impact on members and consumers.

“The waiver request was based on the legal vehicles and FERC precedents in effect to stop liquidation in an auction that was dysfunctional and which certainly would have resulted in unjust and unreasonable rates,” she said.

FERC’s order requires PJM to rerun the cleared July 2018 FTR auction and liquidate a “significant portion” of the FTR positions from the GreenHat portfolio for September 2018 through May 2019, PJM said. It also requires the RTO to unwind the default allocations and related settlements made for GreenHat FTRs that went to settlement since September 2018.

PJM would be required to resettle every FTR portfolio impacted by rerunning the prior auctions, it said. (See FERC Orders PJM to Unwind GreenHat Settlements.)

The resettlements would “likely place a number of members in breach of their collateral requirements of PJM’s credit policy and require them to fulfill a collateral call within two business days based on the unanticipated changes in the positions in members’ FTR portfolios that would result from changing the cleared results of the July 2018 FTR auction,” Daugherty said.

The RTO asked FERC on July 26 for a waiver of Tariff rules requiring it to offer all of GreenHat’s FTR positions at a price designed “to maximize the likelihood of liquidation.” The RTO said a slower liquidation of the company’s large portfolio would reduce losses to members.

But FERC said PJM’s request would affect the outcome of the July FTR auction “as well as parties’ confidence in the rules governing future proceedings.”

The commission also rejected PJM’s request to retain $550,000 in collateral posted by one of GreenHat’s principals through a second company (ER18-1972).

PJM said it will ask FERC to rehear the waiver case and seek a stay on the order in the interim. Asked when the stay request would be filed, PJM spokesman Jeff Shields said, “We are still considering our legal options.”