By Suzanne Herel

PJM recommended three market rule changes regarding virtual trading in a report requested by stakeholders and released last week.

“The goals of these proposed rule changes are to maintain the benefits added to PJM’s markets by virtual trading, eliminate opportunities for inefficient trades to profit in the market and level the allocation of uplift across all virtual transactions,” the report said. (See PJM Ponders Changes to Virtual Trades, DA Market.)

It recommends:

• Aligning the eligible trading points for increment offers (INCs) and decrement bids (DECs) with nodes where generation, load or interchange transactions are settled, or at trading hubs;
• Altering the biddable locations for up-to-congestion transactions (UTCs) to generation buses as sources only, trading hubs, load zones and interfaces; and
• Allocating uplift to UTCs consistent with INC and DEC transactions.

PJM said it proposed the changes to stimulate stakeholder discussion. “The goal of this discussion is to retain all of the positive aspects that virtual transactions bring to the market while removing the bulk of the issues that they can create when used inefficiently under the existing rules.”

An overview of the report will be presented at the Oct. 22 meeting of the Markets and Reliability Committee. The study also looks at the purpose of virtual trading, the mechanics by which such trades are offered and cleared, potential problems that can arise and examples of how market participants use them.

Virtual transactions have been incorporated in PJM energy markets since the June 1, 2000, inception of the day-ahead market. They are bids and offers that take financial positions without the intent of delivering or consuming actual power in the real-time market.