It sure looks like it's based on pre-conceived notions of the "goodness" of the recipient of the regional transmission organization payments.
A recent article in RTO Insider details a report to MISO's market subcommittee by Market Monitor David Patton, which revealed "some wind generators appear to be deliberately over-forecasting their output to inflate their revenues."
Two-thirds of MISO’s $7.5 million in DAMAP payments to wind resources in 2015 and 2016 was because of over-forecasting and only $2.5 million was spent on curtailment, Patton said. “Most of our wind DAMAP payments are unjustified,” he said.
The purpose of DAMAP is to provide an incentive for Market Participants to be flexible in their offers in the real-time market.
The DAMAP compensates suppliers when (i) the real-time dispatch of a resource is reduced below the day-ahead schedule's level, and (ii) the market participant would have been financially better off in real-time had it operated at its day-ahead schedule.
This is complicated stuff! Regional energy markets are extremely complicated, to the point that they are nearly incomprehensible to the regular folks who fund millions of dollars in "market compensation" payments every year in their electric bills. But don't feel too bad, it appears that energy markets are also complicated for the experts who create and police them to try to prevent manipulation by traders and other participants. Every regional electric market would be well-served by a couple of whip-smart analysts whose only job is to continually test the market by attempting to find ways to manipulate it for profit. Obviously the creators and monitors of these markets are completely blind to the opportunities they create that allow participants to unwittingly "push the money button" and be rewarded by compensation payments. To expect Pavlov's dogs to immediately report the unexpected reward they received, instead of continuing to push the button and feast at will, is unnatural. If the creators and monitors of energy markets expect an unnatural response, they need to provide a compensatory reward for it. In lieu of having staff dedicated to and capable of rooting out flaws, market monitors should look at providing the stimulus necessary to find volunteers within the market participants.
So, how did the MISO Market Monitor propose to solve this problem, once discovered? He proposed changes to the market, instead of punishing the wind energy dogs who had been pushing the money button that brought it to his attention. He chose to stop ringing the bell.
But how did the PJM Market Monitor propose to solve a similar "money button" problem that developed in his own market? He worked with FERC to punish the traders who pushed the button and brought it to his attention. He beat the dog. In fact, FERC has proposed fining the traders somewhere in the neighborhood of $35M.
Why the disparate treatment? Is it because the general public looks disparagingly upon "Wall Street" (and therefore traders big and small) as the root of all evil? Is it because wind energy is looked upon by the same public as a "clean" and "good" struggling industry? I've got news for you, general public. Big wind is a hugely profitable industry whose greed knows no bounds! What may have started out as a cottage industry predicated upon selfless environmental gains has morphed into a gigantic subsidy- and compensation-gobbling monster that fills the pockets of foreign investors with your gold. Years of environmental propaganda has conditioned you to behave just like Pavlov's dogs when you hear the words "clean energy." You may believe anything with a "green" label must be "good" and therefore more valuable, without examining any actual benefits to you.
Energy markets will only work if they are consistent. Allowing one group of participants to escape the punishment heaped upon another group isn't consistent. What kind of bell are they trying to ring?
Oh, and big wind is ripping you off... big time!