Electric market manipulation is becoming mainstream news lately. In the comments section of my post about renewal of the PJM Market Monitor's contract this week, manipulative banksters JP Morgan and Barclays were mentioned. Just to be clear, JP Morgan and Barclays have been accused of manipulating electricity markets in California, other western markets, and midwest states. They have not been accused of manipulation in PJM (at least not in these big, high profile cases). Is that a good thing or a bad thing? Does it mean that these banksters haven't been playing games and skimming on PJM's electricity market, or does it simply mean that they haven't been caught yet?
The Wall Street Journal had a big, splashy article about market manipulation the other day. It's got some really great graphics that explain one way that these banksters have manipulated the market in such simple terms that anyone can understand it. Bankster offers electricity in the next day market at a really low price, then jacks up the price when it comes time to actually sell it. The buyer decides not to buy it after all, because it's too expensive. Bankster collects what's known as a "make-whole payment" from the buyer in exchange for being ready to supply power.
Maybe the WSJ's graphic designer needs to go work for FERC or Monitoring Analytics to make their reports and explanations of market manipulation sexy enough for water cooler chat, too.
Here's FERC's attempt to be scary with talk about fraud and attempts to deceive. Any ordinary consumer reading this would still have no idea what market manipulation really is.
Here's the PJM Market Monitor's 2012 State of the Market Report. Boring! You'd have to be a real geek to even enjoy flipping through it. But wait, Monitoring Analytics has produced a "Press Briefing" version that includes some explanation of what they do and what happened in 2012 as represented by a bunch of graphs!
Where's the comic book version?
There isn't one. Therefore, if it wasn't for our friendly, neighborhood banksters, we wouldn't even be discussing market manipulation in the first place. And market monitors and regulators wouldn't be today's pop culture rock stars. And try though they may, FERC and Monitoring Analytics seem to be incapable of dumbing this stuff down enough so that the average consumer can understand it, much less find it interesting.
The WSJ article explains one scheme that was uncovered. There are probably hundreds more going on right now, and hundreds more being devised. As soon as the regulators close one loophole, the banksters start manipulating another. It's a never-ending battle.
Deregulation and competitive markets don't benefit consumers. It actually costs them money.
The Wall Street Journal had a big, splashy article about market manipulation the other day. It's got some really great graphics that explain one way that these banksters have manipulated the market in such simple terms that anyone can understand it. Bankster offers electricity in the next day market at a really low price, then jacks up the price when it comes time to actually sell it. The buyer decides not to buy it after all, because it's too expensive. Bankster collects what's known as a "make-whole payment" from the buyer in exchange for being ready to supply power.
Maybe the WSJ's graphic designer needs to go work for FERC or Monitoring Analytics to make their reports and explanations of market manipulation sexy enough for water cooler chat, too.
Here's FERC's attempt to be scary with talk about fraud and attempts to deceive. Any ordinary consumer reading this would still have no idea what market manipulation really is.
Here's the PJM Market Monitor's 2012 State of the Market Report. Boring! You'd have to be a real geek to even enjoy flipping through it. But wait, Monitoring Analytics has produced a "Press Briefing" version that includes some explanation of what they do and what happened in 2012 as represented by a bunch of graphs!
Where's the comic book version?
There isn't one. Therefore, if it wasn't for our friendly, neighborhood banksters, we wouldn't even be discussing market manipulation in the first place. And market monitors and regulators wouldn't be today's pop culture rock stars. And try though they may, FERC and Monitoring Analytics seem to be incapable of dumbing this stuff down enough so that the average consumer can understand it, much less find it interesting.
The WSJ article explains one scheme that was uncovered. There are probably hundreds more going on right now, and hundreds more being devised. As soon as the regulators close one loophole, the banksters start manipulating another. It's a never-ending battle.
Deregulation and competitive markets don't benefit consumers. It actually costs them money.
RSS Feed