Off Peak

November 15, 2001

Markets Behaving Badly

 

To understand 'gaming,' be a gamer.

FERC Staff Member: What sort of behavior is wrong?

Charles J. Cicchetti:* I'm not certain. When we tried to understand 'gaming' [in California], we discovered there was underscheduling and underbuying - arbitrage between two markets, the PX and ISO. This arbitraging did not seem so bad until a shortage emerged.

Marji Philips: I hate to say 'gaming' is bad. You want us to be gaming. You want us to make money. Otherwise, you won't have enough generation. As traders, we are the ones who are taking the risks. So you want to give me room to play my portfolio.

Sonny Popowski: You want these folks to be creative, but not gaming. You need something like the infield fly rule in baseball.

Cicchetti: Get the rules right and then enforce the rule. ... There are some things that monitors should do and some things that someone should do but not the monitor. ... But you do need an independent cop on the beat. The market monitor should be policing and booking after the arrest. The market monitor should be a lean, mean fighting machine.