Patterns of Ownership Sample Clauses

Patterns of Ownership. For the 2018/2021 Long Term FTR Auction, financial entities purchased 72.0 percent of prevailing flow FTRs and 76.5 percent of counter flow FTRs. For the 2018/2019 Annual FTR Auction, financial participants purchased 66.9 percent of all prevailing flow FTRs and 84.2 percent of all counter flow FTRs. For the Monthly Balance of Planning Period Auctions, financial entities purchased 74.4 percent of prevailing flow and 80.1 percent of counter flow FTRs for January through June of 2018. Financial entities owned 63.2 percent of all prevailing and counter

Patterns of Ownership. The overall ownership structure of FTRs and the ownership of prevailing flow and counter flow FTRs is descriptive and is not necessarily a measure of actual or potential FTR market structure issues, as the ownership positions result from competitive auctions. In order to evaluate the ownership of prevailing flow and counter flow FTRs, the MMU categorized all participants owning FTRs in PJM as either physical or financial. Physical entities include utilities and customers which primarily take physical positions in PJM markets. Financial entities include banks 6 See PJM. “Manual 6: Financial Transmission Rights,” Revision 15 (October 10, 2013), p. 39. and hedge funds which primarily take financial positions in PJM markets. International market participants that primarily take financial positions in PJM markets are generally considered to be financial entities even if they are utilities in their own countries. Table 13-2 presents the Monthly Balance of Planning Period FTR Auction cleared FTRs for January through March 2014 by trade type, organization type and FTR direction. Financial entities purchased 77.8 percent of prevailing flow and 87.4 percent of counter flow FTRs for the year, with the result that financial entities purchased 81.4 percent of all prevailing and counter flow FTR buy bids in the Monthly Balance of Planning Period FTR Auction cleared FTRs for January through March 2014. Buy Bids Physical 22.2% 12.6% 18.6% Financial 77.8% 87.4% 81.4% Total 100.0% 100.0% 100.0% Sell Offers Physical 31.6% 36.8% 32.4% Financial 68.4% 63.2% 67.6% Total 100.0% 100.0% 100.0% Table 13-3 presents the daily net position ownership for all FTRs for January through March 2014, by FTR direction. Physical 41.7% 15.3% 32.0% Financial 58.3% 84.7% 68.0% Total 100.0% 100.0% 100.0%

Patterns of Ownership. In order to evaluate the ownership of prevailing flow and counter flow FTRs, the MMU categorized all participants owning FTRs in PJM as either physical or financial. Physical entities include utilities and customers which primarily take physical positions in PJM markets. Financial entities include banks, trading firms and hedge funds which primarily take financial positions in PJM markets. International market participants that primarily take financial positions in PJM markets are generally considered to be financial entities even if they are utilities in their own countries.

Patterns of Ownership. In order to evaluate the ownership of prevailing flow and counter flow FTRs, the MMU categorized all participants owning FTRs in PJM as either physical or financial. Physical entities include utilities and customers which primarily take physical positions in PJM markets. Financial entities include banks, trading firms and hedge funds which primarily take financial positions in PJM markets. International market participants that primarily take financial positions in PJM markets are generally considered to be financial entities even if they are utilities in their own countries. Table 13-5 presents the monthly balance of planning period FTR auction cleared FTRs for 2018 by trade type, organization type and FTR direction. Financial entities purchased 76.2 percent of prevailing flow FTRs, up 3.6 percentage points, and 82.9 percent of counter flow FTRs, up 1.0 percentage points, for the year, with the result that financial entities purchased 79.0 percent, up 2.0 percentage points, of all prevailing and counter flow FTR buy bids in the monthly balance of planning period FTR auction cleared FTRs for 2018. Buy Bids Physical 23.8 17.1 21.0 Financial 76.2 82.9 79.0 Total 100.0 100.0 100.0 Sell Offers Physical 18.0 19.5 18.5 Financial 82.0 80.5 81.5 Total 100.0 100.0 100.0 Table 13-6 shows the HHI values for cleared MW for the 2018/2019 planning period monthly auctions by period. Table 13-6 Monthly Balance of Planning Period FTR Auction HHIs by period Auction Hedge Type Prompt Month Prompt Month+1 Prompt Month+2 Q2 Q3 Q4 Jun-18 Obligation 353 432 487 587 659 773 Option 3796 5981 7006 4854 4761 6586 Jul-18 Obligation 329 434 1283 827 559 681 Option ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ 3666 3918 6260 Aug-18 Obligation 254 534 528 509 430 522 Option 2437 3135 4673 5486 4729 5578 Sep-18 Obligation 330 481 534 610 772 Option ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ 1622 4876 Table 13-7 presents the average daily net position ownership for all FTRs for 2018, by FTR direction. Physical 36.8 18.9 29.7 Financial 63.2 81.1 70.3 Total 100.0 100.0 100.0 In an effort to manage FTR revenues, PJM may adjust normal transmission limits (rather than the inflated limits used in Stage 1A) in the FTR auction model. If the normal capability limit is not consistent with full funding goals and simultaneous feasibility, then FTR Auction capability reductions are undertaken pro rata based on the MW of Stage 1A infeasibility and the availability of auction bids for counter flow FTRs.36 PJM may also remove or reduce...

Patterns of Ownership. The overall ownership structure of FTRs and the ownership of prevailing flow and counter flow FTRs is descriptive and is not necessarily a measure of actual or potential FTR market structure issues, as the ownership positions result from competitive auctions. In order to evaluate the ownership of prevailing flow and counter flow FTRs, the MMU categorized all participants owning FTRs in PJM as either physical or financial. Physical entities include utilities and customers which primarily take physical positions in PJM markets. Financial entities include banks and hedge funds which primarily take financial positions in PJM markets. International market participants that primarily take financial positions in PJM markets are generally considered to be financial entities even if they are utilities in their own countries. Table 13-9 presents the Monthly Balance of Planning Period FTR Auction cleared FTRs for 2016 by trade type, organization type and FTR direction. Financial entities purchased 81.7 percent of prevailing flow FTRs, up 4.2 percent, and 75.2 percent of counter flow FTRs, down 10.0 percent, for the year, with the result that financial entities purchased 78.6 percent, down

Patterns of Ownership. The overall ownership structure of FTRs and the ownership of prevailing flow and counter flow FTRs is descriptive and is not necessarily a measure of actual or potential FTR market structure issues, as the ownership positions result from competitive auctions. The percentage of FTR ownership shares may change when FTR owners buy or sell FTRs in the Monthly Balance of Planning Period FTR Auctions or secondary bilateral market.

Patterns of Ownership. For the 2016 to 2019 Long Term FTR Auction, financial entities purchased 70.1 percent of prevailing flow FTRs and 78.5 percent of counter flow FTRs. For the 2015 to 2016 Annual FTR Auction, financial participants purchased 56.3 percent of all prevailing flow FTRs and 75.0 percent of all counter flow FTRs. For the Monthly Balance of Planning Period Auctions, financial entities purchased 74.9 percent of prevailing flow and 76.8 percent of counter flow FTRs for January through December of 2015. Financial entities owned 65.9 percent of all prevailing and counter flow FTRs, including 60.6 percent of all prevailing flow FTRs and 79.6 percent of all counter flow FTRs during the period from January through December 2015. • FTR Forfeitures. Total forfeitures for the 2015 to 2016 planning period were $0.2 million for Increment Offers, Decrement Bids and UTC Transactions. • Credit Issues. There were three collateral defaults and seven payment defaults for 2015. Two collateral defaults totaled $710,300 and seven payment defaults totaled $1,726,641 for Intergrid Mideast Group, LLC. There was one other collateral default for the first nine months of 2015 for $35,000, which was promptly cured. There were no additional defaults in the last quarter of 2015. PJM terminated Intergrid’s membership as of April 23, 2015, and ▇▇▇▇ approved PJM’s termination as of June 23, 2015. Some of Intergrid’s invoices were paid through Intergrid, a guarantor or cash collateral posted with PJM. Intergrid held FTRs at the time they were declared in default. PJM has liquidated all of Intergrid’s FTR positions in accordance with Section 7.3.9 of the Operating Agreement.3 PJM liquidated 500.8 MW of Intergrid’s FTRs in the June Monthly Balance of Planning Period Auction for a net of $509,732 in revenue. PJM also liquidated 417.2 MW of Long Term FTRs for various planning periods for a net of $230,318 in cost. The net revenue result of Intergrid’s FTR liquidation is $279,414. PJM has notified its Members that the Intergrid default will not result in any default allocation assessments in accordance with Section 15.2.2 of the Operating Agreement.4

Patterns of Ownership. For the 2015 to 2018 Long Term FTR Auction, financial entities purchased 57.5 percent of prevailing flow FTRs and 80.0 percent of counter flow FTRs. For the Monthly Balance of Planning Period Auctions, financial entities purchased 80.1 percent of prevailing flow and 83.0 percent of counter flow FTRs for January through December of 2014. Financial entities owned 69.7 percent of all prevailing and counter flow FTRs, including 60.7 percent of all prevailing flow FTRs and 84.9 percent of all counter flow FTRs during the period from January through December 2014.

Patterns of Ownership. For the 2017/2020 Long Term FTR Auction, financial entities purchased 77.5 percent of prevailing flow FTRs and 84.9 percent of counter flow FTRs. For the 2017/2018 Annual FTR Auction, financial participants purchased 60.1 percent of all prevailing flow FTRs and 76.7 percent of all counter flow FTRs. For the Monthly Balance of Planning Period Auctions, financial entities purchased 74.3 percent of prevailing flow and 82.7 percent of counter flow FTRs January through December of 2017. Financial entities owned 59.6 percent of all prevailing and counter flow FTRs, including 50.4 percent of all prevailing flow FTRs and 71.9 percent of all counter flow FTRs during the period from January through December, 2017. • FTR Forfeitures. FTR forfeitures were not billed after January 19, 2017, pending retroactive implementation of a new FTR forfeiture rule. As of the September bill, PJM has begun retroactive billing under the new FTR forfeiture rule. In the period without FTR forfeiture bills, no information on forfeitures was provided to participants and behavior could not be adjusted. • Credit Issues. There were two collateral defaults in 2017, for a total of $318,746. Both defaults were cured reasonably promptly.