Traders Profit as Power Grid Is Overworked

Subject: Traders Profit as Power Grid Is Overworked Sat Aug 16, 2014 1:06 am

PORT JEFFERSON, N.Y. — By 10 a.m. the heat was closing in on the North Shore of Long Island. But 300 miles down the seaboard, at an obscure investment company near Washington, the forecast pointed to something else: profit.

Traders Profit as Power Grid Is Overworked Electricityjp1-master675

Traders Profit as Power Grid Is Overworked Electricityjp1-master675

As the temperatures climbed toward the 90s here and air-conditioners turned on, the electric grid struggled to meet the demand. By midafternoon, the wholesale price of electricity had jumped nearly 550 percent.

What no one here knew that day, May 30, 2013, was that the investment company, DC Energy, was reaping rewards from the swelter. Within 48 hours the firm, based in Vienna, Va., had made more than $1.5 million by cashing in on so-called congestion contracts, complex financial instruments that gain value when the grid becomes overburdened, according to an analysis of trading data by The New York Times.

Those profits are a small fraction of the fortune that traders at DC Energy and elsewhere have pocketed because of maneuvers involving the nation’s congested grid. Over the last decade, DC Energy has made about $180 million in New York State alone, The Times found.

More: http://www.nytimes.com/2014/08/15/business/energy-environment/traders-profit-as-power-grid-is-overworked.html?_r=0
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Traders Profit as Power Grid Is Overworked

Traders Profit as Power Grid Is Overworked

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