Power market watchdog levies $655,000 fine
Alberta’s electricity market watchdog has levied a $655,000 penalty against a Saskatchewan trading company, the largest fine laid by the Market Surveillance Administrator since deregulation a decade ago.
Photograph by: Tim Wimborne/Reuters, NP
Alberta’s electricity market watchdog has levied a $655,000 penalty against a Saskatchewan trading company, the largest fine laid by the Market Surveillance Administrator since deregulation a decade ago.
The hefty charge was the sum of 332 fines against NorthPoint Energy, the trading arm of Saskatchewan Crown utility SaskPower, for breaking a rule around scheduling power sales across provincial boundaries.
It comes 11 years after the administrator investigated similar rule bending between the now defunct and notorious Enron Corp. and PowerEx, the trading arm of B.C. Power.
Those 1999 incidents resulted in fundamental changes and rule tightening of electricity markets in Alberta and across North America.
Market administrator Harry Chandler likened the more recent NorthPoint’s incidents to parking infractions rather than grand theft auto, noting the trading unit misinterpreted the rule, rather than intentionally set about trying to undermine the system for financial gain.
“It was pretty clearly a misunderstanding they had about the rule,” Chandler said. “And it took a period of time to get that clear, what the misunderstanding was about the restatement of the energy.”
No electricity price spikes resulted from the 300-odd trades that happened between 2008 and 2009, or harm happened to the integrated power system, he said.
The rule in question was brought in December 2007 and involved electronic tagging to ensure the volume and timing of power flowing across both B.C. and Saskatchewan borders matched market bids. The frequency NorthPoint traders broke the rule after its inception did not indicate intent, the administrator noted in its report.
The trading unit paid the fine immediately and instituted a number of changes as a result of the investigation, said chief executive Grant Ring.
He attributed the incidents to traders seeking opportunities during a “breaking-in time” when the rule was new and boundaries unclear.
“We’re in the business of trading, and yes, that involves risk,” Ring said. “But we’re not in the business of making money inappropriately.”
Ring said the $655,000 fine was not materially different to the profit made by NorthPoint at the time, but would not detail the difference.
The penalty was a strong signal the market administrator was prepared to levy substantive, not just token fines, noted a veteran power player.
“It’s an interesting sign the MSA is sending to the market that they’re prepared to put fines in place for rule violations,”said Sheldon Fulton, executive director of the Industrial Power Consumers Association of Alberta. “It’s a plus from that perspective, because it’s one thing to have a set of rules, and another to enforce them. But it remains to be seen whether we’re going to see additional types of inquiries.”
The one concern Fulton expressed was the hefty fine might inhibit traders from moving power into or out of the province for fear of being fined.
domeara@theherald.canwest.com
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