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Portland GE Reports "Ill Conceived" Energy Trades That Led to Big Losses

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DW Keefer's picture
Journalist Independent Journalist and Analyst

DW Keefer is a Denver-based energy journalist who writes extensively for national and international publications on all forms of electric power generation, utility regulation, business models...

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Portland General Electric Company said that energy trading activity in wholesale electricity markets led to “significant exposure" to the company and losses estimated at $127 million.

In an August 24 email to employees, Maria Pope, president and CEO, called the trades “ill conceived.”

In a filing with the Securities and Exchange Commission, the utility reported that at least two PGE traders made multiple energy trades with “increasing volume" late in the second quarter and into the third quarter. of 2020. Those trades led to “significant exposure” to the utility.

PGE said it placed two energy traders on administrative leave and enhanced oversight including implementing supervisory and reporting changes.

In August, a portion of the company’s energy portfolio suffered losses as wholesale electricity prices rose “substantially” at a number of market hubs due to extreme weather conditions, constraints on regional transmission facilities and changes in power supply in the West. At the same time, the California Independent System Operator declared a Stage 3 Electrical Emergency and ordered rolling blackouts, the first since 2001.

PGE said that as a result of these conditions, its energy portfolio experienced realized losses of $104 million and unrealized, mark-to-market losses of $23 million. Total third quarter losses in the affected portfolio could total up to $155 million, depending on market conditions. The utility warned that the final losses could exceed early estimates.

In the wake of the trading losses, PGE’s Board of Directors formed a special five-member committee to review the energy trades that led to the losses. The group also will review company procedures and controls related to trading and make recommendations to the Board.

PGE also hired an external consultant to conduct an operational review of its energy supply risk management policies, procedures and personnel.

Portland General Electric serves around 900,000 customers in 51 cities across Oregon.

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