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2009 State of the Market Report

Market Performance

Virtual supply was generally more profitable at the nodal level ($2.46 per MWh) because larger price differences occur at individual nodes that are less liquid than Cinergy Hub. Almost $36 million of the $41 million in gross virtual supply profits in 2009 occurred at individual nodes, although the allocation of RSG costs offsets more than one-half of these profits. Virtual demand was consistently unprofitable at the Cinergy Hub and generally profitable at other locations. However, many of the demand bids at Cinergy are likely physical hedges (which tend to be modestly unprofitable), rather than speculative bids by virtual-only participants. The average loss of cleared virtual-demand bids at the Cinergy Hub was $0.87 per MWh in 2009, compared to a profit of $0.44 per MWh at nodal locations.

To compare the trends in the Midwest ISO to other RTO markets, Figure 23 shows monthly average virtual supply and demand transactions for the Midwest ISO, ISO New England, and New York ISO as a percent of actual load.

Figure 23: Virtual Transaction Volumes 2007 – 2009

20%

15%

Virtual Load

Midwest ISO ISO-NE NYISO

10%

Share of Actual Load

5%

0%

15%

10%

Virtual Supply

5%

0%

070809 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Avg

2007

2008

2009

Virtual load and supply volumes declined in all of the markets beginning in the fourth quarter of 2008 due to tight credit conditions. Virtual trading in neighboring markets returned to normal

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