The alleged practice, known to some as the "Lake Erie Loop Scam," is scheduling power to flow over circuitous routes around Lake Erie a day ahead of its actual transmission. The so-far-unnamed market participants save money by avoiding certain tariffs and fees by scheduling to send the electricity north to Canada and back south again.If this is the case, I expect a HUGE refund check before the dust settles. And a couple of CEOs and traders going to jail would be nice, too.
They may further profit because electricity will take the path of least resistance and will not actually flow through the path scheduled, causing congestion along other transmission lines and further inflating the cost.
According to an estimate released by the Massachusetts Municipal Wholesale Electric Co., the practice may have resulted in overcharges to consumers amounting to more than $450 million since January.