PJM Interconnection LLC’s board of managers initiated an independent investigation into GreenHat Energy LLC’s default in the grid operator’s financial transmission rights or FTR market, according to an Oct. 16 news release. FTR is a financial product that allows market participants to hedge the costs of day-ahead transmission congestion. GreenHat, a Texas-based financial trading company, acquired a substantial 890 million megawatt hour FTR portfolio. When the company started acquiring them since the 2015 long-term FTR auctions, clearing prices indicated the portfolio would be profitable and the company had a low credit requirement in accordance with the credit policy in effect at the time. PJM declared the default in June, and since then, has taken efforts to strengthen credit rules, including collateral requirements, and has requested the Federal Energy Regulatory Commission to revise liquidation requirements. PJM said it has formed a special committee composed of three board members and retained independent third-party experts to assist the committee in examining the facts and circumstances that led to the default and make recommendations for future changes.