DC Energy — and its profits — are an unexpected result of the deregulation of the nation’s electric grid. The idea behind deregulation was to eliminate old monopolies and create robust, competitive markets that would encourage investment and ultimately lower costs for consumers. But in most places, electricity bills have been rising, not falling. While fuel prices, taxes and fees have added directly to the costs, Wall Street-style traders have contributed in subtle ways by turning new markets, like the trading of congestion contracts, to their advantage, The Times analysis found.

The contracts have attracted big money: More than $2 billion has been invested nationwide in the monthly auctions for contracts since 2011, according to Platts, a trade publication.

Image Margot Garant, the mayor of Port Jefferson, has urged the owner of the Port Jefferson and Northport plants to modernize them. Credit... Ozier Muhammad/The New York Times

The Times examined 150,000 congestion contracts that have been auctioned since 2003 by the New York Independent System Operator, a nonprofit company that oversees the state’s transmission network. Under deregulation, system operators manage the nation’s transmission lines and run wholesale power markets where utilities like PSEG Long Island acquire power to sell to their customers. Using data made public by the company, The Times cataloged who bought the contracts and at what prices, and how much money was subsequently won or lost.

The data show how congestion and these contracts led to big profits in Port Jefferson on May 30, 2013.

Capitalizing on Math

DC Energy had bet there would be trouble. That spring, its traders bought a number of congestion contracts at a monthly Nyiso (pronounced NIGH-so) auction. Those derivatives entitled the firm to collect the difference in power prices between multiple points on the Long Island grid, including between Port Jefferson and Northport, 20 miles to the west.

On that May morning, transmission lines near a power plant in Northport were down for maintenance just as the heat arrived. The Northport area had plenty of electricity for itself but could not send more to communities like Port Jefferson. So while prices in Northport climbed to more than $129 a megawatt hour, prices in Port Jefferson jumped to $324 — a boon for DC Energy, which held congestion contracts tied to price differences between the two points.