Legally, they seem to have lied at one point when asked, and anyway this is a settlement which doesn't mean their actions were found illegal.
I'm not sure if it's the previous two hours or the next two hours, but either way yields the same result. Also, they may not be doing 3 hour increments, but just having a buffer time. I only know what the article says.
Whoever built the system probably assumed that bids represented people's actual intentions, and tried to get the cheapest power given the inputs. They missed a loophole, yes.
Note that there are other strategies that did similar but different things.
I'm not sure if it's the previous two hours or the next two hours, but either way yields the same result. Also, they may not be doing 3 hour increments, but just having a buffer time. I only know what the article says.
Whoever built the system probably assumed that bids represented people's actual intentions, and tried to get the cheapest power given the inputs. They missed a loophole, yes.
Note that there are other strategies that did similar but different things.