After almost eight years since the Federal Energy Regulatory Commission (FERC) commenced its investigation against Barclays Bank PLC (Barclays) and four of its traders, Scott Connelly, Daniel Brin, Karen Levine and Ryan Smith, for allegedly manipulating the California electricity markets, Barclays filed its answer in federal district court. As expected, Barclays denied all of FERC’s substantive allegations and asserted that the District Court should give no merit to FERC’s findings of fact or legal conclusions. FERC, according to Barclays and the individual traders, must prove its case before an independent arbiter and cannot rely on anything that happened at the agency level. FERC is seeking a $435 million civil penalty against Barclays; $15 million against Connelly; and $1 million each from Brin and Levine. (more…)
WE KNOW ENERGY®
Robert E. Pease, David Perlman and Michael Brooks
David Perlman, Stephen Hug and Caitlin Tweed
On June 9, 2015, FERC issued an order accepting PJM’s proposal to modify its forward capacity market, the Reliability Pricing Model (“RPM”), to establish a new capacity product, the Capacity Performance Resource. PJM’s proposal is designed to tighten the performance standards applicable to resources that receive a capacity obligation through the RPM and is intended to address poor resource performance that has been experienced since implementation of the RPM, especially during the 2014 polar vortex.
Once implemented, PJM’s proposal will impose more stringent performance standards on resources that receive a capacity obligation through the RPM, including imposing non-performance charges when resources fail to perform and bonus payments for over-performance. All capacity resources will be eligible to offer as Capacity Performance Resources, and demand resources, energy efficiency resources, capacity storage resources, and intermittent resources will be allowed to aggregate their capabilities in order to reliably perform during emergency conditions. A Non-Performance Charge will be assessed on resources who fail to perform during system emergencies. (more…)
FERC Finds Manipulation Violations by Company and Trader that Complied with Tariff but did not Act to Further Market Design GoalsFriday, May 29, 2015 2:50 pm by Robert E. Pease and David Perlman
On May 29, 2015, the Federal Energy Regulatory Commission (FERC) issued an Order Assessing Civil Penalties against Powhatan Energy Fund and its affiliates as well as against Houlian Chen, Powhatan’s chief trader, for violating FERC’s anti-manipulation rule. FERC ordered Powhatan to pay $28.8 million in penalties and over $4.7 million in disgorgement and it ordered Chen to pay an additional $1 million penalty. In this assessment order, FERC rejected all of Powhatan’s arguments and instead adopted the Division of Enforcement’s recommendations on the facts, the law and the penalty amounts. The Order directs Powhatan and Chen to pay the penalties and the disgorgement amounts within 60 days of the date of the order. Similar to the Barclays case currently pending in federal district court in California, because Powhatan previously elected to have the matter heard de novo in federal district court, if Powhatan and Chen fail to pay, FERC must go to federal district court to enforce its penalty assessment.
Federal District Court Denies Barclays Motion to Dismiss FERC Petition Which Alleges Manipulation and Assesses Significant PenaltiesThursday, May 21, 2015 2:02 pm by Jennifer Lias, Robert E. Pease, David Perlman and Michael Brooks
For the past two years we have been tracking and reporting on an enforcement proceeding brought by the Federal Energy Regulatory Commission (“FERC”) against Barclays Bank PLC (“Barclays”), Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith (collectively, the “Traders” and together with Barclays, “Defendants”) for alleged manipulative trading in the western electricity markets from November 2006 to December 2008. Yesterday, the United States District Court for the Eastern District of California denied a motion by the Defendants to dismiss the manipulation action. Although the court’s order did not address the merits of the manipulation charge, the court’s order is significant because it is the first judicial ruling on the scope of FERC’s enforcement authority over the physical electricity markets and the court found that FERC can pursue civil penalty actions against individuals as well as companies. (more…)
Robert E. Pease
On December 30,2014, the Commission approved four Stipulation and Consent Agreements (Agreements) between the Office of Enforcement (Enforcement) and Twin Cities Power – Canada, Ltd., Twin Cities Energy, LLC, and Twin Cities Power, LLC (collectively, Twin Cities), and Jason F. Vaccaro, Allan Cho, and Gaurav Sharma (collectively, the Traders). Enforcement accused Twin Cities and the Traders of violating the Commission’s anti-manipulation rule by manipulating electricity prices in the Midcontinent Independent System Operator, Inc. (MISO) from January 2010 through January 2011 in order to benefit their related financial positions. Twin Cities admitted the violations and agreed to pay a civil penalty of $2,500,000 and disgorgement of $978,186 plus interest. Twin Cities will also implement measures designed to ensure compliance in the future, including submitting compliance reports for four years.
The Traders neither admit nor deny the violations and agreed to pay the following civil penalties: Jason Vaccaro, $400,000, Allan Cho, $275,000, Gaurav Sharma, $75,000. Additionally, the Traders agreed to physical trading bans as follows: Jason Vaccaro for five years, Allan Cho for four years, Gaurav Sharma for four years. The Traders will also implement measures designed to ensure compliance in the future, including submitting compliance reports. (more…)
In an order issued on November 20, 2014, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) directs regional transmission organizations and independent system operators (“ISOs”) to file a report on the status of how their market rules address fuel assurance challenges. ISOs have 90 days from the date of the Commission’s order to evaluate the specific fuel assurance challenges they may experience and prepare a report that comprehensively describes the actions they have already undertaken, and/or propose to undertake, in response to their unique fuel assurance concerns. (more…)