On May 29, 2014, 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.
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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
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…)
PJM Sets Out Framework For Continued Participation Of Demand Response In Wholesale Markets Following EPSAFriday, October 10, 2014 2:35 pm by Stephen Hug
On October 7, 2014, PJM Interconnection, L.L.C. (“PJM”) filed with the Federal Energy Regulatory Commission (“FERC”) a blueprint for the continued participation of demand response resources in its markets in the wake of the United States Court of Appeals for the D.C. Circuit’s decision in Electric Power Supply Ass’n v. Fed. Energy Reg. Comm’n, 753 F.3d 216 (D.C. Cir. 2014) (“EPSA”). In that case, the D.C. Circuit vacated Order No. 745, FERC’s rule governing the compensation of demand response resources in wholesale energy markets on the basis that the rule encroached upon state jurisdiction over retail sales. The court’s opinion casts significant doubt on FERC’s authority to require transmission providers to allow demand response to participate in their markets, with some wondering whether there is any room left for demand response in wholesale markets at all. (more…)
Robert E. Pease
On August 25, 2014, staff at the Federal Energy Regulatory Commission (FERC Enforcement) issued a Notice of Alleged Violations (NAV) against City Power Marketing, LLC, and its principal owner, K. Stephen Tsingas. The Notice said that FERC Enforcement has preliminarily determined that City Power and Tsingas violated the Commission’s Anti-manipulation rule through Up To Congestion (UTC) trading in the PJM market. FERC Enforcement has defined UTC as “a virtual product that earns or loses money on the change between the Day ahead market and the Real time market of the spread in prices between two price nodes in PJM’s system.” See Preliminary Findings of Enforcement Staff’s Investigation in Powhatan Energy Fund, LLC, http://ferclitigation.com/wp-content/uploads/0005-FERC-Preliminary-Findings-August-9-2013-2002899_1.pdf. FERC Enforcement also alleged that City Power made false statements and omitted material information during the investigation. (more…)