GSEMNA Ordered by FERC to Pay $80M for Alleged Market Manipulation

by | Feb 17, 2017

On February 1, the Federal Energy Regulatory Commission issued an order (Docket No. IN17-3-000) approving a settlement (158 FERC 61,105) between its Office of Enforcement and Houston-based power marketer GDF SUEZ Energy Marketing NA (GSEMNA) following an investigation into whether the retailer had violated the commission’s Prohibition of Energy Market Manipulation regulation between May 2011 and September 2013.

The commission found that GSEMNA had improperly targeted and increased its receipt of lost opportunity cost credits (LOCs) in the PJM Interconnection regional transmission organization.  The retailer had collected on forced outages that were not eligible for credits, according to PJM.

The company agreed to disgorgement of $40.8 million to PJM and a civil penalty of $41 million to the U.S. Treasury, and to be subject to monitoring that includes submission of an annual compliance monitoring report, with the requirement of a second annual report at Enforcement’s option. GSEMNA neither admitted nor denied the alleged violations.

According to an analysis of the order by the District of Columbia-based law firm, Troutman Sanders, around June 2011, GSEMNA implemented a strategy to profit from LOCs. GSEMNA would identify certain affiliate-owned combustion generating units that were unlikely to be dispatched in the real-time market, and bid the units into the day-ahead market at below-cost offers, thereby more easily clearing the day-ahead market, the law firm said. GSEMNA would then collect LOCs when the units were not dispatched.

The order approving the enforcement settlement is one of two such orders released this past week. The second order approved a $36,000 settlement between Enforcement and Covanta Haverhill Associates following the company’s alleged failure to provide instantaneous metered power output data as required by ISO New England’s tariff.

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