On November 20, FERC Enforcement announced the issuance of its annual report for fiscal year 2014. All market participants in the energy industry need to ensure that their ducks are in a row as FERC Enforcement is continuing its focus on fraud and market manipulation. Just over the last few months, FERC enforcement has been active in the power marketing industry. For example, on August 5, FERC’s issued a public notice of violations against Powhatan Energy Fund for allegedly manipulating PJM’s up-to congestion market. On August 25, FERC issued a notice of violation against City Power Marketing for allegedly manipulating PJM’s up-to congestion market. On September 29, FERC approved a settlement between DC Energy, LLC, Scylla Energy LLC and PJM regarding a dispute over the deviation charges applied to internal bilateral transactions. In addition, at the end of October FERC announced that it has opened three probes, one into the natural gas market and two generators that took advantage of uplift payments last winter.

Below are some highlights from FERC Enforcement’s annual report:

• FERC Staff opened 17 new investigations this year, and over the course of 2014 “obtained almost $25 million in civil penalties and disgorgement of $4 million in unjust profits.”
• FERC Staff audited numerous entities “resulting in 162 recommendations for corrective action and refunds and recoveries totaling more than $11.7 million.”
• FERC Staff continued to analyze market rules and their functionality. The annual State of the Markets report is available here.
• FERC Staff continued to enhance is Analytics and Surveillance division, including a cooperative effort with the CFTC on trader report data as well as an in depth review of what role manipulative trading had in causing high prices during last year’s polar vortex.

Going forward, FERC reiterated its commitment to investigating fraud and market manipulation through fiscal year 2015.