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FERC Focus on Market Manipulation Continues in 2015

FERC assessed $26.25 million in civil penalties and disgorged nearly $1 million in profits in Fiscal Year (FY) 2015, according to an annual report released by the agency Thursday.

The Federal Energy Regulatory Commission’s Office of Enforcement (OE) presented an overview of FY2015 enforcement activities to the Commission during its regular meeting at the FERC offices in Washington, DC, Thursday.

OE’s activities in 2015 reflect FERC’s ongoing focus on market manipulation cases (see Daily GPI, Nov. 20, 2014). FERC had been considering requiring quarterly reporting of natural gas transactions within its jurisdiction as part of an effort to investigate market manipulation, but it opted this week to terminate the proceeding (see Daily GPI, Nov. 17).

According to the OE’s report, FERC approved nine settlement agreements in FY2015 with 11 different entities resolving “violations of the agency’s anti-manipulation rule by six related entities, violations of reliability standards by four entities, and violations of tariff provisions by one entity.”

The OE said it is also currently seeking to recover $544.6 million in civil penalties and $42.24 million in unjust profits through seven litigation proceedings, the most ever for the agency in a single year. Investigating instances of fraud and market manipulation continued to be the top priority in 2015; OE said it litigated six such cases during the fiscal year.

OE’s Division of Audits and Accounting conducted 22 audits in FY2015, resulting in 360 recommendations for corrective actions, with the agency directing $26.3 million in refunds and recoveries, up from $11.7 million in FY2014.

Of the 22 investigations opened by the OE’s Division of Investigations in FY2015, 16 were closed with no action either because of insufficient evidence or because FERC staff determined no violation had occurred. Most of the investigations that were closed with no action were initially opened over possible market manipulation, the agency said.

As it did last year, FERC continued to emphasize its commitment to transparency, noting its reporting of these no-action cases as part an effort to provide greater insight into its enforcement activities.

In a presentation to FERC Thursday, OE’s Todd Hettenbach told the Commission that “enforcement staff prepared this report recognizing that a substantial portion of our investigative work is non-public and that the Commission’s regulations and sound public policy generally require that we keep information regarding that work confidential. While this makes good sense, and certainly has merit as a policy matter, the lack of complete information may give the public and regulated entities an incomplete view of the commission’s enforcement program.”

Commenting after the meeting, FERC Chairman Norman Bay echoed Hettenbach’s comments.

“Our report represents the continuing focus by the Commission on providing valuable transparency to the public and to industry on what the Office of Enforcement is doing, and really when you look at the amount of transparency the commission provides, if you look at what FERC does compared to the transparency provided by other agencies, I think the case can be made that what FERC does is among the best in class,” Bay said.

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