As Senate and House negotiators met Thursday to work on the omnibus energy bill, Rep. Joe Barton (R-TX) offered for consideration a “discussion draft” proposal that would make it illegal for companies and individual parties to participate in round-trip, or “wash,” trades involving electricity. While it did not address natural gas round-trip activities, Barton spokeswoman Samantha Jordan noted the draft was a “first step,” and there was a “possibility” that a ban on similar trades on the gas side would be added later.

The draft, which would amend the Federal Power Act (FPA), would make it “unlawful for any person or other entity…to purchase from, or sell to, any other person or entity electric energy at wholesale and to simultaneously arrange a financially offsetting trade…to deceptively affect reported revenues, trading volumes or prices.” It is a “by-product” of a previous measure offered by Reps. Greg Walden (R-OR) and Peter DeFazio (D-OR) seeking to prohibit round-trip trades, and “relates very strongly to it,” Jordan said (see Daily GPI, June 6).

For violations, Barton proposes to raise civil penalties to a maximum of $1 million for each contract or round-trip arrangement, and criminal penalties to $1 million and five years in prison. Barton, a member of the energy bill conference committee, is chairman of the House Energy and Air Quality Subcommittee.

A number of energy companies — including Dynegy, Reliant Resources, El Paso and CMS Energy — are being investigated by the Department of Justice, the Federal Energy Regulatory Commission and Commodity Futures Trading Commission for their trading activities. While round-trip trades that are designed to boost revenues and trading volumes have been called questionable, their legality or illegality has been a clouded issue.

In addition to the section on round-trip trades, the Barton draft calls for the FERC to issue rules, no later than six months after enactment of the energy bill, to establish an electronic system to provide information on a “timely basis” on the “availability and price” of wholesale power and transmission services for federal and state regulators, buyers and sellers of electricity, transmission users and the public.

It would require regional transmission organizations (RTOs), independent system operators (ISOs), and transmission-owning utilities to submit statistical information about available capacity and capacity constraints, and directs brokers, exchanges and other market-making entities to submit statistical data on the “amount and sale price” of bulk wholesale electric transactions.

FERC would require the information to be “posted on the Internet as soon as practicable and updated as frequently as practicable.”

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