Following on the heels of an announcement by Pennsylvania’s attorney general that PPL EnergyPlus didn’t violate antitrust laws in PJM Interconnection’s market, PPL last Thursday received a letter from the U.S. Department of Justice (DOJ) in which the agency said that it had “favorably concluded” its investigation of the company.

The Pennsylvania Public Utility Commission (PUC) last summer said that its six-month investigation of PPL found evidence that the company unfairly manipulated wholesale electricity markets in early 2001, subsequently damaging wholesale and retail markets and the public’s confidence in them. As a result, the PUC referred the case to the U.S. Department of Justice, the Federal Energy Regulatory Commission (FERC) and the Pennsylvania attorney general for appropriate action.

Questions arose as to whether PPL EnergyPlus deliberately withheld electricity from the market in order to create an artificial shortage of capacity, which consequently drove up the price. Beginning in January 2001, the price of capacity abruptly rose from approximately $5 per MWh to $177 per MWh for nearly three months.

Although PJM rules at the time did not explicitly prohibit PPL’s actions, both PJM and the PUC concluded that the company unfairly used its market power. By April 2001, when PJM changed its rules with FERC, capacity prices dropped sharply and returned to historic price patterns, the PUC said.

Pennsylvania Attorney General Mike Fisher last Wednesday said that his antitrust section had concluded its year-long review of PPL EnergyPlus and determined that the company did not violate antitrust laws in the first quarter of 2001. Fisher did, however, state that he agrees with the PUC that PPL had market power in the first quarter of 2001.

PPL said that the conclusion of the investigations by Fisher and the DOJ “have laid to rest allegations” regarding the wholesale marketing actions of PPL EnergyPlus.

PPL said that FERC has already completed two investigations and found no reason to take action against PPL. “With these allegations now behind us, we are confident that PPL will continue to be recognized as one of the most ethical and successful wholesale electricity marketing operations in the country,” said Champagne.

PPL EnergyPlus markets electricity, most of which is produced by power plants operated by PPL Generation, an affiliated company.

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