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U.S. Legislators Target Energy Market Manipulation with New Bill
With the support of a major consumer group, U.S. regulators have reintroduced bicameral legislation aimed at supporting FERC in addressing energy market manipulation.
S.1410, better known as the Energy Consumer Protection Act of 2023, would provide the Federal Energy Regulatory Commission with tools to enforce existing laws by allowing them to ban companies from trading in energy markets if they manipulate the electricity or natural gas markets or file false market information.
U.S. Representatives Jan Schakowsky (D-IL), Sean Casten (D-IL) and Don Beyer (D-VA) reintroduced the legislation earlier this month. Companion legislation was introduced in the Senate by U.S. Senators Catherine Cortez Masto (D-NV) and Maria Cantwell (D-WA).
“We must do everything we can to ease the burdens Americans have already suffered due to climate change,” said Rep. Casten. “Our bill, the Energy Consumer Protection Act, will help bring down energy costs for families across the country by giving FERC the additional authorities it needs to prevent market manipulation.”
In backing the proposed legislation on behalf of the Industrial Energy Consumers of America (IECA), CEO Paul Cicio said his organization supports efforts to provide FERC “with additional enforcement authority to penalize companies that repeatedly manipulate electricity and natural gas markets. This includes fraudulent price reporting.”
The IECA is a nonpartisan association of manufacturing companies representing 12,000 facilities nationwide.
With summer rapidly approaching, federal and state legislators are looking to protect energy consumers from rising costs after California and other Western markets experienced record high natural gas prices this past winter. The California Public Utilities Commission has launched an investigation into the price spikes, along with a review of potential threats to natural gas and electric reliability.
Earlier this year, California Gov. Gavin Newsom (D) sent a letter to FERC Chairman Willie Phillips, calling on FERC to investigate “whether market manipulation, anticompetitive behavior, or other anomalous activities” were driving the higher prices in western gas markets…
“…If warranted, I ask that FERC bring its full enforcement powers and resources to bear to protect customers,” Newsom said.
In response, FERC stated that it was conducting surveillance to determine whether any market participants engaged in behavior that contributed to, or took advantage of, the high natural gas prices.
Meanwhile, in 2021, Winter Storm Uri sent natural gas and electricity prices skyrocketing to previously unheard of levels as the bitter temperatures wreaked havoc throughout the industry. FERC subsequently opened an investigation, with initial findings indicating that “some anomalies” may have been caused by natural gas market manipulation.
Then-FERC Chairman Richard Glick said the regulator was unable to probe some aspects of the possible illegal activity because the main Texas power grid, the Electric Reliability Council of Texas (aka ERCOT), manages 90% of the state and operates independently.
FERC, the North American Electric Reliability Corporation (NERC) and NERC’s regional entities in late 2022 also launched a joint inquiry to review the “severe cold weather” that occurred over the Christmas weekend that “contributed to power outages affecting millions of electricity customers across the country” (No. R23-12).
Winter Storm Elliott ushered in a historic tropical bomb cyclone that led to blizzard conditions and winter storms across most of Canada and the United States beginning Dec. 21 through Dec. 26. About 70 people were killed, including at least 34 people in Erie County, NY, where Buffalo was slammed by up to 50 inches of snow.
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