- Feds set sights on KeySpan, N.Y. Post, Feb. 23, 2010.
- Justice Department Investigating NY Energy Markets, PULP Network June 13, 2007,
- Did Electricity Market Manipulation Cost New York Consumers $157 Million in the Summer of 2006? , PULP Network, March 31, 2007.
The Department of Justice complaint alleges that the withholding and the swap arrangement with Morgan Stanley had the result of increasing capacity charges, which are passed through to consumers, from May 2006 through February 2008, in violation of antitrust laws.
Simultaneously with the filing of the complaint, a proposed consent judgment was filed. Admitting no wrongdoing, KeySpan (now National Grid) has agreed to pay the United States $12 million to settle claims that it manipulated electricity prices from 2006 to 2008 by economically withholding part of the capacity of its Ravenswood power plant in order to maintain high prices in the NYISO capacity market.
There is no allegation in the Department of Justice complaint estimating the amount by which capacity charges were inflated and the amount of excessive charges passed through to
In FERC proceedings involving the same matter, Con Edison stated in its papers
the impact on New York State’s consumers of economic withholding during the 2006 Capability Year on was approximately $157 million, of which approximately $119 million impacted New York City consumers alone.FERC found that the withholding strategy violated no NYISO tariffs, and that the strategy was not prohibited, and created no real remedy for consumers. See Did Electricity Market Manipulation Cost New York Consumers $157 Million in the Summer of 2006? , PULP Network, March 31, 2007.
Thus, the proposed $12 million settlement -- which would be paid to the U.S. government, and not for the benefit of consumers injured by the alleged violation -- is not even one tenth the estimated cost inflicted upon New York customers by KeySpan's alleged market manipulation in 2006, not to mention the rest of the period of alleged antitrust violations which continued to February 2008.
The proposed settlement and a Justice Department "competitive impact statement," will be published in The Federal Register under the Antitrust Procedures and Penalties Act. The law requires courts to consider
- the competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and
- the impact of entry of such judgment upon competition in the relevant market or markets, upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial.
The capacity markets of the type operated by the NYISO have been faulted for being costly and ineffective. See Wholesale Electricity Capacity Market Results Attacked by PA, MD, DE and NJ Utility Commissions and Utility Consumer Advocates, June 05, 2008