Wednesday, May 19, 2010

AARP Objects to Proposed Settlement by U.S. of Antitrust Case Against KeySpan for Inflating NYISO Charges

AARP has submitted comments and objections to the proposed settlement of a U.S. Justice Department (DOJ) antitrust lawsuit against KeySpan filed in February 2010. The Complaint alleges KeySpan violated the Sherman Act when it inflated NYISO electricity capacity auction prices from 2006 to 2008. The amount by which prices were inflated was estimated by Con Edison at $159 million in 2006 alone.

A Proposed Final Judgment, filed the same day as the Complaint, would settle the case. See KeySpan Agrees to $12 Million Settlement of DOJ Antitrust Claims it Manipulated NYISO Electric Capacity Market Prices, PULP Network, February 23, 2010.

Under federal law, there must be an opportunity for public review and comment before a court approves settlement of a civil antitrust case brought by DOJ. Under the terms of the proposed settlement:
  • KeySpan would admit no wrongdoing,
  • Keyspan would pay $12 million to the U.S. Treasury.
  • There would be no remedy for customers who were overcharged,
  • there is no statement of the harm to markets and consumers caused by KeySpan or disclosure of the portion of inflated charges received,
  • no explanation for requiring disgorgement of only part of KeySpan's share of the inflated prices paid to all sellers in the NYISO capacity market, and
  • inadequate factual justification in the record for a settlement.
AARP's comments ask the Justice Department to supply more information and to renegotiate the proposed settlement, and for the Court to disapprove it if it is not modified.

Matthew L. Wald, Critics Assail U.S. Plan to Settle With KeySpan, N.Y. Times, July 21, 2010.

Memorandum and Order, Feb. 2, 2011. U.S. District Court Judge William H. Pauley III, approved the settlement on the terms agreed to by the Government, accepting the US DOJ recommendation to reject arguments of objectors including AARP, the state utility regulator, and Con Edison.

Matthew L. Wald, KeySpan Price-Fixing Penalty Approved - Some Call It Low, N.Y. Times Feb. 2, 2011. "Although price-fixing by an electricity company may have cost New York customers nearly $300 million, the federal government can close the books on the case by collecting a penalty of just $12 million, a judge ruled on Wednesday."

Michael Giberson, United States v. KeySpan Corporation antitrust Case Settles for Paltry $12 Million, Knowledge Problem, Feb. 2, 2011. "$12 million seems like a too-modest remedy."

No comments: