To settle the investigation, CECG agreed to pay a $135 million penalty to the government and also to disgorge $110 million of its profits from the trading gambit, $104 million of which is to be used for the benefit of electric consumers. New York's share is $78 million.
There is no indication in the FERC order approving the settlement of how much CECG may have profited from the alleged manipulation. CECG admitted no wrongdoing, claiming it was only engaging in legitimate hedging transactions within the law. Although the case was settled with no actual finding of market manipulation, the FERC Chairman issued a statement indicating his belief in correctness of FERC enforcement staff's conclusions regarding market manipulation:
As a final point, I note that since the issuance of the Commission’s order, a senior Constellation official has stated publicly that the company’s practices at issue here were “lawful portfolio risk management transactions.” In my opinion, clearly that is not the case. The Stipulation and Consent Agreement sets forth a detailed description of the transactions that I believe Constellation knowingly and willfully engaged in that form the basis of Enforcement Staff’s conclusion that Constellation engaged in market manipulation, fraud, and misrepresentation. I urge anyone who has any question as to Constellation’s actions in this case to read that Stipulation and Consent Agreement."
There are disputes over which agencies are "eligible" to make recommendations to FERC:
AARP opposed a petition of a New York power generator seeking to be included in the group of agencies eligible to make recommendations to the FERC ALJ regarding distribution of the $78 million for the benefit of New York's electric customers.
A ruling from the FERC ALJ on which entities are eligible to make recommendations regarding allocation of the funds has not yet been issued. The ALJ has indicated she will look favorably upon consensus recommendations from the agencies deemed eligible to make therm, which would avoid the need for FERC to decide contested allocation proposals.The New York PSC, the Attorney General, and the DOS opposed motions of the Long Island Power Authority (LIPA) and small New York municipally owned utilities to participate in apportionment of the fund by FERC. LIPA filed a response in support of its motion.
Meanwhile, New York's large industrial and commercial customers (represented by their association, Multiple Intervenors) petitioned the NY PSC on April 10 asking the PSC to seek control of 100% of the CECG settlement fund for NewYork, and, if specific harm from the Constellation trading gambits cannot be readily measured (as is likely), they ask the PSC to use all the $78 million as refunds, based on customer elcetricity usage. MI further said they will oppose any use of the money other than for refunds.
Resources currently available to PULP -- an independent nonprofit organization -- are insufficient to support the analysis, expertise, and advocacy required to participate fully in all the major NYISO, state, and federal regulatory proceedings which affect the rates, terms and conditions of electric service.
Follow PULP on Twitter