On March 8, 2012, FERC issued an Order approving a Stipulation and Consent Agreement in which FERC agreed to halt an electricity market manipulation investigation, and the target, Constellation Energy Commodities Group (CGC) -- without admitting wrongdoing -- agreed to disgorge $110,000,000 “for the benefit of electric energy consumers." CECG also agreed to pay a fine of $135,000,000 to the government.
The disgorged profits stemmed from alleged manipulation or gaming, mainly of the wholesale electricity spot markets of the NYISO.
After using some of the disgorged profits to upgrade ISO and RTO computer systems so that a similar recurrence of market gaming is less likely, the balance is being split among the regions served by the wholesale electric utilities whose markets were affected by the alleged manipulation, i.e., NYISO ($78,000,000), ISO-NE ($20,000,000) and PJM ($6,000,000). A FERC Administrative Law Judge is conducting a proceeding to allocate the money.
Proposal of the PJM Advocates
The RTO and ISO utilities are set up as non-profit organizations, with complex governance structures that include consumers as one of numerous "stakeholders":
PJM stakeholders develop market rules which guide PJM’s energy, capacity and ancillary services markets. Adopted market rules impact generation clearing prices in all wholesale markets and directly impact retail customer bills; in fact, generation costs makes up the majority of ratepayers’ electric bills. Stakeholder processes are also used to develop transmission expansion planning rules to address reliability, economic and policy goals, develop region-wide load forecasts and determine how to best integrate demand side resources such as demand response and energy efficiency. CAPS would facilitate retail load participation in these processes.The PJM advocates in the multi state PJM region cite the need for more consumer representation in proceedings at PJM, pointing out the difficulty of participation in the "stakeholder" process:
Residential and smaller commercial consumer interests are routinely underrepresented in the PJM stakeholder process. Meanwhile, market participants with generation and transmission interests in PJM are generally well-represented at each PJM meeting. While there is some representation of large industrial customers, the vast majority of customers in PJM, as well as their designated state Consumer Advocates, are absent from most meetings; particularly at the lower-level committees where proposals are first developed and participation is vital to influencing market rule development. Consumer Advocate participation is often limited to higher-level committee meetings, such as the Members Committee where proposals have already been fully-formed and fully vetted. The perpetual problem of limited state consumer advocate office participation is directly tied to persistently-limited resources and can best be remedied through the funding of CAPSThe PJM state consumer advocates propose to create a new organization that would be accountable to the advocates in the states served by PJM, and funded for three years with a $1.2 million initial grant of the disgorged funds. The staff of the proposed new entity would participate at the PJM, representing the participating offices in matters such as changes in market rules. Consumer Advocate Offices are independent and have the capability of challenging regulatory decisions at FERC or in court. Consumer Advocate Offices that support this proposal include:
the Delaware Division of Public Advocate; the District of Columbia Office of People’s Counsel; the Illinois Office of the Attorney General; the Illinois Citizens Utility Board; the Indiana Office of Utility Consumer Counsel; the Maryland Office of People’s Counsel, the Pennsylvania Office of Consumer Advocate, the Virginia Office of the Attorney General; and the West Virginia Consumer Advocate Division. In addition, the Office of Ohio Consumer Counsel and the New Jersey Division of Rate Counsel support the proposal in principle but are not signatories to this filing.New York
In New York, consumer groups are urging the Governor, the Attorney General, and the Public Service Commission to use a portion of the $78 million for the state's electric customers for bill assistance to reduce the number of service terminations for bill collection purposes, for energy efficiency programs, and to bolster utility consumer advocacy. See New York Formulating Plans to Use $78 Million Disgorged by Energy Trader for the Benefit of Electricity Consumers, PULP Network, June 16, 2012. Eventually, the utility consumer representation function, could be funded through a small non-bypassable charge at the ISO/RTO level, in the same way the ISO/RTO operations are funded, with the cost incorporated in wholesale electric rates.