Senators press FERC on efforts to police markets

Source: By Rod Kuckro and Jeremy Dillon, E&E News reporters • Posted: Sunday, September 22, 2019

A group of senators expressed alarm that the Federal Energy Regulatory Commission may be giving short shrift to “preventing fraud and manipulation” in U.S. energy and financial markets.

Led by Sen. Maria Cantwell (D-Wash.), the lawmakers asked each of the agency’s three commissioners to address a series of moves that Cantwell said call into question whether it is using its authority to “go after bad actors” in jurisdictional wholesale power and gas markets, as well as transmission and transportation services.

The letter was also signed by Sens. Dianne Feinstein (D-Calif.), Ron Wyden (D-Ore.), Angus King (I-Maine) and Ed Markey (D-Mass.).

“Several recent actions seem to indicate that the Commission may not be fully committed to finding, stopping, and punishing manipulative acts that can stifle competition and result in unjust and unreasonable prices,” the senators wrote.

In a statement, Cantwell cited “troubling developments,” including FERC’s elimination earlier this week of its Division of Energy Market Oversight within its Office of Enforcement. The move was first reported by E&E News on Monday (Energywire, Sept. 16).

“This surprise announcement has raised concerns about whether this closure will weaken FERC capabilities to assess broader energy market trends and continue to perform vital compliance functions,” they said.

The senators also pointed to action by the commission in May to rescind its policy on issuing notices of alleged violations (NAVs) regarding market investigations.

“We believe these NAVs may improve markets and that the public and market participants have a right to know if the Commission believes there is enough evidence of wrongdoing to initiate an investigation, even if the details of the investigation remain appropriately non-public,” they wrote.

The senators also expressed concern about a decline in the number of civil penalty actions initiated by FERC that “seems to signify a curtailment in enforcement activity,” as well as the “abrupt terminations of non-public investigations without any public transparency.”

Nothing ‘nefarious’

Chairman Neil Chatterjee formally announced the elimination of the market oversight division at yesterday’s monthly FERC meeting.

He said the administrative move will let the Office of Enforcement “focus on its core mission — continuing oversight of market activity, investigations and audits,” while transferring some policy-related functions to other FERC offices.

“This reorganization makes a lot of sense” because of the efficiencies it creates, he added.

Chatterjee later told reporters that he had run the changes by Cheryl LaFleur and Norman Bay, who each served as commission chair. Bay had at one point been the head of the Office of Enforcement.

Commissioner Richard Glick said he had heard the move characterized as an effort to “defang” the Office of Enforcement.

“I don’t think that’s the case at all; sounds to me like it’s a simple matter of administrative efficiency — trying to move things around a little bit to make them function a little bit better,” he said. “If I thought there was something nefarious going on, I wouldn’t be shy to talk about it.”

FERC did not consult with independent market monitors that police the power markets.

Asked if he was notified, Joseph Bowring, the monitor for the PJM Interconnection, said no.

David Patton, president of Potomac Economics, said he was unaware of the FERC reorganization.

Patton’s company serves as independent market monitor for the Midcontinent Independent System Operator, the New York Independent System Operator, ISO New England and the Electric Reliability Council of Texas.

Still, Patton said he is fine with the reorganization “as long as they hang on to the core functions that they need to accomplish.”

“Shifting offices around and people around hasn’t in the past impacted our ability to work” with FERC, he said. “So I don’t know that I would have a concern in this case, either.”

Because of the concerns on Capitol Hill about the reorganization, FERC staff today will be briefing the staffs of the energy committees in the House and Senate, according to sources.