On March 28, 2022 and March 29, 2022, FERC issued two orders approving stipulation and consent agreements between FERC’s Office of Enforcement and Dynegy Marketing and Trade, LLC (“Dynegy”) and Constellation NewEnergy Inc. (“Constellation”), respectively. Among other things, Dynegy agreed to pay a $450,000 civil penalty for alleged violations of PJM Interconnection, L.L.C. (“PJM”) capacity tariff requirements, and Constellation agreed to pay a $2.4 million civil penalty for alleged violations of California Independent System Operator Corp. (“CAISO”) resource adequacy tariff requirements.

FERC’s Office of Enforcement protects customers through market oversight and surveillance, initiates investigations of possible violations, recommends remedies to address any violations, and pursues remedies through settlement or enforcement actions (see November 26, 2019 edition of the WER). FERC’s Office of Enforcement investigated Dynegy’s real-time offers into the PJM capacity market for potential misrepresentations as to whether ten dual-fired combustion turbines at three facilities could ramp to their maximum oil-based output during their summer capacity tests (ICAP) while running on gas, and whether Dynegy maintained a prospective capacity increase for one of the facilities. Meanwhile, FERC’s investigation into Constellation centered on Constellation’s treatment of import offers used to meet CAISO’s resource adequacy requirements whereby Constellation allegedly relied on the bilateral spot market as opposed to identifying a specified source of power linked to a specific import prior to submitting offers.  Such actions may have been in contravention of CAISO tariff rules requiring market participants to have a reasonable expectation of being able to perform at bid levels. Both Dynegy and Constellation neither admit nor deny all alleged violations.

FERC approved both stipulations, finding resolution of the issues associated with the preliminary investigations conducted by FERC’s Office of Enforcement were in the public interest and on fair and equitable terms given the nature and seriousness of the allegations. Dynegy agreed to pay a civil penalty of $450,000, to disgorge $119,425, and to submit at least two annual compliance monitoring reports. Constellation agreed to pay a civil penalty of $2.4 million, disgorge $2.3 million, and to only use specific generation resources or firm contracts in connection with import resource adequacy going forward.

A copy of the orders are available here and here.