On February 27, 2025, FERC granted a complaint filed by BP Energy Retail Company California LLC (“BP Energy” or “Company”) under sections 206 and 306 of the Federal Power Act appealing a penalty the California Independent System Operator Corporation (“CAISO”) assessed against BP Energy under a section of CAISO’s Open Access Transmission Tariff (“OATT”) requiring scheduling coordinators to timely submit certain meter data. FERC found that the penalty was unjust and unreasonable under the circumstances, even though CAISO had calculated the penalties using what was then a newly approved methodology that was expressly aimed at addressing the potential for disproportionate meter data penalties.

Section 37 of CAISO’s OATT requires scheduling coordinators to submit Settlement Quality Meter Data (“SQMD”) in order to financially settle CAISO’s markets. CAISO first issues an initial settlement statement nine business days after a given trading day. After that initial issuance, there is a schedule for CAISO to issue recalculation settlement statements and for scheduling coordinators to submit new or revised meter data, subject to certain deadlines. To be timely, a scheduling coordinator is required to submit actual SQMD by the fifty-second day after the relevant trading day; submissions beyond that period are considered late. If a scheduling coordinator fails to submit timely SQMD, CAISO will conduct an investigation, and if a violation of OATT Section 37 is found, CAISO will assess penalties. The OATT does not provide CAISO discretion to reduce or waive the penalties, but it allows market participants to directly appeal penalties to FERC.

CAISO’s meter data penalties have generated significant activity before FERC, and FERC has previously acknowledged that Section 37 of CAISO’s OATT may in some circumstances lead to disproportionate penalties and improper allocation of market adjustments. To address these concerns, in 2024, CAISO received FERC approval to calculate penalties as the lower of (a) 30% of the value of the error or (b) $1,000 per trading day.

In its Complaint, BP Energy explained that in 2023, during an audit of the SQMD process, it became aware that its predecessor had failed to provide certain meter data to CAISO beginning in December 2021. Seventeen accounts had not been set up in the predecessor’s internal systems, and as a result, those accounts were not billed for periods before May 2023 and were inadvertently not included in the SQMD reports to CAISO. BP Energy explained that, after discovering this administrative error, it acted promptly to determine the cause of the error and implemented changes to ensure that the error would not happen again. The Company further stated that it submitted corrected SQMD to CAISO for resettlement. CAISO initiated an investigation and found that BP Energy had submitted untimely SQMD. CAISO assessed a penalty of approximately $182,000 against BP Energy, calculated as thirty percent of the value of the error under CAISO’s “lower of” policy. BP Energy subsequently appealed to FERC.

FERC granted BP Energy’s Complaint, finding that the penalty was unjust and unreasonable under the circumstances. FERC found that the penalty was not commensurate with any potential damage caused by the inadvertent error, which was promptly reported upon discovery and promptly remedied. Further, FERC explained that the error had a de minimis effect on CAISO’s market because the inaccurate reporting of SQMD related to the seventeen accounts accounted for 0.01% of CAISO’s total load for the relevant period. As a result, FERC ordered CAISO to nullify the penalty against BP Energy.

FERC’s order, issued in Docket No. EL25-21, can be found here.