In settlement with FERC, Gila River admits manipulating California power markets
Originally published November 21, 2012
The Federal Energy Regulatory Commission said Nov. 19 it has approved a settlement between its Office of Enforcement and Gila River Power LLC over Gila River’s manipulation of power markets in California.
The settlement agreement marks the first time that a market participant has admitted to a violation of FERC’s anti-manipulation rule in an energy trading case, the commission said. It calls for Gila River to pay a fine of $2.5 million and disgorge unjust profits of $911,553, plus interest.
Gila River, a subsidiary of Entegra Power Group LLC, admitted to using wheeling-through transactions between July 2009 and October 2010 to manipulate prices in markets operated by the California Independent System Operator, and to violating FERC regulations requiring accurate submissions to the California ISO. Gila River sold power generated from its 2,200-MW power plant near Phoenix, Ariz., into California ISO markets at the Palo Verde intertie.
Because congestion at Palo Verde limited the amount of power Gila River could import and lowered the price of those imports, Gila River – in violation of FERC’s anti-manipulation rule – designed its transactions to avoid creating congestion so that it would receive a higher price on a higher quantity of energy imports, FERC said. The company submitted falsely designated wheeling-through transactions to benefit power imports sourced from its power plant, the commission said.
Gila River admitted that its wheeling-through transactions violated the California ISO tariff because it was not wheeling power through the region. Its transactions lacked a resource and a load outside the California markets, as required by the tariff.
FERC said it is directing the California ISO to allocate the disgorged funds and interest to benefit electric ratepayers.
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