News Release: November 19, 2012
Docket No. IN12-8-000
FERC Approves Market Manipulation Settlement with Gila River
The Federal Energy Regulatory Commission (FERC) has approved a settlement between its Office of Enforcement and Gila River Power LLC for 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. 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 (California ISO), and to violating FERC regulations requiring accurate submissions to the California ISO. Gila River sold power generated from its 2,200 megawatt power plant located southwest of 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. It submitted falsely designated wheeling-through transactions to benefit power imports sourced from its power plant. The company’s trading strategy moved the price of power at import nodes, including Palo Verde.
Gila River admitted that its wheeling-through transactions violated the California ISO tariff because it was not wheeling power through the region, and its transactions lacked a resource and a load outside the California markets as required by the tariff.
The Commission notes that Gila River and its employees provided exemplary cooperation to Enforcement staff, actions that were considered in approving the settlement agreement. Its employees were candid and forthcoming in testimony and meetings with staff. Further, through its admissions and conduct, Gila River accepted responsibility for its violations.
FERC is directing the California ISO to allocate the disgorged funds and interest to benefit electric ratepayers within the ISO.