Docket No. IN24-2-000 | News Release
I concur in today’s order finding that American Efficient, LLC and its affiliates (American Efficient) stole nearly half a billion dollars from hard‑working Americans by collecting compensation for fake “energy efficiency resources.”[1] American Efficient’s money‑for‑nothing scheme to defraud[2] Americans was flagrantly illegal, and the disgorgement of approximately $410 million in unjust profits and civil penalty of $722 million, however historic, is more than warranted. I write separately to highlight two additional steps that should be immediately taken to fully address American Efficient’s thievery.
While I do not take lightly the weight of a criminal referral, the interests of justice demand it. Therefore, first, I urge the Commission to act swiftly in referring this matter to the Attorney General for criminal enforcement pursuant to our authority under section 314(a) of the Federal Power Act (FPA).[3] And second, I also urge PJM Interconnection, L.L.C. (PJM) to take appropriate actions to protect ratepayers and immediately stop any additional capacity payments to American Efficient or its affiliates pending the final resolution of this proceeding.
American Efficient’s conduct is not only market manipulation, but a fundamental betrayal of the environmental and reliability principles that have been used to justify energy efficiency resources (EERs) in the first place.
EERs exist because in concept reducing electricity demand is generally cleaner and cheaper than building new generation, and can offer reliability benefits. Every dollar of capacity payment to an EER reflects an assumption that real customers are consuming less electricity due to real programs that actually reduce load.[4]
American Efficient delivered none of that benefit. Here, it simply purchased retail sales data from retailers like Home Depot and Walmart, modeled hypothetical savings assuming customers used those products as intended, and then sold those modeled reductions into PJM and MISO as if it had caused or controlled a single watt of reduced demand.[5] It had not. American Efficient did not have control over any energy savings nor were its programs designed to achieve any energy savings. American Efficient had no contracts with customers, provided no rebates or incentives to end-users, had no knowledge whether a particular product was actually a more efficient replacement, and had no mechanism to verify that any product was even installed.[6] It sold a fiction.
The scale of the fraud in this case is staggering. In total, American Efficient cleared more than 20,750 MW in PJM alone and received $465 million in capacity payments[7] while providing nothing to ratepayers in return. American Efficient’s scheme diverted funds that should have supported genuine demand‑reducing programs, and corrupted a market mechanism designed to produce environmental and reliability benefits. Ratepayers across states like Ohio, Pennsylvania, Illinois, Maryland, Virginia, New Jersey, and others in the PJM and MISO footprints paid real money for benefits they never received. This was not victimless. What elevates this matter to potential criminal conduct is American Efficient’s repeated flagrant conduct and deliberate escalation of wrongdoing after repeated warnings, and after being disqualified from participating in the ISO New England, Inc. (ISO-NE) and MISO capacity markets, intentionally choosing not to disclose these disqualifications to PJM.[8]
After both MISO and ISO‑NE disqualified the company from their capacity markets for similar conduct, a good‑faith participant would have paused, sought guidance, or corrected course. American Efficient did the opposite: it doubled down aggressively to PJM’s capacity market well-known for its price volatility. It expanded its participation. It partnered with powerful investment banks, and even monetized future revenue streams despite knowing that the payments to retailers were neither designed to achieve nor causing additional energy efficiency.[9]
This is not a case of technical noncompliance by an unsuspecting actor as addressed in Executive Order 14294.[10] American Efficient is a sophisticated (albeit nefarious) enterprise that understood the rules, knew it was violating them, and accelerated its misappropriation of ratepayer funds while the opportunity remained open. The involvement of senior personnel, absence of meaningful compliance controls, and failure to cooperate with Enforcement staff on a number of points further underscore the willful nature of the misconduct.[11]
Under the FPA, the Commission is authorized to refer potential criminal conduct to the Department of Justice (DOJ).[12] Those provisions indicate that criminal penalties may be assessed against a person who willfully and knowingly violates the FPA or a Commission rule, regulation, or order.[13] The Commission may also transmit to the Attorney General such evidence as may be available concerning such acts or practices, and the Attorney General, in its discretion, may institute criminal proceedings.[14] Last year, in Docket No. AD25-12-000, this Commission issued a Notice of Guidance identifying four factors that the Commission and its staff should consider in determining whether to refer potential criminal violations to the DOJ. Those factors are: “(1) the harm or risk of harm, pecuniary or otherwise, caused by the alleged offense; (2) the potential gain to the putative defendant that could result from the offense; (3) whether the putative defendant held specialized knowledge, expertise, or was licensed in an industry related to the rule or regulation at issue; and (4) evidence, if any is available, of the putative defendant’s general awareness of the unlawfulness of his conduct as well as his knowledge or lack thereof of the regulation at issue.”[15]
Applying the Commission’s referral guidance makes the need for a criminal referral irrefutable. The harm here is extraordinary. Ratepayers across one of the world’s largest and now most vulnerable electricity markets were systematically and fraudulently overcharged for more than a decade, market prices were distorted, legitimate EER participants were disadvantaged, and the integrity of the capacity market was compromised. That harm directly corresponds to the enormous financial gain American Efficient secured by structuring its entire enterprise around maximizing unlawful capacity revenues, partnering with investment banks, and monetizing future revenue streams, demonstrating that profit was not incidental but the very purpose of the operation. This fraudulent business model was executed by a sophisticated market participant with deep familiarity with EER eligibility requirements, as evidenced by its detailed regulatory filings and measurement and verification reports designed to appear compliant. A company cannot simultaneously operate with that level of sophistication and claim ignorance of the rules it relied upon. Enforcement staff found that “American Efficient and its representatives made knowingly misleading statements to PJM and MISO to obtain approval to participate in the PJM and MISO capacity markets”[16] and its persistence after repeated warnings, combined with the absence of meaningful compliance controls, demonstrates intentional, not mistaken, conduct. Viewed together, these factors form a single, coherent picture of misconduct on a scale that squarely meets the criteria for criminal referral. As American Efficient’s own former Policy Director explained, this was a “wealth transfer between rate payers and [American Efficient].”[17]
Today’s order is a necessary civil response. I concur fully. But the record demands more. Civil penalties, while certainly appropriate in this case, don’t carry the same deterrence factor that criminal accountability does. The facts warrant civil and criminal accountability here, which would work in concert to deter such future schemes and deliver justice to the wrongdoers in this case. Ratepayers deserve both.
For these reasons, I respectfully concur.
David A. LaCerte
Commissioner
[1] Order Assessing Civil Penalties, American Efficient, LLC, ___ FERC ¶ ____, P 1 (2026) (Penalty Order).
[2] Id PP 402-403.
[3] 16 U.S.C. § 825m(a).
[4] The Commission originally found EER participation in the PJM capacity market to be just and reasonable and not unduly discriminatory due to the mismatch between when EERs were installed and when the load-reducing effects were identified in PJM’s load forecast. After improvements were made in PJM’s load forecast methodology, the Commission approved PJM’s proposal to sunset the participation of EERs in the capacity market starting with the 2026/2027 Delivery Year. PJM Interconnection, L.L.C., 189 FERC ¶ 61,095, at PP 61-63 (2024), order on reh’g, 190 FERC ¶ 61,081 (2025). Similarly, the Commission approved the Midcontinent Independent System Operator’s (MISO) proposal to disallow EER participation beginning in the 2026/2027 Planning Year. Midcontinent Indep. Sys. Operator, Inc., 193 FERC ¶ 61,199, at P 13 (2025).
[5] Penalty Order, ___ FERC ¶ ____, PP 73-77.
[6] Id. PP 150-153 (citing Staff Report at 63-66).
[7] Id. P 61.
[8] Id. PP 424-434, 565-567.
[9] Id. PP 72, 118, 284-293.
[10] Executive Order 14294: Fighting Overcriminalization in Federal Regulations, 90 Fed. Reg. 20,363 (May 9, 2025).
[11] Penalty Order, ___ FERC ¶ ____ at P 563.
[12] 16 U.S.C. §§ 825m(a). I also note that while the FPA does not discuss the Commission’s authority to refer criminal conduct to state attorneys general, that such a referral would also be warranted in this case.
[13] 16 U.S.C. § 825o.
[14] 16 U.S.C. § 825m(a).
[15] Notice of Guidance, 191 FERC ¶ 61,201, at P 5 (2025).
[16] Penalty Order, ___ FERC ¶ ____ at P 348.
[17] Id. P 7.