FERC today released its 16th annual report on enforcement activities. The report provides a comprehensive overview of the office’s accomplishments over the past year, including significant actions, strategic goals, and guidance to the industry. The report also serves an important function in providing the public and the regulated community with more information regarding the Office of Enforcement’s non-public activities.
The 2022 report notes that the Office of Enforcement focused its activities on ensuring that all energy markets are efficient, safe, reliable and secure. The office this year opened 21 new investigations and negotiated 11 settlements representing approximately $57.52 million in civil penalties and disgorgement, which was directed to those harmed by the misconduct.
Enforcement priorities for 2022 focused on fraud and market manipulation, serious violations of the mandatory reliability standards, anticompetitive conduct, threats to the nation’s energy infrastructure and associated impacts on the environment and surrounding communities and conduct that threatens the transparency of regulated markets.
“Ensuring that our energy markets are free from manipulation so that they can continue to serve consumers is a top priority at FERC, and it requires vigorous oversight and enforcement efforts,” FERC Chairman Rich Glick said.
Enforcement activities are conducted by staff in three divisions within the office: the Division of Investigations, the Division of Audits and Accounting, and the Division of Analytics and Surveillance.
The Division of Investigations opened 21 new investigations and closed seven without further action. Investigations staff negotiated 11 settlements approved by the Commission. These settlements resolved seven investigations, involving approximately $55.54 million in payments, $23.59 million in civil penalties and $31.95 million in disgorgement, and two federal district court litigation matters totaling $1,975,000 in disgorgement. Five of these settlements also included compliance monitoring requirements.
The Division of Audits and Accounting completed 12 audits of public utility, natural gas, oil and regional transmission organization companies, resulting in 51 findings of noncompliance and 258 recommendations for corrective action and directed $158 million in refunds and other recoveries. Accounting staff used delegated authority to decide, or advise the Commission in, 427 proceedings involving accounting matters. Finally, staff assessed for timeliness and accuracy the Electric Quarterly Reports (EQRs) from more than 3,000 entities each quarter, and 2,600 annual financial reporting form submittals.
The Division of Analytics and Surveillance identifies and reviews transactions for instances of potential misconduct, and in 2022 provided analytical expertise to Investigations staff in approximately 50 investigations. Staff reviewed physical natural gas markets to detect potential manipulation by running automated screens that cover the majority of physical and financial trading hubs in the United States; these screens produced 16,766 screen trips, resulting in the identification of 26 instances of natural gas market behavior that required further analysis. Staff each month ran and reviewed 96 electric surveillance screens; monthly, hourly, and intra-hour sub-screens; and reports for more than 41,000 hubs and pricing nodes within the six regional organized markets. This electric surveillance activity produced approximately 525,865 screen trips, resulting in the identification of 32 instances of market behavior that required further analysis, and ultimately two referrals for investigation. Staff also reviewed 2.5 million transactions filed through the Commission’s EQRs by all market-based rate holders selling wholesale energy in the bilateral markets.