The Federal Energy Regulatory Commission (“FERC” or “Commission”) released an Order Approving Stipulation and Consent Agreement involving North America Power Partners (“NAPP”) in Docket No. IN09-6. The matters considered in the Order related to NAPP’s participation as a Curtailment Service Provider in the PJM Interconnection L.L.C. (“PJM”) Synchronized Reserve Market, Interruptible Load for Reliability (“ILR”) Program and the Interchange Energy Market during 2007 and 2008. Without admitting or denying liability, NAPP agreed to pay a civil penalty of $500,000, disgorge unjust profits of $2,258,127, plus interest, and undertake various compliance-related activities, including semi-annual reporting and conducting a comprehensive compliance audit. NAPP’s former Senior Vice President of Operations, also a former PJM employee, was a central figure in the activities subject to the enforcement order. The order stressed that the penalty amount reflected NAPP’s financial position and could have been substantially higher for an entity with more resources. The matters were referred to FERC Enforcement by PJM.
In the Synchronized Reserve Markets, NAPP’s allegedly inappropriate activities included (1) offering resources into the market during times when the resources had informed NAPP they were unavailable, (2) failing to notify the underlying resources on the 9 occasions when PJM declared Synchronized Reserve Events, leading to the resources’ failure to respond to the events and (3) failing to submit meter data to PJM demonstrating that the resources reduced demand. These activities were determined by Enforcement Staff both to constitute violations of the PJM Open Access Transmission Tariff (“OATT”) and to constitute a fraudulent scheme committed with scienter in connection with a jurisdictional transaction in violation of the Commission’s anti-market manipulation regulation at 18 CFR Sec. 1c.2.
With regard to its ILR participation, NAPP’s allegedly inappropriate activities included (1) overstating Peak Load Contribution values of its registered resources and (2) registering resources without having the resources’ authorization to participate in the program. Enforcement determined that registration of resources without their authorization both violated the PJM OATT and constituted a fraudulent scheme committed with scienter in connection with a jurisdictional transaction in violation of the anti-market manipulation regulation at 18 CFR Sec. 1c.2. Twenty-seven of the 101 resources that NAPP registered ultimately opted not to participate in the 2007/2008 ILR Planning season. Since PJM’s OATT did not permit NAPP to remove the resources from the program, NAPP reserved revenues associated with these resources for purposes of returning the payments.
Enforcement also determined that NAPP engaged in OATT violations when it offered a resource with a real-time LMP rate into the day ahead market, and in conducting day-ahead Interchange Energy Market transactions during hours in which it did not have a sufficiently staffed and communications-enabled market operations center.