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Matters

End User To Pay $5 Million Under FERC Settlement

June 2, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

FERC approved a settlement between its Office of Enforcement (Enforcement) and Lincoln Paper and Tissue, LLC (Lincoln) under which Lincoln has agreed to a civil penalty of $5,000,000 and disgorgement of $379,016.03 to resolve an investigation into whether Lincoln engaged in fraudulent conduct in its participation in ISO-New England, Inc.’s (ISO-NE) Day-Ahead Load Response Program (DALRP), thereby violating the Commission’s Anti-Manipulation Rule, 18 C.F.R. § 1c.2 and section 222 of the Federal Power Act (FPA).

Lincoln neither admits nor denies the allegations

In a prior order assessing a civil penalty, FERC said that, "the Commission found that Lincoln curtailed its internal generation by approximately 3 MW during the five-day period when Lincoln’s initial baseline load was established for the DALRP. Instead of operating the generator to supply Lincoln with as much of its energy needs as possible (as was typical for the facility) during this time, Lincoln purchased replacement energy during the baseline period at a cost of $10,000. The Commission concluded that by intentionally ramping down the generator and purchasing energy, instead of producing energy on site, Lincoln established a false and inflated baseline."

In such prior order FERC said that the Commission, "determined that by ramping down on-site generation and buying more grid power, Lincoln knowingly established and communicated to ISO-NE an inflated baseline that did not reflect Lincoln’s genuine load response capability. It thus concluded that Lincoln did not intend to reduce its consumption or increase its generation once the baseline was established."

Lincoln neither admits nor denies that its DALRP conduct was a fraud that violated the Commission’s rules, regulations, or policies.

The settlement states that because Lincoln is bankrupt, it is unlikely to be able to pay these full amounts and instead has agreed to allow the Commission’s Claims in two parts: (1) an allowed unsecured Claim of $379,016.03 for the disgorgement; and (2) an allowed subordinated Claim of $5,000,000 for the civil penalty (collectively Settled Claims). Given Lincoln’s bankruptcy, Enforcement agrees that Lincoln’s allowance of the settled claims reasonably satisfies Lincoln’s disgorgement and civil penalty obligations, FERC said

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