FERC Enforcement Staff Alleges Market Manipulation by Constellation Energy Commodities Group

The Staff of the Office of Enforcement of the Federal Energy Regulatory Commission, in a nonpublic preliminary investigation, "has preliminarily determined that Constellation Energy Commodities Group, Inc. (CCG) violated the Commission's Prohibition of Electric Energy Market Manipulation, 18 C.F.R. § 1c.2 (2011) and the Commission's Market Behavior Rule: Communications, 18 C.F.R. § 35.41(b) (2011)," a Staff Notice of Alleged Violation issued yesterday states.

Staff alleges that Constellation Energy Commodities Group, Inc. engaged in virtual transactions in the New York Independent System Operator's (NYISO's) Control Area and scheduled day-ahead physical flows between the NYISO and PJM Interconnection, Inc., Ontario, and/or ISO New England, Inc. (ISO-NE), in order to benefit Constellation Energy Commodities Group, Inc.'s financial positions that settled off the average of the day-ahead prices for the settling months in the respective regions of those NYISO and ISO-NE markets. Staff alleges that this behavior violated 18 C.F.R. § 1c.2 of the Commission's regulations and occurred from approximately September 2007 through December 2008.

In addition, Staff alleges that Constellation Energy Commodities Group, Inc. violated 18 C.F.R. § 35.41(b) by providing inaccurate and misleading information to the NYISO concerning its uneconomic virtual trading activities in the NYISO.