Vista Energy Marketing to Pay $350,000 to Settle FERC Investigation

FERC approved a stipulation and consent agreement between its Office of Enforcement, Vista Energy Marketing, L.P., and Michael P. Whalen, Jr. which resolves Enforcement's investigation under Part 1b of the Commission's regulations, 18 C.F.R. Part 1b, into whether Vista accurately described Whalen's role in Vista in connection with Vista's application for market-based rate (MBR) authority under section 205 of the Federal Power Act, and whether Vista and Whalen violated the terms of the Commission's August 2009 order granting that application (IN12-9).

Whalen was one of three investor/owners of Vista, an entity seeking market-based rate authority. Whalen previously pled guilty to charges involving the delivery of false, misleading or inaccurate reports of market information to natural gas price indices in 2000-2001.

In its application for MBR authority in Docket No. ER09-553-000, Vista made multiple representations and commitments to the Commission that Whalen would play a limited role in Vista's operations and management. FERC granted Vista MBR authority, though Vista never transacted under it, and voluntarily withdrew its MBR tariff on July 2, 2010.

FERC said that Whalen was involved in multiple aspects of Vista's operations. Among other activities described in the stipulation, FERC said that Whalen personally conducted Vista business development and marketing activities, directed Vista employees in specific business development tasks, organized and participated in regular status update meetings, offered advice and direction to Vista employees, and participated in Vista hiring and personnel management issues.

FERC said that, "Enforcement ... determined that Vista's representations and commitments regarding Whalen constituted misleading information and that Vista failed to exercise due diligence to correct this misleading information, thereby violating 18 C.F.R. § 35.41(b). Enforcement determined that Vista's conduct constituted a reckless violation of a Commission order given Vista's awareness of the Commission's concerns and subsequent directives regarding Whalen's role in Vista."

Vista and Whalen neither admit nor deny violations of the terms of the Commission order and of 18 C.F.R. § 35.41(b), but Vista agreed to pay a civil penalty of $350,000 and Vista and Whalen each agree to certain future limitations on their involvement with Commission-jurisdictional electric sales.

Specifically, Vista agrees for a period of two years to refrain from filing an application under FPA section 205 seeking Commission authorization to sell electric energy at wholesale in interstate commerce.

Whalen agrees for a period of two years not to have a role other than as a passive investor in any entity that sells electric energy at wholesale in interstate commerce, not to make new investments in entities that seek or have authority to sell electric energy at wholesale in interstate commerce, and to restrictions on certain business contacts with individuals at entities in which he is already invested. Whalen further agrees to submit periodic affidavits during the two-year period attesting to his compliance with these restrictions.

Though Staff determined that Vista's violations were committed with "reckless disregard for compliance with the Commission's regulations," the stipulated civil penalty was reached in light of the following factors: Vista never made jurisdictional sales under its MBR authority and withdrew its MBR tariff; Vista's violations did not generate profits for Vista or cause market harm; Vista did not obstruct or interfere with administration of justice; Staff found no prior history of similar violations by Vista; Vista fully cooperated with Staff's investigation.