FERC Issues Show Cause Order to End User Over Alleged "Fraud"

FERC yesterday issued a show cause order to Lincoln Paper and Tissue, LLC, directing the company to show cause why its should not be subject to a civil penalty and disgorgement for what FERC Staff alleged was a violation of the ISO New England Day-Ahead Load Response Program (DALRP).

FERC Enforcement Staff alleges that Lincoln Paper and Tissue, "adopted and implemented a plan to inflate Lincolns's [sic] baseline load and then repeatedly offered load reductions at the minimum offer price in order to freeze the inflated baseline, maximizing payments for phantom load reductions."

FERC Enforcement Staff alleges that, "Lincoln curtailed generation during the baseline period, intentionally creating a misleading baseline."

Further, Enforcement Staff alleges that Lincoln, "offered load response on a daily basis, fraudulently communicating a willingness and ability to reduce load ... [and] that Lincoln understood that the mill would not reduce load and, in fact, did not reduce load, contrary to its DALRP load reduction offers.

Enforcement Staff recommended a penalty of $4.4 million for Lincoln and disgorgement of $379,000.

Lincoln Paper and Tissue may request a hearing on the allegations.