FERC Approves $1.3 Million Settlement With Demand Response Provider to Resolve Investigation

FERC approved a $1.3 million settlement between its Office of Enforcement and Enerwise Global Technologies, Inc. (Enerwise) concerning an investigation into whether Enerwise violated the Commission's anti-manipulation rules.

Specifically, Enerwise agrees: (i) to pay a civil penalty of $780,000; (ii) to make $500,000 in demand response metering and automatic load control technology improvements for PJM customers during calendar year 2013; and (iii) to disgorge $20,726 plus interest in unjust profits.

Enforcement had opened a non-public, preliminary investigation of Enerwise in November 2010 after receiving a referral from PJM alleging irregular electricity consumption activity by the Maryland Stadium Authority (MSA), an Enerwise Interruptible Load for Reliability (ILR) demand response customer, immediately prior to three 2010 PJM emergency events in the BG&E zone. "Witnesses in Baltimore informed PJM that on September 24, 2010 MSA turned on stadium lighting at its Camden Yards baseball park used by the Baltimore Orioles on a non-Orioles game day immediately after PJM's declaration of an emergency event that was scheduled to start two hours later. PJM's referral alleged that increasing MSA's load in the two hours prior to the emergency event could have artificially increased the amount of demand reduction provided by MSA, thereby inflating potential payments (or eliminating potential shortfall penalties) to Enerwise and MSA," FERC said.

According to FERC's order:

"Enforcement further determined that Enerwise in May 2009 also instructed MSA to increase its stadium load prior to the test event to portray a larger load reduction than actually occurred. MSA increasing its load prior to the test event allowed Enerwise to demonstrate a larger load reduction for MSA using an available PJM baseline methodology that calculated a customer's load reduction based on the difference between the metered load during the two hours prior to a load reduction event and the metered load during the event. Enerwise's instruction to MSA in 2009 to increase its load in the hours prior to events resulted in MSA portraying a larger load reduction than actually occurred in 2009 prior to the August 18, 2009 test event and during the three emergency events in 2010. However, as noted in the Agreement, MSA otherwise met its load reduction obligations during the three 2010 events and neither MSA nor Enerwise received any 2010/2011 PJM Delivery Year payments based on MSA's increased load because of PJM's detection of MSA's load irregularities."

Additionally, the settlement also addresses allegations Enerwise registered load in the ILR program that it knew it could not reliably provide in an emergency.

The FERC order states:

"Enerwise knew MSA's registration for 4.6 MW of load reduction was based on operation of an MSA ice storage facility and on MSA's two 1.8 MW backup generators, but that operational problems with the generators could cause the generators to trip off-line when operated simultaneously. Enerwise further knew that the intended repairs required to ensure that the MSA generators would not trip when operated simultaneously had not been made or scheduled prior to the June 1 start of the ILR program's mandatory load reduction period. Enerwise nevertheless registered MSA for the full 4.6 MW load reduction for the 2009/2010 PJM Delivery Year ... When PJM required Enerwise to perform a test event of its demand resources in the BG&E zone on August 18, 2009, Enerwise arranged to send an engineer on-site to MSA to perform a one-time work-around so that MSA temporarily could operate both generators simultaneously during the test event. Enerwise's work-around thereby misrepresented to PJM MSA's ability to reliably operate both generators simultaneously on an emergency basis."

Enforcement determined that Enerwise was paid for 1.8 MW of load reduction that MSA could not have reliably provided in an emergency declared during the 2009/2010 PJM Delivery Year. Enforcement determined that Enerwise received, less payments to MSA, unjust profits of $20,726.

Enerwise neither admits nor denies that it violated the Commission's Anti-Manipulation Rule, 18 C.F.R. § 1c.2 and the PJM Tariff.

Docket No. IN12-15