Power Marketer to Pay $2.5 Million in FERC Settlement

Twin Cities Power – Canada, Ltd., Twin Cities Energy, LLC, and Twin Cities Power, LLC has agreed to pay a civil penalty of $2.5 million, and disgorge nearly $1 million, to settle an investigation into alleged market manipulation.

Three individual traders, Jason F. Vaccaro, Allan Cho, and Gaurav Sharma, would also agree to fines as follows: Jason Vaccaro, $400,000; Allan Cho, $275,000; Gaurav Sharma, $75,000. Additionally, the individual traders agree to physical trading bans as follows: Jason Vaccaro for five years; Allan Cho for four years; Gaurav Sharma for four years.

The settlement relates to Twin Cities' trading and scheduling physical power between MISO, PJM Interconnection, L.L.C. (PJM) and Ontario, Canada's Independent Electricity System Operator (IESO) and its trading of number of financial products, including products referencing physical prices at the MISO Cinergy Hub, such as the MISO Cinergy Hub Balance-of-Day Swap (Bal-Day Cin)

FERC Enforcement Staff had alleged that on 144 days during the relevant period, Twin Cities engaged in a consistent pattern of flowing physical power in the direction of its financial swaps.

Staff alleged that Twin Cities imported power into MISO when it held a short swap position, or exported power from MISO when it held a long swap position. Staff alleged, Twin Cities' financial positions were larger than its physical positions, such that the increase in the value of Twin Cities' swaps exceeded the losses from its physical flows.

Staff alleged that Twin Cities' physical flows mirrored changes in its financial positions. Staff alleged that Twin Cities' physical power flows were not intended to get the best price and were not in response to market fundamentals. Staff alleged that Twin Cities' intent was to move prices at the MISO Cinergy Hub in order to benefit their financial swap positions, including Bal-Day Cin.

According to the settlement, Twin Cities Canada admits that it violated the Commission's Anti-Manipulation Rule, 18 C.F.R. § 1c.2 (2014). The individual traders neither admit nor deny a violation of the Commission's Anti-Manipulation Rule, 18 C.F.R. § 1c.2 (2014).

Docket No. IN12-2