U.S. Senator Edward J. Markey (D-MA) joined U.S. Senator Maria Cantwell (D-WA) and a group of colleagues today in writing to the commissioners of the Federal Energy Regulatory Commission (FERC) to express concerns over the apparent erosion of its role in preventing fraud and manipulation in U.S. energy markets. The letter was also signed by U.S. Senators Dianne Feinstein (D-CA), Ron Wyden (D-OR), and Angus King (I-ME).

The letter follows several troubling developments that may signal the Commission is no longer fully utilizing the authority granted to it by Congress in 2005 to go after bad actors in jurisdictional wholesale power and gas markets and in jurisdictional transmission and transportation services. These developments include the surprise announcement Monday that the Commission was eliminating the Division of Energy Market Oversight (DEMO) within its Office of Enforcement, the unilateral termination of ongoing investigations without any public transparency, and the rescission of its policy on issuing Notices of Alleged Violations.

“Several recent actions seem to indicate that the Commission may not be fully committed to finding, stopping, and punishing manipulative acts that can stifle competition and result in unjust and unreasonable prices,” the senators wrote in their letter.

As some of the authors of the 2005 legislation that empowered the Commission with anti-market manipulation authority, the senators asked each of the commissioners to respond individually to a number of specific questions related to their areas of concern.

“We hope your responses will help reassure Congress and markets that the Commission remains committed and eager to protect American consumers from all forms of energy market fraud and manipulation,” the senators continued.

Last week, Senator Cantwell brought up some of these concerns with the Executive Director of FERC, Anton Porter, at a Senate Committee on Energy and Natural Resources Subcommittee hearing. 

“It’s so important for us to focus on the important tools that the Federal Energy Regulatory Commission has when it comes to market manipulation and keeping our markets just and reasonable rates,” said Cantwell. “There’s recent reports that FERC Office of Enforcement may not be being as vigilant as they have been in the past and might not be going after as many bad actors.”

The full text of the letter is available HERE and below.

September 19, 2019

Dear Chairman Chatterjee and Commissioners Glick and McNamee:

We are writing to express our concern over the apparent erosion of the vital role the Federal Energy Regulatory Commission (FERC) plays in preventing fraud and manipulation in our nation’s energy and financial markets. Several recent actions seem to indicate that the Commission may not be fully committed to finding, stopping, and punishing manipulative acts that can stifle competition and result in unjust and unreasonable prices.

In 2005, Congress amended the Federal Power Act and the Natural Gas Act to empower the Commission with broad authority and responsibility to prevent the use of ‘any manipulative or deceptive device or contrivance’ in jurisdictional wholesale power and natural gas markets and in jurisdictional transmission and transportation services. As some of the authors of that legislation, and in consideration of the enduring lessons of the 2001 Western U.S. energy crisis, we would like clarity on the following recent actions by the Commission:

The recent decline in the number of civil penalty actions initiated by FERC seems to signify a curtailment in enforcement activity. Abrupt terminations of non-public investigations without any public transparency are also troubling.

Further, recent press articles report that the Commission eliminated its Division of Energy Market Oversight (DEMO). This surprise announcement has raised concerns about whether this closure will weaken FERC capabilities to assess broader energy market trends and continue to perform vital compliance functions.

Finally, on May 16, 2019, the Commission rescinded its policy on issuing Notices of Alleged Violations (NAVs) regarding investigations (Docket No. PL 10-2-003). We believe these NAVs may improve markets and that the public and market participants have a right to know if the Commission believes there is enough evidence of wrongdoing to initiate an investigation, even if the details of the investigation remain appropriately non-public. 

Ensuring wholesale electricity and natural gas markets remain competitive and free of manipulation provides tremendous self-reinforcing benefits to American ratepayers. We ask for timely and individualized responses to each of the attached questions regarding the above topics. We hope your responses will help reassure Congress and markets that the Commission remains committed and eager to protect American consumers from all forms of energy market fraud and manipulation.

Sincerely,

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