FERC approves Dominion penalty for alleged anti-manipulation violation

Federal energy regulators have approved a settlement between a Virginia electric utility and regulatory enforcement staff over allegations of market manipulation. The settlement requires Virginia Electric and Power Company (doing business as Dominion Energy Virginia) to pay a civil penalty of $7 million to the U.S. Treasury, and to disgorge an additional $7 million to  regional transmission organization PJM Interconnection, L.L.C.

At issue is an order issued by the Federal Energy Regulatory Commission approving a stipulation and consent agreement between the Commission's Office of Enforcement and utility Dominion Energy Virginia. The allegations relate to how Dominion Energy Virginia submitted bids to supply electricity to the PJM market from the utility's fleet of 20 simple-cycle combustion turbines, with an aggregate generating capacity of 2,414 megawatts. According to the order, enforcement staff alleged that during a 12-month period in 2010 and 2011, the utility violated the Commission's anti-manipulation rule by changing its bid pricing and structure for these units to obtain more day-ahead commitments to generate, to increase lost opportunity credits, and to achieve longer real-time run times when dispatched -- specifically, by inflating the units' claimed startup costs while discounting their incremental energy offers.

As part of the settlement, Dominion Energy Virginia stipulated to certain facts, but neither admitted nor denied the alleged violations. The utility agreed to pay a civil penalty of $7 million, to disgorge another $7 million to PJM, and to be subject to enhanced reporting and compliance requirements.

The Commission approved the stipulation and consent agreement, finding that "the Agreement is a fair and equitable resolution of the matters concerned and is in the public interest, as it reflects the nature and seriousness of the conduct and recognizes the specific considerations stated above and in the Agreement."

According to the Commission's 2018 Report on Enforcement, in fiscal year 2018, "staff negotiated six settlements that resulted in more than $83 million in civil penalties and disgorgement of more than $66 million in unjust profits." Since 2007, the enforcement office says its staff has negotiated settlements allowing for the recovery of approximately $776 million in civil penalties plus disgorgement of approximately $511 million.