I guess they found exactly what they were looking for, because they dropped off a petition requesting a jury trial at the U.S. District Court for the Eastern District of Virginia, Richmond Division, in the matter of:
PETITION FOR AN ORDER AFFIRMING THE FEDERAL ENERGY REGULATORY COMMISSION'S MAY 29, 2015 ORDER ASSESSING CIVIL PENALTIES AGAINST POWHATAN ENERGY FUND, LLC, HEEP FUND, INC.,
HOULIAN "ALAN" CHEN, AND CU FUND, INC.
Although the Commission issued an Order assessing civil penalties on May 29, the accused had 60 days to cough up the roughly $34.5M in penalties and disgorgement. They didn't pay. FERC wasted no time filing its petition after the 60 days were up.
"It has taken Powhatan almost five years to get to court for a very simple spread trading strategy that has been blessed by 12 independent experts at our website, ferclitigation.com," said Powhatan's Richard Gates.
FERC listed six, count 'em, six lawyers as counsel for the plaintiff. It listed only two lawyers for the defense, one for Powhatan Energy Fund and one for Alan Chen, HEEP Fund and CU Fund. Does it really take six FERC lawyers to equal one defense lawyer? Who is paying for this? How much has FERC spent on this investigation over the past 5 years, and how much will it spend down in Richmond? At what point will the cost of this litigation be more than the recovery?
"While the costs of fighting off the bogus allegations have been huge and will just grow for us, we're glad we are able to stand our ground and not be forced into settlement the way others firms have. Plus, it will be nice to be in the neutral venue of a courtroom instead of this Orwellian organization that has trapped us the last 5 years," added Gates.
Richmond? FERC says it selected Richmond because:
Venue is also governed by FPA section 317, 16 U.S.C. § 825p, which provides that “[a]ny suit or action to enforce any liability or duty created by . . . this Act, or any rule, regulation, or order thereunder may be brought in [the district wherein any act or transaction constituting the violation occurred] or in the district wherein the defendant is an inhabitant.”
Oh, there it is!
Respondents’ unlawful scheme resulted in
the misdirection and capture of over $10 million in PJM market payments, including
approximately $1,147,087 that would otherwise have flowed to Dominion Virginia Power and inured to the benefit of Dominion and its ratepayers, including ratepayers in this District.
I will admit that I haven't read everything in this case, but FERC has yet to convince me that any actual ratepayers were damaged here. If Dominion had collected the MLSA payments instead of Powhatan and Chen, would they have directly reduced rates, or simply gone into Dominion's corporate coffers? Since FERC has yet to adequately explain, I'm leaning toward the latter option. Who is FERC really protecting here? Ratepayers or its pet incumbent utilities?
Gates seems to agree, "By filing the lawsuit, FERC has shown the world it continues not to support open and competitive power markets. Instead, FERC favors incumbent utilities that function without incentives to do better. Indeed, earlier this year the WSJ* described how utilities get profits by just spending more. While we believe in the societal benefits of competition, and know the law allows for it in these markets, it makes sense utilities may not want any."
Is FERC confused about who it serves? Is this case supposed to hinge on a jury's failure to understand it and instead be swept away by platitudes and grandstanding from FERC's sextet of lawyers? FERC used the word "Enron" something more than 30 times in its District Court Petition. Maybe the defense can use the word "McCarthyism" an equal number of times just to keep things fair? I suppose the jury's view of these two competing terms is going to depend on its average age.
And the quality of the public relations battle deployed.