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Don't Mess With FERC's Incumbent Utility Pets!

8/1/2015

8 Comments

 
Apparently FERC's Office of Enforcement had nothing better to do yesterday than to enjoy a summer drive down to Richmond for an enjoyable afternoon of venue shopping.

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 $34.5
M 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.”
And the trades occurred in PJM.  And Powhatan's "principal place of business" is in Henrico, Virginia.  Of course FERC probably knows that the Gates brothers actually live in Pennsylvania and Chen in Texas.

Why Richmond?

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.
So, FERC wants this case heard before jurors who might believe they were personally cheated out of more than a million bucks?  I do hope they fully explain their use of "to the benefit of Dominion and its ratepayers" to show how much would have ended up in Dominion's pocket and how much would have ended up in Dominion's ratepayer pockets if not for the defendant's actions.  Maybe FERC can also explain how much of the $34.5M in penalties and disgorgement will end up in Dominion's pocket and how Dominion will flow that recovery into the rates that will make the ratepayers on the jury whole (or not).  And do tell where the rest of the money will go, FERC...

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.


Richmond?

*If you don't subscribe to WSJ and can't read this article via the link, type the phrase "Utilities’ Profit Recipe: Spend More" into Google and click through on that link.  No, we're not advising that you engage in newspaper subscription link manipulation, through a scheme to engage in fraudulent Headline Googling (HG) transactions in internet search engine markets to garner excessive amounts of certain free reads of stories behind a paywall. I also recommend that you not engage in any views that constitute a wash viewing scheme in violation of the WSJ’s prohibition of that practice.
8 Comments
Eric Morris
8/2/2015 04:53:48 am

So, I wonder if Rich and Kevin had offered to act like Ed McMahon and deliver large payments to a few ratepayers in each PJM state, not the utilities, early on, to save them litigation fees, I bet they may have done that. Even though they have done nothing wrong. And I bet FERC would have said "no".

Reply
Keryn
8/2/2015 11:24:54 am

Now wouldn't that be a great scheme to boost customer satisfaction? Pick one or two senior citizens who are behind on their electric bill each month and just excuse it. Chump change compared to what the utilities spend wining and dining politicians and regulators who probably aren't very grateful for the utility largesse.

Reply
Rich Gates link
8/2/2015 07:17:00 am

It is hilarious FERC's Steve Tabackman is described as "Attorney-Adviser (Public Utilities) (OE)" in FERC's Phone Directory, which is on the Internet.

So not only do utilities get profits by just spending more, they also get their own government-sponsored litigators to bully, harass, and beat down outsiders who enter the market and happen to be lots smarter than they are.

With all of these "perks", I could see why a lot of these entrenched interests don't want the gig to end...

Reply
Eric Morris
8/2/2015 10:23:00 pm

Calling him a "litigator" is far too generous. I am pretty sure Gerry Spence never fell asleep in a deposition.

Reply
Mission Possible! link
8/2/2015 08:10:42 am

Mission: Reliable, Efficient and Sustainable Profits for Utilities.
Assist utilities in obtaining reliable, efficient and sustainable legal services at a reasonable cost through appropriate regulatory and market means.

Reply
Rich Gates link
8/2/2015 11:06:41 am

Yeah, they enjoy sustainable profits for little innovation, brains, or risk. Sad.

Hopefully this will be blown up soon. The entrenched interests, along with their political connections, need to go.

Reply
http://www.leenya.com/2/post/2015/07/mini-summer-new-york-dream-tour.html
1/29/2016 04:38:38 pm

http://www.leenya.com/2/post/2015/07/mini-summer-new-york-dream-tour.html

Reply
Ty M. Carlson link
1/30/2016 03:26:58 am

Stop path WV was working that don’t mess with anyone. They are working for the pet saving. This is register by the government. The author tell in this about energy issue.

Reply



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    About the Author

    Keryn Newman blogs here at StopPATH WV about energy issues, transmission policy, misguided regulation, our greedy energy companies and their corporate spin.
    In 2008, AEP & Allegheny Energy's PATH joint venture used their transmission line routing etch-a-sketch to draw a 765kV line across the street from her house. Oooops! And the rest is history.

    About
    StopPATH Blog

    StopPATH Blog began as a forum for information and opinion about the PATH transmission project.  The PATH project was abandoned in 2012, however, this blog was not.

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