FERC on Monday approved a settlement agreement requiring Alliance NYGT to pay nearly $900,000 for running two small power plants on natural gas for more than three years while being reimbursed for more expensive kerosene (IN21-4).

Under the terms of the agreement with the commission’s Office of Enforcement, the company will pay NYISO $463,984 for restitution and compensating market participants and remit a $420,000 civil penalty to the U.S. Treasury.

The agreement also requires that Alliance submit two annual compliance monitoring reports, with a third annual report at the office’s option, and to conduct at least one training program relating to compliance with the commission’s regulations and the NYISO tariff.

Alliance bought the Hillburn and Shoemaker generators in 2007. The units are located in Orange County, and each has a 40-MW nameplate capacity. Between January 2009 and January 2012, Alliance operated the generators exclusively on kerosene while making repairs to remedy operational issues that were most pronounced when burning gas.

Alliance completed the generators’ gas equipment upgrades in 2012 and contacted NYISO to request information about updating the reference prices in advance of the repairs being completed. Alliance failed to start on gas in response to a January 2013 dispatch request, but thereafter “the generators began operating primarily on gas to fulfill their awards.”  However, the units’ reference prices remained indexed to the more expensive liquid fuel, the commission said.

NYISO in September 2013 began communicating with Alliance about the type of fuel used to operate the generators, but the company’s responses were “untimely, inaccurate or incomplete,” according to FERC, and it wasn’t until March 2016 that the firm began updating its reference prices to reflect gas capabilities for both generators.

During the period that it failed to notify NYISO of the generators’ ability to operate on gas, Alliance received inflated make-whole payments.