By Michael Brooks
FERC on Thursday upheld NYISO’s decision to deny a New York energy service company’s application to join the ISO until its predecessor pays its outstanding debt (EL19-39).
Light Power & Gas of NY told FERC in January that NYISO had violated its Tariff and the Federal Power Act in treating it as the successor to North Energy Power, a bankrupt ESCO kicked out of the ISO in October after it filed for Chapter 11 bankruptcy and its unpaid obligations exceeded its collateral.
NYISO noted — and LPGNY did not dispute — that though the two companies are separate, both share Abe Leiber, Jack Klein and Hindy Gruber as principals, and that LPGNY “apparently seeks to serve the very same customers as North Energy.”
The ISO also noted that, though formed in 2014, LPGNY only became active a week after North Energy filed for bankruptcy, when one principal contacted the ISO about joining. LPGNY also filed its application to join exactly one week after North Energy’s membership was terminated, NYISO said.
LPGNY argued that NYISO’s Tariff has no “successor liability” policy and that, even if it and North Energy were the same company, the ISO failed to follow its bad debt and re-entry provisions for defaulting transmission customers.
FERC sided with NYISO. “We find that NYISO’s decision to treat LPGNY as the same entity as North Energy is reasonable in light of the record, particularly the close overlap in not only those entities’ relevant personnel, but also their business activities,” the commission said. “Namely, both entities have the same contacts and administrators, similar addresses, are engaged in the same business in the same territory and seek to serve the same customers.”
The commission has previously found that it “may disregard the corporate form in the interest of public convenience, fairness or equity.”
It also found that the Tariff “neither explicitly supports nor prohibits NYISO’s decision,” though it urged the ISO to file Tariff revisions spelling out the factors it will consider when deciding whether to treat two separate entities as the same. Moreover, it emphasized that its decision “does not rely on the application of ‘successor liability’ that LPGNY alleges is the basis of NYISO’s actions.”
Finally, FERC found that NYISO did not violate its bad debt procedures, saying the Tariff gives the ISO “wide latitude in pursuing cost-recovery measures that may minimize or avoid a bad debt loss.”
PJM and a group of New York transmission owners intervened in NYISO’s defense. PJM said the case “implicates broader and common policy issues regarding whether [RTO/ISO] tariff rules” allow for denying a new member’s application based on prior enforcement history.
The Maryland Public Service Commission also intervened, though without taking a position, saying it was interested in the case because of its potential impact on PJM. The RTO is dealing with the effects of being burned by financial transmission rights trader GreenHat Energy and its principals Andrew Kittell and John Bartholomew, who were identified as lieutenants in J.P. Morgan Ventures Energy Corp.’s scheme to manipulate the CAISO and MISO markets between 2010 and 2012.
In an unusual move, LPGNY asked FERC to dismiss the interventions, a request the commission dismissed.
