By Ted Caddell
A Pennsylvania-based power trading company accused by FERC of making riskless up-to-congestion transactions to collect line loss payments denied any wrongdoing Friday and requested the matter be dismissed.
Coaltrain Energy said that it didn’t manipulate the market, that its trading strategy wasn’t deceptive and that it didn’t engage in wash trades or try to affect market prices (IN16-4).
If the commission doesn’t terminate the case, Coaltrain said it will seek a de novo trial, with a federal court deciding all issues of fact and law, rather than the company potentially appealing an unfavorable FERC ruling afterward.
One of the allegations levied by FERC was that Coaltrain’s use of employee-monitoring software gave investigators evidence of the company’s trading strategy. FERC said Coaltrain employees at first claimed they had forgotten about the software — Spector 360 — when the Office of Enforcement initially asked, and then repeatedly delayed giving up the data. (See FERC: Spy Software Provides Evidence of UTC Scam.)
In its response, Coaltrain denied attempting to conceal the data, which included logs of the company’s trading.
“What actually happened is that it simply did not occur to the individuals involved that Spector 360 was a source of potentially responsive material at the time they were working on Coaltrain’s initial document responses,” the company said. “As soon as the issue was identified, Coaltrain promptly provided this data. The data was exculpatory, not inculpatory and there was no reason to conceal it.”
The response revealed that the owners of Coaltrain, Shawn Sheehan and Peter Jones, did not have Spector 360 installed on their computers, and so their actions would not have been recorded.
The response also says that Coaltrain had several communications with PJM’s Independent Market Monitor, Joe Bowring, and provided FERC with recordings of those discussions. “The content and context of these calls demonstrate that Coaltrain provided the IMM with accurate, truthful information that specifically addressed each of the IMM’s stated concerns,” the company said.
In one discussion, Bowring answered that he considered trades to be illegitimate if “the only reason you’re making money from the transaction is you’re buying and selling at the same price, and making money entirely from the payback of the marginal losses. Dr. Bowring reiterated that, in his view, Coaltrain’s trades were ‘not violating the rules.’”
When Bowring later expressed concern over Coaltrain’s trades, the company said, “Coaltrain agreed to halt trades on specific paths and followed through on that promise.”
FERC is seeking $42 million in penalties and unjust profits.
