FERC on Thursday approved a consent agreement between its Office of Enforcement and Golden Spread Electric Cooperative over charges of market manipulation that will cost the utility almost $1 million (IN21-9).

Enforcement alleged Golden Spread offered its gas-fired Mustang Station generating unit in West Texas into SPP’s market so that it “improperly targeted” and increased the unit’s day-ahead make-whole payments.

Golden Spread neither admitted nor denied the alleged violations but agreed to pay $375,000 in disgorgement funds (profits from the alleged behavior and interest) and a $550,000 civil penalty. FERC also directed the cooperative to strengthen its compliance training program and will subject it to compliance monitoring.

The commission stressed that Golden Spread’s market transactions were based on “fraudulent intent” and not on market fundamentals, which are prohibited by its anti-manipulation rule.

“Make-whole payments are not intended to provide an incentive to resource owners to design offers that seek to target and inflate such payments,” FERC said.

The commission said Enforcement staff found evidence of an offering strategy at the 521-MW Mustang Station related to make-whole payments for six months in 2016. Golden Spread received $314,151 in make-whole payments from the SPP market during that time by “strategically” offering the facility in self-commit status during certain hours of the operating day, staff said.

SPP told FERC that make-whole payments are designed to keep resource owners indifferent to the RTO’s commitment decisions by incentivizing them to offer their units in market status so that staff can make and optimize unit commitment decisions for the entire market, as opposed to resource owners self-committing their units.

FERC said the SPP market and its participants bore the cost of Golden Spread’s violation and directed the RTO to use its “best efforts” to allocate the disgorgement funds on a pro rata basis to affected market participants.

Commissioner James Danly dissented from the decision, saying the proceeding represented “another instance of the commission penalizing a market participant for doing nothing more than attempting to maximize its revenues in conformity with the provisions of the tariff under which it operates.”

“Golden Spread … responded to the incentives established by [SPP’s] open access transmission tariff in the very manner in which SPP intended and, in so doing, provided the exact benefit to the market that SPP stated the tariff was designed to achieve,” Danly wrote in his eight-page dissent. “Because Golden Spread acted within both the spirit and the letter of the tariff, it could not have committed market manipulation.”

During the commission’s open meeting Thursday, Danly said the settlement was “totally unjustifiable, and it represented a departure from our precedent in which a jurisdictional entity can comply with both the spirit and the letter of the tariff and still find themselves in the position where they have to buy their way out of enforcement scrutiny with a settlement.”

FERC noted that Golden Spread cooperated with Enforcement during the investigation.

Golden Spread did not respond to a request for comment. The Amarillo, Texas-based cooperative’s members serves more than 300,000 customers in Texas, Oklahoma, Kansas and Colorado.