Demand response aggregator CPower has agreed to pay a $2.5 million penalty after FERC’s enforcement division found the company took capacity payments in violation of ISO-NE rules (IN22-7).
The violations stemmed from the use of ISO-NE’s Price Responsive Demand (PRD) structure, implemented in the Forward Capacity Market in 2018.
Under PRD, an active demand capacity resource (ADCR), made up of one or more demand response resources (DRRs), can obtain a capacity supply obligation (CSO) and receive capacity payments.
Importantly, they’re then also required to submit demand response offers from the associated resources into the region’s day-ahead and real-time markets at levels equal to or greater than their CSO.
Between 2018 and 2019, CPower failed to do so, FERC found.
“The deficiencies between CPower’s CSOs and DROs [demand reduction offers] … grew from a minimum of 5.5 MW in June 2018 to a minimum of 33.2 MW in February 2019,” the enforcement filing says.
The company earned nearly $2.5 million in capacity payments that did not have associated DROs, FERC found. And an “individual within substantial authority personnel at CPower” was aware that some of its resources were offering at levels less than their capacity obligations, FERC said.
FERC’s Office of Enforcement started looking into the discrepancy after a referral from the ISO-NE Independent Market Monitor, according to the agency.
In response to the IMM’s initial inquiry, CPower attributed some of the differences to new demand response assets that “did not materialize.”
But FERC found that CPower had violated the ISO-NE tariff, and the company agreed to pay a civil penalty of $2.54 million and disgorge $2.46 million in earnings.
According to the FERC filing, CPower has hired a senior director of regulatory and government affairs and a senior vice president of regulatory affairs in the last year to improve its compliance program.
CPower confirmed with RTO Insider that it settled with FERC, saying, “While today’s outcome stems from the interpretation of what was at that time a new tariff for which there was no precedent, we appreciate that FERC has confirmed that there was no intentional violation and acknowledged the strength of CPower’s compliance program.”
