FERC has approved a $1.5 million civil penalty on Galt Power following an investigation finding manipulation violations in the creation of renewable energy credits (RECs) (IN20-5). 

The commission’s Office of Enforcement determined that Galt, a wholesale power marketing company, conducted prohibited “wash” trades — transactions designed to cancel each other out, carrying no financial risk — to generate RECs in Massachusetts.  

“Galt repeatedly prearranged its two schedules between ISO-NE and NYISO for the same volumes during the same time intervals, a hallmark of wash trades,” the Office of Enforcement found.  

The office determined that Galt generated RECs by sending power from two New York wind farms from NYISO to ISO-NE, while scheduling imports to NYISO from ISO-NE that would kick in when the prior transactions were projected to lose money.  

“Galt willingly lost money on the NYISO-to-ISO-NE transactions to obtain Class I RECs but did not absorb those losses or flow the power on net. Instead, it scheduled the ISO-NE-to-NYISO transaction to mitigate or eliminate any losses,” the office found.  

The office also found that Galt made false statements concealing the wash trades to APX, the operator of the NEPOOL Generation Information System.  

“We do not want to let them know about hedge transactions,” read one internal email from an APX employee. 

Following the office’s findings, Galt has agreed to pay a $1.5 million fine to the U.S. Treasury, along with about $372,000 to the state of Massachusetts for disgorgement and interest. The company also will be required to submit two annual compliance reports.  

According to the agreement, Galt “neither admits nor denies the alleged violations.” 

FERC accepted the agreement June 28, finding it “is a fair and equitable resolution of the matters concerned and is in the public interest.”