In “one of the largest and most brazen frauds in the history” of FERC, American Efficient has been ordered to pay a civil penalty of $722 million and disgorgement of unjust profits totaling about $410 million.

FERC’s ruling, issued late April 15, said the company “stole half a billion dollars from hard-working Americans by collecting compensation for fake ‘energy efficiency resources.’”

According to FERC, American Efficient’s affiliates began participating in PJM’s capacity market in 2014 and in MISO’s capacity market in 2017. The fraud involved “hijacking a regulatory mechanism intended to promote energy efficiency and converting it into an ATM for American Efficient’s worthless paper-shuffling scheme.”

“American Efficient operated a sweeping money-for-nothing scheme to extract capacity payments from PJM and MISO by falsely claiming ownership and control of energy efficiency resources,” according to a FERC press release about the ruling.

“Through this scheme, American Efficient bought sales data for EE products, papered those transactions as if it was acquiring rights to each product’s load reduction-related potential, and then monetized that sales data in the PJM and MISO capacity markets under the guise of offering actual capacity,” the commission said in its ruling.

Once the truth “about American Efficient’s business model emerged over time,” MISO and ISO-NE disqualified American Efficient from their capacity markets.

The independent market monitors for PJM and MISO later referred American Efficient to FERC for potential enforcement action. The commission’s Office of Enforcement began investigating the company in 2021, and in 2024 the commission issued the Order to Show Cause that started the proceeding.