PJM has received FERC approval to divide $40.8 million from an enforcement settlement with GDF SUEZ Energy Marketing among market participants who were impacted by the company’s scheme to improperly capture make-whole payments.

FERC’s Office of Enforcement, which reached the settlement with GDF, approved of PJM’s plan to distribute the funds as negative operating reserve charges to any market participants that incurred deviations between the day-ahead and real-time energy markets between May 2011 and September 2013, according to an email from David Budney, the RTO’s manager of market settlements. It noted that the adjustments have been processed and are available in the market settlements reporting system.

The funds are part of a nearly $82 million payment by GDF to settle market manipulation charges for offering generation below cost to capture make-whole payments in PJM. Enforcement charged GDF with violating the commission’s Anti-Manipulation Rule for an improper bidding strategy designed to increase its receipt of lost opportunity cost credits (LOCs).

According to the settlement, the Houston-based power marketer offered below-cost bids on some of its 12 natural gas-fired units to clear PJM’s day-ahead market and profit off the LOCs when the units weren’t dispatched in real time. GDF used a probabilistic, risk/reward approach to compare when units were unlikely to be dispatched against the risk of running the units at a loss, the settlement said. (See GDF SUEZ to Pay $82M in PJM Market Manipulation Settlement.)

GDF’s parent company rebranded as ENGIE in 2015 and sold off its U.S. fossil-fuel generation assets in 2016. PJM has since updated its rules to eliminate the loophole of which GDF took advantage.

– Rory D. Sweeney