FERC has ordered Ketchup Caddy and its owner to pay $27 million in penalties for dishonestly offering demand response services in MISO’s capacity market from 2019 to 2021.
The commission decided in a Dec. 5 ruling that Ketchup Caddy and owner Philip Mango — who originally created the Frisco, Texas-based company to sell an in-car ketchup holder he invented — violated the Federal Power Act, FERC’s policy against market manipulation and MISO’s tariff by “engaging in a manipulative scheme to register demand response resources with MISO without those resources’ knowledge or consent” (IN23-14).
The evidence in the record shows “Mango acknowledged that he had engaged in an illegal and deceptive scheme. Mango acknowledged that Ketchup Caddy’s activities did not benefit the MISO market and stated that ‘a reasonable person with time to reflect at a minimum would come to the conclusions’ that its activities were illegal,” FERC wrote. It added Mango had a plan to secure “essentially free money” through weekly capacity payments from MISO.
The penalties are unchanged from FERC’s show-cause order issued in February and include $25 million in civil penalties on Ketchup Caddy, $1.5 million in civil penalties on Mango and a directive that Mango disgorge $506,502, plus interest, in undeserved profits for phony load reductions. (See FERC Catches Ketchup Caddy Co. in Another Fake DR Scheme in MISO.)
FERC said Ketchup Caddy’s “manipulative conduct was serious and intentional” and said it based penalties on the “critical need to discourage and deter” similar illicit conduct. Mango and his company have 30 days to ask FERC to reconsider its verdict.
FERC said the company and Mango did not respond to its show-cause order.
FERC staff estimated Ketchup Caddy’s counterfeit capacity offers over three years led to other suppliers missing out on $17.6 million in capacity payments they otherwise would have received through MISO’s capacity auction.
To invent its registered customers, Ketchup Caddy co-founder Todd Meinershagen, a computer programmer, used a random number generator on an Ameren website to land on actual customer accounts and cull data so Mango could contact them about enrolling in Ketchup Caddy’s DR program.
Meinershagen agreed in late 2022 to pay more than $525,000, including interest, for his role in the market manipulation. Mango told FERC staff he kept his business partner “in the dark,” making him believe the demand response enrollment was legitimate.
Ketchup Caddy cleared 211.1 MW in MISO’s 2019/20 MISO capacity auction, 303.2 MW in the 2020/21 auction and 372.3 MW in the 2021/22 auction. The commission said Ketchup Caddy’s false registrations and offers slipped by undetected because MISO didn’t order curtailment in any of those planning years and required only mock tests for performance. Mango admitted he entered false information to satisfy MISO’s mock testing criteria using customer use data Meinershagen obtained from Ameren.
According to FERC, Ketchup Caddy “regularly distributed” MISO capacity payments to Mango’s and Meinershagen’s personal bank accounts totaling more than $500,000 apiece.
“Mango carried out a brazenly fraudulent scheme that had no purpose other than to mislead MISO and enrich Mango and Ketchup Caddy’s co-owner,” FERC said.
FERC in the past two years has uncovered two other companies manipulating MISO’s demand response market and collecting unwarranted payments. In addition to Ketchup Caddy, FERC found that an air separation facility in Indiana accepted payments for fabricated load reductions and an Arkansas steel mill for years made faux use reductions.
MISO’s Independent Market Monitor warned over the summer and fall that MISO’s market likely contains more deceptive demand response players. The IMM’s review of demand response performance in MISO from 2023 to 2024 showed that resources routinely fall short of their load modifying promises. (See MISO Demand Response Under Increasing Scrutiny; IMM Warns of More Potential Schemes.) Considering that since 2019, MISO demand response resources have received more than $800 million in capacity payments, the IMM said the issue is pressing.
“We have a lot of concerns about this. MISO’s rules, penalties and participant conduct all raise concerns for us,” Carrie Milton, of the IMM staff, said at an October Market Subcommittee meeting.
The IMM has recommended MISO discontinue its practice of accepting mock tests instead of actual performance testing, eliminate a batch-load demand response category, enforce stiffer penalties and automate validation of end-use registrations so end-use customers can’t contract with multiple market participants. It’s also asked MISO to require utility-grade meters and five-minute data for DR providing reserves.
MISO stakeholders have warned that the IMM’s recommendations might make DR participation in the MISO markets unappealing.
MISO plans to introduce more stringent demand response participation rules and hopes to have stricter requirements in place sometime in 2025. (See MISO Subcommittee to Act on Bad Actor Demand Response.)
