Neil Chatterjee, head of the Federal Energy Regulatory Commission, is taking our nation back to pre-Enron days when the commission was so weak it didn’t even explicitly prohibit manipulating energy markets.
Under Chatterjee, a former Mitch McConnell aide, the number of new investigations was halved – to 12 – in fiscal 2019, compared with the previous year. The commission reached just two settlement agreements for $14 million, a sixth or less of the annual average for penalties since 2007.
“Several recent actions seem to indicate that the commission may not be fully committed to finding, stopping, and punishing manipulative acts that can stifle competition and result in unjust and unreasonable prices,” Sen. Maria Cantwell (D-Wash.) and four other Democratic senators wrote to FERC commissioners.
Chatterjee, who also previously lobbied for the National Rural Electric Cooperative Association, told senators that annual averages vary and dropped in part because of the effectiveness of FERC enforcement.
“Our focus and priority continues to be addressing market manipulation and protecting our markets,” Chatterjee said.
FERC is pursuing three cases that total about $85 million in penalties, interest and amounts the companies would have to repay.
Former President George W. Bush signed the Energy Policy Act after the bankruptcy of Enron, the Houston energy company that cooked its books to hide billions of dollars in debt. Enron’s former CEO, Jeffrey Skilling, who was convicted of insider trading and other charges, was released from prison in 2018.
The Energy Policy Act gave FERC the power to fine companies up to $1 million a day per violation. Energy companies and trade associations such as the Electric Power Supply Association and Energy Trading Institute have argued in court that the fines should be thrown out because the commission is taking too long to assess penalties.
In May, the commission stopped issuing public notices about alleged violations, saying “the potential adverse consequences … for investigative subjects are no longer justified.” The commission voted in 2009 to issue public notices under former President Barack Obama.
FERC also eliminated its Division of Energy Market Oversight which was part of its enforcement efforts. The division oversaw our country’s natural gas and electric power markets and related energy and financial markets.
Chatterjee’s predecessor as chairman, attorney Norman Bay, had been the commission’s director of enforcement. He resigned in January 2017 after Trump named then-commissioner Cheryl LaFleur as the acting chair.
Before FERC enacted market behavior rules there was no explicit prohibition or definition of market manipulation in FERC rules, regulations or orders or statutes administered by the commission.
In fiscal 2018, FERC opened 16 investigations into market manipulation, the most for any year in the past decade, and recovered almost $150 million in civil penalties and disgorgement of profits.