FERC earlier this week continued its recent uptick in public enforcement activity. FERC settled with ETRACOM LLC for $1.9 million and a requirement to develop and implement a compliance program consistent with FERC’s 2016 “Staff White Paper on Effective Energy Trading Compliance Practices.” Docket No. IN16-2.

ETRACOM was a cross market manipulation case — ERTACOM allegedly lost money in one market in order to make more money in another market — but with a twist. ERTACOM argued, in part, self-defense – that its cross-market activity was necessary to defend itself against a market design flaw in the California ISO.

FERC rejected that defense. FERC said that its Enforcement Staff is not “required to prove that the market in which the manipulation occurred was “well-functioning,” nor does the alleged existence of market flaws serve as a defense to Respondents’ manipulative trading behavior.” 155 FERC ¶ 61,284 at P 119 (2016). FERC concluded that it “expect[s] market participants to abide by [its] Anti-Manipulation Rule at all times, notwithstanding any errors or flaws—actual or perceived, transparent or unknown—in the market.” Id. at P 125

Bob Fallon, 202 464-1331, rfallon@www.efenergylaw.com