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2017 Report on Enforcement released by FERC

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World Pipelines,

The Federal Energy Regulatory Commission’s Office of Enforcement maintained its sharp focus on fraud and market manipulation, serious violations of mandatory reliability standards, anticompetitive conduct and conduct that threatens the transparency of regulated markets in fiscal 2017.

As in previous years, the 2017 Report on Enforcement highlights FERC enforcement staff’s work performing surveillance and analysis of conduct in the wholesale natural gas and electric markets, monitoring market trends and market competitiveness, and auditing jurisdictional companies. The report released on 16 November also provides the public with more information regarding the nature of non-public enforcement activities, such as self-reported violations, surveillance inquiries and investigations that were closed without public enforcement action.

The report stresses that enforcement will pursue those same priorities in fiscal 2018. Conduct involving fraud and market manipulation poses a significant threat to the wholesale energy markets because it undermines FERC’s goal of ensuring efficient energy services at reasonable cost, and it erodes confidence in those markets to the detriment of consumers and competitors.

Some of the highlights of the 2017 Enforcement Report are:

  • Investigations staff opened 27 new investigations and closed 16 pending investigations with no action or through a Commission-approved settlement. Staff negotiated five settlements that resulted in more than US$51 million in civil penalties and disgorgement of more than US$42 million in unjust profits. Because the report covers fiscal 2017, it does not include the Commission’s 7 November 2017 settlement with Barclays Bank and three traders (IN08-8-000) that requires Barclays to pay a US$70 million penalty and disgorge US$35 million in unjust profits.
  • Audits and accounting staff conducted 11 audits of oil pipelines, electric utilities and natural gas companies, resulting in 301 recommendations for corrective action and directing refunds and recoveries totalling more than US$13.3 million.
  • Market oversight staff continued its analysis of market fundamentals and enhanced its capabilities for identifying anticompetitive outcomes and anomalies that may indicate an exercise of market power. It also led a technical conference to discuss trends, concerns and potential solutions relating to declining levels of natural gas index liquidity.
  • Analytics and surveillance staff provided analytical expertise on approximately 50 investigations and, through its surveillance activities, identified anomalies and potential misconduct that prompted 48 inquiries, some of which resulted in referral to investigations staff. For the first time, the report includes examples of non-public inquiries that were closed without a referral to investigations.

Since 2007, enforcement staff has negotiated settlements allowing for the recovery of approximately US$763 million (including Barclays, but excluding pending proceedings and the proceedings against Brian Hunter); total disgorgements amount to almost US$479 million.

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