The Deutsche Bank case and the meaning of ‘price manipulation.’
Bruce W. Radford is publisher of Public Utilities Fortnightly.
A few months back, the Federal Energy Regulatory Commission directed Deutsche Bank Energy Trading LLC to show cause why it shouldn’t be assessed a civil penalty of $1.5 million and be made to return some $123,000 in allegedly unjust profits from power trading in markets run by the California ISO.
FERC acted on an investigation and proposed findings reported by its internal Office of Enforcement. That investigation had found evidence that Deutsche Bank engaged in a “fraudulent scheme” of trading in one market to benefit a position in another, aided by “falsely designating” certain imports and exports as complying with ISO rules.
Moreover, FERC’s enforcement staff alleged that Deutsche Bank had “conceived and executed” a program of trading in spot energy markets, from January through March 2010, so as to benefit certain complementary positions that Deutsche Bank had held on CRRs—“congestion revenue rights,” the term used by the ISO in California to describe what are more commonly known, in East Coast markets, as FTRs, or “financial transmission rights.” (See, Order to Show Cause and Notice of Proposed Penalty, Dkt. IN12-4, Sept. 5, 2012, 140 FERC ¶61,178.)