Related Practices
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Covington has a leading and highly active practice in the area of FERC and CFTC enforcement, compliance and audits, representing a broad range of electricity and natural gas market participants. The risks of non-compliance for energy companies have increased exponentially under the Energy Policy Act of 2005, which explicitly prohibits the manipulation of energy markets, establishes a significantly higher level of potential civil penalties (up to $1 million per day per violation) under the Federal Power Act and the Natural Gas Act, and increases the level of possible criminal penalties for violations. As a result, FERC has significantly increased its enforcement activities against market participants including utilities, financial firms, electricity and natural gas traders, independent power producers, virtual traders, natural gas companies and pipeline shippers and demand response providers. The Commission has approved enforcement settlements totaling hundreds of millions of dollars and has numerous ongoing investigations. Covington represents a wide range of electricity and natural gas market participants and individuals in FERC enforcement proceedings, many of which remain non-public and confidential.
The firm represents and advises clients on:
- Litigation
- Investigations
- Standards of Conduct issues
- Codes of Conduct regarding affiliates activities
- Development and implementation of compliance programs
- Financial audits
- Operational audits
Representative Matters
- Energy Transfer Partners and Oasis Pipeline in investigations by FERC and CFTC regarding alleged market manipulation and undue discrimination, and in resulting litigation and settlements at FERC.
- Texas Energy Future Holdings in an audit by FERC Enforcement's Audit Division regarding compliance with the terms of FERC's order approving the nation's largest leveraged buy-out (the acquisition of Texas Utilities Corp.).
- Major energy trade association with respect to advice on the CFTC's proposed rule on market manipulation and the CFTC's Advanced Notice of Proposed Rulemaking on disruptive trade practices.
- Oil and gas producer in FERC's enforcement investigation regarding the Cheyenne Plains Open Season and in a resulting settlement.
- Seven major energy trade associations including Edison Electric Institute, American Gas Association, Natural Gas Supply Association, and Electric Power Supply Association in preparing a comprehensive White Paper evaluating FERC’s enforcement initiatives both substantively and procedurally, presenting it to FERC, and paving the way for the implementation of significant reforms to FERC’s enforcement program.
- Investment bank in a non-public FERC Enforcement investigation of alleged manipulation of electricity markets with respect to the bidding of electric generation into certain RTO markets.
- Prominent demand response provider in an on-going non-public FERC investigation alleging fraud and manipulation in providing demand response services in the organized electricity markets. We have responded to hundreds of data requests, reviewed thousands of documents, defended depositions and otherwise defended our client before the agency.
- Virtual electricity trader in an on-going non-public FERC investigation of fraud and manipulation with respect to trading virtual electricity products and congestion revenue rights in the California ISO markets. As in other cases, we have responded to extensive data requests from FERC, defended depositions, reviewed documents and prepared position papers evaluating the factual and legal issues.
- Large electric and natural gas utility in a wide-ranging and ongoing FERC enforcement audit of its market activities, including compliance with the market based rate authority provided to its multiple affiliates, compliance with FERC’s electronic quarterly report requirements, and compliance with rules regarding uplift or make-whole payments.
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