Dive Brief:
- The Federal Energy Regulatory Commission is poised to take an enforcement action against Affirmed Energy for alleged misconduct in its sale of energy efficiency resources in the PJM Interconnection capacity market, according to a letter released by the agency on June 26.
- The allegations against Affirmed Energy, an American Efficient subsidiary, are “substantially similar” to those made last month in a complaint by Monitoring Analytics, PJM’s market monitor, American Efficient said in its letter to the enforcement office. The market monitor contends that Affirmed Energy and nine other companies, including Exelon’s Baltimore Gas & Electric, should be ineligible for capacity payments because they failed to provide adequate measurement and verification reports for their efficiency resources.
- American Efficient denies the allegations, which it said are based on “deeply flawed” theories. It is “unjust to target one company for punishment and loss of its business through an enforcement investigation into what the [independent market monitor] publicly alleges is standard industry practice,” Affirmed Energy said in a June 18 letter to FERC commissioners.
Dive Insight:
FERC’s enforcement office sent Affirmed Energy a “1b.19” letter on May 22 indicating the office was preparing to recommend the agency start an enforcement action against the company, according to American Efficient. On the same day, the enforcement office rejected a proposed settlement agreement from Affirmed Energy, the company said.
The enforcement office has also rejected Affirmed Energy’s request for an extra 30 days to respond to the allegations in the 1b.19 letter, American Efficient said.
“This sequence of events shows that [the Office of Enforcement] (i) has not had any serious interest in considering realistic settlement outcomes, and (ii) has known that for some time — all the while refusing to provide us with any indication of the possibility of timely resolution,” American Efficient said. “This is an unfair and unreasonable way to treat the subject of an investigation, especially one that has been transparent and cooperative throughout this process.”
Further, moving forward with the enforcement office’s investigation into Affirmed Energy may appear to prejudge the market monitor’s complaint, according to the company.
The energy efficiency providers named in the complaint are: Affirmed Energy, BG&E, Exelon’s Commonwealth Edison, Enel X, Enerwise, FirstEnergy, NRG Energy, Public Service Electric & Gas, Consolidated Edison’s Rockland Electric and Southern Maryland Electric Cooperative.
The enforcement office’s investigation is based on a referral from the market monitor, according to Affirmed Energy.
In seeking more time to respond to the enforcement office, American Efficient said it is also responding to a complaint filed against PJM by ratepayer advocates from Illinois, Maryland and New Jersey. The complaint contends that PJM improperly uses an “addback” mechanism that prevents energy efficiency from fully participating in its capacity market.
“Rushing to judgment on an investigation threatening crushing civil penalties and disgorgement focused solely on Affirmed Energy would be both remarkably unjust and an abuse of the Commission’s authority,” Affirmed Energy said in the June 18 letter.
The record developed in the market monitor’s complaint proceeding would give FERC information on midstream and upstream energy efficiency programs, according to the company.
“This will be crucially important both for your consideration of market-wide rule changes on energy efficiency as well as the enforcement matter against Affirmed Energy,” the company said.
The market monitor and the enforcement office are seeking to enforce their own policy preferences for rules that don’t exist, according to Affirmed Energy.
The market monitor has long advocated for changes to PJM’s energy efficiency rules, but the grid operator has approved Affirmed Energy’s program dozens of times over the last 10 years, the company said.
“Earlier this year, PJM sought stakeholder approval for energy efficiency rule changes consistent with the [market monitor’s] views,” Affirmed Energy said. “The stakeholders, however, rejected those proposed changes.”
The issues raised by the market monitor and the enforcement office are fundamental policy questions about energy efficiency’s role in the capacity markets that should be addressed at a technical conference, Affirmed Energy said. In separate requests, the state ratepayer advocates and four U.S. senators also urged FERC to hold a technical conference on the issue.
American Efficient, a Modern Energy subsidiary, contracts with home improvement retailers and manufacturers to buy the rights to energy savings from the efficiency products they sell. The company sells those savings in capacity markets. American Efficient, based in Durham, North Carolina, operates in 23 states, according to the company’s website.
FERC didn’t respond to a request for comment about why it released information about a non-public investigation. American Efficient declined to comment.
