Dive Brief:

• In the wake of record natural gas and electricity price spikes during Winter Storm Uri last February, the Federal Energy Regulatory Commission is investigating two possible natural gas market manipulation cases, the agency said in its annual enforcement report released Thursday. Staff is reviewing another natural gas matter and action by a participant in the Southwest Power Pool (SPP) electricity markets to see if they merit investigation, according to the report.

• FERC approved nine enforcement office settlement agreements totaling $7.9 million in fiscal year 2021 (FY21), up from three approved agreements totaling $550,000 in FY20, according to the agency's annual enforcement report.

• "I'm pleased to see that after a lull over the last couple of years, the commission is more aggressively pursuing market manipulators," FERC Chairman Richard Glick said during the agency's monthly meeting on Thursday. "The cop is back on the street and we will aggressively pursue wrongdoing."

Dive Insight:

FERC staff has been reviewing the activities of participants in electric and natural gas markets during Winter Storm Uri, which blanketed Texas and parts of the central U.S. in February.

During the frigid weather, the natural gas market saw record prices, with trades peaking at $1,250 per million British thermal units (MMBtu) in Oklahoma, and prices exceeding $100/MMBtu throughout the Southwest, Rockies, Upper Midwest and in Texas and the South Central U.S., Michael DeLiso, FERC Natural Gas Market Surveillance Branch chief, said during Thursday's meeting.

Also setting records, power prices hit $9,000/MWh in the Electric Reliability Council of Texas (ERCOT) market and exceeded $1,000/MWh in SPP, the California Independent System Operator and Midcontinent Independent System Operator markets, DeLiso said.

In its review of market activity during the cold weather, FERC staff focused on identifying market participants with large market concentrations and unusual buy-side or sell-side losses, DeLiso said. He added  the agency lacks jurisdiction over ERCOT and so it did not look for possible manipulation there.

The annual enforcement report showing an increase in activity by FERC's enforcement office comes about two years after five senators said they were concerned the agency may not be fully committed to preventing market manipulation. Then-Commissioner Glick agreed, saying "the commission's commitment to preventing manipulation and penalizing bad behavior appears to be waning."

FERC's enforcement efforts appear to have increased under Glick's chairmanship, which began in January.

The agency launched a dozen investigations in FY21, up from six in the previous year. It also closed only four investigations without taking any action, down from eight that were closed without action last year.

Ten of the investigations in FY21 involved potential market manipulation, seven involved possible tariff violations and eight involved potential misrepresentations barred by FERC's "duty of candor" rule, which requires market participants to provide accurate information.

In FY21, FERC's Division of Audits and Accounting completed 12 audits of public utility, natural gas and oil pipeline companies, with 64 findings of non-compliance. In FY20, the division finished 10 audits with 51 non-compliance findings.

Meanwhile, FERC Commissioner James Danly dissented from a decision Thursday approving a settlement agreement between the enforcement office and Golden Spread Electric Cooperative. The utility agreed to return $375,000 in unjust profits and pay a civil penalty of $550,000 for allegedly manipulating SPP's market. The cooperative based in Amarillo, Texas, neither admitted nor denied the allegations.

"It's totally unjustifiable," Danly said. Golden Spread complied with SPP's tariff but had to "buy their way out of enforcement scrutiny" with a settlement.

"Today's order will leave market participants with no way of knowing whether economically substantive and rational profit-maximizing trades, made in conformity with applicable tariffs, will be found to be manipulative," Danly said.