The Federal Energy Regulatory Commission on Thursday ordered Ketchup Caddy and its owner to pay about $27 million for using bogus demand response resources to make offers in the Midcontinent Independent System Operator’s capacity market.
Ketchup Caddy and Philip Mango, the company’s owner, “engaged in a fraudulent device, scheme, or artifice to defraud the MISO market and market participants,” FERC said.
FERC ordered Ketchup Caddy to pay $25 million and Mango to pay $1.5 million in civil penalties. It also ordered Mango to return $506,502 in unjust profits. The company and Mango cooperated with the commission’s investigation, but didn’t respond to a show cause order FERC issued in February, the agency said.
Ketchup Caddy used customer data scraped from an Ameren website to enroll and clear about 210 MW of demand response resources in MISO’s 2019 planning resource auction, according to FERC. It cleared 303 MW and 372 MW in the following two capacity auctions.
Ketchup Caddy received capacity payments until MISO removed the company from its capacity market in October 2021, when the grid operator learned of Ketchup Caddy’s fraudulent registrations, FERC said.
FERC enforcement office staff estimated that Ketchup Caddy’s uncontracted Planning Resource Auctions offers caused $17.6 million in losses through reduced capacity prices. “The conduct also potentially risked the reliability of the MISO grid as MISO could not rely on Ketchup Caddy’s fraudulent capacity in an emergency,” FERC said.
Mango told FERC staff that he never contacted potential demand response customers before enrolling “unwitting customers” in the 2019 PRA, the agency said. “Mango also testified that he never took any steps, such as preparing a draft contract, to formally enroll customers and was divided from the outset about whether to try to sign up customers and share revenue or to not even attempt to enroll actual customers,” FERC said.
In testimony with FERC enforcement staff, Mango acknowledged that he had engaged in an illegal and deceptive scheme, the agency said.
“Mango also acknowledged that Ketchup Caddy’s activities did not benefit the MISO market and stated that ‘a reasonable person with time to reflect at a minimum would come to the conclusions’ that its activities were illegal,” FERC said.
Mango admitted to submitting “mock test” information for customers to MISO to meet a registration requirement, FERC said.
Ketchup Caddy — a corporate entity that Mango had created to sell an in-car ketchup holder he invented — and Mango have 30 days to ask FERC to reconsider its decision.
MISO has taken steps to protect its market from similar abuse, according to Brandon Morris, a spokesman for the grid operator. “And we are strengthening our formal tariff requirements and dedicating additional resources to evaluate participation of demand-side resources in our markets,” he said in an email Friday.
Editor’s note: this story has been updated to include a comment from MISO.
