Massachusetts power providers pay $8.5M in fines for emissions scheme

Dive Brief:

Berkshire Power Co. and two companies responsible for managing its plant in Agawam, Mass., have agreed to $8.5 million in fines, settling allegations the companies tampered with pollution monitoring equipment in violation of the Clean Air Act.
The agreements settle the first-ever criminal charges brought for making false statements to the Federal Energy Regulatory Commission, SNL Energy reported.
Tyler Amon, a special agent with the U.S. Environmental Protection Agency, called it a "deliberate scheme" by Berkshire Power Plant management and staff to misreport emissions data and gain a competitive advantage over other generators.

Dive Insight:

Settlements announced by United States Attorney Carmen Ortiz and Massachusetts Attorney General Maura Healey are the first ever related to false statements to FERC, according to Ortiz, and are an indication of a continued focus on power markets and the potential for manipulation.

“This resolution addresses a pattern of behavior by multiple persons and entities in obstructing the enforcement of laws designed to protect the air we breathe,” Ortiz said in a statement. “The comprehensive resolution ... demonstrates the seriousness with which we take conduct which undermines environmental compliance and the fair regulation of energy markets.”

Berkshire Power Co. (BPC), which owns the Berkshire Power Plant, and plant manager Power Plant Management Services agreed to plead guilty to felony charges they violated and conspired to violate the federal Clean Air Act. Those charges arose from "air pollution monitoring equipment tampering and related false emissions reporting between 2009 and 2011," according to the attorneys' statement.

According to SNL, FERC's Office of Enforcement issued an order last October after a tip from the U.S. Attorney's Office for the District of Massachusetts after that office itself was notified after criminal investigators looking into the emissions scheme and uncovered potentia violations of the Federal Power Act.

PPMS also agreed to plead guilty to charges that it violated the FPA, "the first ever criminal charges under this statute, for making false statements to the regional power grid administrator, ISO-New England, regarding the Plant’s availability to produce power."

BPC and PPMS will pay a total of $4.25 million related to the criminal charges: BPC will pay $2.75 million in criminal fines for the Clean Air Act violations and make a $750,000 community service payment to the American Lung Association. PPMS will pay $500,000 in criminal fines for the Clean Air Act and Federal Power Act violations and make a $250,000 community service payment.

Along with the plant’s former operation and maintenance company, EthosEnergy Power Plant Services – formerly Wood Group Power Plant Services – the three companies will also pay over $4 million in civil penalties.

EthosEnergy agreed to resolve allegations that it violated sections of the Commonwealth’s Public Health Law dealing with air pollution stemming from its employees’ involvement with the air pollution monitoring equipment tampering at Berkshire Power Plant. Under the terms of a consent judgment, EthosEnergy will pay a $1.1 million civil penalty, and make a $200,000 payment to fund the installation of electric vehicle charging stations.

“Fraud against the commonwealth is very serious and will be aggressively prosecuted, criminally and civilly, by this office, especially when the consequence of the fraud is to expose the public to health and safety risks,” said Massachusetts AG Healey in a statement. “This type of conduct can not be tolerated.”

BPC and PPMS will also pay more than $3 million in interest to FERC in civil penalties and disgorgement, for misrepresenting to ISO-New England the plant's ability to generate power.