Enforcement Prohibition of Energy Market Manipulation
Conduct involving fraud and market manipulation poses a significant threat to the markets overseen by the Commission and is an enforcement priority. Such intentional misconduct undermines the Commission’s goal of providing efficient energy services at a reasonable cost because the losses imposed by such actions ultimately are passed on to consumers. Similarly, anticompetitive conduct and conduct that threatens market transparency undermine confidence in the energy markets and damage consumers and competitors. Such conduct might involve the violations of rules designed to limit market power or to ensure the efficient operation of regulated markets. Of particular concern to the Commission are cases involving the greatest harm to the public, where there is often significant gain to the violator or loss to the victims of the misconduct.
Under 18 C.F.R. § 1c it is unlawful for any entity, directly or indirectly, in connection with the purchase or sale of electric energy or natural gas or the purchase or sale of transmission or transportation services subject to Commission jurisdiction:
- To defraud using any device, scheme or artifice (i.e. intentional or reckless conduct);
- To make any untrue statement of material fact or omit a material fact; or
- To engage in any act, practice or course of business that operates or would operate as a fraud or deceit.
In certain instances, investigation of alleged manipulation has resulted in Enforcement staff closing investigations where a violation was not found, and the Commission has authorized release of staff reports to provide information on fraud and manipulation to the public. In other instances, the Commission has approved settlements or set manipulation cases for hearing.