AICPA SOC Service Organizations - Certrec

FERC Levies Civil Penalty in the Amount of $2,400,000 and Disgorgement of $2,300,000 against Constellation NewEnergy, Inc. (Cne)

Summary of NERC Penalties









Quarter 1 

6/17- 8/17

Constellation NewEnergy, Inc. (CNE)

Lack of compliance with the commission-approved rules and regulations of the applicable market

CAISO tariff

C.F.R. § 35.41(a) and sections 4.2.1,, and 37.3.1

Civil penalty of $2,400,000 to the United States Treasury

Disgorge $2,300,000 to CAISO

FERC Enforcement determined that CNE violated 18 C.F.R. § 35.41(a) and sections 4.2.1,, and 37.3.1 of the CAISO tariff. Section 35.41(a) provides, in relevant part, that “where a Seller participates in a Commission-approved organized market, Seller must operate and schedule generating facilities, undertake maintenance, declare outages, and commit or otherwise bid supply in a manner that complies with the Commission-approved rules and regulations of the applicable market.” Enforcement determined CNE violated Section 35.41(a) through its violation of the CAISO tariff. CAISO tariff §§ 4.2.1 and generally require market participants to follow dispatch and operating instructions issued by CAISO. Section 4.2.1 requires that market participants “shall comply fully and promptly with the Dispatch Instructions and Operating Instructions,” while Section requires market participants to “comply with Operating Instructions issued by the CAISO as authorized under the CAISO Tariff.” Enforcement determined CNE did not comply with these tariff provisions when it could not respond to RA-related dispatches by CAISO in June and August 2017. CAISO tariff § 37.3.1 requires that market participants have a “reasonable expectation” of being “available and capable of performing at the levels specified in the bid” at the time it is placed in the day-ahead market. Enforcement determined CNE lacked a sufficiently reasonable basis for its expectation that it would be able to wait to secure electricity in the spot market to support its RA imports during times when the market was constrained. To the contrary, Enforcement concluded it was unreasonable to expect that electricity would be readily or sufficiently available in the spot market during times when CAISO market prices rose to or above bids of $999/MWh because such prices usually reflect an environment in which it is difficult to secure sufficient supply to meet demand.

CNE Agreement

CNE agreed to: pay a civil penalty of $2,400,000 to the United States Treasury; disgorge $2,300,000 to CAISO; and only use specific generation resources or firm contracts in connection with import RA moving forward.

About Certrec:
Certrec is a leading provider of regulatory compliance solutions for the energy industry with the mission of helping ensure a stable, reliable, bulk electric supply. Since 1988, Certrec’s SaaS applications and consulting expertise have helped hundreds of power-generating facilities manage their regulatory compliance and reduce their risks.

Certrec’s engineers and business teams bring a cumulative 1,500 years of working experience in regulatory areas of compliance, engineering, and operations, including nuclear, fossil, solar, wind facilities, and other Registered Entities generation and transmission.

Certrec has helped more than 200 generating facilities establish and maintain NERC Compliance Programs. We manage the entire NERC compliance program for 80+ registered entities in the US, Canada, and Mexico that trust us to decrease their regulatory and reputational risk. Certrec is ISO/IEC 27001:2013 certified and has successfully completed annual SOC 2 Type 2 examinations.

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