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DailyBubble News

New Legislation Would Give FERC Explicit Authority to Impose Trader Bans |


US Senators Maria Cantwell (D-WA) and Catherine Cortez Masto (D-NV) introduced legislation on July 28, 2022, to provide FERC with the authority to temporarily or permanently ban any person from trading or transacting in certain energy markets if that person is found to have manipulated the natural gas or electricity market or willfully or knowingly provided false information regarding those markets. Known as the Energy Consumer Protection Act of 2022, the legislation will be introduced in the House of Representatives by Representative Jan Schakowsky (D-IL).

Senator Cantwell stated that the legislation adds a “key consumer protection arrow to FERC’s quiver by blocking market manipulators from repeating their crimes and harming energy consumers.” Similarly, Senator Cortez Masto stated that the legislation would “create new tools to prevent bad actors from manipulating energy markets” and from increasing energy prices for consumers and businesses.

The Energy Consumer Protection Act of 2022 amends the Federal Power Act (FPA) and the Natural Gas Act (NGA) to explicitly provide that FERC may permanently prohibit, conditionally or unconditionally, or temporarily prohibit any person (i.e., individual or corporation) that manipulated the natural gas or electricity market or willfully or knowingly provided false information regarding those markets from engaging (directly or indirectly) in transactions in those markets. Specifically, the trader or corporation that is subject to the ban would be prohibited from engaging, directly or indirectly, in purchases or sales of electric energy and natural gas, electric energy products including financial transmission rights, or FERC-jurisdictional transmission services.

In addition, the Energy Consumer Protection Act of 2022 provides that FERC would be able to exercise this authority if it determines that an individual willfully or knowingly reported any false information related to (1) the price of electricity sold at wholesale or the availability of transmission capacity that is being compiled by the federal agency, and (2) the transportation or sale of natural gas that is subject to FERC’s jurisdiction (including information relating to the availability and price of natural gas sold at wholesale and in interstate commerce, and information relating to the operation of facilities for the transportation and sale of natural gas at wholesale and in interstate commerce) to a federal agency or to a private-sector price-reporting agency.

Although FERC currently does not have explicit authority to ban traders from FERC-jurisdictional markets, FERC has approved settlements under which an individual was banned from participating in FERC-jurisdictional markets. Those bans were temporary in nature and lasted between one and three years. FERC, however, has not sought to impose a ban on a trader or corporation that did not agree to the ban through a settlement.

Thus, this legislation would enhance FERC’s enforcement authority and add to the measures FERC could impose on traders and their companies that are found to have engaged in manipulation or willfully or knowingly submitted false information.

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