FERC Fines CCGT Owner for PJM Market and Data Reporting Violations

FERC, the US federal energy regulator, has announced (click here) an enforcement action against Cordova Energy Company LLC (Cordova), an Illinois-based generator, for violating the PJM Interconnection Open Access Transmission Tariff through its offers into PJM, and its submissions to PJM’s electronic Generating Availability Data System (eGADS). The breaches occurred between 01 January 2020 and 30 September 2023. FERC opened its investigation after receiving a referral from the PJM Independent Market Monitor (IMM).

This is notably the first enforcement action to be announced since the appointment of David Rosner as Chairman of FERC in August (click here), and it offers living proof that the Office of Enforcement (or rather the Office of Enforcement and Regulatory Accounting, as it is now called) at FERC remains open for business as the Commission transitions to new leadership.

A summary of the salient facts of the case as outlined in FERC’s 13-page Order is provided below:

• For context, Cordova owns the Cordova Energy Centre, a combined-cycle gas turbine (CCGT) power plant located in Rock Island County, Illinois;
• The Cordova plant is classified as a capacity resource in PJM, and consists of two natural gas-fired combustion turbine units and one steam turbine unit;
• PJM administers the capacity market in which eligible capacity resources participate in a series of auctions to provide a certain number of megawatts of capacity for a delivery year in the future;
• Any resource whose capacity clears these auctions commits to the obligations set out in the PJM Tariff and PJM Operating Agreement - in exchange they receive a monthly capacity payment;
• The “must offer requirement” requires that PJM capacity resources offer all available capacity into PJM’s energy markets;
• More specifically, Attachment K, Appendix, § 1.10.1A(d) of the PJM Tariff requires that a capacity resource must offer its full Installed Capacity (ICAP) equivalent of its cleared Unforced Capacity (UCAP) commitment into the PJM energy markets unless it declares an outage or derating;
• In January 2022, the Cordova plant had mechanical issues that required a maintenance outage and a derating of its energy offers by 20 MW;
• Cordova resolved the maintenance issue by 28 March 2022 but inadvertently continued to derate its energy market offers by 20 MW until 19 May 2022;
• As a result, for 22 days between 28 March and 18 May 2022, all of Cordova’s energy offers into PJM were approximately 20 MW lower than its committed ICAP of 474.6 MW;
• Regarding the second component of violations, PJM’s eGADS is an optional service for generators to report Generating Availability Data System (GADS) data which is used by the North American Electric Reliability Corporation (NERC) to collect information about the performance, reliability, and availability of generating units;
• GADS reporting is mandatory for certain NERC-registered entities and requires generators to submit specific GADS codes which provide the reason a resource is not fully available;
• At the time of Cordova’s breaches, the GADS reports were used to determine the generator’s UCAP value in PJM;
• During the above period, Cordova failed to submit complete and accurate GADS data to PJM via eGADS for 2,412 hours;
• The errors resulted in a lower calculated Equivalent Forced Outage Rate of demand (EFORd) which in turn impacted the amount of capacity that Cordova was able to sell for the 2021/2022 to 2025/2026 delivery years;
• Cordova’s inaccurate and/or missing eGADS data submissions resulted in capacity market overpayments of USD $1,668,874 for the 2021/2022 to 2024/2025 delivery years and will result in a capacity market overpayment of USD $295,562 during the 2025/2026 delivery year;
• FERC determined that Cordova Energy had violated provisions of the PJM Tariff and 18 C.F.R. §§ 35.41(a) and (b) (2025) regarding its energy offers and eGADS submissions to PJM;
• According to the Order, 18 C.F.R. § 35.41(a) requires 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.

• Cordova, a Seller with market-based rate authority from FERC, violated § 35.41(a) when it failed to offer its available capacity consistent with its ICAP Must-Offer obligations;
• In addition, 18 C.F.R. § 35.41(b), requires that:

A Seller must provide accurate and factual information and not submit false or misleading information, or omit material information, in any communication with the Commission, Commission-approved market monitors, Commission-approved regional transmission organizations, Commission-approved independent system operators, or jurisdictional transmission providers, unless Seller exercises due diligence to prevent such occurrences.

• Given that Cordova violated the PJM Tariff and Operating Agreement in connection with the inaccurate offer curves submitted to PJM, and its failure to submit complete and accurate data in eGADS, Cordova was also found to have violated 18 C.F.R. § 35.41(b);
• The Order notes that Cordova fully cooperated with FERC during the investigation.

Penalties:

Cordova agreed to the following penalties:

• A civil penalty of USD $370,000;
• The disgorgement of USD $1,964,436 plus interest in ill-gotten profits;
• The submission of annual compliance monitoring reports to FERC for two years with a third year at FERC’s discretion.