Terra-Gen agreed to pay $5.6 million to settle allegations that it manipulated the California Independent System Operator’s market, according to a settlement agreement the Federal Energy Regulatory Commission approved on Tuesday.
The agency’s enforcement office alleged Terra-Gen told CAISO a battery system wasn’t working on certain days so it wouldn’t have to buy high-priced power on those days.
Terra-Gen also violated FERC’s “duty of candor” rule in a compliance report to the agency related to an earlier settlement agreement. The report failed to disclose that CAISO’s market monitor had new concerns about the company’s market behavior, according to FERC.
The company admitted that it violated FERC’s duty of candor rule, but it neither admitted nor denied that it violated FERC’s anti-manipulation rule, according to the settlement.
Under the agreement, Terra-Gen will pay a $4.95 million fine and disgorge $681,007 in profit, plus interest.
The agreement covers a period from July 2020 through April 2022 related to a 58-MW wind facility and a 65-MW battery system in Kern County, California, near Los Angeles.
During that period, Terra-Gen offered the resources into the CAISO day-ahead market to provide ancillary services. Awards that Terra-Gen obtained based on the offers were binding in the real-time market and required the company to place the resources on automatic generation control for the duration of the awards so that CAISO could directly dispatch the resources when needed, FERC said.
However, when CAISO issued “regulation-down” awards ordering Terra-Gen to buy power and store it in the batteries, but real-time locational marginal prices were high, the company claimed outages for the batteries or removed them from the grid operator’s control, FERC said. A former vice president of origination, who was fired, devised and oversaw the scheme, according to the settlement agreement.
Terra-Gen didn’t claim outages or disconnect from CAISO’s automatic generation control when the grid operator asked the company to sell power from the batteries into its market, FERC said.
Although Terra-Gen incurred charges from CAISO when its battery system was unavailable during the award periods, the company still earned $681,007 during the 262 hours that it engaged in the scheme, according to the agency.
FERC said Terra-Gen fully cooperated in the enforcement office investigation. Also, Terra-Gen has made “substantial, positive changes” to its compliance program, including by creating a position of “director of energy markets compliance,” FERC said.
Terra-Gen has been charged with violating CAISO’s rules before. In 2021, Terra-Gen agreed to pay nearly $630,000 to settle allegations it gave CAISO false information about a wind farm and deviated the wind farm’s output from the grid operator’s dispatch instructions.
Terra-Gen owns 4.2 GW of wind, solar and battery storage projects, including 5.6 GWh of energy storage facilities, mainly in California and Texas, according to the company. Terra-Gen’s owners are Abu Dhabi Future Energy Company PJSC – Masdar and Igneo Infrastructure Partners.
