OE explains that, because ISO-NE was calling on Maxim’s plant to maintain reliability, rather than in economic merit order, ISO-NE’s rules “provided that Maxim could be paid make-whole payments (called Net Period Commitment Payments) based on its fuel price.” OE alleges that “when the IMM asked Maxim about its offers, Maxim (through Mitton) responded with communications giving the impression that Maxim was unable to obtain gas and was therefore burning more expensive oil. Maxim gave those responses to the IMM even though, on many days, Mitton had bought large quantities of gas before submitting a Day Ahead offer based on oil prices.” OE states that Maxim received approximately $3 million in “excessive payments” from its strategy, which ISO-NE later recouped “after discovering (with no help from Maxim) what Maxim had done.” As it did in another recent show cause order, FERC stated that its issuance of the Show Cause Order “does not indicate [FERC] adoption or endorsement of the OE Staff Report.”
FERC Commissioner Tony Clark wrote separately in dissent—which is uncommon but not unprecedented for show cause orders—to express his belief that the OE staff report and the information Maxim provided in the non-public investigation phase of the proceeding “do not . . . sufficiently support[] the Commission moving forward” with the Show Cause Order. Commissioner Clark also noted that, “in the next phase of the proceeding, both [OE] Staff and the Respondents will have an opportunity to more fully develop the record,” and, as such, he “make[s] no prejudgment as to the final disposition of [the] case.” Commissioner Norman C. Bay, who was the director of OE when the alleged market manipulation occurred, did not vote on the Show Cause Order.
The deadline for the Respondents to answer the Show Cause Order is March 4, 2015. OE staff will have thirty days to reply to the answer(s) when filed. Of note, the Show Cause Order might not be the last related to Maxim, as OE currently is investigating two other trading strategies involving the company and its personnel.
1 Maxim Power Corp., 150 FERC ¶ 61,068 (2015).
2 The subsidiaries addressed in the Show Cause Order are Maxim Power (USA), Inc., Maxim Power (USA) Holding Company Inc., Pawtucket Power Holding Co., LLC, and Pittsfield Generating Company, LP.