At the Nov. 20, 2025, public meeting of the Federal Energy Regulatory Commission (FERC), Chairman Laura Swett asked Office of Enforcement and Regulatory Accounting (OERA) staff for the “biggest takeaway” from their annual Report on Enforcement. In response, OERA staff summarized a recurring focus in recent FERC enforcement matters. The staff explained, “one constant you see in many of the cases … is that value needs to be provided consistent with the obligations imposed by the terms of services an entity is being paid for.” This takeaway is reflected in two enforcement settlements FERC recently approved, one of which highlights the added seriousness OERA staff attaches to cases that involve alleged deliberate conduct.
Terra-Gen, LLC, 195 FERC ¶ 61,016 (2026)
The first settlement, issued April 7, 2026, relates to two resources owned by Terra-Gen subsidiaries that operate in the California Independent System Operator (CAISO) market. Each resource consists of a wind farm and associated battery storage system. OERA staff found that Terra-Gen violated the CAISO tariff and anti-manipulation rule in connection with the resources’ offer strategy in CAISO’s ancillary services market, and the duty of candor rule for failing to report the conduct in a compliance monitoring report submitted to OERA staff pursuant to a prior unrelated FERC-approved settlement.
The tariff and manipulation claims resulted from a strategy Terra-Gen allegedly employed in certain situations when it received a regulation-down award in CAISO’s day-ahead market. Regulation-down awards require resources, such as the Terra-Gen batteries in this case, to purchase energy from the grid and store it in the battery system. OERA staff found that, when market prices were high, Terra-Gen avoided this obligation to purchase energy in the real-time market by either claiming outages without a legitimate basis or removing the resources from automatic generation control, thereby preventing CAISO from directly dispatching the resources to implement the awards. By allegedly leaving the market in this way, Terra-Gen incurred charges for not following the regulation-down dispatch signals but still fared better than if it had fulfilled its day-ahead awards. As evidence of this scheme, the settlement quotes email communications from Terra-Gen’s former vice president of origination, including one in which he allegedly stated, “If CAISO signals the battery to regulate down in a high pricing even[t], we will leave the market, resulting in only a small portion of lost revenue.”
The duty of candor claim relates to a compliance monitoring report Terra-Gen sent OERA staff in September 2022 pursuant to a 2021 settlement requiring Terra-Gen to identify any known violations of the CAISO tariff or FERC regulations. Terra-Gen’s September 2022 report did not disclose violations associated with the conduct. However, three months before submitting this compliance monitoring report, CAISO’s market monitor contacted Terra-Gen raising concerns over its failure to respond to regulation-down awards. Before submitting the compliance monitoring report, Terra-Gen’s vice president of origination allegedly sent an email about the market monitor inquiry to other personnel, including high-level executives, stating, “we did violate the tariff.” Despite this statement, Terra-Gen did not disclose the issue in its first report. Moreover, after Terra-Gen submitted the report, the market monitor referred the matter to OERA, which then issued a preservation directive to Terra-Gen. After receiving the directive, Terra-Gen sent OERA staff an amended compliance monitoring report noting that since submitting the original report, it learned of the market monitor inquiry. OERA staff found this statement in the amended report misleading.
Terra-Gen paid a penalty of $4.95 million and disgorgement of $681,007. It also implemented several remediation and compliance measures, including terminating the vice president of origination. Terra-Gen admitted the tariff and duty of candor violations but neither admitted nor denied the manipulation claim.
MPH Rockaway Peakers, LLC and Bayswater Peaking Facility, LLC, 195 FERC ¶ 61,019 (2026)
The second settlement, issued April 8, 2026, relates to two co-located resources indirectly owned by MPH-Rockaway that operate in the New York Independent System Operator (NYISO) market. The first resource, GT1, is a 60.5 MW natural gas-fired electric generation facility. The second, GT2, is a 60.5 MW electric generation facility. OERA staff alleged that MPH-Rockaway violated the NYISO tariff and duty of candor rule for offering and receiving payment for capacity and reserves that it could not provide due to a derate that it did not report.
These alleged violations stemmed from MPH-Rockaway’s July 2021 modification to GT2 to allow it to run on natural gas. After the modification, when GT1 and GT2 ran on natural gas at the same time, GT2’s gas compressor became part of GT1’s auxiliary load, resulting in a 2.7 MW increase to GT1’s auxiliary load and a 2.7 MW decrease of its energy output. According to the allegations in the settlement, since the July 2021 modification, GT1 and GT2 frequently run together on natural gas during summer peak conditions, resulting in a 2.7 MW derate for GT1. However, this derate was not reflected in GT1’s capacity calculation because MPH-Rockaway performed the calculation in September 2020 when the two generators ran separately. OERA staff alleged that MPH-Rockaway failed to notify NYISO about the 2.7 MW derate and did not consistently and accurately submit Generating Availability Data System reports reflecting the reduced capacity. MPH-Rockaway agreed to pay a penalty of $185,000 and disgorgement of $626,642 in capacity and reserve market overpayments, though these figures were reduced based on payments MPH-Rockaway previously made to NYISO. MPH-Rockaway admitted to the violations.
The Terra-Gen and MPH-Rockaway settlements serve as reminders of OERA’s current enforcement focus on generators failing to provide the value for which they are paid, whether in the energy, capacity or ancillary services markets. McGuireWoods’ Federal Energy Regulatory Commission team is monitoring this enforcement priority. For questions about these cases or regarding FERC enforcement and compliance issues, contact the author.