Rumford – The U.S. Federal Energy Regulatory Commission has named two parties formerly affiliated with the Beaver Ridge Wind development in Freedom in an investigation into alleged market manipulation at an unrelated facility.
The investigation centers around Rumford Paper Mill where FERC staff allege the facility engaged in the fraudulent practice of inflating its baseline load representations to the regional transmission organization ISO New England in order to receive larger payments for appearing to reduce their own electricity needs.
Paper mills, like the one in Rumford, commonly incorporate hydroelectric generators, using the energy to power the mill and selling any excess power back into the grid.
Competitive Energy Services of Portland, the original parent company of the Beaver Ridge Wind development, and Richard Silkman, a co-managing partner of CES, are each named in separate staff notices of alleged violations released Jan. 25, by FERC. Beaver Ridge Wind has since been sold to Massachusetts-based Patriot Renewables. Additional notices allege violations by the paper mill owner and operator in Rumford, a subsidiary of New Page Corp., and by Lincoln Paper and Tissue, LLC, operator of a paper mill in Lincoln.
The notices allege that CES and Silkman violated the Commission’s Prohibition of Electric Energy Market Manipulation by advising the Rumford facility to engage in a fraudulent practice to collect payments in ISO New England’s Day-Ahead Load Response Program (also known as DALRP).
CES and Silkman, the notice alleges, advised the mill to curtail on-site generation during DALRP program hours when it enrolled in DALRP.
“Staff believes that this practice artificially inflated the participant’s baseline load and misrepresented the participant’s load profile to ISO-NE,” the notice reads, continuing:
“Staff also alleges that Dr. Silkman advised and assisted the participant to ensure that its baseline did not appreciably change. The participant was paid for the difference between its inflated baseline load and its normal operational load as a “load reduction” even though no load reduction actually occurred.”
FERC staff alleges the violations occurred from approximately July 2007 through February 2008.
VillageSoup attempted to contact Silkman on Feb. 14 and left a voicemail message requesting comment, but as of Feb. 15 had received no response. VillageSoup contacted CES again Feb. 15 and was told no one was available to speak on behalf of the company.
The three notices of violation are among the first to be released by FERC since the agency started making preliminary notices public in January. Additional details of the investigation into the Rumford paper mill are currently confidential, according to FERC spokesman Craig Cano.
In 2010, FERC approved six settlement agreements with civil penalties, down from 22 in 2009. The reason given in the report is that the Commission wanted to increase its focus on reliability and market manipulation cases, which “are complex and require more resources and time to complete.”
Cano said the Commission is not disclosing a time line for completing the investigation.
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