FERC Levies a Civil Penalty of $360,000 and a Disgorgement of $154,623 on Pacific Summit Energy, LLC (PSE) Due to a Violation of Section 4A of the NGA

FERC Enforcement concluded that PSE’s October 2017 Bidweek physical trading had the effect of inflating physical natural gas prices in Transco Zone 6, resulting in increases in the value of PSE’s existing financial basis positions. This inflationary effect on physical natural gas prices was magnified by two factors: 1) PSE purchasing physical natural gas at prices Enforcement determined were uneconomically high and 2) PSE concentrating its purchases during the first hour of the first day of Bidweek trading when it would have a signaling effect on later trades and the highest likelihood to effect market prices. Enforcement further determined that PSE was, or should have been, aware of the effect the above-described physical trading would have on its October 2017 financial basis positions after having made materially similar trades during the September 2017 Bidweek. Enforcement determined PSE made its uneconomic purchases of physical gas in the first hour of the first day of October 2017 Bidweek trading with either the intent or with a reckless disregard for how such trading would inflate the value of its existing financial positions. FERC concluded that, on net, PSE’s October 2017 physical First of Month index positions, financial index swap positions, and financial basis swap positions improperly benefited PSE by $154,623. FERC Enforcement concluded that during the October 2017 Bidweek, PSE engaged in a related-positions fraudulent scheme that violated Section 4A of the NGA, 15 U.S.C. § 717c-1.7. FERC also concluded that PSE’s October 2017 Bidweek trading also violated the Commission’s corresponding regulation, 18 C.F.R. § 1c.1. PSE agreed to (a) pay a civil penalty of $360,000to the United States Treasury; (b) disgorge $154,623; and (c) submit annual compliance monitoring reports to Enforcement for a period of two years.