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Competition & Market Manipulation

Brattle is at the forefront of developing and applying new and improved tools to distinguish acceptable competitive behavior from anticompetitive or manipulative actions. Brattle has been involved in both reactive litigation and enforcement matters as well as proactive compliance and transaction screening matters to help find acceptably competitive outcomes.

This involvement has spanned many levels of agencies and different jurisdictions from civil actions between parties to state and federal reviews in both North America and Europe. Our work in energy-related market conduct assessments draws on our deep familiarity with operational and planning procedures in the electric and gas industries, while our work in other commodities benefits from Brattle’s experience in financial securities, risk management and trading practices, and antitrust tools and frameworks used in non-energy settings, such as the U.S. Federal Trade Commission.

Areas of Expertise
NEWS

The Brattle Group will manage an open solicitation process for General Electric (GE) to sell transmission rights across GE’s Linden Variable Frequency Transformer (VFT).

Engagements
REPRESENTATIVE ENGAGEMENTS

Below is a list of representative engagements for our Competition & Market Manipulation practice.

Assisting internal investigation
Brattle is assisting a client concerned that various trades placed over time could be questioned as “uneconomic” and thus fraudulent under the agencies’ market manipulation rules. These transactions may have led to various financial benefits and/or out-of-market payments that could be alleged as potential manipulation targets. The analysis is evaluating trading data to determine whether intentionally uneconomic trades were in fact placed into the market and, if so, whether those trades distorted market outcomes. This analysis will provide the client and its counsel with an understanding of the agency’s potential “best case” and the associated potential liability involved.
Plaintiff’s actions related to the California Energy Crisis
The Brattle Group provided litigation support and expert testimony in many proceedings before the FERC seeking refunds from sellers into the California Power Exchange (PX), the California ISO, and the bilateral markets in the Pacific Northwest in the aftermath of the Energy Crisis of 2000-2001. Our clients included the largest utility companies in California, the California Attorney General, and the California Public Utilities Commission. Brattle experts offered testimony on manipulative gaming schemes, the exercise of market power, price discrimination, fraudulent misrepresentation in electricity and ancillary services sales, and the price impacts of such seller behavior on prices. Brattle testimony linked manipulative activities directly to violations of the PX and ISO tariffs and sellers’ market-based-rate authorizations and also explained why the resulting distorted prices in bilateral contracts were contrary to the public interest in the context of the Mobile-Sierra Doctrine.
Assistance to a Canadian electricity market monitor
We are currently working for the market monitoring unit of a Canadian provincial regulator to assist it with the implementation of its anti-manipulation rules. The project involves application of the framework to various scenarios cited by the market monitor as potential violations of the rules, as well as the development of processes and procedures to monitor for and detect manipulative activity and enforce the rules if violations are confirmed.
Southern Company energy auction
Brattle serves as the Independent Auction Monitor (IAM) for the Southern Company energy auction. Southern Company must supply its excess power resources under specified terms and conditions into a day-ahead and hour-ahead energy auction that is overseen by an external monitor. Our role is to: (1) verify Southern's calculations of available capacity to offer into the auctions; (2) confirm that any transmission service necessary to accommodate a purchase under the auction is not unreasonably withheld; (3) verify that the auction has cleared properly; (4) ensure that internal data control restrictions are maintained to protect bidder information; (5) report complaints to the Federal Energy Regulatory Commission (FERC); and (6) independently file reports with the FERC regarding the auction.
FERC and state merger evaluations using DPT and related tools
In several cases, Brattle has been engaged by applicants as well as opponents to determine whether a proposed merger could satisfy FERC’s Delivered Price Test (DPT) criteria for benign impacts on competition. These analyses require a detailed evaluation of the extent of regionally-deliverable and economic electricity supply that can discipline the merged parties potential influence on market prices. They also require analyses on vertical relationships between the parties and the fuel and transmission resources serving their market area.

We have frequently filed direct testimony at the FERC and at state public service commissions on the competitive impacts of the proposed mergers on the electricity market, in such jurisdictions as New York, Wisconsin, Kansas, Nevada, Pennsylvania, and New Jersey. These reports addressed whether the combined entity would have an ability to foreclose or raise their rivals’ costs, the impact of the merger on both upstream (delivered gas) and downstream markets, and any short-term incentive to exercise vertical wholesale market power created by the merger. Where necessary, mitigation measures have been identified to relieve market power in overly-concentrated segments and locations.

Experts
Publications
Article
Derivatives' Roles in Manipulation
October 2017
Published in the Futures and Derivatives Law Report, Volume 37, Issue 9

The article, published in the October 2017 issue of The Journal of the Law of Investment & Risk Management Products Futures & Derivatives Law Report, discusses the role derivatives play in market manipulation.

Presentation
Retail Electricity and Gas Competition: Regulatory and Market Update
December 15, 2017
Published by The Brattle Group, Inc.

The analysis examines those states in the U.S. and Canada that permit full (residential, commercial, and industrial) and partial retail choice and the share of customers and load served by retail electricity providers since 2005.

Article
An Econometric Assessment of Electricity Demand in the United States Using Utility-specific Panel Data and the Impact of Retail Competition on Prices
August 23, 2017
Published in The Energy Journal, Volume 38, Number 4
The article estimates electricity demand elasticity for different customer classes as well as the price effects from unbundled wholesale generation in conjunction with retail competition in the United States during the period 1972-2009.
Article
Market Manipulation in Energy-Related Markets
August 2017
Published in the American Bar Association's (ABA) Transportation and Energy Industries Digest
Presentation
Summary of the FERC White Papers on Compliance and Enforcement
January 26, 2017
Presented at the Electric Utility Consultants, Inc. (EUCI) conference, “Financial Transmission Rights (FTRs/CRRs/TCRs)”
Report
Comments of Drs. Romkaew Broehm, Jeremy Verlinda, and James Reitzes to the Federal Energy Regulatory Commission Regarding Modifications to Commission Requirements for Review of Transaction Under Section 203 of the Federal Power Act and Market-Based Rate Applications under Section 205 of the Federal Power Act (Docket No. RM16-21-000)
November 28, 2016
Prepared for the Federal Energy Regulatory Commission
The comments offer commentary on four proposed changes by the FERC regarding its horizontal market power review standards for M&A and market-based rate approvals.
Presentation
FERC's Market Manipulation Rule: Impact on FTRs and the Virtual Market
March 08, 2016
Presented at the Energy Bar Association Midwest Chapter Annual Meeting
Book
Market Power and Market Manipulation in Energy Markets: From the California Crisis to the Present
April 2015
Gerald A. Taylor, Shaun D. Ledgerwood, Romkaew P. Broehm, Peter S. Fox-Penner, Romkaew P. Broehm, Shaun D. Ledgerwood, Gerald A. Taylor, and Peter S. Fox-Penner
Published by PUR Inc.
Report
Comments of Dr. Romkaew Broehm and Mr. Gerald A. Taylor to the Federal Energy Regulatory Commission Regarding Market-Based Rates for Wholesale Sales of Electric Energy, Capacity and Ancillary Services by Public Utilities (Docket No. RM14-14-000)
September 2014
Prepared for the Federal Energy Regulatory Commission
Report
Summary of Proposed Refinements to Market-Based Rates Policies & Procedures
June 2014
Romkaew P. Broehm and Richard Sweet
Published by The Brattle Group, Inc., in response to Notice of Proposed Rule Making (Docket No. RM14-14)
Presentation
Is It Possible to Charge Market-Based Pricing for Ancillary Services in a Non-ISO Market? Regulation and Operating Reserves
May 16, 2014
Presented at the Center for Research in Regulated Industries 33rd Eastern Conference
Article
Infrastructure and Competition in the Electric Delivery System
September 2013
Published in The Electricity Journal, Volume 26, Issue 7
Article
Uneconomic trading and market manipulation
July 2013
Published in Energy Risk
Presentation
Market Manipulation post Hunter vs. FERC: A Framework for Unified Analysis
June 2013
Panel presentation delivered at the Harvard Electricity Policy Group’s 71st Plenary Session, Calgary, AB
Presentation
Uneconomic Trading in Energy Markets: A Framework of Market Manipulation
April 2013
Presented at the Penn State Faculty Colloquy, State College, PA
Presentation
Market Manipulation Cases in U.S. Wholesale Electricity and Natural Gas Markets
February 2013
Presented at the Bird & Bird Seminar on Market Abuse, London, UK
Article
A Framework for Analyzing Market Manipulation
September 2012
Published in Review of Law & Economics, Volume 8, No. 1
Presentation
An Analytical Framework for Anti-Manipulation Compliance, Monitoring, and Enforcement
April 2012
Presented at the Marcus Evans Conference on European Energy Market Integrity: REMIT & Regulatory Compliance, London, UK
Article
Rummaging through the Bottom of Pandora’s Box: Funding Predatory Pricing through Contemporaneous Recoupment
April 2012
Shaun D. Ledgerwood and Wesley Health
Published in Virginia Law and Business Review, Volume 6, Number 3
Article
A Comparison of Anti-Manipulation Rules in U.S. and EU Electricity and Natural Gas Markets: A Proposal for a Common Standard
April 2012
Published in Energy Law Journal
Report
Completing the Puzzle: Defining Manipulation Under REMIT
January 2012
Published by The Brattle Group, Inc.
Presentation
Triggers and Targets: A Framework for Analyzing Market Manipulation
July 2011
Presented to the American Gas Association, Washington, DC
Presentation
An Economic Analysis of the Remit Proposals
June 2011
Presented at The 16th European Gas Conference in Oslo, Norway
Report
Defining Market Manipulation in a Post-REMIT World
June 2011
Published by The Brattle Group, Inc.
Article
Market Manipulation Without Market Power
June 2011
Published in Law360
Report
Comments of Romkaew P. Broehm and Peter S. Fox-Penner, re: Market-Based Rates for Wholesale Sales Of Electric Energy, Capacity and Ancillary Services by Public Utilities
May 2011
Report
Losing Money to Increase Profits: A Proposed Framework for Defining Market Manipulation
March 2011
Published by The Brattle Group, Inc.
Article
Network Effects in Infrastructure Regulation: Principles and Paradoxes
2009
Published in Review of Network Economics
News & Knowledge
April 04, 2018
Brattle to Manage Sale of Transmission Rights from GE's Linden VFT Smart Grid Project

The Brattle Group will manage an open solicitation process for General Electric (GE) to sell transmission rights across GE’s Linden Variable Frequency Transformer (VFT).

February 21, 2018
Shaun Ledgerwood and John Tsoukalis to Present at Energy Risk Event on Trade Surveillance & Market Compliance for Energy Trading Organizations

Brattle Principal Shaun Ledgerwood and Senior Associate John Tsoukalis will present at Energy Risk’s training event, “Trade Surveillance & Market Compliance for Energy Trading Organizations,” taking place February 21-22, 2018 in Houston, TX.

January 29, 2018
Shaun Ledgerwood and John Tsoukalis to Present at EUCI Conference on Financial Transmission and Auction Revenue Rights

Brattle Principal Shaun Ledgerwood and Senior Associate John Tsoukalis will present at Electric Utility Consultants, Inc.’s (EUCI) conference, “Financial Transmission and Auction Revenue Rights (FTRs/CRRs/TCRs/ARRs),” taking place January 29-30, 2018 in Washington, DC.

January 17, 2018
Brattle Economists Author Article on Derivatives' Roles in Manipulation

Brattle Principal Shaun Ledgerwood and Senior Associate Jeremy Verlinda have authored an article published in the October 2017 issue of The Journal of the Law of Investment & Risk Management Products Futures & Derivatives Law Report, which discusses the role derivatives play in market manipulation.

December 15, 2017
Brattle Economists Provide Update on U.S. and Canada Retail Electric and Gas Competition

Brattle economists Agustin Ros, Ahmad Faruqui, Rebecca Carroll, and Neil Lessem have undertaken a comprehensive review of retail electricity and natural gas competition in the U.S. and Canada.

October 26, 2017
Shaun Ledgerwood to Present at Platts’ 10th Annual Nodal Trader Conference

Brattle Principal Shaun Ledgerwood will present at Platt’s 10th Annual Nodal Trader Conference on FTR Litigation and Risks, Updates on Compliance, and Supporting the Mexican Market, taking place October 26-27, 2017 in New York, NY.

August 23, 2017
Agustin J. Ros Authors Energy Journal Article on U.S. Electricity Demand and Impact of Competition on Prices

Principal Agustin J. Ros has authored an article published in The Energy Journal that estimates electricity demand elasticity for different customer classes as well as the price effects from unbundled wholesale generation in conjunction with retail competition in the United States during the period 1972-2009.

August 01, 2017
Article by Drs. Shaun Ledgerwood and Jeremy Verlinda on Energy Manipulation Cases Published in ABA Transportation and Energy Industries Digest

Brattle economists Shaun Ledgerwood and Jeremy Verlinda review two recent energy-related manipulation cases where the plaintiffs claimed antitrust harms, but received very different outcomes following Motions to Dismiss.

June 21, 2017
Regulatory Economist Agustin J. Ros Joins The Brattle Group

The Brattle Group is pleased to announce that regulatory economist Dr. Agustin (Augie) Ros has joined the firm’s Boston, MA office as a principal.

February 23, 2017
Shaun Ledgerwood Featured in Risk.net article on FERC Manipulation Standards

Brattle Principal Shaun Ledgerwood has been featured in a Risk.net article that discusses the need for greater clarity around the U.S. Federal Energy Regulatory Commission’s (FERC) anti-manipulation standards.

January 26, 2017
Shaun Ledgerwood to Present at EUCI Conference on Financial Transmission Rights

Brattle Principal Shaun Ledgerwood will present at the Electric Utility Consultants, Inc. (EUCI) conference, “Financial Transmission Rights (FTRs/CRRs/TCRs),” taking place January 25-26, 2017 in Washington, DC.

September 12, 2016
Brattle Consultants Contribute to Significant Win for the State of California on Energy Crisis Tariff Violations

Testimony by Brattle consultants contributed to a favorable outcome for the State of California in a recent decision by the U.S. Court of Appeals for the Ninth Circuit, which upheld a ruling by the Federal Energy Regulatory Commission (FERC) finding that several electric power sellers committed tariff violations during the California Energy Crisis in the summer of 2000.

July 18, 2016
Analysis by Brattle Economists Cited in FERC Decision on MISO’s Export Pricing to PJM for MVPs

A recent order issued by the Federal Energy Regulatory Commission (FERC) on export pricing cites an analysis conducted by Brattle Academic Advisor Peter Fox-Penner and Principal Romkaew Broehm on behalf of the Midcontinent Independent Transmission System Operation (MISO) and MISO Transmission Owners.

July 11, 2016
Ahmad Faruqui to Speak at the National Town Meeting on Demand Response and Smart Grid

Brattle Principal Ahmad Faruqui will present at the 2016 National Town Meeting on Demand Response and Smart Grid, which taking place on July 11-13, 2016 in Washington, D.C.

April 13, 2016
Brattle Consultants Contribute to Significant Win for the State of California on Energy Crisis Long-Term Contracts

Based on evidence presented by Brattle consultants, a FERC Administrative Law Judge issued a ruling that found that the Mobile-Sierra doctrine does not protect two long-term wholesale electricity contracts entered into during the Western Energy Crisis in 2001.

May 20, 2015
Brattle to Sponsor Symposium on Market Power and Market Manipulation in Energy Markets

The Brattle Group will be sponsoring the upcoming program, “A Symposium on Market Power and Market Manipulation in Energy Markets," taking place Wednesday, May 20th, 2015 and hosted by the Center for Business & Public Policy at Georgetown University's McDonough School of Business.

April 14, 2015
Brattle Consultants Release Book on Market Power and Market Manipulation in Energy Markets

Brattle principals Gerald Taylor, Shaun Ledgerwood, Romkaew Broehm, and Peter Fox-Penner have authored a book that provides insights and an analytical framework for understanding the legal and economic nuances associated with energy market manipulation. Market Power and Market Manipulation in Energy Markets: From the California Crisis to the Present will be published in April 2015 by PUR Inc.

November 18, 2014
Brattle Economists Contribute to FERC Ruling Supporting Findings of Manipulative Behavior by Power Suppliers During the California Energy Crisis

Testimony provided by Brattle consultants supported a FERC order affirming the initial decision in the matter of San Diego Gas & Elec. Co. v. Sellers of Energy and Ancillary Servs, which found power suppliers engaged in manipulative behavior during the California Energy Crisis.

October 22, 2014
Brattle Economists Advise In Clearance of Ground-Breaking European Merger

A team of Brattle economists, led by principal Pinar Bagci, advised Nynas AB on the acquisition of a specialty base oil manufacturer of certain refinery assets operated by Shell Deutschland.