What do independent experts think?
Twelve independent experts reviewed the allegations. The video above describes the background of the investigation and the five videos below profile specific experts. Position papers from the twelve experts are found elsewhere on this site.
FERC alleges Powhatan Energy Fund committed market manipulation. We take their allegations very seriously. However, we are rule followers who take compliance more seriously. We have spent much time, energy and resources preparing our legal arguments. We believe in them.
Powhatan launched this site because we didn’t want to wait two to three years to tell our side of the story—we want the public to know the full story now. Without it, it is impossible to fairly evaluate FERC’s allegations.
Powhatan has about ten investors. These individuals have reputations that are important to them. They are concerned that FERC’s accusations will unfairly harm their relationships with family that they love, friends who enrich their lives, and business acquaintances who are vital to their livelihoods. They communicate with these people at little league baseball games, in their neighborhoods, on their social media networks, while at work and elsewhere. They do not want to carry the stigma of unfounded accusations on their shoulders.
This site’s primary purpose is to share the legal documents that FERC’s Office of Enforcement and Powhatan have prepared and exchanged. Since we know the typical person may not want to go through hundreds of pages of legalese, the site also offers the opinions of a dozen independent academic and practitioner experts who have reviewed the legal documents. Their position statements are relatively short. The FERC’s Office of Enforcement was given three of the experts’ affidavits when the investigation was private. The other nine position papers were obtained when Powhatan learned that FERC might take the case public. These nine expert opinion papers could not be delivered to the FERC’s Office of Enforcement in our response to its preliminary findings since we were given only 60 days to respond. Instead, these nine affidavits were delivered to FERC on September 24, 2014 in Powhatan’s 1b.19 response.
There is a lot of complicated information on this site. Here, we try to help you understand what’s being discussed.
City Power: An entity that received a Notice of Alleged Violations from the FERC Office of Enforcement on August 25, 2014 for its participation in UTC trades. It is unrelated and not affiliated with Powhatan.
Coaltrain Energy: An entity that received a Notice of Alleged Violations from the FERC Office of Enforcement on September 11, 2015 for its participation in UTC trades. It is unrelated and not affiliated with Powhatan.
Due Process: The Fourteenth Amendment to the United States Constitution requires, in part, that laws give the person of ordinary intelligence a reasonable opportunity to know what is prohibited. It incorporates notions of fair notice or warning and requires legislatures to set reasonably clear guidelines for law enforcement officials and triers of fact in order to prevent arbitrary and discriminatory enforcement.
FERC: Federal Energy Regulatory Commission. The FERC is an independent agency that regulates the interstate transmission of electricity, natural gas and oil. It is part of the United States Department of Energy. The Commission is overseen by five commissioners who are appointed by the President of the United States with the advice of the United States Senate. Also known as “Commission.”
MLSA: Marginal Loss Surplus Allocation. This is the disbursement of over-collected transmission line losses. Also known as a “TLC.”
Monkeys throwing darts: A somewhat casual way of saying or implying the word “random” or concept of “randomization.”
Oceanside Power, LLC: A limited liability company that placed Up-to Congestion (see UTC) transactions at PJM in 2010. It is unrelated and not affiliated with Powhatan.
Orwellian: An adjective describing the situation, idea, or societal condition that George Orwell identified as being destructive to the welfare of a free and open society. It denotes an attitude and a brutal policy of draconian control by propaganda, surveillance, misinformation, denial of truth, and manipulation of the past, including the “unperson” – a person whose past existence is expunged from the public record and memory, practiced by modern repressive governments.
PJM: PJM Interconnection LLC. It is a Regional Transmission Organization that coordinates the movement of wholesale electricity in the electrical grid serving all or parts of 13 states in the Northeast and the Midwest. PJM is one of seven federally regulated transmission organizations and is based in Valley Forge, Pennsylvania.
Powhatan Energy Fund LLC: It is a private partnership with fewer than 10 investors. Also known as “Powhatan.”
Scienter: The United States Supreme Court defines scienter as a mental state embracing intent to deceive, manipulate or defraud.
Spread trade: A generic term for a type of trading strategy commonly used by traders in securities, commodities, and derivative securities markets and widely recognized by regulators as a legitimate trading strategy.
TLC: Transmission Loss Credit. This is the disbursement of over-collected transmission line losses. Also known as an “MLSA.”
Transparency: It is something that is honest, open, and not secretive. FERC’s Office of Enforcement has stated that they would like this characteristic to define the markets they regulate. This is one area of agreement Powhatan has with FERC and is the reason for this site.
Wash-like trades: We are not sure. You better ask FERC OE what it means.
Wash Sale: A transaction involving no change in beneficial ownership.
Backfield, Samuel: He is an attorney with the FERC Office of Enforcement. He works alongside Steve Tabackman.
Bay, Norman: He was the Director of Enforcement at FERC who oversaw the investigation of Powhatan. On July 15, 2014, he was confirmed by the Senate with a 52-45 vote to be a FERC Commissioner. According to RTO Insider, his last act as the Director of Enforcement at FERC was to charge Powhatan with market manipulation.
Bowring, Joe: His firm, Monitoring Analytics LLC, is the Independent Market Monitor for the PJM markets. He was appointed by PJM and approved by the FERC. He and his firm are responsible for monitoring compliance with the rules, standards, procedures and practices of the PJM markets.
Burdick, Janel: She was a FERC Analyst who was involved in the investigation. When Norman Bay became a FERC Commissioner, Ms. Burdick became his Advisor. However, she has since left Mr. Bay’s office and transferred back to working at FERC Enforcement as the Acting Deputy Director of the Division of Analytics and Surveillance.
Byrne, Donna: She is an attorney at Skadden, Arps, Slate, Meagher & Flom LLP who has represented Alan Chen, HEEP Fund, and CU Fund.
Chen, Alan: He was an independent manager who Powhatan hired to advise and manage the fund. He obtained a Ph.D. in engineering in China in 1995 and moved to the United States to seek a better life for him and his family. In the following decade, he gained experience and developed knowledge about the electrical grid in the United States, with a particular expertise in the PJM market.
Colbert, Cathleen: She is a FERC Analyst who is involved in the investigation.
Danly, James: He is an attorney at Skadden, Arps, Slate, Meagher & Flom LLP who has represented Alan Chen, HEEP Fund, and CU Fund.
Estes, John: He is an attorney at Skadden, Arps, Slate, Meagher & Flom LLP who represents Alan Chen, HEEP Fund, and CU Fund.
Gasteiger, Larry: He is currently Norman Bay’s Chief of Staff. From August 2009 to August 2014, he was the Deputy Director of the Office of Enforcement and served under Mr. Norman Bay.
Gates, Kevin and Rich: They are both officers of Powhatan Energy Fund LLC’s managing member. They are identical twins who obtained their Eagle Scout awards in 1986.
Hill, David: He is an attorney at Skadden, Arps, Slate, Meagher & Flom LLP who has represented Alan Chen, HEEP Fund, and CU Fund.
McSwain, William: He is an attorney at Drinker Biddle & Reath LLP who represents Powhatan Energy Fund LLC.
Olson, Tom: He is an attorney at FERC who has been involved in this case.
Owens, James: He is an attorney with the FERC Office of Enforcement. He works alongside Steve Tabackman.
Piccolo, Christian: She is an attorney at Drinker Biddle & Reath LLP who represents Powhatan Energy Fund LLC.
Richardson, Sally: She is a law professor at Tulane University who previously represented Alan Chen, HEEP Fund, and CU Fund when she was an attorney at Skadden, Arps, Slate, Meagher & Flom LLP.
Rosenblatt, Lauren: She was an attorney with the FERC Office of Enforcement. Steve Tabackman reported to her. Around September 2014, she left the FERC and is now an attorney at NV Energy, a firm based in Senator Harry Reid’s State of Nevada.
Slocum, Tyson: He is a Director of Public Citizen. On April 11, 2014, he said that Powhatan was “disgraced.”
Tabackman, Steve: He is the attorney who led the investigation of Powhatan for the FERC’s Office of Enforcement.
Powhatan Energy Fund LLC is a private investment partnership. The Federal Energy Regulatory Commission’s Office of Enforcement alleges that Powhatan and a trader the fund contracted manipulated the energy market. Powhatan strongly disagrees. We feel forced to share the full details of their investigation alongside independent analysis of the charges.
* Powhatan gave the Federal Energy Regulatory Commission (FERC) three expert affidavits when the investigation was private. Craig Pirrong Ph.D., Richard Wallace Esq., and Richard Tabors Ph.D. wrote these affidavits. We obtained the other nine position statements when we learned the FERC may make the case public. These nine expert opinions were delivered to FERC on September 24, 2014 in conjunction with Powhatan’s 1b.19 response. The views expressed by the experts are their own. They do not speak on behalf of anyone else. The experts were compensated by either Powhatan or Heep Fund for their work.