Contract analysis

I. EXECUTIVE SUMMARY This memorandum constitutes the comprehensive closing record of Calderwood & Harkness LLP's ("C&H" or the "Firm") representation of Dunmore Energy Holdings Ltd. ("DEH") and its wholly owned subsidiary Dunmore Power Trading LLC ("DPT," and together with DEH, "Dunmore" or the "Client") in connection with the Federal Energy Regulatory Commission ("FERC") Office of Enforcement ("OE") non-public inves

II. CLIENT AND PARTIES A. Dunmore Energy Holdings Ltd. (DEH) Dunmore Energy Holdings Ltd. is a Cayman Islands exempted company with its registered office at 4th Floor, Harbour Place, 103 South Church Street, George Town, Grand Cayman, KY1-1002, Cayman Islands. DEH's Employer Identification Number is 98-1347562. Its principal U.S. office is located at 2200 Post Oak Boulevard, Suite 3100, Houston, Texas 77056. DEH is a

III. INVESTIGATION BACKGROUND A. Origin and Triggering Events The FERC investigation that gave rise to this matter originated from two independent sources that converged to focus regulatory attention on DPT's trading activity in the MISO markets. First, Velthorn Market Analytics, Inc., in its capacity as the MISO Independent Market Monitor, identified certain bidding patterns in DPT's MISO Day-Ahead and Real-Time tra

1. Uneconomic Day-Ahead Bidding. FERC Staff alleged that Kyle Renfro, DPT's Senior Trader on the MISO Day-Ahead Desk, submitted Day-Ahead energy offers for Dunmore's gas-fired generation units at Indiana Hub at prices significantly below the marginal cost of production. Specifically, FERC Staff identified offers submitted at prices ranging from as low as negative $15 per MWh to negative $40 per MWh, which FERC Staff

2. Cross-Product Manipulation. FERC Staff alleged that DPT took Real-Time virtual positions — specifically, Increment Offers ("INCs") and Decrement Bids ("DECs") — at the Minnesota Hub that were designed to amplify the congestion differential created by the uneconomic Day-Ahead bids at Indiana Hub. FERC Staff characterized these virtual positions as a complementary component of the overall manipulative scheme, intend

3. Physical-Financial Coordination. FERC Staff alleged that DPT coordinated the timing and volume of natural gas nominations through Dunmore Midstream Partners LP ("DMP") to support the uneconomic generation offers at Indiana Hub. Specifically, FERC Staff alleged that DPT adjusted gas nominations to ensure that Dunmore's gas-fired generation units would be physically capable of running at the levels implied by the be

IV. ENGAGEMENT OF CALDERWOOD & HARKNESS LLP A. Conflict Check and Clearance Upon being contacted by Martin Llewellyn, General Counsel of DEH, on May 22, 2023, C&H initiated its standard pre-engagement conflict check. An internal conflict check memorandum was prepared and circulated on May 23, 2023. The conflict check encompassed all entities associated with the proposed representation, including DEH, DPT, DMP, the eq

V. DEFENSE STRATEGY A. Core Defensive Theories Following a thorough review of the available facts, the applicable legal framework, and the FERC OE's stated theories of violation, C&H developed and pursued the following core defensive theories throughout the investigation and settlement negotiations:

1. Legitimate Portfolio Optimization. DPT's Day-Ahead offers at Indiana Hub were consistent with a legitimate portfolio optimization strategy and did not constitute manipulation under 18 C.F.R. § 1c.2. The FERC anti-manipulation rule requires a showing of fraudulent or deceptive conduct undertaken with scienter — that is, an intent to manipulate or deceive. DPT's bidding strategy reflected a rational economic approac

2. Legitimate Basis for Negative Offers. The negative-price offers identified by FERC Staff reflected genuine opportunity costs and contractual commitments associated with DPT's gas-fired generation units, not artificial price suppression. Specifically, Dunmore's gas-fired units were subject to minimum generation requirements under their interconnection agreements and gas transportation contracts, which created econo

3. FTR Positions as Routine Hedging. DPT's FTR positions were acquired months before the commencement of the Relevant Period as part of a routine hedging strategy to manage congestion risk associated with DPT's physical generation portfolio. The temporal separation between the acquisition of the FTR positions and the allegedly manipulative bidding activity during the Relevant Period undermined FERC Staff's theory tha

4. Congestion Driven by Transmission Outages. The congestion patterns at Indiana Hub during the Relevant Period were primarily driven by transmission outage events and other exogenous factors, not by DPT's bidding activity. Dr. Whitfield's expert analysis demonstrated that the vast majority of the congestion observed during the Relevant Period could be attributed to planned and unplanned transmission outages, load gr

5. Limited Actual Market Impact. The actual market impact of DPT's trading activity was substantially less than the $12.8 million estimated by FERC Staff. Dr. Whitfield's independent economic analysis, which employed a counterfactual simulation methodology that isolated the incremental impact of DPT's offers on congestion and pricing, concluded that the actual market impact attributable to DPT's activity was no more

6. Mitigating Factors. Multiple mitigating factors weighed in favor of a reduced penalty, including: (a) Dunmore's pre-existing compliance program, which, while not fully effective in preventing the conduct at issue, demonstrated a baseline commitment to regulatory compliance; (b) Dunmore's proactive hiring of Jennifer Caulfield as Chief Compliance Officer on February 6, 2023 — notably, before the FERC investigation

VI. INVESTIGATION PROCEEDINGS — CHRONOLOGICAL SUMMARY A. Initial Response Phase (May–June 2023) The initial phase of the matter was focused on establishing the engagement, implementing document preservation measures, conducting an initial assessment of the facts and legal exposure, and filing C&H's notice of appearance and initial response to FERC OE's preliminary inquiry. May 22, 2023: FERC OE's preliminary inquiry

VII. SETTLEMENT NEGOTIATIONS A. Negotiation Timeline Settlement negotiations began in late November 2023 and continued through late January 2024, culminating in the parties' agreement on final terms on January 24, 2024, and the execution of the Stipulation and Consent Agreement on January 31, 2024. November 28, 2023: C&H prepared an internal settlement strategy memorandum setting forth the Firm's recommended negotiat

VIII. CONSENT AGREEMENT EXECUTION AND FERC APPROVAL C&H prepared the initial draft of the Stipulation and Consent Agreement, which was circulated internally for review by Catherine Bloom and Hannah Brinkley with proposed revisions and marginal comments. The draft was then submitted to FERC Staff for review and further negotiation. Several rounds of comments and revisions were exchanged between C&H and FERC Staff befo

IX. FINANCIAL SUMMARY A. Calderwood & Harkness Fees The actual fees billed through the closure of the matter totaled $2,143,750, which fell within the initial estimated range of $1.5 million to $2.8 million provided in the engagement letter. The fees were billed at the hourly rates specified in the engagement letter: Catherine Bloom at $1,250 per hour; Alan Ngo at $1,150 per hour; Hannah Brinkley at $725 per hour; an

X. DOCUMENT PRODUCTION SUMMARY The following table summarizes the three document productions made by C&H on behalf of Dunmore to FERC OE during the investigation: Total Pages: Approximately 1.24 million pages of documents were produced across the three rolling productions. Custodians: Documents were collected from 11 custodians, including Kyle Renfro, Anastasia Petrov, Derek Sung, Rhonda Vasquez, Jennifer Caulfield,

XI. KEY DOCUMENTS INDEX The following is a comprehensive chronological index of all key documents generated, received, or produced during the course of this matter. All documents listed below are maintained in the Firm's permanent file for Matter No. 1016-00004.

1. Conflict Check Memorandum (May 23, 2023)

2. Engagement Letter — C&H to Martin Llewellyn (May 24, 2023)

3. Litigation Hold Memorandum — Hannah Brinkley to Martin Llewellyn and Rhonda Vasquez (May 25, 2023)

4. Notice of Appearance — filed with FERC OE (June 5, 2023)

5. Internal Case Assessment Memorandum — Hannah Brinkley and Patrick Gallagher to Catherine Bloom (June 8, 2023)

6. Client Memorandum: FERC Enforcement Process Overview — to Gavin Harcourt, Elena Mirova, and Martin Llewellyn (June 10, 2023)

7. Response to Preliminary Inquiry Letter — Catherine Bloom to Margaret Hollowell (June 14, 2023)

8. Analysis of First Data Request Memorandum — Patrick Gallagher (June 30, 2023)

9. Objections and Responses to First Data Request — Catherine Bloom to Thomas Adebayo (July 17, 2023)

10. First Document Production Cover Letter — Hannah Brinkley to Thomas Adebayo (July 24, 2023)

11. Whitfield Economic Advisors LLC Engagement Letter (July 10, 2023)

12. Analysis of Second Data Request Memorandum — Patrick Gallagher (August 10, 2023)

13. Objections and Responses to Second Data Request — Catherine Bloom to Thomas Adebayo (August 18, 2023)

14. Second Document Production Cover Letter — Hannah Brinkley to Thomas Adebayo (August 21, 2023)

15. Kyle Renfro Testimony Preparation Outline — Hannah Brinkley and