Contract analysis

I. INTRODUCTION AND EXECUTIVE SUMMARY Respondents Dunmore Energy Holdings Ltd. ("DEH") and Dunmore Power Trading LLC ("DPT") respectfully submit this Response to rebut the Preliminary Findings letter dated October 2, 2023 (the "Preliminary Findings"), issued by the Division of Investigations, Office of Enforcement, Federal Energy Regulatory Commission ("FERC" or the "Commission"), in the above-captioned proceeding. F

II. BACKGROUND A. The Respondents

1. Dunmore Energy Holdings Ltd. Dunmore Energy Holdings Ltd. ("DEH") is a Cayman Islands exempted company (Employer Identification Number 98-1347562) with its registered office at 4th Floor, Harbour Place, 103 South Church Street, George Town, Grand Cayman, KY1-1002. DEH is a vertically integrated energy holding company that operates across the energy value chain, with business segments encompassing upstream oil and

2. Dunmore Power Trading LLC Dunmore Power Trading LLC ("DPT") is a Delaware limited liability company (Employer Identification Number 82-4519763) and a wholly owned subsidiary of DEH. DPT's registered agent is Capitol Registered Agents Inc., located at 1209 Orange Street, Wilmington, Delaware 19801. DPT's principal office for business operations is located at 2200 Post Oak Boulevard, Suite 3100, Houston, Texas 77056

3. Dunmore Midstream Partners LP Dunmore Midstream Partners LP ("DMP") is a Delaware limited partnership (Employer Identification Number 47-8831205) and an affiliate of DEH. DMP operates natural gas gathering and pipeline infrastructure in the Midwest region, including gathering systems and interstate pipeline capacity that supply natural gas fuel to certain of DPT's gas-fired generation plants within the MISO footpr

III. LEGAL FRAMEWORK A. Elements of Market Manipulation Under the Federal Power Act and Commission Regulations

Section 222 of the Federal Power Act ("FPA"), 16 U.S.C. § 824v, prohibits "any entity" from using or employing "any manipulative or deceptive device or contrivance" in connection with the purchase or sale of electric energy or the purchase or sale of transmission services subject to the jurisdiction of the Commission. Congress enacted Section 222 as part of the Energy Policy Act of 2005, Pub. L. No. 109-58, § 1283, 1

IV. ARGUMENT A. DPT's Day-Ahead Offers Reflected Legitimate Portfolio Optimization, Not Manipulation

1. The Portfolio Optimization Strategy Explained The centerpiece of FERC Staff's Preliminary Findings is the allegation that DPT submitted Day-Ahead generation offers at Indiana Hub at prices significantly below the marginal cost of production — ranging from -$15/MWh to -$40/MWh — with the purpose of creating artificial congestion patterns to benefit DPT's FTR positions. This allegation fundamentally mischaracterizes

2. Economic Rationale for Offer Prices The economic rationale for DPT's Day-Ahead offer prices at Indiana Hub is grounded in the fundamental principles of portfolio optimization. When a market participant operates a diversified portfolio of generation assets with varying cost structures, dispatch constraints, and contractual obligations, the optimal bidding strategy for any individual unit depends not only on that un

3. No Evidence of Fraudulent Intent Perhaps the most significant fact in this proceeding is the absence of any evidence — direct or circumstantial — of fraudulent intent on the part of DPT, its traders, or Dunmore's management. FERC Staff's Preliminary Findings do not identify a single document, communication, or statement reflecting a plan, scheme, or intent to manipulate MISO markets. This is not for want of a thor

1. Contractual Minimum Generation Obligations FERC Staff's theory that DPT's negative Day-Ahead offers at Indiana Hub were "uneconomic" and therefore indicative of manipulation rests on a fundamental misunderstanding of the cost structure and contractual obligations applicable to DPT's gas-fired generation units. The Preliminary Findings treat negative offers as inherently suspect, apparently on the assumption that a