Contract analysis

I. Introduction and Purpose This letter is submitted following the first settlement conference held on December 4, 2023, at which counsel for Respondents and representatives of FERC OE engaged in a productive and candid exchange regarding the parties' respective positions and the contours of a potential consensual resolution of this matter. We appreciated the professionalism and openness of the dialogue during that s

II. Summary of Counter-Proposal Terms For the convenience of FERC Staff, the material terms of Dunmore's counter-proposal are summarized below. Each element is addressed in greater detail in the sections that follow. These proposed terms, taken together, represent a fair, proportionate, and appropriate resolution of this matter. Dunmore's proposal ensures meaningful accountability through a substantial financial pena

III. Disgorgement Is Speculative and Unquantifiable A central element of Dunmore's counter-proposal is the omission of any disgorgement component. This position is firmly grounded in the expert economic analysis of Dr. Leonard Whitfield, the factual record developed through the investigation, and applicable Commission policy and precedent. As set forth below, Staff's disgorgement figures — whether the original $12.8

IV. The Proposed $3.5 Million Penalty Is Appropriate Dunmore's proposed civil penalty of $3.5 million is the product of a careful and good-faith assessment of the factual record, the applicable Penalty Guidelines, the strength of Respondents' defenses, and the relevant mitigating factors. As set forth below, this amount reflects appropriate accountability for the conduct at issue while properly crediting Dunmore's co

V. Dunmore's Financial Profile and Ability to Pay Dunmore wishes to be clear that it is not seeking inability-to-pay treatment in connection with this proceeding. Dunmore Energy Holdings Ltd. is a substantial enterprise with the financial capacity to pay the proposed penalty. In fiscal year 2022, DEH generated consolidated revenue of $3.82 billion and EBITDA of $891 million. DPT, as a wholly owned subsidiary of DEH,

VI. Comprehensive 36-Month Enhanced Compliance Plan As a central component of its counter-proposal, Dunmore commits to a robust and comprehensive 36-month Enhanced Compliance Plan ("ECP"). The ECP is designed to address the specific compliance risks identified in this investigation and to ensure that Dunmore maintains industry-leading compliance practices across its energy trading operations. The key elements of the

1. Chief Compliance Officer. Jennifer Caulfield is confirmed as Dunmore's Chief Compliance Officer. Ms. Caulfield reports directly to the DEH Board of Directors and has the authority, resources, and organizational independence necessary to oversee all aspects of Dunmore's regulatory compliance program. Ms. Caulfield's appointment, which occurred on February 6, 2023, predated the commencement of this investigation and

2. Annual Compliance Training. All trading personnel across DPT's MISO and SPP trading desks — currently numbering 22 individuals — will receive a minimum of 16 hours of compliance training per year for the duration of the ECP period. Training topics will include, at a minimum: the Commission's anti-manipulation rules under 18 C.F.R. § 1c.2; the prohibition on market manipulation under Section 222 of the Federal Powe

3. Quarterly Compliance Audits. Ridgeway Compliance Solutions LLC, under the direction of Dr. Carolyn Whitford, Founder and Managing Director, will conduct quarterly compliance audits of DPT's trading operations for the duration of the monitoring period. Each quarterly audit will include a review of trading activity across DPT's Day-Ahead, Real-Time, and FTR portfolios; an assessment of compliance with internal polic

4. Automated Trade Surveillance Systems. Dunmore will implement automated surveillance technology to detect potential manipulation patterns in DPT's Day-Ahead and Real-Time trading activity. The surveillance system will include, at a minimum: real-time monitoring of bidding patterns and price offers at major trading hubs; cross-product transaction monitoring designed to identify potential correlations between physica

5. Quarterly Reporting to FERC OE. Dunmore will submit quarterly compliance reports to the Office of Enforcement for the full 36-month duration of the ECP. Each quarterly report will describe the compliance activities undertaken during the reporting period, including training sessions conducted, audit findings, surveillance system alerts and their resolution, and any disciplinary actions taken in connection with comp

6. Annual Compliance Certification. On each anniversary of the date of any Commission order approving the consent agreement, CEO Gavin Harcourt and CCO Jennifer Caulfield will execute and submit to FERC OE annual certifications attesting to Dunmore's compliance with all requirements of the ECP. Each certification will confirm that the signatories have personally reviewed the compliance program and believe, based on r

7. Comprehensive Updated Policies and Procedures. Dunmore will develop and implement comprehensive updated policies and procedures governing trading desk oversight, FTR position monitoring, and cross-product transaction review. These policies will be drafted with the assistance of Ridgeway Compliance Solutions and will be submitted to FERC OE for review within 90 days of the date of any Commission order approving the

VII. Proposed Process and Next Steps Dunmore is committed to the prompt and good-faith resolution of this matter. To that end, Dunmore proposes that the parties schedule a second settlement conference at the earliest mutually convenient date to discuss the terms set forth in this letter. Undersigned counsel is available during the weeks of January 22 and January 29, 2024, and would be pleased to accommodate Staff's s

VIII. Conclusion For the reasons set forth above, Dunmore respectfully submits that a civil penalty of $3.5 million, with no disgorgement, combined with the comprehensive 36-month Enhanced Compliance Plan described in Section VI and Dunmore's demonstrated cooperation throughout this investigation, represents a fair, proportionate, and appropriate resolution of Docket No. IN23-7-000. This counter-proposal reflects an