Contract analysis

I. Purpose and Scope of This Memorandum This memorandum has been prepared to assist Catherine Bloom in conducting the pre-testimony preparation sessions with Kyle Renfro, Senior Trader on Dunmore Power Trading LLC's ("DPT") MISO Day-Ahead Desk, in advance of his scheduled investigative testimony before the FERC Office of Enforcement ("OE" or "Staff") on September 5, 2023. The memorandum identifies and outlines the an

II. Witness Background — Kyle Renfro Kyle Renfro is a Senior Trader on the MISO Day-Ahead Desk at Dunmore Power Trading LLC, a wholly-owned subsidiary of Dunmore Energy Holdings Ltd. He is 36 years old and is based at DPT's offices at 2200 Post Oak Boulevard, Suite 3100, Houston, Texas 77056. He reports directly to Derek Sung, Senior Vice President of Power Marketing & Trading. During the Relevant Period (January 3,

III. Anticipated Areas of FERC Staff Questioning Based on our review of Staff's data requests, the Velthorn referral letter, and the pattern of similar FERC enforcement investigations, we anticipate that Staff will organize its questioning of Renfro around the following six major topic areas. Each is discussed in detail below, together with the anticipated questions, our recommended response framework, and the specif

III.A. Day-Ahead Bidding Strategy at Indiana Hub Core Allegation. At the center of FERC Staff's investigation is the allegation that Renfro submitted Day-Ahead generation offers for Dunmore's gas-fired generation units at prices significantly below marginal cost at the Indiana Hub pricing node. According to Staff's preliminary analysis, as reflected in the first set of data requests and the Velthorn referral, the off

1. How Renfro determined offer prices for gas-fired generation units in the Day-Ahead market on a day-to-day basis, including the inputs, models, and analytical tools he used;

2. The specific explanation for submitting offers at negative prices (below $0/MWh), including how such prices were calculated and what economic rationale supported them;

3. Whether the offers reflected the actual marginal cost of generation — including fuel costs, variable operations and maintenance costs, start-up costs, and emissions costs — or whether they reflected some other consideration;

4. The specific generation units for which negative offers were submitted, which we expect will focus on Dunmore's 2,650 MW gas-fired fleet, including the individual unit names, capacities, heat rates, and operational characteristics;

5. The frequency and pattern of negative offers, including whether they were submitted daily, seasonally, or in response to specific market conditions, and whether the frequency or magnitude of negative offers changed over the course of the Relevant Period;

6. Whether Renfro received instructions, guidance, or approval from Derek Sung, or from any other individual within Dunmore's management structure, regarding the negative bidding strategy;

7. Whether there were any written trading strategy documents, desk policies, standard operating procedures, or other guidelines governing Day-Ahead offer pricing at DPT, and whether such documents addressed or authorized the submission of negative offers; and

8. Renfro's understanding of the concept of "uneconomic" bidding and whether he considered his offers to be uneconomic at the time they were submitted. Recommended Response Framework. Renfro should explain that the negative Day-Ahead offers reflected a legitimate portfolio optimization strategy — not an effort to manipulate congestion patterns or inflate the value of DPT's FTR positions. The following key supporting

III.B. FTR Portfolio and Relationship to Day-Ahead Positions Core Allegation. Staff alleges that DPT held Financial Transmission Rights with a notional value of approximately $47.3 million that would benefit from the congestion patterns allegedly created or exacerbated by the uneconomic Day-Ahead bids at the Indiana Hub. Financial Transmission Rights are financial instruments that entitle the holder to receive (or ob

1. Renfro's role in FTR acquisition decisions — did he identify, evaluate, recommend, or approve the acquisition of specific FTR positions? Did he have authority to execute FTR purchases, or was this function handled by other personnel on the trading desk?

2. The timeline of FTR acquisitions relative to the commencement of the uneconomic bidding pattern on January 3, 2022 — were the FTRs acquired before, during, or after the Relevant Period? Were additional FTR positions added during the Relevant Period?

3. Whether Renfro considered DPT's FTR positions when formulating his Day-Ahead bidding strategy — did the existence or direction of the FTR portfolio influence his Day-Ahead offer prices?

4. The specific FTR paths held by DPT — including the source and sink nodes, the direction of congestion on each path, and the relationship between those paths and the Indiana Hub;

5. Whether Renfro discussed DPT's FTR positions with other traders on the desk, including Anastasia Petrov, and whether FTR performance was discussed in the context of Day-Ahead market conditions; and

6. Whether any internal analyses, models, or reports were prepared that correlated FTR value or FTR settlement amounts with Day-Ahead bidding behavior or congestion outcomes at the Indiana Hub. Recommended Response Framework. Renfro should explain that DPT's FTR positions were acquired as routine hedging instruments, consistent with standard industry practice for a generation owner operating in a congestion-prone reg

III.C. Communications with Anastasia Petrov Regarding Real-Time Positions Core Allegation. Staff alleges that DPT took Real-Time virtual positions — specifically, Increment Offers ("INCs") and Decrement Bids ("DECs") — at the Minnesota Hub pricing node that were designed to amplify the congestion differential created by Renfro's uneconomic Day-Ahead bids at the Indiana Hub. Staff's data indicates that approximately 1

1. The nature and frequency of communications between Renfro (Day-Ahead desk) and Petrov (Real-Time desk) during the Relevant Period — how often did they communicate, through what channels (email, instant message, phone, in-person), and what was the subject matter of their communications?

2. Whether Renfro and Petrov coordinated their respective market positions — did they discuss each other's positions, share market views, or align their trading strategies?

3. Whether Renfro directed, suggested, or influenced Petrov's Real-Time virtual trading at the Minnesota Hub — did he provide Petrov with recommendations, instructions, or market analysis related to her virtual positions?

4. Whether there was a common or unified trading strategy linking Day-Ahead physical offers at the Indiana Hub with Real-Time virtual positions at the Minnesota Hub — was there an articulated strategy document or understanding that the two sets of positions were to be managed in concert?

5. The reporting structure on the trading desk — did both Renfro and Petrov report to Derek Sung? Were they part of the same P&L group or different groups? Were their performance evaluations or compensation linked in any way? Recommended Response Framework. Renfro's testimony on this topic must be calibrated carefully. He should acknowledge the reality that he and Petrov communicated regularly as part of the normal o

III.D. Physical-Financial Coordination with Gas Scheduling / Dunmore Midstream Partners LP Core Allegation. Staff alleges that DPT coordinated the timing and volume of gas nominations through Dunmore Midstream Partners LP ("DMP") (EIN 47-8831205) to support the uneconomic generation offers submitted by Renfro in the Day-Ahead market. The theory is that by coordinating gas nominations with the bidding strategy, DPT wa

1. Renfro's involvement in, or knowledge of, gas nomination scheduling — did he participate in the gas nomination process, communicate with gas schedulers, or have visibility into the timing and volume of gas nominations for the generation units whose offers he managed?

2. Whether Renfro communicated with personnel at Dunmore Midstream Partners LP about gas scheduling in connection with his Day-Ahead offers — did he inform DMP personnel of his expected generation schedules or request specific gas nomination volumes?

3. Whether the gas costs reflected in the Day-Ahead offers — which are a critical component of the marginal cost calculation — were based on actual market-based gas prices, or on internal transfer prices from DMP that may not have reflected arm's-length market rates;

4. The relationship between DPT's physical gas supply commitments (including any take-or-pay obligations) and the negative offer prices submitted at the Indiana Hub — how did the gas supply arrangements factor into the decision to submit offers below $0/MWh? Recommended Response Framework. Renfro should explain the extent of his involvement with gas scheduling, which we expect was limited. In most integrated energy c

III.E. Trading Desk Compliance and Risk Management Expected Questions. Staff will almost certainly devote a portion of the testimony to exploring the compliance and risk management environment in which Renfro operated. This line of questioning serves multiple purposes for Staff: it allows Staff to assess whether DPT had adequate internal controls to detect and prevent the type of trading behavior at issue; it establi

1. Renfro's awareness of DPT's compliance policies regarding market manipulation, including any written policies, codes of conduct, or compliance manuals addressing FERC's Anti-Manipulation Rule (18 C.F.R. § 1c.2) and Section 222 of the Federal Power Act (16 U.S.C. § 824v);

2. Whether Renfro received compliance training regarding market manipulation — specifically, whether he received training on the definition of market manipulation, the types of conduct that could constitute manipulation, and the obligation to submit offers that reflect legitimate economic considerations;

3. Whether Renfro was aware of DPT's market-based rate authorization, granted by FERC in Docket No. ER05-1128-000, and the associated obligations and conditions of that authorization, including any requirements related to market behavior;

4. The risk limits and position limits applicable to Renfro's Day-Ahead trading activities — were there limits on the volume, price, or financial exposure of his offers? Were those limits monitored and enforced?

5. Whether Renfro's trading activity was subject to supervisory review by Derek Sung or by other compliance, risk management, or back-office personnel — was there a pre-trade review process, a post-trade review process, or both?

6. Whether Renfro was aware of the referral from Velthorn Market Analytics or of any prior contact from the MISO Independent Market Monitor regarding DPT's trading practices during the Relevant Period. Recommended Response Framework. Renfro should confirm that he received compliance training regarding FERC's market rules, to the extent that this is factually accurate. We need to verify the existence, content, and tim

III.F. Knowledge, Intent, and State of Mind Expected Questions. This is the area that will likely conclude Staff's substantive questioning and is the most legally consequential portion of the testimony. FERC's Anti-Manipulation Rule, 18 C.F.R. § 1c.2, requires proof that the respondent acted with "scienter" — that is, with the intent to manipulate or defraud, or with reckless disregard for the manipulative nature of

1. Whether Renfro believed his bidding strategy was lawful at the time he submitted the Day-Ahead offers during the Relevant Period;

2. Whether anyone at DPT or DEH — including Derek Sung, Anastasia Petrov, or anyone in compliance or management — ever questioned the legitimacy of the negative bidding strategy or expressed concerns about whether it complied with FERC rules;

3. Whether Renfro understood that his Day-Ahead bids could affect congestion patterns at the Indiana Hub or elsewhere in MISO — i.e., whether he appreciated the physical and economic consequences of submitting large volumes of negative offers;

4. Whether Renfro's intent in submitting the negative offers was to affect congestion patterns, to create or increase congestion differentials, or to benefit DPT's FTR positions — or whether his intent was solely related to the legitimate generation economics of DPT's gas-fired fleet. Recommended Response Framework. Renfro should clearly and unequivocally state that he believed his bidding was consistent with FERC ru

IV. Key Documents for Pre-Testimony Review with Renfro In advance of the preparation sessions, the following categories of documents should be compiled, organized by topic area, and reviewed with Renfro. These documents are drawn from the 48,200 documents in the first production (Bates-stamped DUNMORE-000001 through DUNMORE-048200) and the 63,400 documents in the second production (Bates-stamped DUNMORE-048201 throug

1. Renfro-Petrov Communications. All custodial emails and instant messages between Kyle Renfro and Anastasia Petrov during the Relevant Period (January 3, 2022 – March 17, 2023), with particular attention to communications referencing Day-Ahead positions, Real-Time virtual positions, congestion, FTRs, or Indiana Hub/Minnesota Hub pricing.

2. Renfro-Sung Communications. All communications between Kyle Renfro and Derek Sung regarding Day-Ahead bidding strategy, offer pricing methodology, negative bidding, portfolio optimization, and any instructions or approvals from Sung regarding the Indiana Hub bidding approach.

3. Day-Ahead Offer Logs and Bid Submission Records. Complete records of Day-Ahead generation offers submitted by Renfro at the Indiana Hub during the Relevant Period, including offer prices, quantities, and unit-level detail.

4. FTR Acquisition Records and Position Reports. Records of FTR acquisitions, including auction participation records, FTR path specifications (source/sink nodes), notional values, acquisition dates, and internal FTR position reports showing the portfolio's value over time.

5. Trading Desk Policies and Procedures. All trading desk policy and procedure documents applicable to the Day-Ahead desk during the Relevant Period, including any written trading strategy documents, desk manuals, offer pricing guidelines, and standard operating procedures.

6. Gas Nomination Records and DMP Communications. Gas nomination schedules, gas scheduling communications, and all communications between Renfro and Dunmore Midstream Partners LP personnel regarding gas supply, gas nominations, and gas cost inputs.

7. Compliance Training Records. Records of compliance training received by Renfro, including training dates, training content, attendance records, and any certifications or acknowledgments signed by Renfro.

8. Risk Management Protocols. DPT risk management protocols, position limit documentation, risk reports, and any exception reports or limit breach notifications involving Renfro's Day-Ahead positions during the Relevant Period.

9. Rhonda Vasquez Communications. Any communications between Renfro and Rhonda Vasquez (VP, Regulatory Affairs) regarding FERC obligations, market-based rate requirements, or compliance with FERC rules.

10. Production Cost Models and Marginal Cost Calculations. Production cost models, marginal cost calculation spreadsheets, and other analytical tools used by Renfro to determine Day-Ahead offer prices, including all input data and assumptions. Patrick Gallagher will be responsible for compiling these documents into a topically organized binder for use in the preparation sessions. Any documents that are particularly s

V. Preparation Session Logistics We propose conducting two preparation sessions with Renfro in advance of his September 5 testimony: First Preparation Session: August 30, 2023 (Full Day) This session will serve as the primary substantive preparation. The objectives for this session are: (i) review key documents from the categories identified in Section IV above with Renfro, ensuring he is familiar with the documents

VI. Testimony Ground Rules and Witness Instructions The following standard instructions should be communicated to Renfro during the preparation sessions and reinforced immediately prior to the September 5 testimony. These instructions apply to investigative testimony under 18 C.F.R. § 1b.12:

1. Testimony is Under Oath. The testimony will be given under oath. A court reporter will be present, and a verbatim transcript will be made. The transcript will become part of the investigative record and may be used in any subsequent enforcement action, including a formal proceeding before an Administrative Law Judge or in connection with a settlement.

2. Format. FERC Staff will ask questions. Thomas Adebayo (Lead Investigator), Christine Pham (Senior Attorney), and potentially Dr. Samuel Breck (Senior Economist) may all ask questions. Counsel — Catherine Bloom — may object to questions and may instruct Renfro not to answer on the grounds of attorney-client privilege, the work-product doctrine, or other applicable privilege. Renfro should follow counsel's instructi

3. Listen, Answer, Stop. Renfro should listen to each question carefully and completely before beginning to answer. He should answer only the question asked. He should not volunteer additional information, provide background context that was not requested, or anticipate follow-up questions. When he has answered the question, he should stop talking.

4. Clarification. If Renfro does not understand a question — whether because it is ambiguous, compound, or unclear — he should ask Staff to rephrase or clarify the question before answering. He should not attempt to interpret an unclear question and should not answer a question he does not fully understand. 5. "I Don't Know" and "I Don't Recall." If Renfro does not know the answer to a question, he should say so. If

6. Documents. Renfro should not bring any documents to the testimony unless specifically instructed by counsel. Staff may present documents to Renfro during the testimony and ask him to review and comment on them. If presented with a document, Renfro should take the time to read the entire document (or the relevant portion) carefully before answering any questions about it. He should not assume he knows what a docume