1016-00004 · Dunmore Energy Holdings · Compliance Plan

ridgeway-engagement-letter.docx DOCUMENT Finance & Banking

3 / 35 ← → ✕

DUNMORE ENERGY HOLDINGS LTD. 2200 Post Oak Boulevard, Suite 3100 Houston, Texas 77056

October 15, 2023

Dr. Carolyn Whitford Founder & Managing Director Ridgeway Compliance Solutions LLC 3000 Richmond Avenue, Suite 800 Houston, Texas 77098

Re: Engagement of Ridgeway Compliance Solutions LLC as Independent Compliance Consultant and Monitor — FERC Docket No. IN23-7-000

Dear Dr. Whitford:

This letter (this "Engagement Letter") sets forth the terms and conditions under which Dunmore Energy Holdings Ltd. retains Ridgeway Compliance Solutions LLC to serve as an independent compliance consultant and monitor in connection with the matters described more fully herein. We appreciate your willingness to undertake this important engagement, and we look forward to working with you and your team throughout this process.

1. Introduction and Background

Dunmore Energy Holdings Ltd. ("Dunmore" or "DEH"), a Cayman Islands exempted company with its principal United States office at 2200 Post Oak Boulevard, Suite 3100, Houston, Texas 77056, Employer Identification Number 98-1347562, hereby retains Ridgeway Compliance Solutions LLC ("Ridgeway" or "Consultant"), a Texas limited liability company with its principal office at 3000 Richmond Avenue, Suite 800, Houston, Texas 77098, to serve as independent compliance consultant and monitor under the terms and conditions set forth in this Engagement Letter.

Dunmore's wholly owned subsidiary, Dunmore Power Trading LLC ("DPT"), a Delaware limited liability company, Employer Identification Number 82-4519763, holds market-based rate authority granted by the Federal Energy Regulatory Commission ("FERC") under FERC Docket No. ER05-1128-000. DPT trades actively in the Midcontinent Independent System Operator, Inc. ("MISO") and Southwest Power Pool, Inc. ("SPP") organized wholesale electricity markets. DPT currently operates a fourteen-trader MISO trading desk under the supervision of Derek Sung, Senior Vice President, Power Marketing & Trading, who is responsible for overseeing all aspects of DPT's day-to-day trading operations in the MISO Day-Ahead and Real-Time energy markets, as well as DPT's Financial Transmission Rights portfolio and virtual transaction activity within the MISO footprint.

FERC's Office of Enforcement ("FERC OE") is conducting a non-public investigation under FERC Docket No. IN23-7-000 into DPT's trading activities in the MISO Day-Ahead and Real-Time energy markets during the period from January 3, 2022 through March 17, 2023 (the "Relevant Period"). The investigation involves allegations of potential market manipulation in violation of Section 222 of the Federal Power Act, 16 U.S.C. § 824v, and the Commission's Anti-Manipulation Rule, 18 C.F.R. § 1c.2. These provisions broadly prohibit any entity from, directly or indirectly, using or employing any device, scheme, or artifice to defraud 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, or from engaging in any act, practice, or course of business that operates or would operate as a fraud or deceit upon any entity.

The investigation was initiated following a referral by Velthorn Market Analytics, Inc., MISO's Independent Market Monitor, submitted by Dr. Patricia Engel, President of Velthorn Market Analytics, Inc., dated April 3, 2023. FERC's preliminary inquiry letter, requesting the preservation and production of documents and information relating to DPT's trading activities during the Relevant Period, was issued on May 22, 2023. Since that time, Dunmore and DPT have cooperated with FERC OE's investigation, including responding to multiple data requests and facilitating investigative testimony of DPT trading personnel.

Dunmore's outside counsel for this enforcement matter is Calderwood & Harkness LLP ("Calderwood & Harkness" or "C&H"), 1001 Fannin Street, Suite 4200, Houston, Texas 77002, led by Catherine Bloom, Responsible Partner, and Hannah Brinkley, Lead Associate (C&H Matter Number 1016-00004). This Engagement Letter has been drafted and reviewed by Calderwood & Harkness in connection with that representation. Dunmore's prior FERC regulatory counsel, Aldercroft & Beane LLP, was conflicted out of the enforcement matter due to a preexisting relationship with one of the entities involved in the underlying transactions and is therefore not participating in or advising on this engagement.

FERC Staff issued Preliminary Findings on October 2, 2023, setting forth Staff's preliminary conclusions regarding DPT's trading activities during the Relevant Period. Dunmore is currently engaged in responding to those Preliminary Findings and is pursuing a negotiated resolution of the investigation with FERC OE. Based on the current posture of discussions, it is anticipated that any resolution will take the form of a Stipulation and Consent Agreement that will include, among other terms, an enhanced compliance plan as a central component. The engagement of Ridgeway is intended to position Dunmore to design, implement, and monitor such an enhanced compliance plan, and to demonstrate to FERC OE Dunmore's commitment to maintaining a best-in-class compliance program for its wholesale electricity trading operations.

In connection with Dunmore's broader compliance efforts, Jennifer Caulfield was appointed as Dunmore's Chief Compliance Officer on February 6, 2023, reporting directly to the DEH Board of Directors. Ms. Caulfield has been charged with overseeing all aspects of Dunmore's regulatory compliance program and will serve as the primary internal point of contact for the engagement described herein.

2. Qualifications of Ridgeway and Dr. Whitford

Dr. Carolyn Whitford is the Founder and Managing Director of Ridgeway Compliance Solutions LLC. Dr. Whitford is a former attorney in FERC's Office of Enforcement, where she gained direct, firsthand experience in energy market manipulation investigations, enforcement proceedings, and compliance program design and evaluation. During her tenure at FERC OE, Dr. Whitford participated in multiple significant enforcement matters involving organized wholesale electricity market participants and developed deep expertise in the Commission's anti-manipulation framework, including the interpretation and application of Section 222 of the Federal Power Act and 18 C.F.R. § 1c.2.

Since founding Ridgeway, Dr. Whitford has focused the firm's practice on designing, implementing, and monitoring compliance programs for wholesale electricity market participants subject to FERC jurisdiction. Ridgeway has advised numerous entities holding market-based rate authority on the development of compliance programs that satisfy FERC's expectations as articulated in the Commission's Policy Statement on Enforcement, as well as in the terms of consent agreements and settlement orders. Ridgeway has served as an independent compliance monitor in prior FERC enforcement matters, and its work product has been accepted by FERC OE as satisfying the compliance monitoring requirements of consent agreements in those cases.

Given Dr. Whitford's direct experience with FERC's enforcement processes, her familiarity with the Commission's expectations for compliance programs, and Ridgeway's demonstrated track record in this area, Ridgeway's qualifications make it well-suited to serve as the independent compliance consultant and monitor for DPT's wholesale electricity trading operations, in a capacity acceptable to FERC OE in connection with the anticipated resolution of Docket No. IN23-7-000.

3. Scope of Engagement

Ridgeway's engagement shall encompass the following scope of services, each of which is described in detail below.

3.1 Compliance Program Design

Ridgeway shall design and develop a comprehensive enhanced compliance program (the "Enhanced Compliance Plan") for DPT's wholesale electricity trading operations in the MISO and SPP organized wholesale electricity markets. The Enhanced Compliance Plan shall be designed to satisfy the requirements anticipated to be set forth in the Stipulation and Consent Agreement in Docket No. IN23-7-000, and shall be suitable for submission to FERC OE as an appendix to such agreement.

The Enhanced Compliance Plan shall address, at a minimum, each of the following areas:

(a) Day-Ahead and Real-Time Market Bidding Policies and Procedures. Comprehensive policies and procedures governing Day-Ahead and Real-Time market bidding in the MISO and SPP markets, including detailed guidance on offer pricing relative to marginal cost, the documentation of cost bases for physical generation offers, and procedures for ensuring that bids and offers submitted to the market reflect legitimate economic interests and do not constitute uneconomic bidding designed to manipulate market prices or congestion patterns.

(b) Financial Transmission Rights Policies. Policies for the acquisition, management, and ongoing monitoring of Financial Transmission Rights ("FTR") positions, including procedures for reviewing FTR positions in the context of DPT's overall portfolio to identify potential conflicts of interest or cross-product strategies that could give rise to manipulation concerns.

(c) Cross-Product Transaction Review. Procedures for systematic cross-product transaction review, encompassing physical generation offers, virtual transactions (including Increment Offers, Decrement Bids, and Up-To Congestion transactions), and FTR positions. These procedures shall be designed to detect patterns of coordinated trading across products that could constitute market manipulation or otherwise raise concerns under FERC's anti-manipulation rule.

(d) Gas Nomination and Scheduling Coordination Policies. Policies governing coordination between DPT and Dunmore Midstream Partners LP ("DMP," Employer Identification Number 47-8831205) regarding gas nominations and scheduling, to ensure that DPT's bidding in the wholesale electricity markets reflects actual marginal costs, taking into account the fuel supply arrangements between the affiliated entities, and to prevent any manipulation of gas nominations or scheduling for the purpose of influencing electricity market prices.

(e) Trading Desk Oversight Protocols. Trading desk oversight protocols, including requirements for supervisory review of trading activity by the Senior Vice President, Power Marketing & Trading (or designee), escalation procedures for transactions or trading patterns that deviate from established risk limits or compliance parameters, and procedures for real-time monitoring of trading activity.

(f) Whistleblower and Internal Reporting Mechanisms. Whistleblower and internal reporting mechanisms that enable DPT trading personnel and other Dunmore employees to report potential compliance violations without fear of retaliation, including anonymous reporting channels and clear procedures for the investigation and resolution of reported concerns.

(g) Record-Keeping and Documentation Requirements. Record-keeping and documentation requirements for trading decisions, including the preservation of trader communications (including instant messages, emails, and recorded telephone conversations), the documentation of the economic rationale for significant trading decisions, and the retention of all records in accordance with FERC's record retention requirements.

(h) Annual Compliance Certification Process. An annual compliance certification process pursuant to which both the Chief Executive Officer of Dunmore (currently Gavin Harcourt) and the Chief Compliance Officer of Dunmore (currently Jennifer Caulfield) shall execute certifications attesting to the effectiveness of DPT's compliance program and confirming that DPT's trading operations have been conducted in compliance with FERC's rules and regulations and with the terms of the Enhanced Compliance Plan during the preceding twelve-month period.

3.2 Compliance Training

Ridgeway shall design and deliver annual compliance training for all DPT trading personnel. At the time of this Engagement Letter, DPT employs fourteen traders on its MISO trading desk. Ridgeway's training obligations shall extend to all current and future members of the MISO trading desk, as well as any SPP trading personnel that may be assigned during the term of this engagement.

Compliance training delivered by Ridgeway shall meet or exceed a minimum of sixteen (16) hours per year per trading employee. Training may be delivered in multiple sessions over the course of the year, provided that the aggregate annual training requirement is satisfied for each covered employee.

Training content shall cover, at a minimum, the following topics:

(a) FERC's Anti-Manipulation Rule (18 C.F.R. § 1c.2), including the elements of a violation, the Commission's interpretation and application of the rule, and relevant precedent from enforcement actions and Commission orders;

(b) Section 222 of the Federal Power Act (16 U.S.C. § 824v), including the scope of the prohibition and its relationship to the Anti-Manipulation Rule;

(c) MISO and SPP market rules, including the specific rules governing Day-Ahead and Real-Time energy markets, virtual transactions, and Financial Transmission Rights;

(d) Recognition of manipulative trading patterns, including case studies drawn from prior FERC enforcement actions and settlement orders, with particular emphasis on patterns relevant to the types of trading activities at issue in Docket No. IN23-7-000;

(e) Reporting obligations of market participants and individual traders, including obligations under FERC regulations, MISO and SPP tariffs, and Dunmore's internal compliance policies; and

(f) Consequences of violations, including potential penalties under the Federal Power Act, sanctions under MISO and SPP market rules, and disciplinary consequences under Dunmore's internal policies.

The initial compliance training session shall be delivered within ninety (90) days of the execution of any Stipulation and Consent Agreement with FERC in Docket No. IN23-7-000. Annual refresher training shall be delivered thereafter on an annual basis during the Monitoring Period (as defined in Section 3.3 below).

Ridgeway shall provide all training materials, attendance records, and training completion certifications to Dunmore's Chief Compliance Officer, Jennifer Caulfield, and to Calderwood & Harkness LLP for inclusion in Dunmore's periodic compliance reporting to FERC OE as required under the anticipated consent agreement.

3.3 Independent Compliance Monitoring

Ridgeway shall serve as the independent compliance monitor for DPT's MISO and SPP trading operations for a period of twelve (12) months from the date of FERC's order approving the Stipulation and Consent Agreement in Docket No. IN23-7-000 (the "Monitoring Period").

During the Monitoring Period, Ridgeway shall conduct quarterly compliance audits, for a total of four (4) audits during the twelve-month engagement. The parties acknowledge that the overall compliance monitoring period required by the anticipated Stipulation and Consent Agreement is thirty-six (36) months. Monitoring beyond Ridgeway's initial twelve-month term shall be addressed separately, either through an extension of this engagement by mutual written agreement or through the engagement of a successor independent compliance monitor, as described further in Section 5 of this Engagement Letter.

Each quarterly compliance audit shall include, at a minimum, a review of the following:

(a) DPT's trading activity in the MISO and SPP Day-Ahead and Real-Time energy markets during the quarter, including a review of bid and offer pricing relative to marginal cost;

(b) DPT's FTR positions, including new acquisitions, dispositions, and the relationship between FTR positions and DPT's other trading activity;

(c) Virtual transaction patterns, including Increment Offers, Decrement Bids, and any Up-To Congestion transactions, and any correlations between virtual trading activity and physical or FTR positions;

(d) Coordination between DPT and DMP regarding gas nominations and scheduling, and the extent to which DPT's bidding reflects actual marginal costs;

(e) Trader communications, including emails, instant messages, and recorded telephone conversations, on a sample basis as determined by Ridgeway in its independent professional judgment;

(f) Adherence by DPT trading personnel and management to the policies and procedures set forth in the Enhanced Compliance Plan; and

(g) Any other matters that Ridgeway determines, in its independent professional judgment, are relevant to the assessment of DPT's compliance with FERC's rules and regulations and with the Enhanced Compliance Plan.

Following each quarterly audit, Ridgeway shall prepare a written quarterly audit report summarizing its findings, identifying any compliance deficiencies or areas of concern, and recommending corrective actions to be taken by Dunmore and DPT. Quarterly audit reports shall be delivered to Jennifer Caulfield, Martin Llewellyn, and Calderwood & Harkness LLP within thirty (30) days following the close of each calendar quarter during the Monitoring Period.

3.4 FERC Reporting Support

Ridgeway shall assist Dunmore in preparing the quarterly reports to FERC OE that are expected to be required under the anticipated Stipulation and Consent Agreement in Docket No. IN23-7-000 for the duration of the Monitoring Period. The quarterly reporting obligations to FERC OE are anticipated to cover the period through February 9, 2027, which represents thirty-six (36) months from the anticipated date of the FERC order approving the consent agreement. Ridgeway's engagement under this Engagement Letter covers only the first twelve (12) months of that period; reporting assistance for the remaining twenty-four (24) months shall be addressed separately.

Ridgeway's quarterly audit reports and audit findings may be shared with FERC OE as part of Dunmore's compliance reporting obligations under the consent agreement. Ridgeway acknowledges and consents to such disclosure, subject to the confidentiality provisions set forth in Section 8 of this Engagement Letter. All quarterly reports to FERC OE shall be reviewed by Calderwood & Harkness LLP prior to submission to ensure consistency with the terms of the consent agreement and with any applicable legal privileges.

3.5 Automated Trade Surveillance System

Ridgeway shall advise Dunmore on the selection, procurement, and implementation of automated trade surveillance systems capable of detecting potential market manipulation patterns in DPT's trading operations. The advisory services under this Section 3.5 shall include, without limitation:

(a) Assessment of DPT's existing trade monitoring capabilities and identification of gaps;

(b) Development of functional specifications and requirements for an automated trade surveillance system, including the capability to detect uneconomic bidding patterns, cross-product coordination between physical offers, virtual transactions, and FTR positions, and anomalous congestion patterns at relevant MISO pricing nodes, including but not limited to the Indiana Hub and the Minnesota Hub;

(c) Evaluation of commercially available trade surveillance platforms and provision of recommendations to Dunmore regarding the selection and procurement of an appropriate system;

(d) Guidance on the configuration and calibration of the selected system's alert thresholds and detection algorithms to align with the requirements of the Enhanced Compliance Plan and FERC's anti-manipulation framework; and

(e) Validation of system functionality upon deployment, including testing of the system's ability to generate alerts for the types of trading patterns and anomalies identified in the functional specifications.

Ridgeway shall deliver a written trade surveillance system specifications and validation report to Dunmore's Chief Compliance Officer and to Calderwood & Harkness upon completion of the validation process.

4. Key Dunmore Personnel / Points of Contact

Dunmore designates the following individuals as key personnel and points of contact for this engagement:

(a) Jennifer Caulfield, Chief Compliance Officer — Ms. Caulfield shall serve as Ridgeway's primary day-to-day contact for all matters relating to compliance program design and implementation. The CCO reports directly to the DEH Board of Directors, ensuring the independence of the compliance function from DPT's trading operations.

(b) Rhonda Vasquez, Vice President, Regulatory Affairs — Ms. Vasquez shall serve as the liaison for all FERC-related regulatory matters and reporting, including coordination on the preparation and submission of quarterly reports to FERC OE.

(c) Derek Sung, Senior Vice President, Power Marketing & Trading — Mr. Sung shall serve as the contact for trading desk operations and personnel matters, including facilitating Ridgeway's access to trading records, systems, and the members of DPT's MISO trading desk.

(d) Martin Llewellyn, General Counsel — Mr. Llewellyn shall provide legal oversight of this engagement on behalf of Dunmore and shall be the point of contact for all legal and contractual matters arising under this Engagement Letter.

(e) Calderwood & Harkness LLP — Catherine Bloom, Responsible Partner, and Hannah Brinkley, Lead Associate, shall serve as outside counsel coordinating this engagement and the broader FERC enforcement response. All communications regarding the FERC enforcement proceeding shall be coordinated through Calderwood & Harkness.

5. Term and Duration

This Engagement Letter shall be effective as of October 15, 2023 (the "Effective Date"). Ridgeway's engagement for compliance program design (Section 3.1) and compliance training development (Section 3.2) shall commence immediately upon execution of this Engagement Letter.

The twelve-month Monitoring Period (Section 3.3) shall commence on the date on which FERC issues an order approving the Stipulation and Consent Agreement in Docket No. IN23-7-000, and shall continue for twelve (12) consecutive months from such date. The FERC reporting support services (Section 3.4) and automated trade surveillance advisory services (Section 3.5) shall be performed concurrently during the applicable portions of the engagement period.

This engagement may be extended beyond the initial twelve-month Monitoring Period by mutual written agreement of the parties, subject to FERC OE approval if such approval is required under the terms of the Stipulation and Consent Agreement. The parties acknowledge that the Enhanced Compliance Plan contemplates a thirty-six (36) month compliance monitoring period as a condition of the anticipated consent agreement. Dunmore may seek to extend Ridgeway's engagement for all or a portion of the remaining twenty-four (24) months, or may engage a successor independent compliance monitor to fulfill the monitoring requirements for the balance of the thirty-six-month period. Any such extension or successor engagement shall be documented in a separate written agreement.

6. Fees and Payment

6.1 Flat Fee

In consideration of the services described in Section 3 of this Engagement Letter, Dunmore shall pay Ridgeway a flat fee of Three Hundred Eighty-Five Thousand Dollars ($385,000.00). This flat fee encompasses the full scope of services to be provided by Ridgeway under this Engagement Letter, including:

(a) Compliance program design and documentation (Section 3.1);

(b) Compliance training, including the initial training session and the first annual refresher training session (Section 3.2);

(c) Twelve-month independent compliance monitoring, including four quarterly audits and quarterly audit reports (Section 3.3);

(d) FERC reporting support during the Monitoring Period (Section 3.4); and

(e) Automated trade surveillance system advisory services, including specifications development and system validation (Section 3.5).

6.2 Payment Schedule

The flat fee shall be payable in three installments as follows:

(a) First Installment: One Hundred Twenty-Five Thousand Dollars ($125,000.00), payable upon execution of this Engagement Letter;

(b) Second Installment: One Hundred Thirty Thousand Dollars ($130,000.00), payable upon delivery of the completed Enhanced Compliance Plan to Dunmore and Calderwood & Harkness LLP; and

(c) Third Installment: One Hundred Thirty Thousand Dollars ($130,000.00), payable upon completion of the twelve-month Monitoring Period and delivery of the final summary report described in Section 10.

6.3 Expenses. Reasonable out-of-pocket expenses incurred by Ridgeway in connection with the performance of services under this Engagement Letter, including travel, lodging, and materials, shall be reimbursable at cost upon submission of itemized invoices with supporting documentation. Out-of-pocket expenses shall not exceed Twenty-Five Thousand Dollars ($25,000.00) in the aggregate without the prior written approval of Dunmore. All expense reimbursement requests shall be submitted to Jennifer Caulfield for approval.

6.4 Payment Terms

All invoices shall be payable within thirty (30) days of receipt by Dunmore. Invoices shall be directed to the attention of Jennifer Caulfield, Chief Compliance Officer, at the address set forth in Section 4 above, with a copy to Martin Llewellyn, General Counsel.

7. Independence and Objectivity

Ridgeway shall maintain independence from Dunmore, DPT, and their respective management teams in performing its monitoring and audit functions under this Engagement Letter. The integrity and credibility of Ridgeway's role as independent compliance monitor depend upon Ridgeway's ability to exercise independent professional judgment without actual or perceived conflicts of interest.

Ridgeway hereby confirms that it has no financial interest, whether direct or indirect, in DEH, DPT, DMP, or any other entity affiliated with Dunmore. Ridgeway further confirms that it has no current or prior business relationship with Pendleton Capital Partners, LP (holder of approximately 27% of the equity interest in DEH), Greenvale Infrastructure Fund III (holder of approximately 19% of the equity interest in DEH), or the Harcourt Family Trust that would impair, or create the appearance of impairing, Ridgeway's independence in performing its functions under this Engagement Letter.

Ridgeway's audit findings and reports shall reflect its independent professional judgment and shall not be subject to approval, revision, or editorial control by Dunmore, DPT, or their management. While Ridgeway shall coordinate with Dunmore's key personnel and Calderwood & Harkness as described in this Engagement Letter, such coordination shall not compromise or limit Ridgeway's ability to report its findings accurately and completely.

Ridgeway shall have unrestricted access to DPT's trading records, communications, personnel, and systems as necessary to perform its monitoring and audit functions. Dunmore shall not impose any conditions, limitations, or restrictions on Ridgeway's access that would impair Ridgeway's ability to conduct thorough and independent audits. In the event that Ridgeway encounters any obstacle to its access, Ridgeway shall promptly notify Jennifer Caulfield, Martin Llewellyn, and Calderwood & Harkness, and the parties shall work in good faith to resolve any such issue.

8. Confidentiality

Ridgeway acknowledges the non-public nature of the FERC investigation under Docket No. IN23-7-000, conducted pursuant to the Commission's Rules of Practice and Procedure, 18 C.F.R. Part 1b. Ridgeway understands that information relating to the investigation, including the existence and scope of the investigation, any documents or data produced in connection with the investigation, and the substance of any communications with FERC OE, is subject to the confidentiality requirements of 18 C.F.R. Part 1b and shall be treated as strictly confidential.

Ridgeway shall treat all information received from Dunmore, DPT, DMP, Calderwood & Harkness, or any other source in connection with this engagement as confidential and proprietary, and shall not disclose any such information to any third party without the prior written consent of both Dunmore and Calderwood & Harkness, except as required to be disclosed to FERC OE as part of Dunmore's compliance reporting obligations under the anticipated Stipulation and Consent Agreement, or as otherwise required by law, regulation, or order of a court or regulatory agency of competent jurisdiction.

Ridgeway shall implement appropriate safeguards to protect the confidentiality of all information received in connection with this engagement, including limiting access to such information to those Ridgeway personnel who have a need to know in order to perform the services described herein, and maintaining all documents and data in secure storage.

The confidentiality obligations set forth in this Section 8 shall survive the termination or expiration of this engagement and shall remain in effect indefinitely, except to the extent that any specific information becomes publicly available through no fault of Ridgeway.

9. Cooperation and Access

Dunmore and DPT shall provide Ridgeway with full, complete, and timely access to all trading records, trading systems, personnel, communications (including but not limited to emails, instant messages, recorded telephone conversations, and any other forms of electronic or written communication), and all other information, documents, and materials necessary for Ridgeway to perform its services under this Engagement Letter.

All DPT trading personnel, including but not limited to Kyle Renfro, Anastasia Petrov, and all other members of the MISO trading desk, shall cooperate fully with Ridgeway's compliance audits, training sessions, and other engagement activities. Cooperation shall include, without limitation, making themselves available for interviews, responding to requests for information, participating in training sessions, and providing candid and complete responses to Ridgeway's inquiries.

Derek Sung, Senior Vice President, Power Marketing & Trading, and Jennifer Caulfield, Chief Compliance Officer, shall be responsible for facilitating scheduling, access, and logistical arrangements necessary to enable Ridgeway to perform its services efficiently and without undue delay. Any issues related to scheduling, access, or cooperation shall be escalated promptly to Martin Llewellyn, General Counsel, for resolution.

10. Reporting and Deliverables

Ridgeway shall produce and deliver the following reports and deliverables during the course of this engagement:

(a) Enhanced Compliance Plan. A comprehensive written Enhanced Compliance Plan document addressing all elements described in Section 3.1 of this Engagement Letter. The Enhanced Compliance Plan shall be suitable for submission to FERC OE as an appendix to the Stipulation and Consent Agreement in Docket No. IN23-7-000.

(b) Compliance Training Curriculum and Materials. A complete set of compliance training curriculum materials, including presentation slides, case studies, reference materials, and assessment instruments, covering all topics described in Section 3.2 of this Engagement Letter.

(c) Quarterly Audit Reports. Four quarterly audit reports during the twelve-month Monitoring Period, each summarizing Ridgeway's audit findings, identifying compliance deficiencies or areas of concern, and recommending corrective actions, as described in Section 3.3 of this Engagement Letter.

(d) Quarterly FERC Reporting Drafts. Draft quarterly reports for Dunmore's review and submission to FERC OE, prepared in coordination with Calderwood & Harkness LLP, covering Dunmore's compliance activities during each quarter of the Monitoring Period, as described in Section 3.4 of this Engagement Letter.

(e) Trade Surveillance System Specifications and Validation Report. A written report setting forth functional specifications for an automated trade surveillance system and documenting the results of Ridgeway's validation of the selected system upon deployment, as described in Section 3.5 of this Engagement Letter.

(f) Final Summary Report. A comprehensive final summary report delivered at the conclusion of the twelve-month Monitoring Period, summarizing Ridgeway's overall assessment of DPT's compliance posture, the effectiveness of the Enhanced Compliance Plan, any outstanding compliance deficiencies, and recommendations for the remaining twenty-four months of the anticipated thirty-six-month compliance monitoring period.

All deliverables shall be provided in both electronic format (Ashbury Holdings Word and PDF) and hard copy, and shall be delivered to Jennifer Caulfield, Martin Llewellyn, and Calderwood & Harkness LLP unless otherwise specified.

11. Limitation of Liability and Indemnification

11.1 Limitation of Liability

Ridgeway's aggregate liability to Dunmore and its affiliates under or in connection with this Engagement Letter, whether arising in contract, tort (including negligence), strict liability, or otherwise, shall not exceed the total fees actually paid by Dunmore to Ridgeway under this Engagement Letter. In no event shall Ridgeway be liable for any indirect, incidental, consequential, special, or punitive damages, including but not limited to loss of profits, loss of revenue, or loss of business opportunity, regardless of whether such damages were foreseeable or whether Ridgeway was advised of the possibility thereof.

11.2 Indemnification. Dunmore shall indemnify, defend, and hold harmless Ridgeway, its members, officers, employees, and agents from and against any and all claims, demands, suits, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) asserted by any third party and arising out of or in connection with Ridgeway's performance of the services described in this Engagement Letter, except to the extent that any such claim arises from or is attributable to Ridgeway's gross negligence or willful misconduct. Ridgeway shall promptly notify Dunmore in writing of any claim for which indemnification is sought under this Section 11.2 and shall cooperate with Dunmore in the defense of any such claim.

11.3 No Guarantee of Outcome

Ridgeway makes no representation, warranty, or guarantee regarding the outcome of the FERC enforcement proceeding in Docket No. IN23-7-000, the acceptance by FERC OE of the Enhanced Compliance Plan, or the success of any particular compliance strategy or measure. Ridgeway's services are advisory and professional in nature, and the ultimate responsibility for compliance with FERC's rules and regulations rests with Dunmore and DPT.

12. Termination

12.1 Termination by Either Party

Either party may terminate this Engagement Letter upon thirty (30) days' prior written notice to the other party, provided that any such termination shall be subject to any obligations imposed under the Stipulation and Consent Agreement in Docket No. IN23-7-000 (once executed and approved by FERC) requiring the continuation of independent compliance monitoring during the Monitoring Period. In the event that the terms of the consent agreement require the continuation of independent monitoring, neither party may terminate this Engagement Letter during the Monitoring Period without the prior written approval of FERC OE or a determination by FERC OE that a successor monitor has been engaged to fulfill the monitoring requirements.

12.2 Proration of Fees

In the event of termination prior to the completion of all services described in Section 3, fees shall be prorated based on services rendered as of the effective date of termination. Dunmore shall pay Ridgeway for all services performed and expenses incurred through the date of termination within thirty (30) days of the effective date of termination.

12.3 Survival. Termination of this Engagement Letter shall not relieve either party of its confidentiality obligations under Section 8, which shall survive termination and remain in full force and effect. The indemnification obligations set forth in Section 11.2 shall likewise survive termination of this Engagement Letter.

13. Governing Law and Dispute Resolution

13.1 Governing Law

This Engagement Letter shall be governed by and construed in accordance with the laws of the State of Texas, without regard to its conflict of laws principles.

13.2 Dispute Resolution

Any dispute, controversy, or claim arising out of or relating to this Engagement Letter, or the breach, termination, or validity thereof, shall be resolved through binding arbitration administered in Houston, Texas, in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. The arbitration shall be conducted before a single arbitrator mutually agreed upon by the parties, or, in the absence of agreement, appointed in accordance with the applicable rules. The arbitrator's decision shall be final and binding on the parties, and judgment on the award may be entered in any court of competent jurisdiction. Each party shall bear its own costs and attorneys' fees in connection with any arbitration proceeding, unless the arbitrator determines that the allocation of costs and fees should be otherwise.

14. Calderwood & Harkness Review and Coordination

The parties acknowledge that this Engagement Letter was drafted and reviewed by Calderwood & Harkness LLP in connection with C&H Matter Number 1016-00004 and Calderwood & Harkness's representation of Dunmore in the FERC enforcement proceeding in Docket No. IN23-7-000.

Ridgeway shall coordinate with Calderwood & Harkness on all matters relating to the FERC enforcement proceeding, including the content and timing of deliverables, the preparation of reports to FERC OE, and any direct or indirect communications with FERC OE or its staff. Ridgeway shall not communicate directly with FERC OE regarding the investigation or the consent agreement without the prior knowledge and consent of Calderwood & Harkness, unless directed to do so by FERC OE in a manner that does not permit prior consultation with counsel.

Work product generated by Ridgeway at the direction of Calderwood & Harkness LLP in connection with the FERC enforcement proceeding may be subject to attorney work product protection under applicable law. The parties shall cooperate to preserve any applicable privileges and protections, and Ridgeway shall not waive or take any action inconsistent with the preservation of such privileges without the prior written consent of Calderwood & Harkness.

15. Miscellaneous

This Engagement Letter constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, and communications, whether oral or written. This Engagement Letter may not be amended or modified except by a written instrument executed by both parties. No waiver of any provision of this Engagement Letter shall be effective unless made in writing and signed by the waiving party. This Engagement Letter may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

If the foregoing terms are acceptable, please indicate your agreement by signing and returning a copy of this Engagement Letter in the space provided below. We look forward to working with you on this important engagement.

Very truly yours,

DUNMORE ENERGY HOLDINGS LTD.

By: ________

Name: Martin Llewellyn

Title: General Counsel

Date: October 15, 2023

Address: 2200 Post Oak Boulevard, Suite 3100

Houston, Texas 77056

ACCEPTED AND AGREED:

RIDGEWAY COMPLIANCE SOLUTIONS LLC

By: ________

Name: Dr. Carolyn Whitford

Title: Founder & Managing Director

Date: October 15, 2023

Address: 3000 Richmond Avenue, Suite 800

Houston, Texas 77098

Acknowledgment by Outside Counsel

The undersigned, as outside counsel to Dunmore Energy Holdings Ltd. in FERC Docket No. IN23-7-000, hereby confirms that she has reviewed this Engagement Letter and that its terms are consistent with the anticipated requirements of the Stipulation and Consent Agreement in Docket No. IN23-7-000 and with Calderwood & Harkness LLP's strategy for the resolution of the FERC enforcement matter.

CALDERWOOD & HARKNESS LLP

Reviewed and Approved:

By: ________

Name: Catherine Bloom

Title: Partner

Date: October 15, 2023

Address: 1001 Fannin Street, Suite 4200

Houston, Texas 77002 C&H Matter No. 1016-00004

DUNMORE ENERGY HOLDINGS LTD. 2200 Post Oak Boulevard, Suite 3100 Houston, Texas 77056
October 15, 2023
Dr. Carolyn Whitford Founder & Managing Director Ridgeway Compliance Solutions LLC 3000 Richmond Avenue, Suite 800 Houston, Texas 77098
Re: Engagement of Ridgeway Compliance Solutions LLC as Independent Compliance Consultant and Monitor — FERC Docket No. IN23-7-000
Dear Dr. Whitford:
This letter (this "Engagement Letter") sets forth the terms and conditions under which Dunmore Energy Holdings Ltd. retains Ridgeway Compliance Solutions LLC to serve as an independent compliance consultant and monitor in connection with the matters described more fully herein. We appreciate your willingness to undertake this important engagement, and we look forward to working with you and your team throughout this process.
1. Introduction and Background
Dunmore Energy Holdings Ltd. ("Dunmore" or "DEH"), a Cayman Islands exempted company with its principal United States office at 2200 Post Oak Boulevard, Suite 3100, Houston, Texas 77056, Employer Identification Number 98-1347562, hereby retains Ridgeway Compliance Solutions LLC ("Ridgeway" or "Consultant"), a Texas limited liability company with its principal office at 3000 Richmond Avenue, Suite 800, Houston, Texas 77098, to serve as independent compliance consultant and monitor under the terms and conditions set forth in this Engagement Letter.
Dunmore's wholly owned subsidiary, Dunmore Power Trading LLC ("DPT"), a Delaware limited liability company, Employer Identification Number 82-4519763, holds market-based rate authority granted by the Federal Energy Regulatory Commission ("FERC") under FERC Docket No. ER05-1128-000. DPT trades actively in the Midcontinent Independent System Operator, Inc. ("MISO") and Southwest Power Pool, Inc. ("SPP") organized wholesale electricity markets. DPT currently operates a fourteen-trader MISO trading desk under the supervision of Derek Sung, Senior Vice President, Power Marketing & Trading, who is responsible for overseeing all aspects of DPT's day-to-day trading operations in the MISO Day-Ahead and Real-Time energy markets, as well as DPT's Financial Transmission Rights portfolio and virtual transaction activity within the MISO footprint.
FERC's Office of Enforcement ("FERC OE") is conducting a non-public investigation under FERC Docket No. IN23-7-000 into DPT's trading activities in the MISO Day-Ahead and Real-Time energy markets during the period from January 3, 2022 through March 17, 2023 (the "Relevant Period"). The investigation involves allegations of potential market manipulation in violation of Section 222 of the Federal Power Act, 16 U.S.C. § 824v, and the Commission's Anti-Manipulation Rule, 18 C.F.R. § 1c.2. These provisions broadly prohibit any entity from, directly or indirectly, using or employing any device, scheme, or artifice to defraud 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, or from engaging in any act, practice, or course of business that operates or would operate as a fraud or deceit upon any entity.
The investigation was initiated following a referral by Velthorn Market Analytics, Inc., MISO's Independent Market Monitor, submitted by Dr. Patricia Engel, President of Velthorn Market Analytics, Inc., dated April 3, 2023. FERC's preliminary inquiry letter, requesting the preservation and production of documents and information relating to DPT's trading activities during the Relevant Period, was issued on May 22, 2023. Since that time, Dunmore and DPT have cooperated with FERC OE's investigation, including responding to multiple data requests and facilitating investigative testimony of DPT trading personnel.
Dunmore's outside counsel for this enforcement matter is Calderwood & Harkness LLP ("Calderwood & Harkness" or "C&H"), 1001 Fannin Street, Suite 4200, Houston, Texas 77002, led by Catherine Bloom, Responsible Partner, and Hannah Brinkley, Lead Associate (C&H Matter Number 1016-00004). This Engagement Letter has been drafted and reviewed by Calderwood & Harkness in connection with that representation. Dunmore's prior FERC regulatory counsel, Aldercroft & Beane LLP, was conflicted out of the enforcement matter due to a preexisting relationship with one of the entities involved in the underlying transactions and is therefore not participating in or advising on this engagement.
FERC Staff issued Preliminary Findings on October 2, 2023, setting forth Staff's preliminary conclusions regarding DPT's trading activities during the Relevant Period. Dunmore is currently engaged in responding to those Preliminary Findings and is pursuing a negotiated resolution of the investigation with FERC OE. Based on the current posture of discussions, it is anticipated that any resolution will take the form of a Stipulation and Consent Agreement that will include, among other terms, an enhanced compliance plan as a central component. The engagement of Ridgeway is intended to position Dunmore to design, implement, and monitor such an enhanced compliance plan, and to demonstrate to FERC OE Dunmore's commitment to maintaining a best-in-class compliance program for its wholesale electricity trading operations.
In connection with Dunmore's broader compliance efforts, Jennifer Caulfield was appointed as Dunmore's Chief Compliance Officer on February 6, 2023, reporting directly to the DEH Board of Directors. Ms. Caulfield has been charged with overseeing all aspects of Dunmore's regulatory compliance program and will serve as the primary internal point of contact for the engagement described herein.
2. Qualifications of Ridgeway and Dr. Whitford
Dr. Carolyn Whitford is the Founder and Managing Director of Ridgeway Compliance Solutions LLC. Dr. Whitford is a former attorney in FERC's Office of Enforcement, where she gained direct, firsthand experience in energy market manipulation investigations, enforcement proceedings, and compliance program design and evaluation. During her tenure at FERC OE, Dr. Whitford participated in multiple significant enforcement matters involving organized wholesale electricity market participants and developed deep expertise in the Commission's anti-manipulation framework, including the interpretation and application of Section 222 of the Federal Power Act and 18 C.F.R. § 1c.2.
Since founding Ridgeway, Dr. Whitford has focused the firm's practice on designing, implementing, and monitoring compliance programs for wholesale electricity market participants subject to FERC jurisdiction. Ridgeway has advised numerous entities holding market-based rate authority on the development of compliance programs that satisfy FERC's expectations as articulated in the Commission's Policy Statement on Enforcement, as well as in the terms of consent agreements and settlement orders. Ridgeway has served as an independent compliance monitor in prior FERC enforcement matters, and its work product has been accepted by FERC OE as satisfying the compliance monitoring requirements of consent agreements in those cases.
Given Dr. Whitford's direct experience with FERC's enforcement processes, her familiarity with the Commission's expectations for compliance programs, and Ridgeway's demonstrated track record in this area, Ridgeway's qualifications make it well-suited to serve as the independent compliance consultant and monitor for DPT's wholesale electricity trading operations, in a capacity acceptable to FERC OE in connection with the anticipated resolution of Docket No. IN23-7-000.
3. Scope of Engagement
Ridgeway's engagement shall encompass the following scope of services, each of which is described in detail below.
3.1 Compliance Program Design
Ridgeway shall design and develop a comprehensive enhanced compliance program (the "Enhanced Compliance Plan") for DPT's wholesale electricity trading operations in the MISO and SPP organized wholesale electricity markets. The Enhanced Compliance Plan shall be designed to satisfy the requirements anticipated to be set forth in the Stipulation and Consent Agreement in Docket No. IN23-7-000, and shall be suitable for submission to FERC OE as an appendix to such agreement.
The Enhanced Compliance Plan shall address, at a minimum, each of the following areas:
(a) Day-Ahead and Real-Time Market Bidding Policies and Procedures. Comprehensive policies and procedures governing Day-Ahead and Real-Time market bidding in the MISO and SPP markets, including detailed guidance on offer pricing relative to marginal cost, the documentation of cost bases for physical generation offers, and procedures for ensuring that bids and offers submitted to the market reflect legitimate economic interests and do not constitute uneconomic bidding designed to manipulate market prices or congestion patterns.
(b) Financial Transmission Rights Policies. Policies for the acquisition, management, and ongoing monitoring of Financial Transmission Rights ("FTR") positions, including procedures for reviewing FTR positions in the context of DPT's overall portfolio to identify potential conflicts of interest or cross-product strategies that could give rise to manipulation concerns.
(c) Cross-Product Transaction Review. Procedures for systematic cross-product transaction review, encompassing physical generation offers, virtual transactions (including Increment Offers, Decrement Bids, and Up-To Congestion transactions), and FTR positions. These procedures shall be designed to detect patterns of coordinated trading across products that could constitute market manipulation or otherwise raise concerns under FERC's anti-manipulation rule.
(d) Gas Nomination and Scheduling Coordination Policies. Policies governing coordination between DPT and Dunmore Midstream Partners LP ("DMP," Employer Identification Number 47-8831205) regarding gas nominations and scheduling, to ensure that DPT's bidding in the wholesale electricity markets reflects actual marginal costs, taking into account the fuel supply arrangements between the affiliated entities, and to prevent any manipulation of gas nominations or scheduling for the purpose of influencing electricity market prices.
(e) Trading Desk Oversight Protocols. Trading desk oversight protocols, including requirements for supervisory review of trading activity by the Senior Vice President, Power Marketing & Trading (or designee), escalation procedures for transactions or trading patterns that deviate from established risk limits or compliance parameters, and procedures for real-time monitoring of trading activity.
(f) Whistleblower and Internal Reporting Mechanisms. Whistleblower and internal reporting mechanisms that enable DPT trading personnel and other Dunmore employees to report potential compliance violations without fear of retaliation, including anonymous reporting channels and clear procedures for the investigation and resolution of reported concerns.
(g) Record-Keeping and Documentation Requirements. Record-keeping and documentation requirements for trading decisions, including the preservation of trader communications (including instant messages, emails, and recorded telephone conversations), the documentation of the economic rationale for significant trading decisions, and the retention of all records in accordance with FERC's record retention requirements.
(h) Annual Compliance Certification Process. An annual compliance certification process pursuant to which both the Chief Executive Officer of Dunmore (currently Gavin Harcourt) and the Chief Compliance Officer of Dunmore (currently Jennifer Caulfield) shall execute certifications attesting to the effectiveness of DPT's compliance program and confirming that DPT's trading operations have been conducted in compliance with FERC's rules and regulations and with the terms of the Enhanced Compliance Plan during the preceding twelve-month period.
3.2 Compliance Training
Ridgeway shall design and deliver annual compliance training for all DPT trading personnel. At the time of this Engagement Letter, DPT employs fourteen traders on its MISO trading desk. Ridgeway's training obligations shall extend to all current and future members of the MISO trading desk, as well as any SPP trading personnel that may be assigned during the term of this engagement.
Compliance training delivered by Ridgeway shall meet or exceed a minimum of sixteen (16) hours per year per trading employee. Training may be delivered in multiple sessions over the course of the year, provided that the aggregate annual training requirement is satisfied for each covered employee.
Training content shall cover, at a minimum, the following topics:
(a) FERC's Anti-Manipulation Rule (18 C.F.R. § 1c.2), including the elements of a violation, the Commission's interpretation and application of the rule, and relevant precedent from enforcement actions and Commission orders;
(b) Section 222 of the Federal Power Act (16 U.S.C. § 824v), including the scope of the prohibition and its relationship to the Anti-Manipulation Rule;
(c) MISO and SPP market rules, including the specific rules governing Day-Ahead and Real-Time energy markets, virtual transactions, and Financial Transmission Rights;
(d) Recognition of manipulative trading patterns, including case studies drawn from prior FERC enforcement actions and settlement orders, with particular emphasis on patterns relevant to the types of trading activities at issue in Docket No. IN23-7-000;
(e) Reporting obligations of market participants and individual traders, including obligations under FERC regulations, MISO and SPP tariffs, and Dunmore's internal compliance policies; and
(f) Consequences of violations, including potential penalties under the Federal Power Act, sanctions under MISO and SPP market rules, and disciplinary consequences under Dunmore's internal policies.
The initial compliance training session shall be delivered within ninety (90) days of the execution of any Stipulation and Consent Agreement with FERC in Docket No. IN23-7-000. Annual refresher training shall be delivered thereafter on an annual basis during the Monitoring Period (as defined in Section 3.3 below).
Ridgeway shall provide all training materials, attendance records, and training completion certifications to Dunmore's Chief Compliance Officer, Jennifer Caulfield, and to Calderwood & Harkness LLP for inclusion in Dunmore's periodic compliance reporting to FERC OE as required under the anticipated consent agreement.
3.3 Independent Compliance Monitoring
Ridgeway shall serve as the independent compliance monitor for DPT's MISO and SPP trading operations for a period of twelve (12) months from the date of FERC's order approving the Stipulation and Consent Agreement in Docket No. IN23-7-000 (the "Monitoring Period").
During the Monitoring Period, Ridgeway shall conduct quarterly compliance audits, for a total of four (4) audits during the twelve-month engagement. The parties acknowledge that the overall compliance monitoring period required by the anticipated Stipulation and Consent Agreement is thirty-six (36) months. Monitoring beyond Ridgeway's initial twelve-month term shall be addressed separately, either through an extension of this engagement by mutual written agreement or through the engagement of a successor independent compliance monitor, as described further in Section 5 of this Engagement Letter.
Each quarterly compliance audit shall include, at a minimum, a review of the following:
(a) DPT's trading activity in the MISO and SPP Day-Ahead and Real-Time energy markets during the quarter, including a review of bid and offer pricing relative to marginal cost;
(b) DPT's FTR positions, including new acquisitions, dispositions, and the relationship between FTR positions and DPT's other trading activity;
(c) Virtual transaction patterns, including Increment Offers, Decrement Bids, and any Up-To Congestion transactions, and any correlations between virtual trading activity and physical or FTR positions;
(d) Coordination between DPT and DMP regarding gas nominations and scheduling, and the extent to which DPT's bidding reflects actual marginal costs;
(e) Trader communications, including emails, instant messages, and recorded telephone conversations, on a sample basis as determined by Ridgeway in its independent professional judgment;
(f) Adherence by DPT trading personnel and management to the policies and procedures set forth in the Enhanced Compliance Plan; and
(g) Any other matters that Ridgeway determines, in its independent professional judgment, are relevant to the assessment of DPT's compliance with FERC's rules and regulations and with the Enhanced Compliance Plan.
Following each quarterly audit, Ridgeway shall prepare a written quarterly audit report summarizing its findings, identifying any compliance deficiencies or areas of concern, and recommending corrective actions to be taken by Dunmore and DPT. Quarterly audit reports shall be delivered to Jennifer Caulfield, Martin Llewellyn, and Calderwood & Harkness LLP within thirty (30) days following the close of each calendar quarter during the Monitoring Period.
3.4 FERC Reporting Support
Ridgeway shall assist Dunmore in preparing the quarterly reports to FERC OE that are expected to be required under the anticipated Stipulation and Consent Agreement in Docket No. IN23-7-000 for the duration of the Monitoring Period. The quarterly reporting obligations to FERC OE are anticipated to cover the period through February 9, 2027, which represents thirty-six (36) months from the anticipated date of the FERC order approving the consent agreement. Ridgeway's engagement under this Engagement Letter covers only the first twelve (12) months of that period; reporting assistance for the remaining twenty-four (24) months shall be addressed separately.
Ridgeway's quarterly audit reports and audit findings may be shared with FERC OE as part of Dunmore's compliance reporting obligations under the consent agreement. Ridgeway acknowledges and consents to such disclosure, subject to the confidentiality provisions set forth in Section 8 of this Engagement Letter. All quarterly reports to FERC OE shall be reviewed by Calderwood & Harkness LLP prior to submission to ensure consistency with the terms of the consent agreement and with any applicable legal privileges.
3.5 Automated Trade Surveillance System
Ridgeway shall advise Dunmore on the selection, procurement, and implementation of automated trade surveillance systems capable of detecting potential market manipulation patterns in DPT's trading operations. The advisory services under this Section 3.5 shall include, without limitation:
(a) Assessment of DPT's existing trade monitoring capabilities and identification of gaps;
(b) Development of functional specifications and requirements for an automated trade surveillance system, including the capability to detect uneconomic bidding patterns, cross-product coordination between physical offers, virtual transactions, and FTR positions, and anomalous congestion patterns at relevant MISO pricing nodes, including but not limited to the Indiana Hub and the Minnesota Hub;
(c) Evaluation of commercially available trade surveillance platforms and provision of recommendations to Dunmore regarding the selection and procurement of an appropriate system;
(d) Guidance on the configuration and calibration of the selected system's alert thresholds and detection algorithms to align with the requirements of the Enhanced Compliance Plan and FERC's anti-manipulation framework; and
(e) Validation of system functionality upon deployment, including testing of the system's ability to generate alerts for the types of trading patterns and anomalies identified in the functional specifications.
Ridgeway shall deliver a written trade surveillance system specifications and validation report to Dunmore's Chief Compliance Officer and to Calderwood & Harkness upon completion of the validation process.
4. Key Dunmore Personnel / Points of Contact
Dunmore designates the following individuals as key personnel and points of contact for this engagement:
(a) Jennifer Caulfield, Chief Compliance Officer — Ms. Caulfield shall serve as Ridgeway's primary day-to-day contact for all matters relating to compliance program design and implementation. The CCO reports directly to the DEH Board of Directors, ensuring the independence of the compliance function from DPT's trading operations.
(b) Rhonda Vasquez, Vice President, Regulatory Affairs — Ms. Vasquez shall serve as the liaison for all FERC-related regulatory matters and reporting, including coordination on the preparation and submission of quarterly reports to FERC OE.
(c) Derek Sung, Senior Vice President, Power Marketing & Trading — Mr. Sung shall serve as the contact for trading desk operations and personnel matters, including facilitating Ridgeway's access to trading records, systems, and the members of DPT's MISO trading desk.
(d) Martin Llewellyn, General Counsel — Mr. Llewellyn shall provide legal oversight of this engagement on behalf of Dunmore and shall be the point of contact for all legal and contractual matters arising under this Engagement Letter.
(e) Calderwood & Harkness LLP — Catherine Bloom, Responsible Partner, and Hannah Brinkley, Lead Associate, shall serve as outside counsel coordinating this engagement and the broader FERC enforcement response. All communications regarding the FERC enforcement proceeding shall be coordinated through Calderwood & Harkness.
5. Term and Duration
This Engagement Letter shall be effective as of October 15, 2023 (the "Effective Date"). Ridgeway's engagement for compliance program design (Section 3.1) and compliance training development (Section 3.2) shall commence immediately upon execution of this Engagement Letter.
The twelve-month Monitoring Period (Section 3.3) shall commence on the date on which FERC issues an order approving the Stipulation and Consent Agreement in Docket No. IN23-7-000, and shall continue for twelve (12) consecutive months from such date. The FERC reporting support services (Section 3.4) and automated trade surveillance advisory services (Section 3.5) shall be performed concurrently during the applicable portions of the engagement period.
This engagement may be extended beyond the initial twelve-month Monitoring Period by mutual written agreement of the parties, subject to FERC OE approval if such approval is required under the terms of the Stipulation and Consent Agreement. The parties acknowledge that the Enhanced Compliance Plan contemplates a thirty-six (36) month compliance monitoring period as a condition of the anticipated consent agreement. Dunmore may seek to extend Ridgeway's engagement for all or a portion of the remaining twenty-four (24) months, or may engage a successor independent compliance monitor to fulfill the monitoring requirements for the balance of the thirty-six-month period. Any such extension or successor engagement shall be documented in a separate written agreement.
6. Fees and Payment
6.1 Flat Fee
In consideration of the services described in Section 3 of this Engagement Letter, Dunmore shall pay Ridgeway a flat fee of Three Hundred Eighty-Five Thousand Dollars ($385,000.00). This flat fee encompasses the full scope of services to be provided by Ridgeway under this Engagement Letter, including:
(a) Compliance program design and documentation (Section 3.1);
(b) Compliance training, including the initial training session and the first annual refresher training session (Section 3.2);
(c) Twelve-month independent compliance monitoring, including four quarterly audits and quarterly audit reports (Section 3.3);
(d) FERC reporting support during the Monitoring Period (Section 3.4); and
(e) Automated trade surveillance system advisory services, including specifications development and system validation (Section 3.5).
6.2 Payment Schedule
The flat fee shall be payable in three installments as follows:
(a) First Installment: One Hundred Twenty-Five Thousand Dollars ($125,000.00), payable upon execution of this Engagement Letter;
(b) Second Installment: One Hundred Thirty Thousand Dollars ($130,000.00), payable upon delivery of the completed Enhanced Compliance Plan to Dunmore and Calderwood & Harkness LLP; and
(c) Third Installment: One Hundred Thirty Thousand Dollars ($130,000.00), payable upon completion of the twelve-month Monitoring Period and delivery of the final summary report described in Section 10.
6.3 Expenses.  Reasonable out-of-pocket expenses incurred by Ridgeway in connection with the performance of services under this Engagement Letter, including travel, lodging, and materials, shall be reimbursable at cost upon submission of itemized invoices with supporting documentation. Out-of-pocket expenses shall not exceed Twenty-Five Thousand Dollars ($25,000.00) in the aggregate without the prior written approval of Dunmore. All expense reimbursement requests shall be submitted to Jennifer Caulfield for approval.
6.4 Payment Terms
All invoices shall be payable within thirty (30) days of receipt by Dunmore. Invoices shall be directed to the attention of Jennifer Caulfield, Chief Compliance Officer, at the address set forth in Section 4 above, with a copy to Martin Llewellyn, General Counsel.
7. Independence and Objectivity
Ridgeway shall maintain independence from Dunmore, DPT, and their respective management teams in performing its monitoring and audit functions under this Engagement Letter. The integrity and credibility of Ridgeway's role as independent compliance monitor depend upon Ridgeway's ability to exercise independent professional judgment without actual or perceived conflicts of interest.
Ridgeway hereby confirms that it has no financial interest, whether direct or indirect, in DEH, DPT, DMP, or any other entity affiliated with Dunmore. Ridgeway further confirms that it has no current or prior business relationship with Pendleton Capital Partners, LP (holder of approximately 27% of the equity interest in DEH), Greenvale Infrastructure Fund III (holder of approximately 19% of the equity interest in DEH), or the Harcourt Family Trust that would impair, or create the appearance of impairing, Ridgeway's independence in performing its functions under this Engagement Letter.
Ridgeway's audit findings and reports shall reflect its independent professional judgment and shall not be subject to approval, revision, or editorial control by Dunmore, DPT, or their management. While Ridgeway shall coordinate with Dunmore's key personnel and Calderwood & Harkness as described in this Engagement Letter, such coordination shall not compromise or limit Ridgeway's ability to report its findings accurately and completely.
Ridgeway shall have unrestricted access to DPT's trading records, communications, personnel, and systems as necessary to perform its monitoring and audit functions. Dunmore shall not impose any conditions, limitations, or restrictions on Ridgeway's access that would impair Ridgeway's ability to conduct thorough and independent audits. In the event that Ridgeway encounters any obstacle to its access, Ridgeway shall promptly notify Jennifer Caulfield, Martin Llewellyn, and Calderwood & Harkness, and the parties shall work in good faith to resolve any such issue.
8. Confidentiality
Ridgeway acknowledges the non-public nature of the FERC investigation under Docket No. IN23-7-000, conducted pursuant to the Commission's Rules of Practice and Procedure, 18 C.F.R. Part 1b. Ridgeway understands that information relating to the investigation, including the existence and scope of the investigation, any documents or data produced in connection with the investigation, and the substance of any communications with FERC OE, is subject to the confidentiality requirements of 18 C.F.R. Part 1b and shall be treated as strictly confidential.
Ridgeway shall treat all information received from Dunmore, DPT, DMP, Calderwood & Harkness, or any other source in connection with this engagement as confidential and proprietary, and shall not disclose any such information to any third party without the prior written consent of both Dunmore and Calderwood & Harkness, except as required to be disclosed to FERC OE as part of Dunmore's compliance reporting obligations under the anticipated Stipulation and Consent Agreement, or as otherwise required by law, regulation, or order of a court or regulatory agency of competent jurisdiction.
Ridgeway shall implement appropriate safeguards to protect the confidentiality of all information received in connection with this engagement, including limiting access to such information to those Ridgeway personnel who have a need to know in order to perform the services described herein, and maintaining all documents and data in secure storage.
The confidentiality obligations set forth in this Section 8 shall survive the termination or expiration of this engagement and shall remain in effect indefinitely, except to the extent that any specific information becomes publicly available through no fault of Ridgeway.
9. Cooperation and Access
Dunmore and DPT shall provide Ridgeway with full, complete, and timely access to all trading records, trading systems, personnel, communications (including but not limited to emails, instant messages, recorded telephone conversations, and any other forms of electronic or written communication), and all other information, documents, and materials necessary for Ridgeway to perform its services under this Engagement Letter.
All DPT trading personnel, including but not limited to Kyle Renfro, Anastasia Petrov, and all other members of the MISO trading desk, shall cooperate fully with Ridgeway's compliance audits, training sessions, and other engagement activities. Cooperation shall include, without limitation, making themselves available for interviews, responding to requests for information, participating in training sessions, and providing candid and complete responses to Ridgeway's inquiries.
Derek Sung, Senior Vice President, Power Marketing & Trading, and Jennifer Caulfield, Chief Compliance Officer, shall be responsible for facilitating scheduling, access, and logistical arrangements necessary to enable Ridgeway to perform its services efficiently and without undue delay. Any issues related to scheduling, access, or cooperation shall be escalated promptly to Martin Llewellyn, General Counsel, for resolution.
10. Reporting and Deliverables
Ridgeway shall produce and deliver the following reports and deliverables during the course of this engagement:
(a) Enhanced Compliance Plan. A comprehensive written Enhanced Compliance Plan document addressing all elements described in Section 3.1 of this Engagement Letter. The Enhanced Compliance Plan shall be suitable for submission to FERC OE as an appendix to the Stipulation and Consent Agreement in Docket No. IN23-7-000.
(b) Compliance Training Curriculum and Materials. A complete set of compliance training curriculum materials, including presentation slides, case studies, reference materials, and assessment instruments, covering all topics described in Section 3.2 of this Engagement Letter.
(c) Quarterly Audit Reports. Four quarterly audit reports during the twelve-month Monitoring Period, each summarizing Ridgeway's audit findings, identifying compliance deficiencies or areas of concern, and recommending corrective actions, as described in Section 3.3 of this Engagement Letter.
(d) Quarterly FERC Reporting Drafts. Draft quarterly reports for Dunmore's review and submission to FERC OE, prepared in coordination with Calderwood & Harkness LLP, covering Dunmore's compliance activities during each quarter of the Monitoring Period, as described in Section 3.4 of this Engagement Letter.
(e) Trade Surveillance System Specifications and Validation Report. A written report setting forth functional specifications for an automated trade surveillance system and documenting the results of Ridgeway's validation of the selected system upon deployment, as described in Section 3.5 of this Engagement Letter.
(f) Final Summary Report. A comprehensive final summary report delivered at the conclusion of the twelve-month Monitoring Period, summarizing Ridgeway's overall assessment of DPT's compliance posture, the effectiveness of the Enhanced Compliance Plan, any outstanding compliance deficiencies, and recommendations for the remaining twenty-four months of the anticipated thirty-six-month compliance monitoring period.
All deliverables shall be provided in both electronic format (Ashbury Holdings Word and PDF) and hard copy, and shall be delivered to Jennifer Caulfield, Martin Llewellyn, and Calderwood & Harkness LLP unless otherwise specified.
11. Limitation of Liability and Indemnification
11.1 Limitation of Liability
Ridgeway's aggregate liability to Dunmore and its affiliates under or in connection with this Engagement Letter, whether arising in contract, tort (including negligence), strict liability, or otherwise, shall not exceed the total fees actually paid by Dunmore to Ridgeway under this Engagement Letter. In no event shall Ridgeway be liable for any indirect, incidental, consequential, special, or punitive damages, including but not limited to loss of profits, loss of revenue, or loss of business opportunity, regardless of whether such damages were foreseeable or whether Ridgeway was advised of the possibility thereof.
11.2 Indemnification.  Dunmore shall indemnify, defend, and hold harmless Ridgeway, its members, officers, employees, and agents from and against any and all claims, demands, suits, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) asserted by any third party and arising out of or in connection with Ridgeway's performance of the services described in this Engagement Letter, except to the extent that any such claim arises from or is attributable to Ridgeway's gross negligence or willful misconduct. Ridgeway shall promptly notify Dunmore in writing of any claim for which indemnification is sought under this Section 11.2 and shall cooperate with Dunmore in the defense of any such claim.
11.3 No Guarantee of Outcome
Ridgeway makes no representation, warranty, or guarantee regarding the outcome of the FERC enforcement proceeding in Docket No. IN23-7-000, the acceptance by FERC OE of the Enhanced Compliance Plan, or the success of any particular compliance strategy or measure. Ridgeway's services are advisory and professional in nature, and the ultimate responsibility for compliance with FERC's rules and regulations rests with Dunmore and DPT.
12. Termination
12.1 Termination by Either Party
Either party may terminate this Engagement Letter upon thirty (30) days' prior written notice to the other party, provided that any such termination shall be subject to any obligations imposed under the Stipulation and Consent Agreement in Docket No. IN23-7-000 (once executed and approved by FERC) requiring the continuation of independent compliance monitoring during the Monitoring Period. In the event that the terms of the consent agreement require the continuation of independent monitoring, neither party may terminate this Engagement Letter during the Monitoring Period without the prior written approval of FERC OE or a determination by FERC OE that a successor monitor has been engaged to fulfill the monitoring requirements.
12.2 Proration of Fees
In the event of termination prior to the completion of all services described in Section 3, fees shall be prorated based on services rendered as of the effective date of termination. Dunmore shall pay Ridgeway for all services performed and expenses incurred through the date of termination within thirty (30) days of the effective date of termination.
12.3 Survival.  Termination of this Engagement Letter shall not relieve either party of its confidentiality obligations under Section 8, which shall survive termination and remain in full force and effect. The indemnification obligations set forth in Section 11.2 shall likewise survive termination of this Engagement Letter.
13. Governing Law and Dispute Resolution
13.1 Governing Law
This Engagement Letter shall be governed by and construed in accordance with the laws of the State of Texas, without regard to its conflict of laws principles.
13.2 Dispute Resolution
Any dispute, controversy, or claim arising out of or relating to this Engagement Letter, or the breach, termination, or validity thereof, shall be resolved through binding arbitration administered in Houston, Texas, in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. The arbitration shall be conducted before a single arbitrator mutually agreed upon by the parties, or, in the absence of agreement, appointed in accordance with the applicable rules. The arbitrator's decision shall be final and binding on the parties, and judgment on the award may be entered in any court of competent jurisdiction. Each party shall bear its own costs and attorneys' fees in connection with any arbitration proceeding, unless the arbitrator determines that the allocation of costs and fees should be otherwise.
14. Calderwood & Harkness Review and Coordination
The parties acknowledge that this Engagement Letter was drafted and reviewed by Calderwood & Harkness LLP in connection with C&H Matter Number 1016-00004 and Calderwood & Harkness's representation of Dunmore in the FERC enforcement proceeding in Docket No. IN23-7-000.
Ridgeway shall coordinate with Calderwood & Harkness on all matters relating to the FERC enforcement proceeding, including the content and timing of deliverables, the preparation of reports to FERC OE, and any direct or indirect communications with FERC OE or its staff. Ridgeway shall not communicate directly with FERC OE regarding the investigation or the consent agreement without the prior knowledge and consent of Calderwood & Harkness, unless directed to do so by FERC OE in a manner that does not permit prior consultation with counsel.
Work product generated by Ridgeway at the direction of Calderwood & Harkness LLP in connection with the FERC enforcement proceeding may be subject to attorney work product protection under applicable law. The parties shall cooperate to preserve any applicable privileges and protections, and Ridgeway shall not waive or take any action inconsistent with the preservation of such privileges without the prior written consent of Calderwood & Harkness.
15. Miscellaneous
This Engagement Letter constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, and communications, whether oral or written. This Engagement Letter may not be amended or modified except by a written instrument executed by both parties. No waiver of any provision of this Engagement Letter shall be effective unless made in writing and signed by the waiving party. This Engagement Letter may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
If the foregoing terms are acceptable, please indicate your agreement by signing and returning a copy of this Engagement Letter in the space provided below. We look forward to working with you on this important engagement.
Very truly yours,
DUNMORE ENERGY HOLDINGS LTD.
By: ________
Name: Martin Llewellyn
Title: General Counsel
Date: October 15, 2023
Address: 2200 Post Oak Boulevard, Suite 3100
Houston, Texas 77056
ACCEPTED AND AGREED:
RIDGEWAY COMPLIANCE SOLUTIONS LLC
By: ________
Name: Dr. Carolyn Whitford
Title: Founder & Managing Director
Date: October 15, 2023
Address: 3000 Richmond Avenue, Suite 800
Houston, Texas 77098
Acknowledgment by Outside Counsel
The undersigned, as outside counsel to Dunmore Energy Holdings Ltd. in FERC Docket No. IN23-7-000, hereby confirms that she has reviewed this Engagement Letter and that its terms are consistent with the anticipated requirements of the Stipulation and Consent Agreement in Docket No. IN23-7-000 and with Calderwood & Harkness LLP's strategy for the resolution of the FERC enforcement matter.
CALDERWOOD & HARKNESS LLP
Reviewed and Approved:
By: ________
Name: Catherine Bloom
Title: Partner
Date: October 15, 2023
Address: 1001 Fannin Street, Suite 4200
Houston, Texas 77002 C&H Matter No. 1016-00004

DUNMORE ENERGY HOLDINGS LTD. 2200 Post Oak Boulevard, Suite 3100 Houston, Texas 77056

DUNMORE ENERGY HOLDINGS LTD.

ACCEPTED AND AGREED:

RIDGEWAY COMPLIANCE SOLUTIONS LLC

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts