CALDERWOOD & HARKNESS LLP Attorneys at Law 1001 Fannin Street, Suite 4200 Houston, Texas 77002 Tel: (713) 654-8000
July 17, 2023
VIA ELECTRONIC DELIVERY AND U.S. MAIL
Thomas Adebayo Lead Investigator Division of Investigations Office of Enforcement Federal Energy Regulatory Commission 888 First Street NE Washington, D.C. 20426
Re: Docket No. IN23-7-000 — Objections and Responses of Dunmore Energy Holdings Ltd. and Dunmore Power Trading LLC to First Data Request
C&H Matter No. 1016-00004
Dear Mr. Adebayo:
I. Introduction
Catherine Bloom, of Calderwood & Harkness LLP, submits this letter on behalf of Dunmore Energy Holdings Ltd. ("DEH" or "Dunmore") and Dunmore Power Trading LLC ("DPT") (collectively, "Respondents") in response to the First Data Request issued by the Staff of the Office of Enforcement ("OE" or "Staff") of the Federal Energy Regulatory Commission ("FERC" or "Commission"), dated June 26, 2023, in the above-captioned non-public investigation.
The First Data Request comprises forty-one (41) interrogatories and twenty-three (23) document requests. Respondents have undertaken diligent and good-faith efforts to respond to each interrogatory and document request in a thorough and timely manner, consistent with Respondents' commitment to full cooperation with the Staff's investigation.
Respondents provide herein the following: (i) General Objections applicable to all interrogatories and document requests; (ii) specific objections to individual interrogatories and document requests, where warranted; and (iii) substantive narrative responses to each interrogatory and a description of Respondents' document production efforts in connection with each document request. All responses are provided subject to and without waiver of the General Objections and specific objections set forth herein.
Respondents respectfully reserve all rights to supplement, amend, or correct the responses set forth in this letter as additional information becomes available during the course of this investigation, as further document review and data analysis is completed, and as Respondents' understanding of the scope and subject matter of the investigation continues to develop. Respondents' provision of responses to the First Data Request shall not constitute, and shall not be construed as, a waiver of any objection, defense, privilege, or protection available to Respondents under applicable law, regulation, or Commission precedent, including but not limited to the attorney-client privilege, the work product doctrine, the protections afforded by 18 C.F.R. § 1b.9, and any rights under the Fifth Amendment to the United States Constitution.
II. General Objections
Respondents assert the following General Objections to the First Data Request, each of which is incorporated by reference into every specific response set forth below as if fully stated therein. The assertion of specific objections in connection with individual interrogatories or document requests does not constitute a waiver of any General Objection, and the absence of a specific objection in connection with any particular interrogatory or document request does not constitute a waiver of any General Objection with respect to that interrogatory or document request.
A. Overbreadth and Burden
Respondents object to the First Data Request to the extent that certain interrogatories and document requests seek information or documents that are overbroad in scope, unduly burdensome, or disproportionate to the needs of this investigation. Respondents note that the Commission's investigative authority under Part 1b of its regulations must be exercised in a manner that is reasonable in scope and tailored to the subject matter of the investigation, and that the burden imposed on Respondents should be proportional to the likely benefit of the information sought.
Several requests in the First Data Request extend beyond the Relevant Period of January 3, 2022 through March 17, 2023 (the "Relevant Period"), as described in the formal order of investigation, without adequate justification for the expanded temporal scope. Respondents have endeavored to respond to each interrogatory and document request for the Relevant Period unless otherwise specified in a particular response. To the extent that any response includes information falling outside the Relevant Period, such inclusion is voluntary, does not expand the scope of Respondents' obligations, and shall not be deemed a waiver of Respondents' objection to the temporal scope of the request.
Respondents further note that DPT's MISO trading desk employed fourteen (14) traders during the Relevant Period, and certain requests that seek "all communications" among "all trading personnel" without temporal or subject-matter limitation impose an extraordinary burden on Respondents. Respondents estimate that unqualified compliance with such requests would require the review and processing of in excess of 3.2 million individual communications, at substantial cost and diversion of Respondents' personnel and resources. Respondents have nonetheless undertaken good-faith efforts to provide responsive information and documents, subject to reasonable limitations as described in the specific responses below.
B. Relevance
Respondents object to any interrogatory or document request that seeks information not relevant to the subject matter of this investigation. The formal order of investigation, dated June 12, 2023, identifies the scope of the investigation as concerning DPT's trading activity at the Indiana Hub and the Minnesota Hub within the Midcontinent Independent System Operator ("MISO") footprint during the Relevant Period, and the relationship between such trading activity and DPT's Financial Transmission Rights ("FTR") positions.
Respondents specifically object to requests that seek information regarding Respondents' trading activity in markets and at pricing nodes other than the Indiana Hub and the Minnesota Hub, except to the extent that such information is directly relevant to understanding Respondents' overall MISO portfolio management. Respondents further object to requests seeking information regarding Respondents' trading activity in the Southwest Power Pool ("SPP") markets, which is outside the scope of the investigation as described in the formal order of investigation. To the extent Respondents have provided information regarding trading activity at nodes or in markets beyond the Indiana Hub and Minnesota Hub, such provision is voluntary and does not expand the scope of Respondents' obligations under the First Data Request.
C. Privilege and Work Product Protection
Respondents object to each interrogatory and document request to the extent it calls for or would require the disclosure of information or documents protected by the attorney-client privilege, the work product doctrine, the joint defense and common interest privilege, or any other applicable privilege or protection recognized under federal or state law.
Respondents have engaged Calderwood & Harkness LLP as counsel in connection with this matter. A Notice of Appearance of Catherine Bloom and Hannah Brinkley of Calderwood & Harkness LLP was filed with the Commission on June 5, 2023. Respondents have also previously been represented by Aldercroft & Beane LLP on FERC regulatory matters, including matters relating to market-based rate authorizations, tariff compliance, and regulatory filings. Communications with both firms, and documents prepared in connection with the provision or receipt of legal advice, are protected by the attorney-client privilege and, where applicable, the work product doctrine.
A privilege log identifying all documents withheld or redacted on the basis of privilege or work product protection will be provided in connection with Respondents' rolling document production, as described in Section V below.
D. Confidentiality
Respondents object to the interrogatories and document requests to the extent that responses thereto may contain commercially sensitive, proprietary, or trade secret information relating to DPT's trading strategies, risk management models, proprietary algorithms, pricing methodologies, portfolio optimization techniques, or other information the public disclosure of which could cause competitive harm to Respondents or reveal confidential business information.
Respondents respectfully request that all such information provided in connection with these responses and the accompanying document production be treated as confidential and afforded the protections of 18 C.F.R. § 1b.9, which provides that information and documents obtained during the course of an investigation shall not be made public without the consent of the person providing such information, except as required by law or as the Commission may authorize. Respondents reserve the right to seek additional protective treatment for specific categories of information or documents as may be warranted.
E. Definitions and Instructions
Respondents construe the defined terms and instructions set forth in the First Data Request reasonably and in accordance with their plain meaning. Where a defined term or instruction is ambiguous, vague, or susceptible to multiple reasonable interpretations, Respondents have adopted a reasonable interpretation and have responded accordingly. Respondents' adoption of any particular interpretation shall not be deemed an admission regarding the meaning of any term or instruction, and Respondents reserve the right to provide additional clarification or to revise their interpretation if Staff identifies a different intended meaning.
Respondents' responses are based on information presently available to Respondents and reasonably accessible after diligent search and reasonable inquiry. Respondents have directed their search to information and documents in the possession, custody, or control of DEH, DPT, and their respective officers, employees, and agents. Respondents do not undertake to provide information that is not within their possession, custody, or control, or that is not reasonably accessible through diligent search.
F. Preservation of Objections
The assertion of specific objections in connection with individual interrogatories or document requests below does not constitute a waiver of any General Objection set forth in this Section II. All General Objections are incorporated by reference into each specific response as if fully restated therein. Similarly, the provision of a substantive response to any interrogatory or document request, notwithstanding the assertion of one or more objections, does not waive those objections. Respondents provide substantive responses subject to and without prejudice to their objections, solely in the interest of cooperation and to assist the Staff's investigation.
III. Specific Objections and Responses to Interrogatories
Category A: DPT Organizational Structure and Personnel (Interrogatories 1–6)
Interrogatory 1 — Corporate Structure
Interrogatory: Describe the corporate relationship among DEH, DPT, and Dunmore Midstream Partners LP ("DMP"), including each entity's jurisdiction of organization, principal place of business, ownership structure, and federal tax identification number.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. No additional specific objections.
Response: Subject to and without waiver of the foregoing objections, Respondents state as follows:
Dunmore Energy Holdings Ltd. ("DEH") is a Cayman Islands exempted company organized under the laws of the Cayman Islands. DEH's registered office is located at 4th Floor, Harbour Place, 103 South Church Street, George Town, Grand Cayman, KY1-1002, Cayman Islands. DEH serves as the ultimate parent holding company of the Dunmore group of companies and does not itself engage directly in energy trading or physical operations in the United States.
Dunmore Power Trading LLC ("DPT") is a limited liability company organized under the laws of the State of Delaware. DPT is a wholly owned subsidiary of DEH. DPT's registered agent is Capitol Registered Agents Inc., located at 1209 Orange Street, Wilmington, Delaware 19801. DPT is the entity that holds FERC market-based rate authorization and conducts wholesale power marketing and trading activities in the MISO and other organized wholesale electricity markets.
Dunmore Midstream Partners LP ("DMP") is a limited partnership organized under the laws of the State of Delaware. DMP operates natural gas gathering, processing, and pipeline infrastructure primarily in the Midcontinent and Gulf Coast regions. DMP is a separately managed entity within the Dunmore corporate family.
All three entities share a principal U.S. office located at 2200 Post Oak Boulevard, Suite 3100, Houston, Texas 77056. The respective federal Employer Identification Numbers are as follows: DEH: 98-1347562; DPT: 82-4519763; DMP: 47-8831205.
Interrogatory 2 — Key Personnel
Interrogatory: Identify all officers and senior personnel of DEH and DPT who had responsibility for, or oversight of, wholesale power marketing and trading during the Relevant Period, including each individual's title, role, reporting relationships, and dates of employment during the Relevant Period.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. No additional specific objections.
Response: Subject to and without waiver of the foregoing objections, Respondents identify the following officers and senior personnel of DEH and DPT who had responsibility for, or oversight of, wholesale power marketing and trading during the Relevant Period:
1. Gavin Harcourt — Founder, Chairman, and Chief Executive Officer of DEH. Mr. Harcourt has served in this capacity since DEH's founding in 2004. As CEO of the parent company, Mr. Harcourt has ultimate executive authority over all Dunmore entities, including DPT, and sets the overall strategic direction for the company's energy marketing and trading business. Mr. Harcourt's office is located at DEH's principal U.S. office in Houston, Texas.
2. Elena Mirova — President and Chief Operating Officer of DEH. Ms. Mirova has served in this capacity since March 2019. Ms. Mirova is responsible for day-to-day operations across all Dunmore operating entities and reports directly to Mr. Harcourt. Ms. Mirova has oversight responsibility for DPT's trading operations through the management reporting structure described in response to Interrogatory 5, below.
3. Derek Sung — Senior Vice President, Power Marketing & Trading, DPT. Mr. Sung has served in this capacity since September 2020. Mr. Sung directly supervised DPT's MISO trading desk during the Relevant Period and had day-to-day oversight authority over all trading personnel on the MISO desk. Mr. Sung reports directly to Ms. Mirova with respect to operational matters and participates in the company's Risk Management Committee. Mr. Sung's office is located at DPT's trading floor at 2200 Post Oak Boulevard, Suite 3100, Houston, Texas 77056.
4. Rhonda Vasquez — Vice President, Regulatory Affairs, DEH. Ms. Vasquez has served in this capacity since January 2018. Ms. Vasquez is responsible for DEH's and DPT's regulatory compliance with FERC requirements, including market-based rate authorizations, Electric Quarterly Report filings, and regulatory communications. Ms. Vasquez reports to the General Counsel, Martin Llewellyn.
5. Martin Llewellyn — General Counsel, DEH. Mr. Llewellyn has served in this capacity since July 2016. Mr. Llewellyn oversees all legal affairs for DEH and its subsidiaries, including DPT, and reports to Mr. Harcourt.
6. Jennifer Caulfield — Chief Compliance Officer, DEH. Ms. Caulfield was appointed to this newly created position on February 6, 2023. Ms. Caulfield is responsible for developing, implementing, and overseeing Dunmore's enterprise-wide compliance program, with particular emphasis on FERC regulatory compliance and energy trading compliance. Ms. Caulfield reports to the Board of Directors of DEH and has a dotted-line reporting relationship to Mr. Llewellyn. Notably, Ms. Caulfield's appointment was made prior to the commencement of this investigation and reflects Dunmore's proactive commitment to strengthening its compliance function.
Interrogatory 3 — Trading Desk Personnel
Interrogatory: Identify all traders who were employed on DPT's MISO trading desk during the Relevant Period, including each trader's name, title, responsibilities, and dates of employment.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. Respondents further object to the extent this interrogatory seeks the identification of personnel whose activities are not relevant to the subject matter of this investigation, including traders whose responsibilities were limited to markets or pricing nodes not at issue.
Response: Subject to and without waiver of the foregoing objections, Respondents state as follows:
DPT's MISO trading desk employed fourteen (14) traders during the Relevant Period. These traders were organized into two primary sub-desks: the MISO Day-Ahead Desk and the MISO Real-Time Desk. All traders on both sub-desks operated under the direct supervision of Derek Sung, SVP, Power Marketing & Trading.
Respondents specifically identify the following traders, whose activities are most directly relevant to the subject matter of this investigation:
1. Kyle Renfro — Senior Trader, MISO Day-Ahead Desk. Mr. Renfro has been employed by DPT since April 2017 and served in the Senior Trader role throughout the Relevant Period. Mr. Renfro was primarily responsible for the formulation and submission of Day-Ahead generation offers at the Indiana Hub and other MISO pricing nodes within the MISO Central region.
2. Anastasia Petrov — Trader, MISO Real-Time Desk. Ms. Petrov has been employed by DPT since August 2019 and served in the Trader role throughout the Relevant Period. Ms. Petrov was primarily responsible for executing virtual transactions, including Increment Offers and Decrement Bids, at the Minnesota Hub and other MISO pricing nodes.
The remaining twelve (12) trading desk personnel are identified by name, title, and dates of employment in Exhibit A attached hereto. All twelve additional traders operated under the supervision of Derek Sung and were assigned to various pricing nodes and product types within the MISO footprint.
Interrogatory 4 — Equity Ownership
Interrogatory: Identify all persons and entities holding an equity interest in DEH, including the percentage interest held, the nature of such interest, and any voting or governance rights associated therewith.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. Respondents further object to the extent this interrogatory seeks information regarding non-controlling, passive investors whose equity interests do not confer management, governance, or voting rights and who have no involvement in, or influence over, DPT's trading operations. Respondents will respond as to the major equity holders of DEH.
Response: Subject to and without waiver of the foregoing objections, Respondents state as follows:
DEH equity is privately held and is not publicly traded on any securities exchange. The major equity holders of DEH are as follows:
1. Gavin Harcourt — Mr. Harcourt holds approximately 38% of the issued and outstanding equity of DEH directly, in his individual capacity.
2. Harcourt Family Trust — The Harcourt Family Trust, a Texas irrevocable trust, holds approximately 16% of the issued and outstanding equity of DEH. Mr. Harcourt is the settlor of the Harcourt Family Trust but does not serve as trustee. The combined Harcourt-controlled equity interest (direct and through the Harcourt Family Trust) is approximately 54%.
3. Pendleton Capital Partners, LP — Pendleton Capital Partners, LP, a Delaware limited partnership (Managing Partner: Richard Ostrander), holds approximately 27% of the issued and outstanding equity of DEH. Pendleton Capital Partners is a private equity firm focused on energy infrastructure and commodities investments. Mr. Ostrander serves on the DEH Board of Directors.
4. Greenvale Infrastructure Fund III — Greenvale Infrastructure Fund III, a Delaware limited partnership (Managing Director: Susan Tanaka), holds approximately 19% of the issued and outstanding equity of DEH. Greenvale Infrastructure Fund III is a private infrastructure investment fund. Ms. Tanaka serves on the DEH Board of Directors.
None of the equity holders identified above, other than Mr. Harcourt in his capacity as CEO, has direct involvement in the day-to-day management or supervision of DPT's trading operations.
Interrogatories 5–6 — Reporting Lines and Trader Authority
Interrogatory 5: Describe the reporting lines and supervisory structure applicable to DPT's MISO trading desk during the Relevant Period, including the delegation of authority for bid submission and the scope of supervisory oversight exercised by each supervisor.
Interrogatory 6: Describe DPT's authority under its FERC Market-Based Rate Authorization, including the docket number under which such authorization was granted and any conditions or limitations applicable thereto.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. No additional specific objections.
Response to Interrogatory 5: Subject to and without waiver of the foregoing objections, Respondents state as follows:
DPT's MISO trading desk operated within a structured reporting and supervisory framework during the Relevant Period. The reporting lines were as follows:
Individual traders on the MISO Day-Ahead Desk and the MISO Real-Time Desk reported directly to Derek Sung, SVP, Power Marketing & Trading. Mr. Sung had day-to-day oversight authority over all MISO trading activities, including the authority to approve, modify, or countermand any trading strategy, bid submission, or position taken by any trader on the desk. Mr. Sung conducted daily morning briefings with trading desk personnel at which anticipated trading activity for the day was discussed, and he reviewed end-of-day position reports summarizing all activity on both the Day-Ahead and Real-Time desks.
Mr. Sung reported to Elena Mirova, President and COO, with respect to operational matters, including trading performance, portfolio composition, and risk management. Mr. Sung also reported to the Risk Management Committee, which met weekly and was chaired by Ms. Mirova.
With respect to the delegation of authority for bid submission, DPT maintained a Delegation of Trading Authority Policy (last revised September 15, 2021) that established position limits and bidding authority for each level of trader. Senior Traders, such as Kyle Renfro, were authorized to submit Day-Ahead generation offers and virtual bids within pre-established position limits without obtaining real-time approval from Mr. Sung, provided that such offers and bids were consistent with the trading strategies discussed and approved at the daily morning briefing. Traders at the Trader level, such as Anastasia Petrov, were authorized to execute virtual transactions within pre-established position limits. Any proposed transaction or strategy that exceeded the established position limits or deviated materially from the approved strategies required prior approval from Mr. Sung.
Response to Interrogatory 6: Subject to and without waiver of the foregoing objections, Respondents state as follows:
DPT holds market-based rate authorization from the Commission, which was initially granted in Docket No. ER05-1128-000 by order issued on August 12, 2005. DPT's market-based rate authorization permits DPT to make sales of energy, capacity, and ancillary services at market-based rates in the wholesale electricity markets, subject to the Commission's standard conditions for market-based rate authorization, including the requirements to file Electric Quarterly Reports ("EQRs"), to comply with the Commission's market behavior rules, and to report changes in status as required by 18 C.F.R. § 35.42. DPT has filed updated market power analyses and change-in-status reports in accordance with applicable requirements. DPT's market-based rate authorization is not subject to any entity-specific mitigation conditions.
Category B: Day-Ahead Bidding Strategy and Methodology (Interrogatories 7–15)
Interrogatory 7 — Day-Ahead Bidding Process
Interrogatory: Describe in detail DPT's process for formulating Day-Ahead offers for gas-fired generation units at the Indiana Hub during the Relevant Period, including the inputs considered, the personnel involved, the analytical tools used, and the approval process for each day's offers.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. Respondents further object to the extent this interrogatory seeks proprietary information regarding DPT's analytical models and tools, and request that any such information disclosed in this response be treated as confidential pursuant to 18 C.F.R. § 1b.9.
Response: Subject to and without waiver of the foregoing objections, Respondents state as follows:
DPT's Day-Ahead offers for gas-fired generation units at the Indiana Hub were developed pursuant to a portfolio optimization strategy that considered the full portfolio of DPT's generation assets, contractual obligations, fuel costs, opportunity costs, and risk hedging considerations. DPT's total U.S. net generation capacity during the Relevant Period was approximately 4,280 MW, comprising approximately 2,650 MW of natural gas-fired generation, approximately 1,130 MW of wind generation, and approximately 500 MW of solar generation, located across multiple states within the MISO footprint and in adjacent markets.
The Day-Ahead bidding process for gas-fired generation at the Indiana Hub was managed by Kyle Renfro, Senior Trader, MISO Day-Ahead Desk, under the supervision of Derek Sung. On a daily basis, Mr. Renfro and the Day-Ahead desk team would assess relevant market conditions, including but not limited to: (i) natural gas prices at applicable pricing points, including Henry Hub, Chicago Citygate, and applicable pipeline delivery points; (ii) forecasted electricity demand and load conditions in the MISO Central region; (iii) weather forecasts and their potential impact on load, generation availability, and transmission congestion; (iv) outage information for DPT's generation units and for other known units in the MISO footprint; (v) historical and forecasted locational marginal prices ("LMPs") at the Indiana Hub and related pricing nodes; (vi) the status of DPT's overall generation portfolio, including the availability of wind and solar resources; and (vii) contractual obligations, including tolling agreements, power purchase agreements, and minimum generation commitments.
Based on these inputs, Mr. Renfro and the Day-Ahead desk team, utilizing DPT's proprietary portfolio optimization software, would formulate a set of Day-Ahead generation offers for each applicable generation unit. These offers were designed to optimize the expected profitability of DPT's generation portfolio as a whole, taking into account the interrelated economics of fuel supply, generation dispatch, transmission congestion, and contractual commitments. The formulated offers were reviewed and approved at the daily morning briefing, which was typically held at approximately 6:30 a.m. Central Time and was attended by Mr. Sung, the Day-Ahead desk team, and the Real-Time desk team.
Interrogatory 8 — Negative Pricing Offers
Interrogatory: For each instance during the Relevant Period in which DPT submitted Day-Ahead offers at negative prices at the Indiana Hub, identify the date, the generation unit, the quantity offered, the offer price, and explain the basis for the offer price, including why it was economic to offer generation at a negative price.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. Respondents further specifically object to the characterization of DPT's offers as "uneconomic" in the preamble to this interrogatory. This characterization assumes the conclusion of the investigation and presupposes that DPT's offers were not based on legitimate economic considerations. Respondents do not accept this characterization and will respond to the factual question posed by the interrogatory without adopting Staff's characterization.
Response: Subject to and without waiver of the foregoing objections, Respondents state as follows:
During portions of the Relevant Period, DPT submitted Day-Ahead offers at the Indiana Hub at prices ranging from negative $15 per megawatt-hour (-$15/MWh) to negative $40 per megawatt-hour (-$40/MWh). Respondents are in the process of compiling a comprehensive table identifying each such offer by date, generation unit, quantity, and offer price, and will provide this table as part of Respondents' rolling document production. Respondents' initial review indicates that negative-price offers were submitted on approximately 87 operating days during the Relevant Period.
These negative-price offers reflected legitimate economic considerations that are consistent with rational, profit-maximizing behavior in the context of DPT's overall generation portfolio. Specifically, the negative offers were based on the following factors:
First, DPT was subject to contractual minimum generation commitments under certain tolling agreements and long-term fuel supply contracts that required a specified minimum quantity of natural gas to be consumed at designated generation facilities during each calendar month. Failure to meet these minimum generation commitments would have resulted in contractual penalties, including demand charges and take-or-pay obligations, that exceeded the costs associated with generating at a loss during periods of low or negative prices. Accordingly, it was economically rational for DPT to submit offers at negative prices in order to ensure dispatch and thereby satisfy its minimum generation commitments.
Second, DPT's generation units at the Indiana Hub are combined-cycle gas turbine ("CCGT") facilities that incur significant costs associated with cycling (i.e., shutting down and subsequently restarting the unit). These cycling costs include increased maintenance expenditures, reduced equipment life, and startup fuel costs. The negative-price offers reflected the opportunity cost of avoiding unit cycling during periods when the anticipated duration of low prices was expected to be short, making it more economical to continue operating at a loss rather than to shut down and incur cycling and restart costs.
Third, the offers reflected the economics of DPT's broader generation portfolio. In a portfolio context, generation from gas-fired units at the Indiana Hub interacts with DPT's wind and solar generation and with DPT's load-serving obligations. The negative-price offers were part of a portfolio optimization strategy designed to maximize the net profitability of the overall portfolio, taking into account the full range of costs and revenues across all generation assets and contractual positions.
Interrogatory 9 — Volume of Day-Ahead Activity
Interrogatory: State the total volume (in MWh) of Day-Ahead generation offers submitted by DPT at the Indiana Hub during the Relevant Period, and the total volume of generation cleared in the Day-Ahead market at the Indiana Hub during the Relevant Period.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. No additional specific objections.
Response: Subject to and without waiver of the foregoing objections, Respondents state as follows:
DPT's Day-Ahead generation offers at the Indiana Hub during the Relevant Period totaled approximately 2,840 gigawatt-hours (GWh), which is consistent with the data reflected in MISO settlement records and statements. Of this amount, Respondents estimate that approximately 2,460 GWh was cleared in the Day-Ahead market, with the balance representing offers that were not dispatched.
For context, DPT's total MISO trading volume for calendar year 2022 was approximately 18.4 million MWh across all products (including Day-Ahead generation, Real-Time generation, virtual transactions, and demand response). DPT's consolidated revenue for fiscal year 2022 was approximately $614 million. DPT's Indiana Hub Day-Ahead activity thus represented a component of a substantially larger MISO trading portfolio.
Interrogatories 10–12 — Marginal Cost Calculations, Fuel Cost Inputs, and Heat Rate Assumptions
Interrogatory 10: Describe in detail the methodology used by DPT to calculate the marginal cost of each gas-fired generation unit at the Indiana Hub during the Relevant Period.
Interrogatory 11: Identify the specific fuel cost inputs used in DPT's marginal cost calculations, including the source of natural gas price data, any adjustments for basis differentials, and any internal transfer pricing for natural gas supplied by Dunmore Midstream Partners LP.
Interrogatory 12: For each gas-fired generation unit at the Indiana Hub, identify the heat rate used in DPT's marginal cost calculations during the Relevant Period, including any adjustments to the heat rate based on ambient conditions, load levels, or other factors.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. Respondents further specifically object to Interrogatory 11 on the grounds that it seeks proprietary and commercially sensitive information regarding DPT's internal fuel cost inputs and transfer pricing methodology, the disclosure of which could cause competitive harm to Respondents. Respondents will respond at a general level regarding the inputs used for marginal cost determination, and request that any such information be afforded confidential treatment pursuant to 18 C.F.R. § 1b.9.
Response to Interrogatories 10–12: Subject to and without waiver of the foregoing objections, Respondents state as follows:
DPT calculated the marginal cost of each gas-fired generation unit at the Indiana Hub using a methodology that incorporated the following principal inputs: (i) the cost of natural gas fuel, including the applicable commodity price, transportation costs, and basis differentials between the applicable gas pricing point and the pipeline delivery point serving each generation facility; (ii) the heat rate of each unit at the applicable load level, including adjustments for ambient temperature, humidity, and unit degradation; (iii) variable operations and maintenance ("O&M") costs, including both scheduled and unscheduled maintenance components; (iv) start-up costs, including start-up fuel, incremental maintenance costs, and auxiliary power consumption associated with unit starts; (v) shutdown costs, including costs associated with cooldown, post-shutdown maintenance, and opportunity costs of the unit being unavailable during restart; and (vi) emission allowance costs, including costs for sulfur dioxide (SO2), nitrogen oxide (NOx), and, where applicable, carbon dioxide (CO2) allowances.
With respect to fuel cost inputs, DPT's gas-fired generation units at the Indiana Hub were supplied with natural gas through a combination of market purchases and deliveries through pipeline infrastructure operated by Dunmore Midstream Partners LP ("DMP"). Natural gas supplied by DMP to DPT's generation facilities was priced using an arm's-length transfer pricing methodology that reflected prevailing market prices at applicable pipeline delivery points, adjusted for transportation and processing costs. The transfer price was established on a monthly basis pursuant to an intercompany fuel supply agreement between DPT and DMP, which was executed on commercially reasonable terms consistent with those that would be negotiated between unaffiliated parties.
DPT also incorporated gas price data from third-party published indices, including the Intercontinental Exchange ("ICE") and Granite Harbor Technologies, for purposes of benchmarking and, where applicable, for calculating the cost of market-purchased gas volumes.
The heat rates used in DPT's marginal cost calculations were based on the design heat rates of each generation unit, as specified by the original equipment manufacturer, adjusted for the following factors: (i) actual operating conditions, including ambient temperature, humidity, and barometric pressure, using real-time weather data; (ii) the load level at which the unit was expected to operate, reflecting the non-linear relationship between heat rate and output; and (iii) unit degradation, based on the most recent performance test data available for each unit. Heat rate curves were updated periodically based on performance testing conducted by DPT's engineering and operations staff.
In addition to the foregoing direct cost inputs, DPT's marginal cost calculations also incorporated the opportunity cost of generation in light of broader portfolio positioning. Specifically, the marginal cost analysis considered the potential impact of generation dispatch at the Indiana Hub on congestion patterns, locational marginal price differentials, and the profitability of DPT's overall portfolio, including contractual positions and obligations. Respondents note that the consideration of opportunity costs in formulating generation offers is a well-recognized and legitimate practice in organized wholesale electricity markets, and that the Commission has long recognized that market participants may properly consider opportunity costs in determining their offers.
Interrogatories 13–15 — Knowledge of Market Impact, Intent, and Strategy Approval
Interrogatory 13: Describe DPT's understanding, during the Relevant Period, of the potential impact of its Day-Ahead generation offers at the Indiana Hub on locational marginal prices and congestion patterns in the MISO market.
Interrogatory 14: State whether DPT's Day-Ahead bidding strategy at the Indiana Hub was intended to influence, or was designed with the purpose of influencing, Day-Ahead or Real-Time locational marginal prices or congestion at any MISO pricing node.
Interrogatory 15: Identify the individuals who approved DPT's Day-Ahead bidding strategy at the Indiana Hub during the Relevant Period, and describe the process by which such approval was obtained, including any written approvals, meeting minutes, or strategy memoranda.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. Respondents further specifically object to Interrogatories 14 and 15 to the extent they seek communications or documents protected by the attorney-client privilege or the work product doctrine, including any legal advice provided by counsel regarding the permissibility of DPT's trading strategies. Respondents additionally object to Interrogatory 14 to the extent it seeks to inquire into the subjective intent of Respondents' personnel in a manner that presupposes a manipulative purpose. The interrogatory as framed assumes that DPT's bidding strategy was "designed" to influence market outcomes in a manner that constitutes manipulation, which is a legal conclusion that Respondents dispute. Respondents will respond to the factual questions posed without accepting Staff's characterization.
Response to Interrogatories 13–15: Subject to and without waiver of the foregoing objections, Respondents state as follows:
With respect to Interrogatory 13, DPT's traders were generally aware, as are all sophisticated market participants, that the submission of generation offers in the Day-Ahead market could, depending on market conditions, affect locational marginal prices and congestion patterns at the pricing node at which the offers were submitted and at other pricing nodes. This general awareness is inherent in participation in organized wholesale electricity markets and does not, standing alone, evidence any manipulative intent or purpose.
With respect to Interrogatory 14, DPT's Day-Ahead bidding strategy at the Indiana Hub was approved through established internal processes and was supervised by Derek Sung, SVP, Power Marketing & Trading. The strategy was designed for legitimate commercial purposes — specifically, portfolio optimization — and was not intended to manipulate MISO market outcomes. DPT's offers reflected the legitimate economic factors described in response to Interrogatories 7, 8, and 10–12 above, including contractual minimum generation commitments, unit cycling costs, fuel costs, and the economics of DPT's broader generation portfolio. DPT denies that its bidding strategy was intended to, or did, artificially inflate or depress locational marginal prices or congestion for any improper purpose.
With respect to Interrogatory 15, DPT's Day-Ahead bidding strategy at the Indiana Hub was developed and implemented by Kyle Renfro, Senior Trader, under the supervision of Derek Sung. The overall portfolio optimization approach was discussed and approved at the trading desk's periodic strategy review meetings, which were attended by Mr. Sung, Mr. Renfro, and other senior members of the trading team. Day-to-day implementation of the approved strategy was carried out by Mr. Renfro and the Day-Ahead desk team, with Mr. Sung providing ongoing supervisory oversight through the daily morning briefings and end-of-day position reports described in response to Interrogatory 5 above. Respondents will produce non-privileged strategy review meeting notes and related documents as part of the rolling document production.
Category C: Financial Transmission Rights (Interrogatories 16–22)
Interrogatory 16 — FTR Portfolio Description
Interrogatory: Describe DPT's FTR portfolio during the Relevant Period, including the source, sink, quantity, type, and term of each FTR position held by DPT.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. No additional specific objections.
Response: Subject to and without waiver of the foregoing objections, Respondents state as follows:
During the Relevant Period, DPT maintained a portfolio of Financial Transmission Rights ("FTRs") within the MISO market. DPT's FTR positions had a total notional value of approximately $47.3 million during the Relevant Period. The FTR portfolio consisted of both obligation FTRs and option FTRs, spanning multiple source-sink pairs within the MISO footprint. The FTRs were acquired through MISO's annual and monthly FTR auctions, which are conducted pursuant to MISO's Open Access Transmission, Energy and Operating Reserve Markets Tariff. Respondents are compiling a detailed table of each FTR position held during the Relevant Period, including the source, sink, quantity, type (obligation or option), and term of each position, and will provide this table as part of the rolling document production.
Interrogatory 17 — FTR Acquisition Timing
Interrogatory: For each FTR position identified in response to Interrogatory 16, state the date on which the position was acquired and the auction or other transaction through which it was acquired.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. No additional specific objections.
Response: Subject to and without waiver of the foregoing objections, Respondents state as follows:
The FTR positions held by DPT during the Relevant Period were acquired over a period of time, with the majority of positions acquired months before the commencement of the Relevant Period on January 3, 2022, as part of DPT's routine and ongoing hedging strategy for congestion risk management. Specifically, DPT participated in MISO's annual FTR auction for the 2021–2022 planning year, which was conducted in the fall of 2021 (with results published in November 2021), as well as monthly FTR auctions conducted on a rolling basis. DPT also acquired a smaller number of FTR positions through the monthly FTR auctions conducted during the Relevant Period, consistent with DPT's ordinary course practice of adjusting its FTR portfolio to reflect changes in expected congestion patterns and portfolio composition.
The timeline of FTR acquisitions demonstrates that DPT's FTR positions were established as part of a long-term hedging strategy and were not acquired in anticipation of, or in coordination with, any particular Day-Ahead bidding strategy at the Indiana Hub during the Relevant Period. A detailed schedule of FTR acquisition dates and corresponding auction identifiers will be provided as part of the rolling document production.
Interrogatories 18–20 — FTR Profitability, Relationship to Day-Ahead Bidding, and Congestion Analysis
Interrogatory 18: State the total profit or loss realized by DPT on its FTR portfolio during the Relevant Period.
Interrogatory 19: Describe the relationship, if any, between DPT's FTR positions and DPT's Day-Ahead generation offers at the Indiana Hub during the Relevant Period. Specifically, explain whether DPT's Day-Ahead bidding strategy was designed to affect congestion patterns in a manner that would benefit DPT's FTR positions.
Interrogatory 20: Describe the analysis conducted by DPT in connection with the acquisition of FTR positions during the Relevant Period, including the data and assumptions used by DPT to assess expected congestion and the value of FTR positions.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. Respondents further specifically object to Interrogatory 19 as compound and argumentative to the extent it presupposes that DPT's Day-Ahead bidding was designed to benefit FTR positions. The interrogatory contains an embedded assumption — that a "relationship" existed between DPT's Day-Ahead offers and its FTR positions of a kind that suggests coordinated manipulation — that Respondents dispute. Respondents will respond to the factual question regarding the organizational and operational relationship between DPT's Day-Ahead bidding and its FTR portfolio management.
Response to Interrogatories 18–20: Subject to and without waiver of the foregoing objections, Respondents state as follows:
With respect to Interrogatory 18, Respondents are in the process of compiling the profit and loss data for DPT's FTR portfolio during the Relevant Period and will provide this information as part of the rolling document production. Respondents note that the profitability of individual FTR positions varies based on actual congestion outcomes relative to expected congestion at the time of acquisition, and that FTR profitability data must be considered in the context of DPT's overall hedging strategy.
With respect to Interrogatory 19, DPT's FTR positions and Day-Ahead generation offers were managed by different functions within the trading desk, consistent with industry practice at large energy trading organizations. Specifically, FTR acquisition and portfolio management was handled by a dedicated congestion risk management team, while Day-Ahead generation offers were managed by the Day-Ahead desk team, as described in response to Interrogatory 7 above. Both teams reported to Derek Sung, who had oversight of the overall MISO trading portfolio. However, the formulation of Day-Ahead generation offers was not directed by, or coordinated with, the FTR portfolio management function for the purpose of influencing congestion patterns to benefit FTR positions. DPT's Day-Ahead offers were based on the legitimate economic factors described in Respondents' responses to Interrogatories 7, 8, and 10–12 above.
With respect to Interrogatory 20, DPT's FTR acquisitions reflected DPT's assessment of expected congestion based on publicly available information, including MISO's Transmission Expansion Plan, MISO's publicly posted historical congestion data, transmission outage schedules, generation interconnection queue data, and other publicly available transmission planning information. DPT's congestion risk management team utilized proprietary analytical models to assess expected congestion and to identify FTR positions that were expected to provide effective hedges against congestion risk in connection with DPT's generation and load-serving activities. Respondents will produce non-privileged internal analyses of FTR positions as part of the rolling document production.
Interrogatories 21–22 — FTR Risk Management and Internal Controls
Interrogatory 21: Describe the internal risk management policies and procedures applicable to DPT's FTR positions during the Relevant Period, including position limits, mark-to-market reporting, and stress testing.
Interrogatory 22: Describe the reporting to Derek Sung or other senior management regarding DPT's FTR positions, including the frequency of such reporting and the information provided.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. No additional specific objections.
Response to Interrogatories 21–22: Subject to and without waiver of the foregoing objections, Respondents state as follows:
DPT maintained internal risk management policies applicable to FTR positions during the Relevant Period. These policies included the following components: (i) position limits that capped the maximum notional value and quantity of FTR positions that could be held at any given time; (ii) daily mark-to-market reporting, which valued outstanding FTR positions against current market indicators and settlement data; (iii) periodic stress testing, which assessed the potential impact of adverse congestion scenarios on FTR portfolio value; and (iv) escalation procedures requiring that any FTR position approaching or exceeding established position limits be reported to Derek Sung for review.
Derek Sung received daily summary reports on FTR portfolio positions, including mark-to-market values and any positions approaching or exceeding limits. In addition, FTR portfolio performance was reviewed at the weekly Risk Management Committee meeting, chaired by Elena Mirova, at which Mr. Sung presented a summary of the MISO trading portfolio's overall performance, including FTR positions. Respondents will produce non-privileged risk management reports and related documents as part of the rolling document production.
Category D: Virtual Transactions at Minnesota Hub (Interrogatories 23–28)
Interrogatory 23 — Description of Virtual Trading Activity
Interrogatory: Describe DPT's virtual trading activity at the Minnesota Hub during the Relevant Period, including the types of virtual transactions submitted, the total volume of such transactions, and the personnel responsible for executing such transactions.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. No additional specific objections.
Response: Subject to and without waiver of the foregoing objections, Respondents state as follows:
During the Relevant Period, DPT submitted both Increment Offers ("INCs") and Decrement Bids ("DECs") at the Minnesota Hub in the MISO Day-Ahead market. Total virtual transactions at the Minnesota Hub during the Relevant Period were approximately 1,620 GWh. These virtual transactions were executed by Anastasia Petrov, Trader, MISO Real-Time Desk, under the supervision of Derek Sung. Ms. Petrov was responsible for identifying virtual trading opportunities based on her assessment of Day-Ahead to Real-Time price divergence at the Minnesota Hub and other MISO pricing nodes. Virtual trading is a well-established and Commission-sanctioned practice in organized wholesale electricity markets, and DPT's virtual transactions at the Minnesota Hub were submitted as a legitimate component of DPT's MISO portfolio management strategy.
Interrogatory 24 — Relationship Between Virtual Transactions and Day-Ahead Offers
Interrogatory: Describe the relationship, if any, between DPT's virtual transactions at the Minnesota Hub and DPT's Day-Ahead generation offers at the Indiana Hub during the Relevant Period.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. Respondents further specifically object to this interrogatory as argumentative and as presupposing the existence of a manipulative "cross-product" scheme in which DPT's virtual transactions and Day-Ahead offers were coordinated for the purpose of manipulating market outcomes. Respondents deny that any such scheme existed and will respond to the factual question regarding the relationship between these two categories of trading activity.
Response: Subject to and without waiver of the foregoing objections, Respondents state as follows:
DPT's virtual trading at the Minnesota Hub and Day-Ahead generation offers at the Indiana Hub were both part of DPT's overall MISO portfolio management. However, these activities were managed by different personnel and reflected different market assessments. As noted above, Day-Ahead generation offers at the Indiana Hub were managed by Kyle Renfro, Senior Trader, MISO Day-Ahead Desk, while virtual transactions at the Minnesota Hub were executed by Anastasia Petrov, Trader, MISO Real-Time Desk. Ms. Petrov's virtual positions at the Minnesota Hub reflected her independent assessment of Day-Ahead to Real-Time price convergence at that node, based on her analysis of expected load, generation, and transmission conditions.
DPT's Day-Ahead generation offers at the Indiana Hub and its virtual transactions at the Minnesota Hub were both subject to oversight by Derek Sung, who had visibility into the overall MISO trading portfolio. This oversight is consistent with standard industry practice for large energy trading organizations that manage multi-product, multi-node portfolios in organized wholesale electricity markets. The existence of a common supervisor does not, standing alone, establish that the two activities were coordinated for a manipulative purpose.
Interrogatories 25–28 — Virtual Trading Strategy, Profitability, and Communications Between Traders
Interrogatory 25: Describe DPT's virtual trading strategy at the Minnesota Hub during the Relevant Period.
Interrogatory 26: State the total profit or loss realized by DPT on virtual transactions at the Minnesota Hub during the Relevant Period.
Interrogatory 27: Describe any analysis conducted by DPT regarding the relationship between virtual transactions at the Minnesota Hub and congestion patterns on the MISO system.
Interrogatory 28: Produce all communications between Kyle Renfro and Anastasia Petrov during the Relevant Period regarding DPT's trading activity.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. Respondents further specifically object to Interrogatory 28 to the extent it seeks "all communications" between Kyle Renfro and Anastasia Petrov without temporal or subject-matter limitation. Mr. Renfro and Ms. Petrov communicated regularly throughout the Relevant Period on a wide range of topics, including matters unrelated to MISO trading activity, personal communications, and other subjects having no relevance to this investigation. Respondents will produce communications between Mr. Renfro and Ms. Petrov during the Relevant Period that relate to MISO trading activity, including Day-Ahead bidding at the Indiana Hub, virtual transactions at the Minnesota Hub, FTR positions, gas nominations, and related topics.
Response to Interrogatories 25–28: Subject to and without waiver of the foregoing objections, Respondents state as follows:
DPT's virtual trading strategy at the Minnesota Hub was based on Anastasia Petrov's assessment of expected Day-Ahead to Real-Time price convergence at that node. Ms. Petrov utilized publicly available information, including load forecasts, weather data, generation outage information, and transmission outage schedules, as well as DPT's proprietary models, to identify opportunities where the Day-Ahead price at the Minnesota Hub was expected to diverge from the Real-Time price. INCs were submitted when Ms. Petrov anticipated that the Day-Ahead price would exceed the Real-Time price, and DECs were submitted when Ms. Petrov anticipated that the Real-Time price would exceed the Day-Ahead price.
With respect to profitability, Respondents are compiling the profit and loss data for DPT's virtual transactions at the Minnesota Hub during the Relevant Period and will provide this information as part of the rolling document production.
With respect to communications between Mr. Renfro and Ms. Petrov, both traders sat on the same physical trading floor at DPT's Houston office and communicated regularly, both in person and through electronic communications, regarding a range of topics related to MISO market conditions and trading activity. These communications were consistent with the standard collaborative practices of a multi-product trading desk. Respondents are collecting and reviewing responsive communications and will produce non-privileged communications related to MISO trading activity as part of the rolling document production.
Category E: Physical-Financial Coordination and Gas Nominations (Interrogatories 29–34)
Interrogatory 29 — Relationship Between DPT and Dunmore Midstream Partners LP
Interrogatory: Describe the relationship between DPT and DMP, including any shared personnel, shared facilities, intercompany agreements, and the extent to which DPT and DMP coordinate their respective operations.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. No additional specific objections.
Response: Subject to and without waiver of the foregoing objections, Respondents state as follows:
DMP operates natural gas gathering, processing, and pipeline infrastructure that supplies fuel to several of Dunmore's gas-fired generation plants, including plants whose output is offered into the MISO market at the Indiana Hub. DPT and DMP are separately managed entities under the DEH umbrella. Each entity has its own management team and conducts its operations independently, subject to the overall corporate governance structure of DEH.
DPT and DMP are parties to an intercompany fuel supply agreement, pursuant to which DMP delivers natural gas to DPT's generation facilities at transfer prices determined in accordance with the arm's-length transfer pricing methodology described in response to Interrogatory 11 above. DPT and DMP share certain corporate services provided by DEH, including legal, finance, and human resources functions, but do not share trading personnel or operations personnel. The principal U.S. offices of DPT and DMP are co-located at 2200 Post Oak Boulevard, Suite 3100, Houston, Texas 77056, but each entity maintains separate operational areas.
Interrogatories 30–32 — Gas Nomination Practices
Interrogatory 30: Describe DPT's process for nominating natural gas for delivery to its gas-fired generation units at the Indiana Hub during the Relevant Period, including the timing of nominations, the pipeline(s) on which nominations were made, and the personnel responsible for gas scheduling.
Interrogatory 31: Describe the coordination, if any, between DPT and DMP with respect to gas nominations and gas scheduling during the Relevant Period.
Interrogatory 32: For each gas nomination made by DPT in connection with generation units at the Indiana Hub during the Relevant Period, state the date, volume, delivery point, and pipeline.
Specific Objections: Respondents incorporate the General Objections set forth in Section II above. Respondents further object to these requests to the extent they seek proprietary commercial information r