PORTLAND, Maine — A Lincoln paper mill and an energy consulting firm are hoping a recent challenge to the Federal Energy Regulatory Commission’s authority will help them avoid paying millions of dollars in fines.
Lincoln Paper and Tissue, the Portland-based consultancy Competitive Energy Services and its owner Richard Silkman together face $13.75 million in fines from FERC on allegations that they manipulated a program that compensates large power customers for backing down consumption at times of high demand.
The U.S. Court of Appeals for the District of Columbia Circuit in May ruled in a 2-1 decision that FERC overstepped its authority in setting prices for the regional demand-response programs. The three defendants this month added the court’s ruling to their argument that the penalties should be dismissed.
“This is putting another nail in the coffin [of FERC’s penalties],” said Peter Brann, an attorney representing Silkman and Competitive Energy Services. “It’s just another reason why this case ought to be dismissed in its entirety.”
FERC alleges that Lincoln Paper and Tissue, Competitive Energy Services and Silkman manipulated the demand-response program by establishing “a false baseline to create the illusion” that the end user was reducing its consumption of electricity. That, in turn, allowed the end user “to extract payments for phantom load reductions,” according to the lawsuits.
The companies and Silkman, who headed the Maine State Planning Office during Gov. John McKernan’s administration, have denied the allegations in the past.
The Lincoln mill, which faces $5 million in penalties, is fighting the case separately from Competitive Energy Services and Silkman, who face $7.5 million and $1.25 million in penalties respectively. Both parties allege in other motions that the case should be dismissed because FERC did not provide fair notice or enough specificity in its charges and that the penalty is beyond the statute of limitations and outside the commission’s jurisdiction.
Attorneys for the Lincoln mill added to that list a motion to dismiss based on the court’s decision earlier this month. Competitive Energy Services and Silkman joined the argument later.
An attorney for FERC did not respond to a request for comment on the impact of the court’s ruling by 4:30 p.m. Monday.
FERC intends to challenge the case it lost to the Electric Power Supply Association. It faces a July 7 deadline to file that request.
The commission filed a request June 2 to stay all proceedings in the matter pending a rehearing of the demand-response case, which Judge Douglas P. Woodlock denied.
Correction: A previous version of this story incorrectly spelled the name of the judge hearing the cases.