Congress broadly authorized the Federal Energy Regulatory Commission (“FERC”) to protect consumers of electricity from all forms of manipulation in the electricity markets, but the regulations that FERC passed are not nearly so expansive. As written, FERC’s Anti-Manipulation Rule covers only instances of manipulation involving fraud. This narrow scope is problematic, however, because electricity markets can also be manipulated by nonfraudulent activity. Thus, in order to reach all forms of manipulation, FERC is forced to interpret and apply its Anti-Manipulation Rule in ways that strain the plain language and accepted understanding of the rule and therefore constitute an improper extension of the fraud-based regulations to nonfraudulent activity. This Note argues that FERC ought to fix the current anti-manipulation regulatory regime, both as a matter of sound governmental regulation and to ensure fair notice to the regulated entities. In particular, this Note contends that FERC should redraft its Anti-Manipulation Rule and that, in doing so, it should use the Commodity Futures Trading Commission (“CFTC”)’s rules as a model. By adopting the CFTC’s rules, FERC could design a new anti-manipulation regulation that would properly and flexibly encompass all forms of potential manipulation in the electricity markets—a solution that would allow the law adequately to respond to future attempts at manipulation.
Regulating Electricity-Market Manipulation: A Proposal for a New Regulatory Regime to Proscribe All Forms of Manipulation,
Mich. L. Rev.
Available at: http://repository.law.umich.edu/mlr/vol113/iss4/4