In some circumstances, MACD may enter into a voluntary negotiated settlement with a Market Participant, rather than issuing formal enforcement actions such as the imposition of a financial penalty. MACD's main objective is to secure the best possible outcomes for both reliability and the market, rather than the enforcement of the rules for its own sake. Accordingly, it may consider whether an alternative resolution, which typically includes a range of mitigation and/or remedial features, is preferable.
Below is a list of negotiated settlements agreed upon by MACD.
2017 Negotiated Settlements
The Independent Electricity System Operator ("IESO") has approved a settlement with The Manitoba Hydro-Electric Board ("Manitoba Hydro") regarding a compliance investigation into Manitoba Hydro's trading activity on the Manitoba and Minnesota interties.
In a Notice of Alleged Breach dated September 13, 2012, staff of the Market Assessment and Compliance Division ("MACD") of the IESO alleged that, from October 2011 to September 2012, Manitoba Hydro may have breached section 3.5.6 of Chapter 7 of the Market Rules when its energy offers exceeded the maximum allowed injection permitted under section 18.104.22.168 of Chapter 7 of the Market Rules. In a Supplemental Notice of Alleged Breach dated December 4, 2015, MACD staff alleged that the offers that were the subject of the earlier Notice of Alleged Breach were misleading and may have been in breach of section 11.2.1 of Chapter 1 of the Market Rules. Further, on December 4, 2015, MACD staff alleged that Manitoba Hydro may have breached section 6.2.6 of Chapter 3 of the Market Rules by refusing to answer three questions posed in one of MACD's information requests.
In order to resolve the matter, and without Manitoba Hydro admitting any wrongdoing related to the breaches as alleged by MACD staff, the IESO and Manitoba Hydro have agreed to a settlement.
Manitoba Hydro has agreed to pay CDN $9,600,000.00 to settle the matter.
2016 Negotiated Settlements
Resolute FP Canada Inc. ("Resolute"): On August 22, 2016, pursuant to Chapter 3 of the market rules, the IESO issued a non-compliance letter to Resolute FP Canada Inc. (“Resolute”) for breach of the requirements of the following provisions of the market rules:
- Chapter 7, section 3.3.8;
- Chapter 7, section 3.5.6; and
- Chapter 7, section 7.5.1.
The IESO’s determination relates to Resolute’s operation of its dispatchable pulp and paper facilities located in Fort Frances and Thunder Bay, during the period October, 2004 to September, 2013, as applicable. In this regard, the IESO has determined that on certain occasions during the relevant period, Resolute engaged in the following conduct:
- submitted bid quantities to the IESO in excess of the facility’s ability to withdraw energy from the IESO-controlled grid;
- failed to update dispatch data to be consistent with the reasonable expectations of the quantity of energy to be delivered or withdrawn by the facility; and
- deviated from the IESO’s dispatch instructions.
The non-compliance letter was issued as part of a settlement between the IESO and Resolute. Without acknowledging or admitting any breach of the market rules, Resolute has accepted, without contest, the IESO’s determinations and has agreed to voluntarily repay the amount of $8,750,000.00. This payment is in addition to an earlier voluntary repayment by Resolute in the amount of $1,825,010.03.
Going forward, Resolute has also agreed to develop and implement an Internal Compliance Program (“ICP”) in order to ensure that potential breaches of the market rules are detected and corrected. In doing so, Resolute will take into account relevant IESO guidance, including the Statement of Approach published December 19, 2013
(see Internal Compliance Programs). Resolute will implement the ICP within one year of the date of the settlement with the IESO.
2014 Negotiated Settlements
Ontario Power Generation Inc. (OPG) paid the sum of $550,000 to the IESO for its failure, on a timely basis, to remove its offers for Lambton G4 in HE19 on October 15, 2010 as required by Chapter 7, Section 3.3.8 of the Market Rules. The payment addresses financial benefit inadvertently received by OPG, impact to the market and other factors. Along with a lack of intent to breach the rule, MACD notes in particular the timely self-report and other cooperation by OPG regarding the matter.
2013 Negotiated Settlements
Independent Electricity System Operator: On December 17, 2010 the IESO reached a settlement agreement with the Market Assessment and Compliance Division ("MACD"), in relation to a MACD finding that the IESO violated North American Electric Reliability Corporation reliability standards and associated Northeast Power Coordinating Council criteria, and thereby breached the market rules. The agreement stipulated that the IESO agreed to pay a penalty in the amount of $130,000, with $100,000 to be suspended pending MACD's evaluation of agreed improvements to the IESO's internal compliance program. MACD judged that those improvements would be of more value to the shared goal of reliability than a financial penalty, in this circumstance. That evaluation is now complete and the IESO has made the requisite improvements to its compliance program. The corresponding component of the penalty is now removed.
2010 Negotiated Settlements
The IESO has agreed to a settlement with the Market Assessment and Compliance Division ("MACD") in the amount of $130,000 for failure to identify an increased generation loss associated with a single contingency during a Bruce E Bus outage in October 2008. This event was found by MACD to violate North American Electric Reliability Corporation reliability standards and associated Northeast Power Coordinating Council criteria and market rules. An amount of $100,000 is suspended for one year. At that time, the suspension will be made permanent provided the IESO compliance program satisfies effectiveness criteria set out in the settlement.