Voltus Settles for $18 Million Over MISO Demand Response Violations

January 7, 2025

Voltus Inc. has agreed to pay $18 million to settle allegations of violating the Midcontinent Independent System Operator (MISO) demand response rules. This comprehensive settlement, which includes a $10.9 million penalty and the return of $7.1 million in profits, directly addresses accusations that Voltus engaged in improper practices while registering demand response resources with MISO. The allegations cover a period from October 1, 2016, through June 1, 2020. During this time, Voltus allegedly registered uncontracted and overstated demand response resources, leading to profits from engagements that lacked proper customer consent or were inaccurately reported. The Federal Energy Regulatory Commission (FERC) handled the case, bringing to light significant regulatory implications and the company’s operations.

Details of the Settlement

The settlement not only highlights regulatory compliance but also details the misconduct during the specified period, leading to Voltus gaining unauthorized profits. The Federal Energy Regulatory Commission (FERC) found that Voltus had manipulated the load-modifying resource capacity, raising concerns about performance reliability if MISO had dispatched those resources. Furthermore, FERC’s findings implicated Greg Dixon, the former CEO of Voltus, in orchestrating a fraudulent scheme to gather customer data illegitimately. Dixon allegedly instructed employees to use data scraping methods on the Ameren Illinois website for collecting customer information without consent. As part of the agreement, Dixon agreed to step down from the Voltus board of directors and pay a $1 million penalty. This settlement reflects the stringent measures regulatory authorities can enforce to maintain the integrity of market operations.

FERC’s enforcement office determined that Voltus had registered demand response resources without proper knowledge or consent from the resource owners. Additionally, some resources were registered at levels above what the customers had agreed to curtail. This practice raised significant questions regarding the performance reliability of such resources, had MISO dispatched them. Key points of the agreement reveal that Voltus and Dixon stipulated to the facts presented in the case, although they did not formally admit or deny the alleged violations. This aspect of the settlement maintains a delicate balance between acknowledgment and denial of wrongdoing. Importantly, Voltus emphasized that they were not accused of market manipulation per se, a notable distinction that they highlighted in their regulatory engagements.

FERC’s Investigation and Findings

The enforcement office’s investigation uncovered a range of improper practices employed by Voltus, specifically focusing on the registration of demand response resources. It was revealed that Voltus had engaged in activities without obtaining the proper knowledge or consent from resource owners. Additionally, certain resources were registered at levels exceeding the agreements with customers, which raised suspicions about the reliability and performance of these resources under MISO’s dispatch. This manipulation resulted in profits from engagements that lacked the necessary customer consent or were inaccurately reported.

Voltus’ settlement with FERC also necessitates several compliance measures to be implemented by the company. One prominent aspect of the settlement is that Voltus must now file annual compliance monitoring reports to FERC’s enforcement office for a minimum of two years, with an extension possible at the office’s discretion. These measures aim to ensure that Voltus aligns itself with operational and regulatory standards moving forward, holding the company accountable for sustained compliance. Notably, although Voltus stipulated to the facts presented, neither the company nor Greg Dixon admitted or denied the alleged violations. This stance allows the company to keep a certain level of distance from the wrongdoing while agreeing to the penalties imposed.

Voltus’ Operations and Market Role

Voltus plays a significant role in the energy market by managing more than 7 GW of distributed energy resources across nine organized wholesale markets in North America. Founded in 2016, Voltus has significantly contributed to channeling over $175 million back to its customers through participation in wholesale markets. Voltus aggregates retail customers to provide load-modifying and emergency demand resources to MISO, underscoring the company’s extensive operational reach and influence within the energy sector. The company’s operations are integral to maintaining grid reliability and facilitating market participation for a broad range of customers.

Nonetheless, the investigation by FERC brought to light critical deficiencies in how these operations were conducted. Particularly, deficiencies in MISO’s initial regulations were exposed, which did not require entities like Voltus to verify contractual relationships when registering demand response resources. This regulatory gap potentially allowed improper practices to go unchecked. FERC’s actions underscore the necessity for rightful practices and substantial evidence of contractual relationships when registering such resources. The investigation highlighted the need for the energy sector to adopt robust operational protocols and comply with regulatory requirements to ensure fairness and transparency in market engagements.

Illicit Data Collection Methods

A crucial part of the investigation focused on the illicit data collection methods employed by Voltus, particularly the development and use of a program called “Scranta.” The program, cleverly named by combining “scrape” and “Santa,” was designed by Greg Dixon and another Voltus employee to gather customer account numbers without the need for utility bills. This method led to unauthorized registrations for several planning resource auctions, contributing significantly to Voltus’ participation in MISO. The unauthorized use of Scranta raised serious concerns about data privacy and the ethical considerations of using such methods for market operations.

As a part of the settlement, future compliance measures were mandated for Voltus, requiring the company to file annual compliance monitoring reports with FERC’s enforcement office for at least two years, which could be extended at the discretion of the office. These measures are intended to ensure that Voltus adheres to operational and regulatory standards in the future. By holding the company accountable and ensuring sustained compliance, the settlement aims to strengthen market integrity and reliability. FERC’s stringent measures highlight the importance of ethical practices in data collection and emphasize the repercussions of employing unauthorized methods for gaining market advantages.

Regulatory Implications and Market Integrity

The enforcement office’s investigation uncovered various improper practices by Voltus, particularly in the registration of demand response resources. It was found that Voltus engaged in activities without securing proper knowledge or consent from resource owners. Additionally, some resources were registered at levels surpassing customer agreements, raising doubts about the reliability and performance of these resources under MISO’s dispatch. This resulted in profits from engagements lacking necessary customer consent or accurate reporting.

As part of the settlement with FERC, Voltus is required to implement several compliance measures. Notably, the company must file annual compliance monitoring reports with FERC’s enforcement office for at least two years, which could be extended at the office’s discretion. These measures are designed to ensure Voltus adheres to operational and regulatory standards, maintaining accountability for sustained compliance. Although Voltus acknowledged the facts presented, neither the company nor Greg Dixon admitted or denied the alleged violations. This strategic stance allows Voltus to distance itself from the wrongdoing while accepting the imposed penalties.

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