FERC Orders American Efficient to Pay $1.1 Billion
- FERC & Federal Policy & Markets Regulatory
Marin Holt
- 0
- 5 minutes read
- Total penalty: $1.1 billion
- Civil penalty: $722 million
- Disgorgement to PJM: $407.7 million
- Capacity cleared over 11 years: 20 GW
The Federal Energy Regulatory Commission on April 16, 2026 ordered American Efficient and affiliated companies to pay $1.1 billion for selling energy-efficiency capacity the firm never installed into the PJM and MISO capacity markets, in what the agency called one of the largest and most brazen frauds in the history of the Commission.
How the Scheme Worked
Over 11 years, American Efficient offered and cleared more than 20 GW of energy-efficiency resources into the PJM and MISO capacity auctions, collecting roughly $500 million from PJM and $15.5 million from MISO. The Commission found the company installed no energy-efficiency products at customer sites and signed no contracts with the end-use customers who bought them. Instead, it purchased sales data from manufacturers, retailers, and distributors and claimed the resulting savings as capacity it controlled. The investigation, opened in 2021 under docket IN24-2-000, traced the conduct to Modern Energy Group, the company’s owner.
Why It Matters
Capacity markets pay resources to stand ready years ahead, and those prices flow into consumer bills across the 13 states served by PJM. A fraud that cleared more than 20 GW distorted those prices for a decade, so households and businesses overpaid for capacity that did not exist. The order signals that FERC will pursue disgorgement against demand-side and efficiency resources that have drawn lighter scrutiny than conventional generators.
The Penalty
FERC assessed a $722 million civil penalty and ordered disgorgement of $407.7 million plus interest to PJM and about $2.1 million to MISO. FERC Chairman Laura Swett said: “American Efficient’s years-long fraud profoundly disrupted the organized capacity markets and ultimately increased costs for ordinary Americans.” The disgorged funds are directed back to the two grid operators that run the capacity auctions securing future generation across the Mid-Atlantic and Midwest.
Critical Perspective
The $1.1 billion is an assessment, not a collected check. American Efficient is contesting the order in the U.S. District Court for the Middle District of North Carolina, arguing FERC overstepped its authority and raising constitutional claims; a request for a preliminary injunction was denied in November 2025. The company maintains it followed PJM’s rules. Whether consumers recover any of the $407.7 million depends on litigation that could run for years.
