The Federal Energy Regulatory Commission (FERC) has taken decisive action against Ketchup Caddy and its owner, Philip Mango. In a recent ruling, they were ordered to pay nearly $27 million after it was found that they had manipulated the demand response resources within the Midcontinent Independent System Operator (MISO) capacity market.
FERC charged that Ketchup Caddy and Mango were involved in deceptive practices aimed at defrauding the market and its participants. They were ordered to pay $25 million in civil penalties, while Mango faces a $1.5 million penalty, along with the return of over $506,000 in unjust profits.
Despite cooperating with the investigation, Ketchup Caddy and Mango did not respond to a prior show cause order issued by FERC in February, according to the agency.
The investigation revealed that Ketchup Caddy had unlawfully obtained customer data from an Ameren website to enroll around 210 MW of demand response resources for the MISO’s 2019 planning resource auction. In subsequent auctions, the company cleared even higher amounts of capacity. However, MISO removed Ketchup Caddy from its capacity market in October 2021 once the fraudulent activity was uncovered.
FERC’s enforcement office estimates that Ketchup Caddy’s fraudulent participation led to losses of approximately $17.6 million, significantly impacting capacity prices and potentially jeopardizing grid reliability during emergencies.
Mango admitted during testimony that he had reached out to few actual demand response customers before the 2019 auction. He also acknowledged that he intended to enroll customers in a way that was not above board, even admitting to submitting false registration information to meet requirements.
Ketchup Caddy, which was initially established by Mango to sell a unique in-car ketchup holder, now faces a 30-day window to appeal FERC’s decision.
In response to the situation, MISO is actively working to strengthen protections against such manipulative practices in its markets. A spokesperson for the operator noted that they are enhancing their tariff requirements and allocating more resources to thoroughly evaluate the participation of demand-side resources.