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The Federal Energy Regulatory Commission has fined Durham-based American Efficient $722 million and ordered the company to repay more than $410 million in “unjust profits” for alleged fraud in its energy efficiency program.
In an April 15 ruling, FERC claims American Efficient withheld key information from electric grid operators that allowed the company to manipulate energy markets.
An American Efficient spokesperson said the company “stands by its position that the commission’s allegations are meritless and that it did not commit any wrongdoing.”
FERC took issue with the company’s business model. Durham entrepreneur Ben Abram and his company Wylan Capital purchased American Efficient in 2013. Since then, it has been an energy efficiency aggregator that buys sales data and “environmental attributes”—the inherent characteristics of lightbulbs, appliances, and other products that make them energy efficient—from large retailers, like Lowe’s, as well as other companies.
American Efficient then used that sales data to calculate the energy savings from the anticipated use of the lighting and appliances, entering those projected savings into “capacity auctions.”
At capacity auctions, grid operators pay for the ability of traditional power suppliers and utilities— as well as energy-efficiency aggregators like American Efficient—to produce power when needed. Ratepayers ultimately pay for the costs of fuel through their respective utilities.
The decision was unanimous among the five commissioners, two Democrats and three Republicans.
“I don’t vote lightly for disgorgement and civil penalties this high,” said FERC Commissioner Lindsay See, a Biden appointee, at a public meeting last week. “But we’ve not been faced with a scam that robbed ratepayers of hundreds of millions of dollars in this way before.
“American Efficient has fought with every legal tool they can muster, and it’s easy to understand why—because their entire business is at stake, their entire business is a scam.”
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