FERC calls it fraud: $1.13B for energy savings that never happened.
Summary
FERC found that American Efficient, LLC spent more than a decade -- from 2014 to this April's order -- collecting capacity-market payments funded through ratepayers' electric bills for energy-efficiency 'savings' it did nothing to cause. Its method: pay retailers a fraction of a penny per product sold, then claim the credit. In one example FERC cited, a $10,619 refrigerator earned the company a 15-cent 'micropayment' -- and the right, it claimed, to bill the buyer for savings from their own purchase. FERC ordered $722 million in civil penalties plus roughly $410 million in disgorgement, both plus interest.
A 15-cent claim on a $10,619 purchase
FERC's order lays out the mechanics with a real example. American Efficient's agreement with Home Depot⧉ covered a $10,619 refrigerator. When a customer bought one, American Efficient paid Home Depot a 'micropayment' of 15 cents -- 0.001% of the retail price -- for a data record of the sale. It then claimed to own the appliance's 'Environmental Attributes' and bid the associated energy savings into PJM's capacity market for payment. FERC found American Efficient made the identical claim for more than one billion products sold by its retail partners.
View data as table
| PJM capacity payments | 500,000,000 |
|---|---|
| MISO capacity payments | 15,500,000 |
Two nuclear reactors a year, on paper
Over 11 years, American Efficient offered and cleared more than 20 gigawatts⧉ of this fake capacity -- FERC's order notes that's roughly equivalent to almost two typical nuclear reactors' worth of capacity every year. In some years, about a third of the megawatts it cleared traced to 'historicals': sales that happened before American Efficient even had a contract with the retailer, meaning its micropayments couldn't possibly have caused them.
The company's own people called it unethical
American Efficient's then-Policy Director described the business model⧉ internally as a 'wealth transfer between ratepayers and [American Efficient]' that was 'at best unethical'; she later resigned. Two other grid operators, MISO and ISO New England, had already expelled American Efficient from their capacity markets after finding its program provided no real benefit. American Efficient didn't challenge either ruling -- and deliberately didn't tell PJM about them, for fear of 'poking the bear' in its most important market.
View data as table
| Civil penalty (FPA Section 316A) | 722,000,000 |
|---|---|
| Disgorgement to PJM | 407,732,930 |
| Disgorgement to MISO | 2,084,828 |
Three separate ways it broke the rules
FERC found American Efficient liable on three independent legal grounds -- lacking real contractual rights to the resources it sold, running a program not genuinely 'designed to achieve' energy savings, and violating federal law's anti-manipulation rule through six specific deceptive acts⧉, including hiding its expulsion from other markets and making false statements about its contract rights. Any one of the three, FERC wrote, independently supports the full penalty.
The takeaway
- A fraction of a penny bought a lot. 15 cents on a $10,619 refrigerator was enough, American Efficient claimed, to justify billing the buyer for the appliance's own energy savings.
- The scheme paid real money. About $500 million from PJM and $15.5 million from MISO -- funded by ratepayers -- for capacity that didn't exist.
- FERC's order more than doubles the ill-gotten gains. $722 million in penalties on top of roughly $410 million in disgorgement, about $1.13 billion combined.
This article is drawn from FERC's own executive summary of its order -- a document written from the Commission's adjudicative and prosecutorial perspective, using strong language (calling the scheme a 'scam,' 'naked rent-seeking') that reflects FERC's findings, not neutral narration; American Efficient's own defense is described in the order only to be rejected, and no public statement from the company is reflected here. The order followed a multi-year Enforcement staff investigation (beginning 2021) and a formal Order to Show Cause proceeding (2024) rather than a settlement; the executive summary does not state whether American Efficient has sought rehearing at FERC or intends to pursue judicial review, both standard avenues to challenge a Commission order.
The $722 million penalty and $410 million disgorgement total roughly $1.13 billion before interest -- FERC's order adds interest on top of both disgorgement components, in an amount not quantified in the executive summary. The $500 million PJM and $15.5 million MISO capacity-payment figures are FERC's own approximate characterizations, not exact accounting totals like the $722 million penalty and the precisely stated disgorgement amounts.
Sources(1) ▾
- Federal Energy Regulatory Commission, Executive Summary, Order Assessing Civil Penalties Regarding American Efficient, LLC (Docket No. IN24-2-000) (2026-04-15) — FERC's own executive summary of its order finding American Efficient, LLC and affiliates engaged in a capacity-market fraud scheme running from 2014 to this order (over 11 years of fake capacity clearing specifically), imposing a $722 million civil penalty and ~$410 million in disgorgement. Fetched via a Wayback Machine capture (direct fetch returned 403); read in full. ferc.gov · original document
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FERC called it⧉ 'one of the largest and most brazen frauds' in the Commission's history: from 2014 onward, American Efficient, LLC collected payments from PJM's and MISO's capacity markets -- markets ultimately funded by ratepayers' electric bills -- by claiming credit for energy-efficiency savings it played no role in producing. On April 15, 2026, FERC ordered the company to pay a $722 million civil penalty and disgorge roughly $410 million in unjust profits, both plus interest.