Federal energy regulators have charged a Portland businessman with hatching a scheme to manipulate the regional energy market and have recommended a $1.25 million civil penalty.

In a notice filed Tuesday, staff at the Federal Energy Regulatory Commission named Richard Silkman, a principal at Competitive Energy Services LLC, with violating the agency’s rules.

The behavior, according to FERC, cost New England electricity consumers more than $3.3 million. Competitive Energy Services received $166,841 in revenue during the period, FERC says.

The charges stem from what FERC staff say was Silkman’s fraudulent advice to Rumford Paper Co., owned by New Page Corp. The advice was related to a program run by New England’s grid operator, in which big power users are paid to reduce electricity consumption during times of high demand.

Silkman allegedly advised Rumford Paper to reduce its internal power generation and purchase energy for a five-day period, to set an artificial baseline. That ultimately benefited the paper mill when it was called on to reduce consumption, over six months in 2007 and 2008.

In a statement, Competitive Energy Services denies any suggestion that Silkman or Rumford Paper did anything unreasonable or improper.

The company said it hasn’t violated any rules or regulations, and that the program cited by FERC was later found to have a design flaw and was terminated by the agency. It also says that until Tuesday, FERC never responded to any of the evidence the company submitted – although the FERC order claims it considered all of Silkman’s submissions.

“We welcome the opportunity to end this accusation and to clear our name,” the statement said.

An economist and former director of the Maine State Planning Office, Silkman is a widely known expert in Maine’s energy industry. He has been involved in two small wind projects in Maine, Beaver Ridge Wind LLC, which is operating, and Mount Harris Wind LLC, which is on hold due to community opposition.

Silkman is a partner in a solar technology and non-transmission alternative development company, Grid Solar LLC. He also is a partner in Kennebec Valley Gas Co., which proposed a natural gas line through central Maine and is being sold to Colorado-based Summit Utilities.

The order gives Silkman 30 days to file a response.

The company’s statement concludes: “ … we believe there is no basis for this FERC action, dispute that we engaged in or even could be capable of market manipulation, and look forward to a transparent process that will yield a fair and open hearing before an impartial federal court. That hearing will demonstrate that our actions were entirely lawful, appropriate, and proper under the governing rules.”

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