A former state official and his company will pay nearly $1.5 million to settle allegations that he and the company manipulated the regional energy market more than a dozen years ago.

In 2012, the Federal Energy Regulatory Commission filed charges against Richard Silkman, a former director of the State Planning Office, and his firm, Competitive Energy Services LLC, alleging that the commission’s rules had been violated in 2007 and 2008 under a program that paid big power users to reduce electric consumption during times of high demand.

FERC said Silkman had advised a client, Rumford Paper Co., to set a fake baseline during the period used to calculate the payments under the power reduction program. Those allegedly false numbers benefited the mill when it was called on to reduce consumption during six months in 2007 and 2008.

Silkman and his firm have denied the allegations and in the settlement announced Friday, didn’t admit or deny that FERC rules were violated. The paper company has denied any wrongdoing and said at the time that FERC filed the charges that there was a design flaw in the energy reduction program.

Under the settlement, Silkman and the company will pay $1,475,000 over seven years. CES will pay $116,841.13 to ISO-New England, which operates the region’s energy grid, and a penalty of $708,158.67 to federal regulators. Silkman will pay a $600,000 penalty to the federal government.

According to regulators, the paper company’s actions cost New England electric consumers more than $3.3 million.

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