Former FERC enforcement officials are not expecting the change in presidential administration to greatly impact the commission's watchdog role, but new commissioners could bring nuanced views of what constitutes market manipulation.

Bob Pease said in his 22 years as FERC's director of investigations, he served under a number of Republican chairmen of the commission and not once did he feel hamstrung in his duties.

FERC chairmen representing the GOP during his tenure, which spanned from 1987 to 2009, generally enforced the commission's dozen or so rules governing market manipulation to weed out and punish manipulative, bad behavior, he said.

On the other hand, the individuals named to fill what will be three seats open for Republicans in 2017 "may not be quite as inventive as some have accused FERC of being under a Democratic administration, but it's very hard to tell," said Pease, who is now senior counsel at the law firm Bracewell.

The election of Donald Trump to the White House will prompt Norman Bay to hand over the reins of the commission sometime in 2017. As the commission is currently comprised of three Democrats following the departure of Republicans Philip Moeller and Tony Clark, Bay is not expected to immediately be removed from his post as chairman, assuming he does not resign in the interim.

Trump yet to announce plans for FERC

While Trump has been busy naming cabinet members and other officials to his administration, his transition team has yet to publicly share their plans for FERC.

Neil Chatterjee, a longtime energy aide to Senate Majority Leader Mitch McConnell, and Janet Sena, senior vice president and director of policy and external affairs at the North American Electric Reliability Corp., are among the names that have been floated to join the panel.

David Applebaum, a partner at Akin Gump, Strauss Hauer & Feld who spent six years in FERC's Office of Enforcement as deputy director then director of the Division of Investigations, said that adding three new Republican commissioners would be a significant change on the margins.

But "in terms of outright fraud, lying, cheating, misrepresenting and those kinds of things as well as related position cases where you're moving physical prices to affect, say, a derivative," he said that he didn't see "a real likelihood" of major changes. "Enforcement is going to continue to bring those cases, and I don't see a reason to think that the new commission is going to look differently on those cases."

He said the thing to watch out for that could see some shifts in thinking would be "gaming-related cases that FERC has been investigating and bringing in the electric markets."

"Those cases are sometimes harder to define, and the law is not as clear on that," Applebaum asserted. "So I think you can expect a new commission will be looking hard at those kinds of cases and determining what it wants to call gaming and when it wants to bring those cases."

He noted that he was not prejudging that the new makeup of the commission would "close down that line of inquiry," but rather was "suggesting that they're going to look harder at it."

As for enforcement's workload in 2017, Applebaum, who left the commission in June, said based on the commission's annual report on enforcement released in November, there appears to be "a lot in the pipeline."

Enforcement's Division of Analytics and Surveillance, which works closely on market manipulation cases, worked on more than 40 investigations in 2016, according to the report. Given that the Division of Investigations only opened 17 new probes in the year, Applebaum said it is clear that there are a lot of ongoing investigations.

Pease remarked that a recent FERC white paper on enforcement brought him to the conclusion that the commission planned to put an emphasis on cross-market manipulation.

"That is a key area that is highlighted not only in its white paper on enforcement but also in its guidance on what compliance officers should be monitoring for," Pease said.

He added that the courts have already made clear that taking a position in one market to benefit a position in another is manipulative behavior. "Whether FERC proves that occurred in the various cases it's bringing is a different matter, but that FERC should be focused on those issues is absolutely the right way for them to go," Pease contended.

FERC currently litigating six matters

FERC is currently litigating six separate enforcement matters before federal district courts across the country, with penalty assessments amounting to $547.1 million in civil penalties and $45.6 million in unjust profits at stake before the courts.

Of note, FERC only closed 11 investigations in 2016 through settlement or no action, down from 22 in 2015.

"The question there being, is FERC so tied up on litigation that they're not bringing these cases yet, or are these cases slowed down in the investigative process but we'll be seeing them in the near future?" Pease said. "There's just no way to tell on that because it's all in the nonpublic arena so there's no great insights."

Applebaum contended: "I think you have a very busy litigation history this past year and that will also be true coming up in 2017, and that is taking up a lot of [the commission's] resources."

He offered that FERC does try to settle cases when it can and he did not see that trend ending. "It's just that the manipulation cases are hard to settle, the penalties are often very significant, the reputational damage is significant, and industry does push back on those," he said.

He added, "That's probably going to continue to be the case until there's more clarity from these ongoing federal court cases, what the judges are going to do on those cases, and that lack of clarity is probably not going to be fully resolved in 2017 or even the next year."

Jasmin Melvin is a reporter at S&P Global Platts, which, like S&P Global Market Intelligence, is a division of S&P Global Inc.