CODE OF ETHICS AND SOUND TRADING PRACTICES
PREAMBLE
This Code of Ethics and Sound Trading Practices (Code) defines the values, principles and internal controls that ACES Power Marketing (APM) shall follow in conducting its business activities. This Code is expressly applicable to APM employees trading or scheduling power, natural gas, heating oil and other approved commodities (trading staff) and employees reporting data from such transactions to index developers (trading control staff).
The Code is intended to complement the internal principles and practices of APM and to guide its agent activities for its members and customers in supplying power, managing risk, providing market liquidity and reporting trading transactions. Compliance with this Code provides assurance to members, customers, regulators, and other market participants that APM’s business activities are, and will continue to be, conducted with integrity. In addition, assurance is given that unlawful and unethical trading practices are not tolerated, and that APM intends to abide by these ethical standards and maintain sound trading practices.
Above all, adopting this Code reaffirms APM’s commitment to excellence, professionalism and unwavering ethical conduct.
I. Ethical Standards
Core Value: Integrity
Conducting business activities with integrity is the essence of ethical conduct. Integrity means conducting business activities in an honorable and principled manner consistent with the ethical standards and sound trading practices set forth herein.
Ethical Standards
This Code requires that APM’s trading staff shall:
1. Conduct business in accordance with formally delegated reliability standards, and all applicable laws, regulations, tariffs and rules, and in good faith, and with a commitment to honest dealing.
2. Not engage in fraudulent behavior.
3. Honor the terms and conditions of its members’ and customers’ power, natural gas, heating oil and other approved commodity contracts consistent with its responsibility as their agent to use its best efforts.
4. Engage only in transactions with legitimate business purposes; such as managing business risk or that otherwise have economic substance. In no event will the trading staff engage in any transactions intended to artificially boost revenues or volumes of any party, or intended to manipulate market prices.
5. Not collude with other market participants to: (a) affect the price or supply of power, natural gas, heating oil and other approved commodities, (b) allocate territories, customers or products, or (c) otherwise unlawfully restrain competition.
6. Adhere to APM’s trading authority policies and company policies dealing with legal compliance (including, but not limited to antitrust, FERC Standards of Conduct, and FERC Market Rules), business conduct, personal conduct, conflict of interest and vendor relations.
7. Maintain and adhere to internal procedures designed to ensure (a) that all trades are properly documented in a timely fashion, and (b) that no trades are concealed or misrepresented.
8. Use a fair market-clearing price at the location of the trade as a transaction price for trades between members and/or customers.
II. Sound Trading Practices
Core Value: Adherence to Sound Trading Practices and Principles Power, natural gas, heating oil and other commodity markets reflect the constantly changing dynamics of supply and demand. Efficient business operations in such an environment demand practices that can manage risk and discover market prices. Such practices must be consistent with the guiding Ethical Standards of this Code.
Sound Trading Practices Standards
This Code requires that APM’s trading staff shall:
1. Operate and schedule electric generating facilities and commit or otherwise offer supply in a manner that complies with the rules, regulations and guidelines of the applicable power, natural gas, heating oil and other approved commodity markets. Moreover, APM will not encourage or advise its members or customers to engage in such activities or misrepresent the operational capabilities of generation facilities in a manner expressly intended to affect market prices by unlawfully withholding available supply from the market expressly to create artificial supply shortages. However, APM may advise its members or customers to decide not to run their electric generating plants or not to offer and schedule such resources or other power supplies (a) when such actions would be uneconomic under the given circumstances, or (b) when such actions would risk jeopardizing public health and safety or damaging their facilities, or (c) in order to comply with facility licensing, environmental or other legal requirements.
2. Not participate in transactions or schedule resources with the intent of creating congestion to manipulate prices or to jeopardize the security of dispatch operations.
3. Not offer reliability services to the market that its members or customers do not intend to provide.
4. Not arrange and execute simultaneous offsetting buy and sell trades, i.e. with the same counterparty and identical price, commodity, location and quantity terms, with an intent to artificially distort actual revenues, trading volumes or affect market prices.
5. Not conduct trading for the purpose of misrepresenting the financial condition of its members’ or customers’ organizations.
6. Not submit or communicate any trade information, trade prices, price quotes, or like information directly to market publications and publishers of surveys and price indices, or like entities, either orally or otherwise.
7. Not solicit receipt of non-public information regarding transmission, transportation or storage, except for such information that constitutes legitimate APM business on behalf of an APM member or customer.
8. Not distribute non-public information regarding transmission, transportation or storage, except for such information that constitutes legitimate APM business on behalf of an APM member or customer. However, for this exception, such distribution is limited to only those parties who are on a need to know basis (e.g. the APM member or customer, the transmission provider, the pipeline company, the storage resource provider).
III. Information Disclosure and Documentation
Core Value: Candid and Complete Disclosure
Markets depend on trust in the accuracy of market information and transparency of market behavior. The confidentiality of commercially sensitive information entrusted to APM will be maintained.
Information Disclosure and Documentation Standards
The trading control staff shall remain separate and distinct from APM’s trading staff. Only the trading control staff shall submit or communicate in writing transaction information directly to market publications, publishers of surveys, price indices, or like entities.
APM’s trading control staff shall:
1. Provide market and transaction information to its members and customers as required by regulators and market monitors in compliance with all applicable rules and requirements, and to cooperate as reasonably necessary to assist in their understanding of market operations.
2. When reporting transactions, do so in accordance with applicable accounting principles and in a manner that accurately represents the price and characteristics of such transactions.
3. Ensure that any information disclosed to market publications and publishers of surveys and price indices is accurate and consistent with the data reporting standards of FERC’s Safe Harbor Policy on Natural Gas and Electric Price Indices, issued July 24, 2003, and subsequently revised subject to maintaining compliance with any restrictions of APM’s confidentiality agreements.
4. Enforce the trading authority policies that are designed to ensure that power, natural gas, heating oil and other approved commodity trading activities are conducted in accordance with such trading authority policies.
5. Maintain and adhere to internal procedures designed to ensure (a) that all trades are properly captured in a timely fashion, and (b) that no trades are concealed or misrepresented.
6. Maintain documentation on all transactions for an appropriate period of time as required of APM (under applicable laws and regulations).
IV. Compliance
Comprehensive Corporate Compliance
APM has a compliance program to ensure appropriate, timely and ongoing review of power, natural gas, heating oil and other approved commodity trading practices and such program is designed to promote compliance with this Code.