(Reuters) - The top U.S. energy regulator on Thursday warned power and natural gas traders that it would vigorously enforce anti-manipulation rules in those markets to protect consumers after last week's record fine against Constellation Energy.

Chairman Jon Wellinghoff said the Federal Energy Regulatory Commission expected all companies in those markets to abide by the terms it set last week for Constellation when it settled a market manipulation probe with a unit of the Baltimore-based power company for a total of $245 million.

Constellation agreed to pay a $135 million civil penalty and to disgorge unjust profits of $110 million. It was the largest penalty FERC has imposed since Congress expanded the communion's enforcement authority in 2005.

After the settlement, Constellation CEO Mayo Shattuck said the company did not admit to any wrongdoing but agreed to settle the case to avoid litigation and pave the way for a merger with Chicago-based energy company Exelon Corp.

But Wellinghoff said in a statement that FERC would hold senior managers of "all companies" accountable for monitoring compliance with terms of the Constellation settlement. He said companies would be expected to refrain from making uneconomical trades on one position in order to lift the value of a different position.

FERC's enforcement unit said Constellation's inappropriate activity involved losing money in the New York physical power market to favorably influence payments it received under a separate financial market.

Constellation and Exelon completed their merger this week.

In his statement, Wellinghoff said companies would be expected to respond truthfully to questions about their trading, and also to realize that FERC "will be vigorous in using its anti-manipulation authority to protect consumers."

FERC's enforcement staff determined Constellation engaged in manipulation in New York from September 2007 to December 2008 that resulted in economic losses to market participants who bought and sold energy in the day-ahead markets of ISO New England and the New York Independent System Operator. The staff also determined this manipulation distorted price discovery, he said.

In addition to the civil penalty and disgorgement of unjust profits, Constellation had to remove the employees involved in the questionable trading activities from any position related to wholesale energy trading.

Shattuck said last week that Constellation believed its trading practices "were lawful portfolio risk management transactions." Wellinghoff's statement said "clearly that is not the case."

"The Stipulation and Consent Agreement sets forth a detailed description of the transactions that I believe Constellation knowingly and willfully engaged in that form the basis of Enforcement Staff's conclusion that Constellation engaged in market manipulation, fraud, and misrepresentation," Wellinghoff said.

(Reporting By Scott DiSavino in New York and Eileen O'Grady in Houston)

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