Effective conservation incentives would send appropriate price signals to consumers. The more common approach, unfortunately, involves arbitrary standards that introduce market inefficiencies and...
An interpretation of FERC’s first application of EPACT.
cases may take longer to bring to closure. Therefore, this conclusion could prove fleeting. Nevertheless, the commission decided to bring these public and discuss them in public, and that is adequate basis to conclude that they have addressed behaviors they consider important to today’s jurisdictional markets.
Despite FERC’s efforts to communicate with market participants about appropriate behavior, the actions on these initial settlements already have created as many questions as they answered.
For example, are all of the more than 40 self-reporting incidents mentioned repeatedly at the Jan. 18 meeting resolved? If some are not resolved, are the remaining cases a “random mix” or cases of greater seriousness? What is the nature of the kinds of matters reported that were not penalized?
If the NRG alleged violations were the result of the “actions of a single employee,” 2 why were two employees terminated? 3
FERC now has acted forcefully to demonstrate its resolve to enforce its regulations. The market can expect more enforcement actions. Questions remain, but a prudent executive will make certain the company is building a culture of compliance around its energy markets and reliability practices that will pass regulators’ review because the Kelliher Commission has shown its intent to make the costs of disobedience prohibitive.
1. PacifiCorp, Order Approving Stipulation and Consent Agreement, Docket No. IN07-5-000 at 3 (Jan. 18, 2007).
2. FERC, Press Release, Jan. 18, 2007, p. 3.
3. NRG Energy Inc., Order Approving Stipulation and Consent Agreement, Docket No. IN07-6-000 at 2 (Jan. 18, 2007).