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Compliance Program Guidance

The industry debates how far FERC should go.

Fortnightly Magazine - April 2009

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This commitment is consistent with Obama’s plans for increasing the availability of renewable energy through the expansion of transmission infrastructure to the top wind resource zones across the United States. As this new infrastructure build accelerates over the coming years, and state and federal regulators balance competing interests such as economic efficiency, reliability, and political expediency, there will be an emphasis on how providers and users of this infrastructure comply with prevailing market rules. FERC will be at the forefront of these presidential initiatives in light of the oversight and enforcement role it plays in encouraging the competitiveness of energy markets and preserving the reliability of system infrastructure. Judging by Obama’s actions and words during his first few months in office, it would appear that a reasoned and balanced approach aimed at sustainability will be taken by the federal agencies charged with bringing his vision to reality. With respect to compliance, FERC is expected to remain keenly focused on issues that threaten the integrity of markets and the reliability of the national grid. This would involve FERC continuing to be an active proponent of companies building out and maintaining their compliance programs.

What has become increasingly clear for market participants is that FERC’s enforcement of compliance has been an evolving process. In addition, both regulators and the industry have continued refining what it means to have an effective and robust regulatory-compliance program. Since 2005, FERC has continued to clarify what it expects from the industry and has provided both forums and policy statements whereby industry participants could better understand what their peers are doing about managing compliance. Further clarification on the benefits of self-reporting and the application of penalty authority appear to be a high priority for market participants. Even though FERC has emphasized that responsiveness, consistency and transparency should be cornerstones of a sound compliance program, companies want greater assurance that if they do the right thing, any levied sanctions will be reduced significantly by the company’s demonstrated commitment to being compliant ( e.g., the NRG settlement). 15 Whichever way FERC chooses to lean in the future, it might be advisable for companies to take a balanced approach that preserves corporate flexibility while providing sufficient guidance to continue taking confident steps in the right direction.



1. 2008 FERC Report on Enforcement , Oct. 31, 2008.

2. Ibid.

3. 2007 FERC Report on Enforcement , Nov. 14, 2007.

4. 2008 FERC Report on Enforcement , Oct. 31, 2008.

5. Ibid.

6. 2007 FERC Report on Enforcement , Nov. 14, 2007.

7. 2008 FERC Report on Enforcement , Oct. 31, 2008.

8. Ibid.

9. HBR, “Hard Side of Change Management,” Oct. 2005.

10. Energy Washington Week , Jan. 7, 2009.

11. Inside FERC , Nov. 24, 2008.

12. Energy Washington Week , Jan. 7, 2009.

13. FERC Statement of Jon Wellinghoff, Feb. 3, 2009.

14. Las Vegas Review Journal , May 6, 2001.

15. October 16th FERC Policy Statement on Compliance , p. 6.