Do you know what your legal exposure is?
James Bowers is director, compliance risk services, at Day, Berry & Howard LLP. David Doot practices in the areas of public utility and energy law and mergers and acquisitions at the same firm. Contact Bowers at firstname.lastname@example.org.
The recent criminal convictions of Kenneth Lay and Jeffrey Skilling close another chapter in the long-running Enron drama, but the impact of this drama on the way corporate America is governed will be felt well into the future.
As the seventh largest U.S. enterprise and the crown jewel of the energy industry, Enron has provided lessons for both corporations generally as well as the energy industry specifically. Predictably, the Enron debacle has spawned a plethora of regulatory reforms—from the broad-ranging corporate governance dictates of the Sarbanes-Oxley Act of 2002 to the specifically tailored proscriptions of the Energy Policy Act of 2005 (EPACT).
How can energy market participants effectively manage the risks inherent in complying with those regulatory reforms?
Congress expresses itself clearly in EPACT. It wants more active enforcement by the Federal Energy Regulatory Commission (FERC), especially against energy market manipulation. It directs FERC to promulgate a rule to protect natural gas and electricity ratepayers from this evil.
Armed with enhanced enforcement and penalty authority granted in EPACT, FERC recently adopted a rule detailing broad prohibitions on energy market manipulation.