Enforcement trends call for a proactive approach to complying with market rules.
Howard Friedman is a senior manager with Deloitte & Touche LLP. Email him at firstname.lastname@example.org.
Federal regulators have penalized wholesale energy market participants with fines ranging from $300 thousand to $300 million over the past two years. The magnitude of the penalties, along with uncertainty over how to effectively mitigate the risk of any civil action by regulators, has raised concern about how companies are approaching their regulatory obligations.
Enforcement by FERC has taken on a shape that has many wholesale market participants wondering whether they are adequately addressing their existing obligations in a manner that is consistent with regulatory expectations.1 While FERC commissioners and staff have made it clear they want companies to adopt a “culture of compliance,” there remains some ambiguity over what that means from a practical perspec- tive. Whether a company is a gas or power asset owner, operator or user, regulators expect—if not require—the enterprise to have adequate processes, practices, and systems in place to support the demonstration of compliance. With the rising stakes and continued uncertainty around how various rules, statutes and standards will be enforced, companies cannot afford to haphazardly address the regulatory risks inherent within their operations and market activities.