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Power & Pipes

FERC, CFTC, and State Energy Law Developments

On June 24, 2009, the Federal Energy Regulatory Commission (Commission) upheld central aspects of its prior decisions on Violation Severity Levels (VSLs) proposed By the North American Electric Reliability Corporation (NERC). In acting to approve two compliance filings from NERC addressing VSL issues, the Commission turned back challenges to its current policy regarding the development of VSLs, including the treatment of VSLs for subrequirements that are merely conditions for meeting the actual core requirement and the double-jeopardy concerns presented By employing separate VSLs for the requirements and subrequirements of a Reliability Standard.

The first compliance filing addressed in the order dealt with the “binary” requirements and subrequirements found in the original 83 Reliability Standards approved By the Commission. Unlike most requirements, which have VSLs addressing increasing degrees of noncompliance, binary requirements are those requirements where an entity is either fully compliant or completely out of compliance. NERC’s compliance filing revised the VSLs for these binary requirements and subrequirements so that all violations of these binary requirements would be assessed as “severe.” In the second compliance filing addressed in the order, NERC submitted modified VSLs for those VSLs to which the Commission had previously granted rehearing. The Commission approved both of these compliance filings.  Read more…