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Power & Pipes

FERC, CFTC, and State Energy Law Developments

At the NERC Board of Trustees meeting this week in Vancouver, Canada, NERC outlined a new initiative intended to reduce the administrative burden on Registered Entities associated with the processing of Reliability Standard violations. The procedure, which has yet to be spelled out in detail, would adjust the administrative process based on the risk to bulk power system reliability presented By a given violation.

Under NERC’s proposal, each Reliability Standard violation must continue to be identified and remedied, but only those violations posing a “serious risk” to bulk power system reliability will be filed with FERC as a Notice of Penalty. Violations presenting only a low-reliability risk will be addressed through what NERC describes as a “find, fix, track and report” process. No matter which process is used for a violation, the violations will continue to be reported to FERC. However, rather than NERC’s past practice of sporadic reporting, NERC will make monthly filings of both the Notices of Penalty and the low-risk “find, fix, track and report” violations.

Although unstated in the press release, because any monetary penalties imposed By NERC must be filed with FERC for approval in a manner that follows the Notice of Penalty regulatory requirements, the description of NERC’s proposal suggests that the “find, fix, track and report” violations will not receive monetary penalties.

NERC plans to make an initial filing with FERC in September to propose this new process. Changes to the NERC Rules of Procedure will most likely be necessary to implement this new enforcement procedure, and any such changes must be posted for stakeholder comment prior to adoption By the NERC Board of Trustees. Interested parties should have the opportunity to comment on the details of the proposal when they are posted By NERC, as well as when the proposed procedures are filed with FERC for approval.

NERC’s press release describing the proposal is available at http://www.nerc.com/fileUploads/File/News/MR_Enforcement_04AUG11.pdf.