The enforcement arm of the Federal Energy Regulatory Commission has released a report describing its enforcement activities in fiscal year 2015.
The 69-page 2015 FERC staff report on enforcement
draws its organization from that of the Commission's Office of
Enforcement. The report presents public summaries of activity by each
Office’s four divisions -- Investigations, Audits, Energy Market
Oversight, and Analytics and Surveillance. Of these, Investigations and
Audits are the most likely to lead to penalties or other direct
enforcement action, while Market Oversight and Analytics typically play
more of a background role, supporting the Commission's investigations
According to the report, the
Investigations division opened 19 new investigations in fiscal 2015, and
closed 22 (through settlement or "no action"). Major settlements in
fiscal 2015 focused on the major 2011 Southwest power outage,
with the Commission concluding its multiyear investigation into that
outage and its causes. In all, staff obtained settlements resulting in
almost $26.25 million in
civil penalties and disgorgement of $1 million in unjust profits. All
settlements included reporting requirements and provisions requiring the
subjects to enhance compliance programs.
The FERC enforcement office's Audits division periodically checks the records of licensees and public utilities
to evaluate their compliance with the statutes and regulations
administered by the Commission. It reportedly performed 22 financial
operational audits of public utilities and oil and natural gas
pipelines. The report states that these audits led to 360
recommendations for corrective action, and
refunds and recoveries totaling more than $26.3 million.
Generally speaking, the annual staff enforcement report is a summary of what's already happened. In other words, the enforcement activity described in the annual report has already occurred. Much of that activity was public; any civil penalties or other remedies described in the report are generally imposed and documented in separate, preexisting proceedings. The report does also provide summary level information on some non-public Enforcement activities, like self-reported violations or investigations closed without public enforcement action.
The enforcement report also provides an important look into how the Commission staff view their work -- the enforcement office's patterns, trends, and priorities, as expressed by the people doing the enforcing. By following the Commission's enforcement activity throughout the year, and comparing that history to staff's view of the year, the enforcement office's points of emphasis come into focus. As expected, in fiscal year 2015, these included fraud and market manipulation, serious violations
of mandatory reliability standards, and conduct that the office found to threaten the
transparency of regulated markets.
The Office of Enforcement's annual report can also be compared to previous reports dating back to at least 2007. Compared to some recent years, fiscal 2015 saw a relatively lower total penalty amount resulting from enforcement action. (Compare 2015's $26.3 million in penalties and $1 million in disgorgement, with 2013's over $304 million in civil penalties and disgorgement of almost $141 million in unjust profits.)
But experience has shown that there can be difficulty, or at least delay, affecting whether FERC will actually collect that money. The report notes that in fiscal 2015, Enforcement
filed three new petitions in federal district court to
enforce earlier Commission orders assessing civil penalties. Along with an anti-manipulation case tried in 2015 before a FERC Administrative Law
Judge, the report notes that staff is waging district court and
administrative litigation to recover over $500 million in civil penalties and disgorgement.