FERC issues guidelines for expanded civil penalties power

The Federal Energy Regulatory Commission has issued new civil penalty guidelines outlining how it will wield new civil penalty authority granted to the agency by the Energy Policy Act of 2005.

The policy statement guidelines are modeled on parts of the United States Sentencing Guidelines, with modifications specific to FERC issues.

FERC said March 18 it adopted the guidelines after nearly four years’ experience with its expanded authority under the 2005 energy act. (HydroWorld 10/19/09) The act expanded FERC power under the Federal Power Act and extended FERC authority to cover violations of the Natural Gas Act.

“This approach promotes consistency by basing the penalty calculations on a set of uniform factors that are weighted similarly for similar types of violators,” the commission said. “The penalty guidelines also provide specific credit to companies for self-reporting violations and for implementing robust compliance programs, thus further encouraging compliance by the industry.”

Washington law firm Van Ness Feldman noted the guidelines base penalties on the greater of a dollar amount listed in a penalty table, the gain to the offender from the violation, or the loss caused by the violation. They also include a “culpability score” based on an offender’s past conduct and efforts to remedy the violation.

“The new penalty guidelines are likely to result in significantly higher penalties in cases where a violation causes a significant pecuniary gain for the violator or loss caused by the violation, such as the costs of the loss of load resulting from a reliability compliance violation,” the law firm said.

The civil penalty guidelines may be obtained from FERC’s Internet site under www.ferc.gov/whats-new/comm-meet/2010/031810/M-1.pdf. The commission’s enforcement staff is to conduct a workshop April 7 to discuss how the guidelines will be applied and to receive comments and questions.

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