Tuesday, December 01. 2020
FERC Presents the 2020 Annual Report on Enforcement
OE’s enforcement priorities in fiscal year 2020 are unchanged with focus on four distinct areas:
- fraud and market manipulation
- serious violations of the Reliability Standards
- anticompetitive conduct
- conduct that threatens transparency in regulated markets
Division of Investigations
In fiscal year 2020, the FERC approved three settlement agreements to resolve pending investigative matters, which totaled more than $550,000. This included $437,500 in civil penalties and disgorgement of approximately $115,000. Also in 2020, DOI staff opened six new investigations and closed eight pending investigations with no action. This includes matters in which staff found no violation or where there was insufficient evidence that a violation had occurred. There were several other matters where DOI found a violation but chose not pursue a sanction and closed the investigation. DOI also resolved 105 self-reports without further action, six MMU referrals without opening full investigations, and 146 calls made to the FERC’s Enforcement Hotline. DOI filed one new case in federal district court and continued to litigate three other cases.
The annual report discusses non-public activities, including summaries of investigations and self-reports that were closed as mentioned above without further action by DOI. Also featured in the report are illustrative examples of the market monitor referrals received by OE that staff reviewed and closed without opening an investigation. These summaries, which have been made confidential by removing identifying information, can be useful to companies trying to comply with the FERC’s regulations.
Division of Audits and Accounting
During fiscal year 2020, the Division of Audits and Accounting (DAA) completed ten audits of public utility, natural gas, oil, and Regional Transmission Organization companies covering a wide array of topics. These audits produced 51 findings of noncompliance and 199 recommendations for corrective action. They also directed $98.4 million in refunds and other recoveries. DAA also acted through the Chief Accountant’s delegated authority or advised on 441 proceedings, including acting on 104 accounting filings requesting approval of a proposed accounting treatment or financial reporting matter. The division assisted with 337 rate, pipeline certificate, merger and acquisition, and debt and security issuance proceedings, including requests for declaratory orders, natural gas certificate applications, merger and acquisition applications, electric and natural gas rate filings, applications for issuance of securities, and requests for accounting approval. DAA served in an advisory role in many of these cases by analyzing the accounting implications of those requests.
DAA also assessed Electric Quarterly Report (EQR) submissions received from nearly 2,800 entities each quarter for accuracy and reliability of the data. Two EQR user group meetings were conducted to improve outreach with the filing community and discuss potential system improvements and enhancements. To the latter end, in March 2020, DAA held a staff-led virtual technical conference on use of XBRL for filing FERC forms. An XBRL implementation schedule has also been established. DAA administered and oversaw compliance with the requirements of FERC Form Nos. 1, 1-F, 2, 2-A, 3-Q (gas and electric), 6, 6-Q, 60, and FERC-61.
To aid companies, the annual report includes illustrative compliance alerts provided by the DAA that cover nearly a dozen distinct areas where there have been consistent concerns or noncompliance of significant impact. Examples of docket number(s) of one or more recent audit reports or FERC orders dealing with various topics are provided in the report so that jurisdictional entities may review the more recent findings pertaining to those topic areas. The aforementioned audits completed in fiscal year 2020 are also described, which summarizes staff’s findings of noncompliance and provides context for audits that resulted in refunds and recoveries. Additionally, the report summarizes DAA’s role in deciding or advising on the proceedings and accounting matters and in the administration of certain FERC form filing requirements and programs.
Division of Analytics and Surveillance
The Division of Analytics and Surveillance (DAS) continued monitoring for potential market manipulation and other anomalous activities in the markets in fiscal year 2020. Natural gas surveillance screens produced approximately 10,594 screen trips. Review of these by DAS produced 26 additional in-depth inquiries into specific trading behavior. DAS ran and reviewed 84 electric surveillance screens each month, as well as performing monthly, hourly and intra-hour sub-screens. The division created reports for over 38,000 hub and pricing nodes within the six ISO/RTOs, identifying 39 instances of market behavior that required further analysis.
DAS staff made five surveillance-related referrals to DOI during the fiscal year. DAS also worked with DOI on approximately 50 investigations involving allegations of manipulation in the FERC-jurisdictional natural gas and electricity markets or violations of tariff provisions. Through this, DAS: 1) provided analytical and data-based assessments of market activity related to ongoing investigations, 2) supported DOI in its investigations, and 3) calculated the amount of unjust profits and harm resulting from violations to assist with determining a civil penalty recommendation.
The annual report includes DAS’s comprehensive review of its surveillance program and describes these analyses of transactional and market data in fiscal year 2020. This section of the report covers further details about DAS’s processes and practices related to reviewing market monitor referrals and data management.
OE’s annual report is available on the FERC’s website.
FERC Staff Presents the 2020 Annual Report on Enforcement (ferc.gov)