Energy Coalition Recommends Improvements to Recent Compliance Program

The energy trade coalition represents both the electric and gas industries and is comprised of the American Gas Association (AGA), Edison Electric Institute (EEI), Electric Power Supply Association (EPSA), Independent Petroleum Association of America (IPAA), Interstate Natural Gas Association of America (INGAA), Natural Gas Supply Association (NGSA), and the Process Gas Consumers Group (PGC). All of the above coalition members understand the goal Federal Energy Regulatory Commission (FERC) wants to achieve, but expressed the need for a better ‘road map’ for compliance. There has to be more clarity and definition of the compliances in the policies, rules, regulations and specific processes.

A diverse coalition of energy trade associations released a White Paper on “Implementation of the Federal Energy Regulatory Commission’s Enforcement Authority”, which expresses support for the spirit of FERC’s enforcement actions, but calls on FERC to be more explicit. The white paper offers a constructive analysis to support the Commission’s use of its enforcement authority to foster a culture of compliance by market participants.

“Energy market participants want to comply with the law and the Commission’s regulations for a good reason—it is the right way to operate,” said former FERC Commissioner Bill Massey, who is representing the energy coalition. Massey said, “In addition, they value their commercial reputations, want to maintain competitive market environments, seek to provide innovative and market responsive services, strongly support industry reliability and understand the costs of noncompliance.”

While the energy coalition expressed its support for compliance in energy markets, the coalition also requested greater clarity. As noted in the white paper, certain FERC regulations and aspects of its enforcement policies and actions need to be clearer.

Massey said, “Market participants who desire to take the steps necessary to achieve full compliance need assistance from the Commission to develop a better compliance ‘road map.’” He said, “FERC and market participants have the same goals—to support the development of necessary energy infrastructure, ensure a reliable energy supply, promote competitive markets, and protect consumers—and market participants urge FERC to take further steps to promote and facilitate compliance with the energy laws and regulations it administers.”

To promote compliance by market participants, the coalition provided a number of recommended steps discussed in the white paper Highlights of the recommendations that FERC can take immediately include: clarifying, simplifying, and codifying certain Commission policies and rules to reduce regulatory uncertainty; measuring the success of the Commission’s enforcement program not by the number and amount of penalties, but by the degree to which the clarity of its rules and transparency of its policies facilitate compliance; and providing timely responses to informal and formal requests for assistance in interpreting the rules and regulations.

The coalition asked Bill Massey and Bob Fleishman of Covington & Burling LLP to prepare this white paper on behalf of the seven electricity and natural gas industry trade associations. Energy corporations like Triple Diamond Energy Corp. will want to hear how this unfolds to better serve their customers and meet the competitive market demands.