The majority of self-reports by regulated companies to FERC this year were for violations of the agency's natural gas capacity-release rules, while self-reports for violations of standards of conduct were down considerably from 2007, according to the Federal Energy Regulatory Commission's (FERC) annual enforcement report issued last Thursday.
"The range of civil penalty for capacity release-related violations [was] wide; the civil penalty amounts in the settlement agreements with Constellation NewEnergy's Gas Division (CNE) and BP Energy Co. were far larger than those with Entergy New Orleans Inc. and MGTC Inc.," the agency said.
As part of settlements, BP agreed to pay $7 million and CNE agreed to pay $5 million and disgorge profits of nearly $1.9 million, while Entergy paid $400,000 and MGTC paid $300,000, FERC said in its second annual report on enforcement activities. The companies were accused of violating the Commission's competitive posting and bidding requirements and the shipper-must-have-title rule.
FERC said it brokered seven settlements totaling $19.5 million in civil penalties this year. Other settling parties were Duquesne Light, Edison Mission and Otter Tail Power Co.
The number of self-reports of violations more than doubled this year to 68 from 31 in 2007, prompted in large part by FERC's assurance that it would mitigate the penalties of those who alert the agency to potential violations. Of the 68 self-reported violations, the Commission said none have led to imposition of penalties. Staff has closed 25 of the cases after a review and without opening an investigation, while three others were closed without penalties after investigations were conducted.
FERC attributed the drop-off in standards of conduct violations to the pendency for much of the year of a new rule that made "major changes." The final rule, which was issued in mid-October, refocused the scope of the standards of conduct rule on the relationship between marketing affiliates and transmission providers, and eliminated the corporate separation approach in favor of the employee functional approach used previously (see NGI, Oct. 20).
The Commission also reported that the number of investigations into allegations of market manipulation rose this year to 20 from 12 in 2007, along with the investigations into charges that companies violated FERC regulations requiring market-based rate power sellers to provide accurate, factual and complete information to the agency and FERC-approved regional market operators.
In addition, there were more referrals to FERC from market monitoring units of regional market operators, with 15 such referrals this year compared to just two in 2007, according to the report.
All told, FERC enforcement staff reported that it opened 48 investigations during the year, up significantly from the 35 opened in 2007. Staff said it closed 22 investigations this year, including eight that had findings of violations and seven that had no violation findings. Seven other investigations were concluded through the settlement process. For the first time, FERC enforcement staff investigated allegations of violations involving the reliability standards that went into effect in June 2007, according to the agency.
FERC also carried out 60 audits of public utilities and natural gas pipeline and storage companies this year, which resulted in 156 recommendations for corrective actions and included $1 million in recoveries from accounting and billing adjustments and $8.7 million in reductions to utility plant.
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