A review of more than three dozen self-reported cases handled by FERC's Office of Enforcement (OE) found no evidence that OE "had not performed enforcement activities in accordance with its own policies and procedures," according to the Department of Energy's (DOE) Office of Inspector General (OIG).

But questions about the basic fairness of the Federal Energy Regulatory Commission’s enforcement authority and processes were left unanswered, according to the report.

"We concluded that these matters were public policy questions which, as important as they may be, are best addressed by policy makers and as such, were outside the purview of the OIG."

The special review of OE's enforcement activities was initiated by OIG because of "the importance of FERC's mission and the significance of its expanded enforcement authority," according to the report. OIG reviewed seven closed investigations, 20 closed hotline case and 10 closed cases regarding potential violations that had been self-reported by regulated entities. Open cases were not reviewed in order to avoid any OIG interference with ongoing enforcement activities.

"We assessed OE's activities based on enforcement policies, procedures, pertinent public and nonpublic documentation, and interviews with investigative staff," OIG said. "Based on this examination, nothing came to our attention to indicate that OE had not performed enforcement activities in accordance with its own policies and procedures."

During the inquiry, four U.S. senators "requested that we review certain aspects of FERC's enforcement activities," and "expressed their concern" that Constellation Energy Commodities Group's agreement to settle an enforcement action was provided in exchange for FERC's approval of the company's merger with Exelon Corp. (see Daily GPIMarch 13, 2012).

The review concluded that the merger was specifically mentioned in the terms of the FERC-Constellation settlement agreement, that Exelon executives were directly involved in the settlement negotiations even before the merger was approved, and that the approval of the merger by FERC and the consummation of the enforcement settlement agreement occurred on the same day.

"The lingering question was whether these actions represented an inappropriate quid pro quo," OIG said. "While these actions may have raised understandable concerns, the evidence did not support such a conclusion. In fact, we found that Exelon had specifically asked for language in the settlement agreement that linked the effective date of the settlement with the effective date of FERC's approval of its merger with Constellation."