FERC's Office of Enforcement (OE) remained focused on fraud and market manipulation, serious violations of reliability standards, anticompetitive conduct, and conduct that threatened transparency in regulatory markets, according to a 2019 Report on Enforcement released Thursday.
"This report highlights how the Commission's enforcement program has matured, how staff has increased efforts to engage in outreach and provide transparency to industry, and how we've improved our ability to detect market anomalies early," said Federal Energy Regulatory Commission Chairman Neil Chatterjee.
In fiscal year 2019 (FY2019), FERC approved two settlement agreements undertaken by OE to resolve pending investigative matters that totaled more than $14 million, which included $7.4 million in civil penalties and disgorgement of another $7 million.
At the same time, Division of Investigations (DOI) staff opened 12 investigations and brought 14 pending investigations to closure with no action, FERC said. DOI also closed 130 self-reports without further action, closed 10 referrals without opening full investigations, and resolved 148 calls made to the Commission’s enforcement hotline. DOI continues to litigate three cases in federal district court on the Commission’s behalf, according to the report.
The Division of Audits and Accounting (DAA) completed 11 audits of public utility and natural gas companies in FY2019, resulting in 76 findings of noncompliance, 286 recommendations for corrective action, and $161 million in refunds and recoveries. DAA acted through the chief accountant’s delegated authority on 120 accounting filings requesting approval of proposed accounting treatments or financial reporting matters.
The Division of Analytics and Surveillance (DAS) continued monitoring for market manipulation and other anomalous activities in the markets and identified potential investigative subjects. "Natural gas surveillance screens produced approximately 7,629 screen trips, which were reviewed by DAS staff, resulting in 20 additional in-depth inquiries into specific trading behavior," according to the report.
DAS staff made a total of six surveillance-related referrals to the DOI during the fiscal year, and worked with DOI on about 45 investigations involving allegations of manipulation in FERC-jurisdictional natural gas and electricity markets, or violations of tariff provisions.
Two months ago, Chatterjee said FERC would realign some of the functions of OE and move them to other offices to better reflect key functions and mission statements of the offices and improve organizational efficiency. Policy-related functions which had been in OE were transferred to the Office of Energy Policy and Innovation (OEPI), while compliance and market surveillance functions remained in OE. In addition, data management support functions in OE's Division of Analytics and Surveillance were transferred to a newly created Data Governance Division within the Office of the Executive Director.
Commissioner Richard Glick said Thursday Congress could help FERC's enforcement efforts by imposing a duty of candor on parties interacting with the commission.
"I think most regulated entities do have to tell us the truth, they have a duty of candor, but...financial traders don't have a duty to basically tell us the truth," Glick said. He also called on Congress to clarify that FERC has the authority to redress recidivist manipulators, and to clarify that all commissioners may vote on motions to terminate enforcement proceedings.