Bill Hederman, the former chief market-watcher for the Federal Energy Regulatory Commission, has directed his newly created Energy Resources Group at the Washington, DC office of Morgan, Lewis & Bockius LLP in the publishing of a FERC compliance manual for energy company executives, illustrating the Commission's expanded powers under the new Energy Policy Act of 2005 (EPAct2005).
The manual "provides guidance to energy companies newly subject to FERC jurisdiction," said Hederman, who had been director of the Office of Market Oversight and Investigations (OMOI) until late last year. "The energy market chaos is over. Congress through the Energy Policy Act of 2005 directed FERC to get tough on compliance in both energy markets and electric grid reliability," and the Commission is doing just that.
The manual points out that the new energy law and FERC's rules implementing the law specifically give the Commission authority to prevent or punish market manipulation by "any entity" participating in the electric or gas market, not just already jurisdictional "natural gas companies."
"It's time to move on, time for business leaders to take the baton from the policy-makers and put measures in place that will successfully comply with the intent of EPAct 2005 and FERC rules," it said. The Morgan Lewis manual, "FERC Compliance, A Legal and Business Guide," is a user-friendly tool, "not a typical law firm document," to help company decision-makers, Hederman said.
The manual of over 150 pages (paper or CD) is available to Morgan Lewis clients or potential clients, which includes just about everyone except an attorney from another law firm, Hederman said at a briefing last Tuesday morning.
Chapter headings include: Elements of a Regulatory Compliance Program; Penalty Authority and Enforcement Policy; Market Behavior Rules; Rules Against Market Manipulation; Standards of Conduct; Code of Conduct and Affiliate Transactions; Market-based Rate Authority Reporting Requirements; Transactions Subject to Prior FERC approval; PUHCA 2005; QF Rules; Interlocking Director Requirements; Reliability; Interstate Pipeline Capacity Release Regulations; Document Retention Regulations.
In the market manipulation section, the manual notes that while FERC is not expanding the subject matter jurisdiction, the new law "gave the Commission broad jurisdiction over the entities that engage in certain conduct." That includes marketers and even municipals, Hederman said. He noted the penalties for noncompliance have grown to be "quite substantial."
FERC believes the law and its new regulations based on the law "permit the Commission to police all forms of fraud and manipulation that affect natural gas and electric energy transactions and activities the Commission is charged with protecting." The manual explains the Commission's reliance on the Securities and Exchange Act rules against market manipulation and how those rules work.
Hederman can be reached at firstname.lastname@example.org.
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