Sen. Dianne Feinstein (D-CA) offered legislation last week to significantly broaden the Federal Energy Regulatory Commission’s authority to impose criminal and civil penalties for illegal activities in both natural gas and electricity markets. Sen. Jeff Bingaman (D-NM), chairman of the Senate and Natural Resources Committee, indicated House-Senate conferees may consider folding the Feinstein measure into the omnibus energy bill.

Specifically, it would increase maximum criminal penalty amounts to $1 million from $5,000 for violations of the Federal Power Act (FPA) and Natural Gas Act (NGA); raise the maximum prison sentence to five years from two years for violations of either statute; and boost daily penalties for violators of the FPA and NGA to $25,000 from the current $500.

On the civil side, the bill proposes to give the Commission the authority to impose fines of $50,000 per day for violations of the FPA. This is five times the existing penalty amount.

In addition, Feinstein’s bill would give FERC the power to levy monetary penalties on energy companies that fail to comply with the agency’s requests for information. This authority would put the Commission on the same footing with the Securities and Exchange Commission.

Under her measure, the Commission would no longer have to get approval from the White House Office of Management and Budget before it can begin an investigation or price discovery of electricity and gas markets involving more than 10 companies. It would be given “new hiring authority” as well to attract accountants, lawyers and investigators for investigative purposes.

The legislation comes in the wake of a General Accounting Office (GAO) report released last month, which concluded that FERC lacked the sufficient penalty authority, market-savvy employees and budget to adequately police the energy markets (see NGI, June 24).

“While I have been supportive of recent efforts by FERC, under Commission Chairman Pat Wood, to stabilize energy prices, much more needs to be done. And, as the GAO report indicated, even if FERC has the will, [it] does not have the tools to do its job,” Feinstein said.

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