FERC made good on its expanded enforcement and civil penalty authority under the Energy Policy Act of 2005 (EPAct 2005) by approving five enforcement investigation settlements and assessing civil penalties totaling $22.5 million.
Four of the settlements originated from self-reporting of tariff, rules and standards of conduct violations, and the fifth originated from a FERC hotline call involving violations of the company's tariff and FERC's business practice standards. FERC has received more than 40 self-reports of violations since August 8, 2005 – the effective date of EPAct 2005.
Although Chairman Kelliher stated that the level of penalties (ranging from $500,000 to $10 million) was in line with the factors identified in the Enforcement Policy Statement and did not warrant the maximum penalties (up to $1 million per day per violation), he stated that FERC "will seek maximum penalties when they are called for by application of these factors, such as when the harm caused by the violation is very significant, where there is complicity of senior corporate management or the company obstructed our investigation." While Chairman Kelliher acknowledged that companies will receive credit for self-reporting violations (as they did here), certain of the other Commissioners warned that this will not be the case for self-reporting repeat offenders. All five of the settling companies agreed to compliance plans to ensure that the FERC tariff and rule requirements that were violated will be followed in the future.
The primary elements of the five settlements are as follows:
- PacifiCorp: $10 million civil penalty for open access transmission tariff (OATT) and standards of conduct violations in part granting undue preference to its merchant power function; $884,000 disgorged to certain network transmission customers for misuse of network transmission service that should have been point-to-point service.
- SCANA Corporation: $9 million civil penalty and $1.4 million in profits disgorged for OATT violations and the misuse of network transmission service to facilitate off-system wholesale power sales; $400,000 credit in forgone point-to-point transmission revenues to retail customers.
- Entergy Services, Inc.: $2 million civil penalty for OATT, data retention and data posting violations; $1 million charitable contribution to the Nike/Entergy Green Schools for New Orleans Partnership (note that several Commissioners warned against use of charitable contribution payments as a form of settlement payment going forward).
- NorthWestern Energy: $1 million civil penalty for tariff and business practice standards violations involving failure to act on certain transmission requests within 30 days (note that this investigation originated from a hotline report).
- NRG Energy, Inc.: $500,000 civil penalty for market behavior rule violations involving misrepresentation of a generating unit's availability.