FERC Conditionally Accepts New Enforcement Mechanism for Electric Reliability Standards

By on April 13, 2012

by Elizabeth P. Philpott

The U.S. Federal Energy Regulatory Commission (FERC) recently approved with conditions the North American Electric Reliability Corporation’s (NERC) petition proposing the use of the “Find, Fix, Track and Report” (FFT) to report possible lesser-risk violations of Reliability Standards.  FERC determined that the FFT initiative would more efficiently process lesser-risk violations and promote reliability because it streamlines the manner NERC reports minor violations and allows NERC to focus its resources on issues that pose more serious risks to reliability.

NERC’s petition proposed three tracks to address possible violations: (1) a Notice of Penalty; (2) an FFT information filing; or (3) a Dismissal. Unlike a Notice of Penalty, which deals with moderate to substantial reliability risks and can result in fines, the FFT process uses informational filings to report possible lesser-risk violations, such administrative, documentation and certain maintenance or testing program implementation failures. 

FERC approved NERC’s FFT initiative subject to the following conditions:

  • Only minimal risk possible violations are eligible;
  • Officer of entity that receives FFT treatment must certify that its statement of remediation is true and correct; and
  • NERC’s monthly FFT informational filings must publicly identify entities receiving FFT treatment unless the disclosure relates to a cybersecurity incident or would jeopardize the security of the Bulk-Power System.

FERC will also continue to monitor the FFT initiative through surveys to determine if the initiative is working and whether it needs improvement.  Additionally, FERC Chairman Jon Wellinghoff reiterated that compliance, not penalties, is his main goal and he has a concern that the FFT initiative may have an adverse impact on self-reporting. Accordingly, NERC is required to include an analysis of the impact that the FFT initiative has on self-reporting in a report due to FERC. 

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