Changes Approved Are Expected to Help Streamline and Simplify the NERC Enforcement Process

On March 15, 2012, the Federal Energy Regulatory Commission conditionally accepted NERC's proposed Find, Fix, Track and Report (FFT) mechanism for resolving lesser-risk, remediated, possible violations of Reliability Standards. We believe this approval is an important development for all entities subject to NERC oversight.

NERC's proposal, which was originally filed in September 2011, had support from all sectors of the electric power industry, and NERC and the Regional Entities have been using the FFT to process numerous violations over the past five months that would otherwise have consumed considerable resources. As FERC noted, the FFT process represents a significant "change in the paradigm" in processing and resolving Reliability Standards violations and explained that the change is warranted at this time, and will allow "the flexibility to more efficiently process and track lesser risk violations in order to focus [NERC] resources on issues that pose the greatest risk to reliability."

It is clear from the order that, despite the approval and endorsement of the FFT process, FERC was reluctant to take the step it made yesterday, and the conditions it imposed in the order track that reluctance. The order includes conditions related to whether a possible violation may qualify for FFT treatment at this time, conditions related to documentation of possible violations processed as FFTs and a condition related to accountability and deterrence. Periodic reports by NERC to FERC will be required, and FERC will most definitely be reviewing the types of violations submitted under FFT as well as the impacts on self-reporting violations.

FERC also permitted NERC, subject to a compliance filing with further information, to proceed to "Phase II" of the FFT initiative, which will allow NERC compliance field staff, auditors and investigators to make determinations regarding FFT treatment when interacting with Registered Entities. The goal is to make the NERC enforcement process more streamlined and less burdensome.

Go here to view a copy of FERC's FFT order.