Mitigating enforcement penalties in NERC hearings and appeals.
Daniel E. Frank (daniel.frank@sutherland.com) and Caileen N. Gamache (caileen.gamache@sutherland.com) are attorneys in Sutherland Asbill & Brennan LLP’s Energy Group in Washington, D.C.
Any entity that deals with power probably has procedures in place to ensure compliance with the requirements of agencies such as the Federal Energy Regulatory Commission (FERC) and the Commodity Futures Trading Commission (CFTC). But there’s a relatively new kid on the block—the North American Electric Reliability Corporation (NERC)—that shouldn’t be overlooked by compliance professionals.
NERC has been around for four decades now, but only recently has been granted authority and enforcement powers comparable to those of the other federal energy regulators. And like the other agencies, NERC isn’t afraid to flex its regulatory muscles.
NERC’s enforcement powers are substantial. As the FERC-designated electric reliability organization (ERO) for the U.S. bulk power system, NERC has authority over all bulk power system users, owners and operators, and is responsible for enforcing its mandatory reliability standards. NERC’s enforcement powers include punishing violators with fines ranging from $1,000 to $1 million per day per violation, depending on the violation and the level of risk posed to the reliability of the electric grid. Violators also may be subject to non-monetary penalties, including being put on a watch list; being required to perform specific remedial actions; facing limits on activities, functions, or operations; and partaking in additional compliance and monitoring programs.