Enforcement
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Regulation of wholesale energy markets and transportation of natural gas and electricity permits markets to operate freely to produce the best outcomes for customers. The Federal Power Act and the Natural Gas Act require the Commission to protect wholesale power and transmission customers and natural gas transmission customers from unjust and unreasonable rates and from undue discrimination and preference. The Commission has adjusted its regulatory policies to meet the dramatic changes that have occurred in both the natural gas and electricity industries. While the core legal duties of the Commission have not changed – that is, to guard the consumer from market power abuse – the means of discharging this duty have evolved over time.
The Commission permits market-based rates and increasingly sets rules of general applicability that govern market participants and, where applicable, an entire market. The foundation for wholesale gas and electric energy markets relies upon open-access transportation and transmission service, which allows independent suppliers to compete for gas and electric energy sales and to offer market choices for customers. As a result of this regulatory approach, it is even more important for the Commission to promote compliance with, and enforce, the statutes it is responsible for implementing and the regulations it issues under those statutes.
The Commission seeks to detect violations quickly; address violations of its requirements; seek disgorgement of unjust profits or other remedies; publicize misconduct where appropriate; and take prompt action to prevent future misconduct.
It is important that the Commission understand market dynamics, detect problems or issues in energy markets early, prevent violations of its rules, and enforce compliance with the laws under its jurisdiction. Perhaps most important, the Commission needs to ensure that utilities subject to its jurisdiction have effective internal monitoring and compliance programs in place to help assure that they are following established Commission rules and regulations. Commission oversight must then provide an independent and external check to ensure that the compliance programs of each jurisdictional utility are adequate, and to periodically audit utility compliance with Commission’s rules, regulations, and statutory requirements.
The Commission’s enforcement tools were greatly reinforced when EPAct 2005 conferred expanded authority, which provided for the first time civil penalty authority for violations of the Natural Gas Act and all of Part II of the Federal Power Act. This expanded penalty authority also applies to any entity (not just companies traditionally subject to the Commission’s jurisdiction) that manipulates wholesale gas or electric markets by engaging in fraud or deceit in connection with jurisdictional transactions. Armed with this expanded authority, the Commission has created an even stronger and more effective compliance and enforcement program to protect the public interest.
