Jump to engagement type: Compliance Programs | Investigations and Enforcement | North American Electric Reliability Corporation (NERC)
The matters described below are examples of the experience that Crowell & Moring attorneys have gained during and/or prior to their tenure with the firm. To view additional energy practice experience, please see the index at the bottom of this page or click here to access the energy representative engagements landing page.
The firm has advised and assisted numerous clients in designing and implementing compliance programs that conform to best industry practices and that include the elements of a robust compliance program identified by FERC. See Revised Policy Statement on Enforcement, 123 FERC § 61,156, PP 57-68 (2008). Some representative engagements are provided below:
- Conducted and documented a top-to-bottom "gap analysis" of a company's compliance program, resulting in recommendations for enhancement of compliance functions and institutionalizing compliance responsibilities.
- Conducted assessments of various compliance program functions at different companies, including effectiveness of training programs, monitoring, telephone taping and electronic records preservation, and internal communications and compliance decision-making processes.
- Drafted Compliance Policies and Procedures for formal adoption by a company's senior management and board of directors.
- Drafted plain-English Energy Trading Compliance Manuals explaining compliance requirements and company procedures for trading desk personnel and supervisors.
- Drafted trading supervisors' guidelines and procedures to ensure effective day-to-day resolution of energy trading compliance issues and on-going monitoring of trading practices.
- Served as counsel to the Electric Power Supply Association (EPSA) in its development and adoption in 2003 of a Code of Conduct prescribing sound trading and price reporting practices. The EPSA Code of Conduct was formulated in the context of compliance proposals developed by the Committee of Chief Risk Officers (CCRO). The firm also worked with EPSA on drafting a compliance template that contains potential components or elements of a compliance program.
- Performed a comprehensive internal audit for a major transmission provider to determine whether it was in compliance with FERC's Standards of Conduct. The audit included (i) review of company policy manuals, organizational protocols and charts, training programs, OASIS, and intranet; (ii) preparation of audit protocol based on corporate structure and activities; (iii) interviews of various transmission and merchant employees, as well as affiliated power marketer employees; (iv) on-site inspection of control room and other shared facilities; and (v) preparation of audit report containing findings and recommendations.
- Assisted various gas pipelines, including the former PG&E Gas Transmission Northwest and North Baja Pipeline in determining whether various proposals for shared services and facilities were consistent with FERC's Standards of Conduct. Prepared a checklist of "dos and don'ts" as part of the pipelines' employee training activities.
- Provided a training program for Iroquois Gas Transmission System on the Marketing Affiliate Rules.
- Analyzed changing Standards of Conduct rules to determine their impact on large transmission providers and their various affiliates.
- Reviewed proposed corporate structures for large investor-owned utilities to determine whether they met the operational separation requirements of FERC's Code of Conduct, which were similar to FERC's Standards of Conduct, but applicable to wholesale sellers of electricity with market-based rate authority.
- Conducted company-wide and specialized compliance training programs, including presentation of seminars, preparation of written hand-out materials, and discussion of real-world scenarios. Training programs have covered FERC's Market Behavior Rules, Anti-Manipulation Regulations, and Policy Statements on Enforcement, ISO market rules, specific trading and operations practices, FERC's Standards of Conduct and Codes of Conduct, index price reporting procedures, Federal Power Act regulatory and filing requirements for public utilities, and NERC reliability standards and compliance.
- Frequently advised Chief Compliance Officers and General Counsel on compliance issues that arise in the ordinary course of energy trading and plant operations, scheduling, and bidding.
- Advised clients on legal aspects of trading-related accounting issues, such as accounting for derivatives under FASB standards and mark-to-market accounting. Advised clients on reporting requirements under the Sarbanes-Oxley Act.
Investigations and Enforcement
The firm has represented clients in numerous FERC enforcement investigations. Representative engagements are described below:
- Counseled NRG Energy, Inc., in connection with a self-report to FERC relating to the failure of a generating unit to respond to dispatch instructions, which resulted in an enforcement investigation and audit that culminated in an extremely favorable disposition. See In re NRG Energy, Inc., 118 FERC § 61,025 (2007).
- Counseled KeySpan-Ravenswood, LLC, in connection with a FERC investigation of the impact of a financial derivative transaction on the company's bidding practices in the New York City capacity market, culminating in no further action, based on findings that the company did not violate market rules or FERC's anti-manipulation regulations. See New York Independent System Operator, Inc., 122 FERC § 61,211, P 149 (2008).
- Represented Duke Energy, in a multitude of proceedings that arose out of the California electricity crisis of 2000-2001 and the Enron disclosures regarding market manipulation. This representation resulted in settlements of all FERC-related matters and in the successful culmination of other governmental investigations. Among matters resolved were the multi-billion dollar FERC refund proceeding; FERC investigations and show cause proceedings relating to allegations of improper trading practices, wash trades, and improper index price reporting; SEC and CFTC investigations growing out of trading and price reporting practices, investigations conducted by the DOJ and State Attorneys General, and multiple class action lawsuits.
- Represented a client in responding to FERC enforcement investigation of circuitous schedules around Lake Erie.
- Represented several clients in market-wide FERC enforcement investigation of supplemental energy bidding practices in the California ISO market, resulting in no action.
- Represented several clients in market-wide market monitor and FERC Enforcement investigations of prescheduling practices in the California ISO market, resulting in no action.
- Counseled clients required to respond to inquiries from FERC, ISO New England, and the Connecticut Attorney General regarding sales of natural gas by electricity generators during the January 2004 cold snap and price spike in New England.
- Represented clients in conducting internal investigations of compliance with FERC's rules prohibiting buy-sell arrangements for natural gas, resulting in a self-report to FERC.
In these and other matters, the firm assisted in-house compliance personnel and general counsel on self-report considerations and in conducting internal investigations, interviewing trading and operations personnel, preparing and defending depositions, collecting, assessing, and producing voluminous data, preparing narrative responses to data requests, meeting with FERC enforcement staff, negotiating and drafting settlement agreements, and recommending and implementing corrective measures, including adoption of new compliance programs.
North American Electric Reliability Corporation (NERC)
Representative engagements are described below:
- Advised companies on registration status and requirements, prepared comments to FERC on proposed registration requirements, appealed registration decisions before the NERC and FERC, negotiated with counterparties on joint registration organization (JRO) arrangements; coordinated with Regional Entities to obtain acceptance of JRO arrangements, negotiated with NERC and Regional Entities on appropriate methods of compliance with certain standards; and coordinated with Regional Entities and NERC to identify limitations on standard compliance requirements based on project-specific factors.
- Assisted clients in developing procedures to address noncompliance issues, counseled on self-reports with respect to areas of noncompliance and on notices of alleged violation or penalties, and designed and implemented mitigation plans.
- Advised clients regarding "Table Top" audits conducted by Regional Entities including preparation for audits, applicable procedures, issues that arise during the audit, and addressing audit findings.
- Reviewed transaction documents, power sale agreements, and operating agreements to identify NERC compliance issues and address related issues, including allocation of responsibility and liability among counterparties.