Union Tribune

July 16, 2002 

Energy regulators draw fire

By TOBY ECKERT 
COPLEY NEWS SERVICE 

WASHINGTON Federal energy regulators failed to increase
several fines for wrongdoing even though all agencies are
required to do so to account for inflation under a 1990 law,
congressional investigators said yesterday.

One civil penalty that the Federal Energy Regulatory
Commission can impose on energy companies hasn't been
adjusted since 1935, according to the General Accounting Office.
That penalty is for failing to comply with a regulation or submit
required information.

The commission's deputy general counsel "confirmed that FERC
had not published any penalty adjustment regulations pursuant
to the Inflation Adjustment Act, but was not aware why the
agency had not done so," the GAO said in a letter to FERC
Chairman Pat Wood III.

This is the second recent report to highlight enforcement
weaknesses at the commission. FERC has been under intense
scrutiny by critics who say it did not do enough to head off
California's 2000-01 power crisis.

Civil fines are not the only or most serious penalties FERC
can impose on companies that violate federal power laws or
regulations. FERC can revoke a company's ability to charge
unregulated rates and seek criminal penalties.

California lawmakers have introduced legislation that would
significantly increase some of the fines FERC can levy.

In a letter responding to the GAO, Wood said he would order
FERC staff members to draft regulations that would increase the
civil penalties by 10 percent, the maximum allowed under the
1990 law for a first-time adjustment.

FERC is investigating allegations that Enron Corp. and other
energy companies manipulated prices during the California
crisis.

Congress passed a law in 1990 requiring federal agencies to
adjust certain maximum civil monetary penalties for inflation by
Oct. 23, 1996. Similar adjustments were to be made every four
years after that.

The four penalties that FERC should have adjusted range from
sanctions for violating parts of the Federal Power Act, now set at
$10,000 per day, to "willful failure" to comply with a
commission order or to submit required documents. That fine,
now $1,000 per violation in addition to any other penalty FERC
imposes, hasn't been changed since 1935, the GAO said.

The report comes a month after the GAO issued a blistering
study that concluded FERC was "not fulfilling its regulatory
mandate" to ensure "just and reasonable" prices for wholesale
power.

Sen. Dianne Feinstein, D-Calif., introduced legislation to beef up
FERC's enforcement powers in response to the earlier GAO
study. Among other provisions, it would increase the maximum
criminal penalty for violating federal power laws to $1 million
and boost civil penalties to $50,000 per violation per day.
"Increasing the level of civil penalties by 10 percent is a step in
the right direction, but it does not go far enough," Feinstein said.

Reps. Doug Ose, R-Sacramento, and Steve Horn, R-Long Beach,
also have introduced legislation that would allow FERC to
impose more penalties on power sellers that over-charge
customers, in addition to ordering refunds.