On Wednesday, the Commission approved two separate Audit Reports from the Division of Audits in the Office of Enforcement (“OE”), one for the New York Independent System Operator, Inc. (“NYISO”) and one for Southwest Power Pool, Inc. (“SPP”). While the Audit Report for NYISO focused on its responsibilities as an Independent System Operator, the Audit Report for SPP focused on its operations. In both cases the Commission accepted all of OE’s recommendations, which are already being implemented by NYISO and SPP.

NYISO Audit Report

OE’s Audit Report of NYISO expressed concerns about their Market Monitoring Unit’s (“MMU”) independence and issues involving the untimely notification of tariff-related problems. In terms of the MMU’s independence, OE found that NYISO’s MMU was reporting to the Vice President of Market Structures while NYISO’s Market Monitoring Plan requires the MMU to act at the direction of the CEO. Additionally, OE’s report found that the MMU may be denied access to necessary resources. Both of these actions suggested that the MMU was not independent of NYISO’s Market Structure. As such, the Commission ordered NYISO to consider changes to its organizational structure and to issue a report detailing the adequacy of resources going to the MMU.

The Commission was also troubled that NYISO has repeatedly failed to alert market participants and FERC of tariff-related problems on a timely basis. The Commission ordered NYISO to conduct a formal review of the processes used to identify and report potential tariff compliance problems. NYISO must submit a compliance plan that will implement the Commission’s recommendations as well as quarterly updates detailing its implementation progress until all corrective actions are completed.

SPP Audit Report

OE’s Audit Report of SPP noted that while SPP has generally complied with its own bylaws and obligations, there were four areas of concern. Specifically, SPP failed to notify its customers that it would not be able to complete certain studies by the deadlines specified in SPP’s Open Access Transmission Tariff; the MMU has not conducted audits of market participants in SPP’s Energy Imbalance Service market for data retention purposes; SPP failed to abide by its own policy regarding travel; and SPP’s Standards of Conduct does not have a provision on non-monetary gratuities but does have one on cash gratuities.

While SPP did not agree to all of the findings within OE’s Audit Report, it agreed to implement all of its recommendations. This includes developing new notification procedures, creating a schedule for audits regarding data collection, following its own travel policy, modifying its Standards of Conduct, and updating the Commission quarterly on its implementation process of the recommended actions.

The Commission’s order on NYISO’s Audit Report can be found at: http://www.ferc.gov/EventCalendar/Files/20090506185642-PA08-3-000.pdf. The Commission’s order on SPP’s Audit Report can be found at: http://www.ferc.gov/EventCalendar/Files/20090506174818-PA08-2-000.pdf.