On May 6, 2011, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued an order allowing the Midwest Independent Transmission System Operator, Inc. (“MISO”) to recover $7,000 in penalties from customers, and in the same order, clarified section 205 filing requirements when an unidentified registered entity (“URE”) is involved. The Commission is allowing MISO to recover the penalty on a pro rata basis from all tariff customers.
The $7,000 penalty is from a settlement between MISO and ReliabilityFirst, the regional entity that conducted a non-public investigation. In 2008, the Commission released an order providing guidance on how a Regional Transmission Organization (“RTO”) could recover costs for assessed reliability penalties. Since MISO is not authorized by the Commission to use any revenues collected currently to pay penalties, MISO submitted and FERC conditionally accepted a schedule to the RTO’s tariff that allowed for cost-recovery from a tariff customer, if the customer caused or directly contributed to the violation. However, when a penalty is not able to be assessed directly to a particular customer or MISO, then MISO must get Commission approval to recover the penalty from all of its customers.
The $7,000 penalty was assessed due to unresolved issues surrounding Critical Infrastructure Protection Reliability Standard CIP-004-1. The original Notice of Penalty did not reveal MISO’s identity, but since MISO made a section 205 filing to recover costs with FERC, the RTO did make a supplemental filing that released the non-public information in order to comply with FERC’s notice requirements. In approving MISO’s request FERC clarified that for all future section 205 filings, it must identify at a minimum the filing party, the party if not the filing party, whose act initiated the penalty, the penalty amount to be collected, the rate schedule to be used, the method of cost recovery, and the proposed effective date. However, if disclosure of such information could jeopardize the Bulk-Power System, it should not be released. In that instance the party should generally state its position, and then in a non-public version, the confidentiality claims should be fully explained to the Commission. FERC will then make a determination as to whether to identify the URE.
A full copy of the FERC order is available here.