On March 15, 2012, FERC issued an order conditionally approving the North American Electric Reliability Corporation’s (“NERC”) “Find, Fix, Track and Report” (“FFT”) proposal. The FFT is an enforcement approach that would treat “low-risk” reliability standard violations differently than more serious violations. Offenders would self- report and NERC would submit its findings to FERC via informational filings in an FFT spreadsheet format. The informational filing reporting approach would apply only to lesser-risk, remediated, possible violations of reliability standards.
Under the FFT proposal, NERC will establish a three-track system to handle possible compliance matters. NERC will: (1) continue issuing notices of penalty for more serious violations; (2) document remediated possible violations of minimal to moderate risks to the bulk power system in an FFT spreadsheet that is submitted monthly to FERC; and (3) dismiss certain issues (i.e., when the matter is not a violation of reliability standards, or the entity is not subject to compliance with the reliability standard at issue).
With respect to FFT-level matters, NERC would not make a finding as to whether a violation had occurred, nor would NERC impose a penalty for FFT-reported violations. There would be no further NERC inquiry once reliability remediation is confirmed and reported to FERC.
FERC conditioned its acceptance of the FFT approach. FERC specified that NERC should only use the FFT process on possible violations that pose a minimal risk to the bulk power system, and risk assessments made in any informational filings should be based on facts available at the time of the possible violation. FERC stated that a risk is not “minimal” if a serious deficiency in an entity’s reliability compliance process is detected or made apparent.
FERC also required additional FFT documentation. FERC: (1) mandated that certification of a remediated process be in the form of an affidavit executed by an officer with knowledge of the remediation; (2) required NERC to explain how an entity’s compliance history will be considered when designating a possible violation as an FFT matter; and (3) advised NERC to take into account an entity’s self-reporting of its possible violations when deciding whether to designate issues as appropriate for FFT reporting.
NERC asked to keep the identity of FFT reporting entities confidential. However, FERC required NERC to identify entities the listed in a FFT filing, unless the possible violation at issue relates to cybersecurity or the disclosure might jeopardize the security of the grid. FERC also mandated that an FFT filing remain open for 60 days so that FERC may review the FFT report.
NERC will file six and 12 month reports outlining the experience gained from the FFT program. The reports will include information to assist FERC in evaluating the program and also include information on how the FFT program has evolved and may be improved.
NERC must make a compliance filing within 60 days of the order and submit reports on the implementation of the FFT program.
A copy of the order can be found here.