Please mark your calendar for NEM's Fall Leadership Roundtable on October 18-20, 2010, in Harrisburg, PA. The conference will take place at the Hilton Harrisburg on One North Second Street. You may register for the Fall Meeting in Harrisburg at this hotlink.

Our Annual Winter Executive Committee Meeting is scheduled for January 17-19, 2011, in Miami at the famous Doral Hotel and Resort. Many Thanks to Doug Marcille, Vice Chair of NEM’s Executive Committee and CEO of US Gas and Electric for hosting this upcoming Executive Committee Meeting.

FERC issued Revised Penalty Guidelines. In explaining how the Revised Guidelines will function, FERC stated that they, "will continue to base penalties on the seriousness of the violation, measured in large part by the harm or risk of harm caused, an organization’s efforts to remedy the violation, as well as other culpability factors, such as senior-level involvement, prior history, compliance, self-reporting, and cooperation. While these factors remain the same, organizations will now know with more certainty how each is applied. At the same time, the modified Penalty Guidelines do not restrict our discretion to make an individualized assessment based on the facts presented in a given case." FERC explained the revisions made in response to stakeholder comments as follows:

"We continue to believe that it is appropriate to model the Penalty Guidelines on the Sentencing Guidelines.

We clarify that the Penalty Guidelines will not affect Enforcement staff’s exercise of discretion to close investigations or self-reports without sanctions.

The Penalty Guidelines will apply to violations of the Reliability Standards only in the Commission’s Part 1b investigations and enforcement actions. We will not apply the Penalty Guidelines to our review of NERC’s Notices of Penalty.

We accept the commenters’ recommendation to reduce the base violation level for reliability violations from sixteen to six and to increase the risk of harm enhancements for reliability violations.

We accept the commenters’ suggestion that we not attempt to conduct a specific, individualized assessment of the value of losses of load that result from reliability violations. Instead, we will use the quantity of load lost, in MWh, as one measure of the seriousness of the violation. We recognize, however, that shedding load may be necessary in certain circumstances to comply with the Reliability Standards, and no penalty would be sought for an operator’s decision to shed load in such circumstances.

We have modified the Penalty Guidelines’ provision on compliance credit, section 1C2.3(f), in two respects. First, we agree to give partial compliance credit to organizations that have effective, yet imperfect, compliance programs. Second, we agree to delete the provision in the Penalty Guidelines that eliminates compliance credit when an organization’s high-level personnel, substantial authority personnel, or individuals with operational responsibility for compliance participated in, condoned, or were willfully ignorant of the violation.

We agree to unbundle the mitigation credits for self-reports, cooperation, avoidance of trial-type hearings, and acceptance of responsibility, recognizing that these factors carry independent value and should be credited accordingly.

We agree to include a scienter requirement with respect to misrepresentations and false statements under section 2C1.1 of the Penalty Guidelines."

The full text of the Revised Policy Statement on Penalty Guidelines is available on the NEM Website.