Today, the Office of Enforcement and Regulatory Accounting (Enforcement) is releasing its nineteenth Annual Report on Enforcement. As in previous years, Enforcement staff prepared this report to provide information about Enforcement’s activities over the last fiscal year. The Report discusses the activities performed by Enforcement’s Divisions of Investigations (DOI), Audits and Accounting (DAA), and Analytics and Surveillance (DAS) during the last fiscal year. I am joined by my colleagues Jessica Hunt from DAA, and Erin Melly from DAS.
As noted in the Report, enforcement priorities in FY2025 focused on five distinct areas: (1) fraud and market manipulation; (2) serious violations of the Reliability Standards; (3) anticompetitive conduct; (4) threats to the nation’s energy infrastructure; and (5) conduct that threatens the transparency of regulated markets.
The Report summarizes audits, litigation filings, and settlements which were approved by the Commission. These resources are also publicly available on e-Library. Enforcement’s Report also includes a discussion of non-public activities, including summaries of investigations and self-reports that were closed without further action by DOI. The Report also includes illustrative examples of the market monitor referrals that staff reviewed and closed without opening an investigation. These summaries can be helpful to companies seeking to comply with the Commission’s regulations and orders. To maintain confidentiality, the companies and individuals whose conduct was under review in these matters are not identified in these summaries.
The Division of Audits and Accounting has included illustrative compliance alerts that cover nearly a dozen distinct areas where there have been consistent concerns or noncompliance of significant impact. To assist jurisdictional entities in gaining a better understanding of a particular topic, docket number(s) of one or more recent audit reports or Commission orders dealing with the various topics are provided in the Report so that jurisdictional entities may review the more recent findings related to a particular topic area. The Report also gives a description of the audits completed in FY2025, which summarizes staff’s findings of noncompliance and provides context for audits that resulted in refunds and recoveries. Additionally, the Report summarizes DAA’s role in advising the Commission in proceedings involving various accounting matters, and in the administration of the Commission’s Electric Quarterly Report (EQR) and various financial reporting form filing requirements and programs.
The Division of Analytics and Surveillance provides a comprehensive review of its surveillance program and describes how it analyzed transactional and market data in FY2025 to detect potential manipulation, anticompetitive behavior, and other anomalous activities in the energy markets. Additionally, this section of the Report includes details about DAS’ processes and practices related to reviewing market monitor referrals and data management.
In FY2025, the Commission approved 11 settlement agreements between Enforcement and subjects to resolve pending investigative matters. The settlements totaled approximately $36.57 million, which included approximately $22.84 million in civil penalties and disgorgement of approximately $13.73 million. The Commission also approved a settlement of one administrative proceeding for $5 million in restitution, and a Commission Penalty Order for a payment of $30,000 to the owner of a dam at which a hydroelectric project was located. In FY2025, DOI staff opened 24 new investigations and brought 17 pending investigations to closure with no action. DOI also closed 163 self-reports without further action, closed one MMU referral without opening a full investigation, and resolved 307 calls made to the Commission’s Enforcement Hotline. In addition, DOI continued to litigate two cases on the Commission’s behalf in federal courts.
In FY2025, the Division of Audits and Accounting completed 10 audits of public utility, natural gas, and oil pipeline companies covering a wide array of topics. The audits resulted in 63 findings of noncompliance and 260 recommendations for corrective action and directed $80 million in refunds and other recoveries. Additionally, DAA acted through the Chief Accountant’s delegated authority or advised on 447 proceedings, including acting on 143 accounting filings requesting approval of a proposed accounting treatment or financial reporting matter, and assisting with 304 rate, pipeline certificate, merger and acquisition, and facility purchase and sale proceedings before the Commission. DAA also assessed EQR submittals received from more than 3,600 entities each quarter as to timeliness and, through automated validations, accuracy and reliability of data. DAA also administered and oversaw compliance with the requirements of FERC Form Nos. 1, 1-F, 2, 2-A, 3-Q (gas and electric), 6, 6-Q (oil), 60, and FERC-61, which in FY2025 involved assessing the Commission’s receipt of approximately 2,556 financial reporting form submittals.
Finally, in FY2025, the Division of Analytics and Surveillance continued monitoring for potential market manipulation and other anomalous activities in the markets. Natural gas surveillance screens produced approximately 1,780 surveillance reviews by DAS staff, who conducted 24 additional in-depth inquiries into specific trading behavior, and made one referral to DOI for investigation. On the electric side, DAS conducted 1,920 surveillance reviews. This surveillance activity identified 36 instances of market behavior that required further analysis. DAS staff made a total of 10 electric surveillance-related referrals to DOI during the fiscal year.
During FY2025, DAS also worked with DOI on approximately 70 investigations involving allegations of manipulation in Commission-jurisdictional natural gas and electricity markets, or violations of tariff provisions. In these efforts, DAS: (1) provided analytical and data-based assessments of market activity related to ongoing investigations; (2) supported DOI in its fact-finding; and (3) calculated unjust profits and market harm resulting from alleged violations to assist with determining a civil penalty recommendation under the Commission’s Penalty Guidelines.
In addition, DAS conducts analytical reviews of wholesale electric market-based rate transactions to detect the potential exercise of market power. Staff routinely analyzed the combined results of 35 statistical indicators to detect potential instances of the exercise of market power within 59 geographic regions or market hubs. During FY2025, DAS staff reviewed over 2.7 million market-based rate transactions filed through the Commission’s EQRs.
Copies of Enforcement’s Annual Report are now available on the Commission’s website. This concludes the presentation. My colleagues and I will be happy to answer any questions you may have. Thank you.