Since the major blackout in the Northeastern United States in August 2003, participants in the electric industry in North America have been acutely aware of the importance of preserving the reliability of the bulk power system. Subsequent events, such as extreme weather or cyber- or physical attacks, have reinforced the urgency of this mission.
To this end, participants must comply with reliability standards set by the North American Energy Reliability Corporation (NERC) and approved by the Federal Energy Regulatory Commission (FERC). Non-compliance with NERC standards can result in significant monetary penalties, as well as the need to expend resources to establish and carry out corrective actions and/or mitigation plans. In some cases, monetary and other sanctions for violations of the reliability standards can add up to millions of dollars. As NERC reforms its compliance monitoring and enforcement program to shift its focus to more significant reliability risks, the average penalties for reliability standards violations overall have increased over time and are expected to climb in the future.
Our attorneys have been at the forefront of the development and evolution of this relatively new regulatory regime. Our team includes a former Director of Compliance Enforcement at NERC as well as an attorney and an auditor who served in FERC’s Office of Enforcement. We continue to advise clients on all aspects of this regulation.
While entities have differing needs in complying with and demonstrating their compliance with NERC reliability standards, areas in which Schiff Hardin can provide assistance include:
- Assisting in the development of internal controls and compliance programs for compliance with NERC reliability standards and to deal with reliability risks, and advising on retention of compliance evidence
- Advising on and assisting in an entity’s preparation for and response to compliance monitoring activities, including compliance audits, self-certifications, spot checks and investigations
- Assisting in internal reviews of potential noncompliance with reliability standards and advising on whether and how to self-report any possible violations
- Defending entities in enforcement actions by NERC and its regional entities and negotiating settlements of such actions
- Providing policy, strategic, and practical advice on emerging reliability issues such as cyber- and physical security or winter preparedness
- Providing advise on the potential impacts of proposed new or revised reliability standards, and commenting on proposed new reliability standards
- Advising on reliability issues associated with mergers, acquisitions and other commercial transactions, and conducting regulatory due diligence for such transactions in the area of reliability regulation