posted on Friday, February 24, 2006 1:21 PM
by
Andrea Robinson
Rule Permitting Challenges to Operational Audits Finalized
In Order No. 675, FERC finalized its revised rules on challenges to its operational audits. Last October, FERC proposed to allow regulated companies to challenge not only financial audits, but also operational audits, [See Rulemaking to Establish Procedures for Challenging FERC Operational Audits], which include reviews of compliance with standards under the Federal Power Act, as well as audits conducted under the Natural Gas Act and the Interstate Commerce Act. FERC proposed to allow the subject of the audit to choose whether to challenge the audit in a shortened procedure or to request a trial type hearing. The final rule takes effect March 29, 2006.
The final rule makes only slight changes to the initial proposal. One adjustment permits entities subject to operational audits to change their choice of a shortened procedure to a trial-type hearing if an interested party raises a new issue during the course of the procedures. Also, FERC clarified that the final rule will not apply to audits or compliance reviews conducted by an Electric Reliability Organization (ERO), nor to audits conducted by FERC under its ERO rules, though this latter exception may change once FERC approves an ERO, which it is expected to do later this year. In addition, an audited entity may target its challenge to the audit finding of a violation, the remedy FERC selects, or both. Audited companies have 30 days from when they receive notice of the audit to inform FERC as to whether they have chosen the shortened procedure or the trial-type hearing.