FY 2004 

PERFORMANCE AND 

ACCOUNTABILITY REPORT

FEDERAL ENERGY REGULATORY COMMISSION 

MARCH 2005

Pat Wood, III 

Chairman 

CONTENTS

Management’s Discussion and Analysis..................................................1

Introduction............................................................................................3 

Overview of the Commission ................................................................3 

Full Cost Recovery ................................................................................5 

Organizational Structure ........................................................................5 

Strategic Plan Overview ........................................................................6 

Business Plan .........................................................................................8 

Making Markets Work...........................................................................8 

Program Performance Overview..........................................................13 

Financial Performance Overview ........................................................30 

Controls, Systems, and Legal Compliance ..........................................34 

Possible Future Effects of Existing Events and Conditions ................37 

Limitations of the Financial Statements ..............................................37 

Financial Statements................................................................................39

Independent Auditors’ Report .............................................................41 

Balance Sheets.....................................................................................46 

Statements of Net Cost.........................................................................47 

Statements of Changes in Net Position................................................48 

Statements of Budgetary Resources ....................................................49 

Statements of Financing.......................................................................50 

Statements of Custodial Activity .........................................................51 

Notes to Financial Statements..............................................................52 

Performance Report ................................................................................65

Introduction..........................................................................................67 

Performance Measurement Data for Energy Infrastructure: 

 FY 2001 – FY 2005 ...........................................................................68 

Performance Measurement Data for Competitive Markets: 

 FY 2001 – FY 2005 ...........................................................................78 

Performance Measurement Data for Market Oversight: 

 FY 2001 – FY 2005 ...........................................................................90 

Performance Measurement Data for Management Initiatives: 

 FY 2001 – FY 2005 .........................................................................100 

Appendix A: Organizational Chart......................................................111

Appendix B: Strategic Plan...................................................................115 
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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Management’s 

Discussion 

and Analysis 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Introduction 

In accordance with the guidelines set forth in Office of Management and Budget 

(OMB) Bulletin No. 01-09 and Section 230 of OMB Circular A-11, this report 

presents the Federal Energy Regulatory Commission’s (the Commission’s, 

FERC’s) FY 2004 audited annual financial statements and program performance 

report. The audited financial statements section includes the Commission’s 

balance sheet; statements of net cost, changes in net financial position, budgetary 

resources, financing, and custodial activity; and notes to the financial statements. 

The program performance section includes performance measurement data for 

fiscal years FY 2001 through FY 2005. Additionally, this report includes an 

overview of the Commission, including its mission and organizational structure. 

This Performance and Accountability Report serves as a guide to the 

Commission’s key initiatives and activities, both during FY 2004 and beyond. 

Overview of the Commission 

The Commission is an independent regulatory agency within the Department of 

Energy whose function is to oversee America’s electric utilities, natural gas 

industry, hydroelectric projects and oil pipeline transportation system. 

Vision

Dependable, affordable energy through sustained 

competitive markets. 

Mission

The Federal Energy Regulatory Commission regulates and 

oversees energy industries in the economic and 

environmental interest of the American public. 

The Commission was created through the Department of Energy Organization 

Act on October 1, 1977. At that time, the Federal Power Commission (FPC), the 

Commission’s predecessor which was established in 1920, was abolished and the 

Commission inherited most of the FPC’s regulatory mission. 

The Commission has five members (Commissioners) who are appointed to fiveyear staggered terms by the President with the advice and consent of the Senate. 

Each Commissioner has an equal vote on regulatory matters and no more than 

three Commissioners may belong to the same political party. One member is 

designated by the President to serve as Chair and is the Commission’s 

administrative head. 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Hydropower regulation, the oldest area of the Commission’s jurisdiction, began 

with the FPC’s regulation of non-federal hydroelectric generation in 1920 and 

includes authorizing the construction of projects in interstate commerce and 

overseeing their operation and safety. 

Since 1935, the Commission has regulated certain electric utility activities under 

the Federal Power Act (FPA). Under FPA Sections 205 and 206, the Commission 

oversees the rates, terms and conditions of sales for resale of electric energy and 

transmission service in interstate commerce by public utilities. The Commission 

must ensure that those rates, terms and conditions are just and reasonable, and not 

unduly discriminatory or preferential. Under FPA Section 203, the Commission 

reviews mergers and other asset transfers involving public utilities. While the 

utilities regulated under FPA sections 203, 205 and 206 are primarily investorowned utilities, government-owned utilities (e.g., Tennessee Valley Authority, 

federal power marketing agencies, and municipal utilities) and most 

cooperatively-owned utilities are not subject to the Commission’s regulation 

(with certain exceptions). 

The Commission may not regulate retail sales or local distribution of electricity, 

as the FPA leaves these matters to the states. In addition, the Commission does 

not have a role in authorizing the construction of new generation facilities (other 

than non-federal hydroelectric facilities) or transmission facilities as these 

activities are also state or local responsibilities. 

The Commission’s role in the natural gas industry is largely defined by the 

Natural Gas Act of 1938 (NGA). Under NGA, the Commission regulates the 

construction of new natural gas pipelines and related facilities and oversees the 

rates, terms and conditions of sales for resale and transportation of natural gas in 

interstate commerce. Pipeline siting and construction is authorized by the 

Commission if found to be required by the public convenience and necessity. As 

with hydropower licensing, the Commission’s actions on pipeline projects 

typically require consideration of factors under the National Environmental 

Policy Act (NEPA), the Endangered Species Act, the Fish and Wildlife 

Coordination Act, the Coastal Zone Management Act and other such statutes. 

Regulation of retail sales and local distribution of natural gas are matters left to 

the states. 

Finally, the Interstate Commerce Act (ICA) gives the Commission jurisdiction 

over the rates, terms and conditions of transportation services provided by 

interstate oil pipelines. The Commission has no authority over the construction of 

new oil pipelines, or over other aspects of the industry such as production, 

refining or wholesale or retail sales of oil. 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Full Cost Recovery 

The Commission recovers the full cost of its operations through annual charges 

and filing fees assessed on the industries it regulates as authorized by the FPA and 

the Omnibus Budget Reconciliation Act of 1986. The Commission deposits this 

revenue into the Treasury as a direct offset to its appropriation, resulting in a net 

appropriation of $0. 

Organizational Structure 

Approximately 1,230 full time equivalents carried out the Commission’s mission 

in FY 2004 using a budget of $205 million. 

The following is a list of the offices within the Commission and a short 

description of their operational role. An organizational chart, as of September 30, 

2004, is included in Appendix A. 

Office of Energy Projects (OEP) – Fosters economic and environmental benefits 

for the nation through the approval and oversight of hydroelectric and natural gas 

pipeline energy projects that are in the public interest. Included in OEP are the 

Commission’s five regional offices located in Atlanta, Georgia; Chicago, Illinois; 

New York, New York; Portland, Oregon and San Francisco, California. 

Office of Markets, Tariffs and Rates (OMTR) – Deals with matters involving 

markets, tariffs and rates relating to electric, natural gas and oil pipeline facilities 

and services. Included in OMTR is the Commission’s Reliability Division. 

Office of Market Oversight and Investigation (OMOI) – Oversees and assesses the 

operations of the nation’s gas, oil pipeline and electricity markets. 

Office of Administrative Law Judges (OALJ) – Resolves contested cases 

effectively, efficiently and expeditiously, while ensuring that the rights of all 

parties are preserved. This is accomplished through either an impartial hearing 

and decision or through a negotiated settlement, as directed by the Commission. 

Office of the General Counsel (OGC) – Provides legal services to the 

Commission. OGC represents the Commission before the courts and Congress 

and is responsible for the legal phases of the Commission’s activities. Included in 

OGC is the Commission’s Dispute Resolution Service (DRS), which assists 

participants to achieve resolution of disputes through consensual decision making. 

Office of Administrative Litigation (OAL) – Represents the public interest in 

administrative proceedings at the Commission. OAL provides testimony, exhibits 

and studies on electric rate, transmission, open access and restructuring cases and 

in natural gas rate-design cases. 

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FY 2004 Performance and Accountability Report 

Office of External Affairs (OEA) – Responsible for all external communications 

with the public and media for the Commission. 

Office of the Secretary (OSEC) – Serves as the official focal point through which 

all filings are made for proceedings before the Commission. 

Office of the Executive Director (OED) – Provides administrative support services 

to the Commission including human capital, organizational management, budget, 

procurement, financial policy and services, logistics, and information technology. 

Strategic Plan Overview 

The United States has the world’s most durable market economy, every sector of 

which depends vitally on energy. The Commission’s primary duty is to promote 

dependable and affordable energy through sustained competitive markets, and 

thereby support a strong, stable national economy. To fulfill this obligation, the 

Commission has three main goals: 

• Adequate infrastructure. Promote a secure, high-quality, environmentally 

responsible infrastructure through consistent policies. 

• Competitive energy markets. Foster nationwide competitive energy markets 

by advancing competitive market institutions and establishing balanced, selfenforcing market rules. 

• Vigilant market oversight. Protect customers and market participants through 

vigilant and fair oversight of energy markets. 

Confidence in our Nation’s energy markets has been affected by the problems in 

Western energy markets, high prices for natural gas and the August 2003 blackout 

in parts of the Midwest, Northeast, and Canada. The Commission has made 

progress in resolving the Western energy markets issues and has begun 

addressing the natural gas markets issues that are within its authority. Since the 

August 2003 blackout, electric reliability has been at the top of the Commission’s 

agenda and shall continue to be for the foreseeable future. More remains to be 

done to restore confidence in energy markets so that necessary additions to 

infrastructure can be financed at reasonable prices. This will require balanced 

and fair market rules and vigilant oversight of energy markets in the future. 

The Commission’s primary emphasis must be to facilitate a full transition to 

competitive wholesale energy markets as soon as possible, while also addressing 

crucial issues that arise during the transition. The Commission’s Strategic Plan 

describes the goals of the Commission as follows: 

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FY 2004 Performance and Accountability Report 

1. Energy Infrastructure. Goal: Promote a Secure, High-quality, 

Environmentally Responsible Infrastructure Through Consistent Policies.

This goal encourages investment in the infrastructure needed to sustain energy 

markets by removing roadblocks, providing cost recovery clarity and welcoming 

innovative thinking about rates and use of new technology. By focusing on 

infrastructure, this goal covers many of the Commission’s important traditional 

responsibilities, for example, pipeline certificates, hydropower licenses and 

preliminary permits, compliance activities, environmental and other licensing 

conditions, dam safety inspections and most rate determinations. This goal also 

covers the establishment of the Commission’s new Reliability Division. 

2. Competitive Markets. Goal: Foster Nationwide Competitive Energy 

Markets as a Substitute for Traditional Regulation.

This goal focuses on the Commission’s need to complete the transition to 

competitive energy markets as quickly and comprehensively as possible. This 

will require the growth of many new institutions, particularly clearly defined and 

independent regional transmission organizations (RTOs), to make electric 

markets work. The Commission also needs to establish balanced, self-enforcing 

market rules in wholesale electric markets, and encourage continued efforts by 

industry groups to standardize business practices, promote the use of demand-side 

participation in energy markets, and establish regional transmission planning. 

Along with some traditional work in the area of rate determinations, this goal 

furthers work on initiatives begun in the last couple of years such as RTOs and 

new policies for natural gas. 

3. Market Oversight. Goal: Protect Customers and Market Participants 

Through Vigilant and Fair Oversight of the Transitioning Energy Markets.

This goal ensures that competitive energy markets benefit the Nation over the 

long run. The Commission must offer the public and market participants credible 

assurance that it will identify and remedy energy market problems to maintain 

just and reasonable rates. At the systemic level, the Commission needs to 

recognize problems when - or before - they develop and craft solutions quickly to 

police individual behavior in markets much more effectively than in the past. 

This goal also includes more traditional work, such as some aspects of litigation, 

dispute resolution, complaints, mergers and auditing. 

The Commission’s Strategic Plan also includes several management initiatives 

that support each of the above goals and objectives. These initiatives include 

functions such as enhancing the talents and skills of the staff through recruitment 

and training; building effective, customer-friendly information technology (IT) 

services; supporting the Commission with logistics and financial services; and 

strengthening strategic management processes. Finally, the management 

initiatives also include the Commission’s communication, outreach and 

collaboration efforts. 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Business Plan 

The Commission’s annual Business Plan details the activities and resource 

allocations used to meet the Strategic Plan’s goals and objectives. This increases 

internal accountability by enabling management to link individual office 

responsibility, due dates, priorities, and budget resources to Commission 

activities. Although developing the Business Plan is an iterative process, it is 

helping to identify which activities help the Commission achieve particular goals 

and objectives. Future iterations will improve priority determinations, identify 

implementation gaps, and improve resource organization and allocation by 

allowing the Commission to compare estimated and actual resource uses at a 

detailed activity level. 

Making Markets Work 

Immediate Responses

Reliability Issues. Immediately after the August 2003 blackout, the Commission 

participated in the joint U.S.-Canadian investigation. Commission staff actively 

participated in drafting portions of the November 2003 interim and April 2004 

final reports on the causes of the blackout and possible solutions to avoid such 

future blackouts. The Commission also re-examined its role, under its existing 

authority, to assure the reliable operation of the Nation’s electric grid. The 

Commission has held and plans to hold conferences and workshops to discuss the 

conclusions and recommendations in the interim and final reports, including 

prompt response to the dangers of future blackouts and the improvement of 

electric reliability standards in North America. 

Recognizing that inadequate vegetation management was a major contributor to 

the blackout, the Commission released a report in March 2004 outlining steps that 

utilities can implement to improve their vegetation management practices. 

Shortly thereafter, the Commission issued an order pursuant to section 311 of the 

Federal Power Act that directed all entities that own, control or operate 

designated transmission facilities in the lower 48 states to report on the vegetation 

management practices they now use for those transmission lines and rights-ofway. On September 7, 2004, the Commission submitted a report on utility 

vegetation management report to Congress with recommendations for needed 

practices and guidance. 

In addition to the vegetation management guidance, the Commission issued a 

policy statement in April 2004 addressing the need to expeditiously modify the 

North American Electric Reliability Council's (NERC) reliability standards in 

order to make these standards clear and enforceable. The Commission 

emphasized public utility compliance with reliability standards, stating that Good 

Utility Practice includes compliance with these standards. The Commission also 

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FY 2004 Performance and Accountability Report 

intends, consistent with its statutory authority, to consider taking utility-specific 

action on a case-by-case basis to address significant reliability problems or 

compliance with Good Utility Practice. The policy statement also addressed 

recovery of prudent reliability costs, and the need for communication and 

cooperation between the Commission and the states, as well as with Canada and 

Mexico. 

The Commission, along with industry volunteers and NERC staff, participated in 

NERC reliability readiness reviews of the 20 largest control areas before the 

summer 2004 peak-demand season began. (A control area is a region, ranging in 

size from a multi-state area to a single city, in which the electrical supply is 

operated or overseen by a single entity.) These reviews, intended to give the 

Nation’s electricity customers the assurance that the grid is managed reliably and 

responsibly, examined the activities of grid operators that manage 80% of the 

Nation’s electricity users. An additional 25 reviews were completed in the Fall of 

2004, and reviews for the remainder of the country are scheduled to be completed 

as soon as possible. In addition to participating in such periodic reviews for the 

foreseeable future, the Commission also signed a formal Memorandum of 

Understanding with the Nuclear Regulatory Commission committing the agencies 

to work together on issues related to transmission grid reliability and nuclear 

power plant safety. 

While the Commission hopes Congress will pass reliability legislation in the near 

future, it cannot wait to move forward on reliability issues, consistent with its 

current authority. The Commission’s goal is to establish a viable mechanism for 

strong, enforceable reliability standards as soon as possible by working with 

industry and market participants on such issues as appropriate reliability 

standards, reliability review measures, improved training for control room

operators, and better reliability enforcement. In a December 27, 2004 order, the 

Commission began an effort to survey the breadth of operator training practices 

across the electric industry, identify best practices, and evaluate minimum

requirements for an effective operator training program. The Commission will 

analyze the survey data and develop a report to Congress based on the results. 

The Commission received an additional $5 million in FY 2004 that was 

earmarked for reliability. In addition to funding many of the reliability initiatives 

described above, the Chairman used the new funds to establish a new reliability 

division staffed with 30 engineers and supporting staff. 

Western Energy Markets. The Commission responded to the crisis in Western 

energy markets by mitigating unjustifiably high wholesale electric prices and 

ensuring that power sellers did not withhold supplies to drive prices up. While 

these customer protection measures are still in place, the long-term viability of an 

economically healthy and reliable electricity system in California is dependent on 

fixing the flaws which plague the current energy markets. These goals are best 

achieved through comprehensive market rules that provide proper incentives for 

investment in transmission, generation and demand response. The Commission 

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FY 2004 Performance and Accountability Report 

has approved components of the California Independent System Operator’s 

(California ISO or CAISO) market design, and continues to address other 

conceptual aspects of the proposed market rules.

The Commission continues to wrap up market manipulation issues stemming 

from the Western energy crisis of 2000 and 2001, and the investigations and 

litigation that were ordered in response to the March 2003 Commission Staff 

Final Report on Price Manipulation in Western Markets. At the direction of the 

Commission, the CAISO is calculating final refund amounts that we estimate may 

be up to $3 billion for California customers. In addition, four large suppliers have 

entered into global settlements under which they will refund or disgorge profits in 

excess of $628 million. From the energy market gaming litigation proceedings, 

the Commission has recovered $26 million. 

Rulemakings. The Commission has adopted, through rulemaking proceedings, 

additional financial reporting requirements and behavioral rules which will 

further ensure development of competitive markets and protection of customers. 

The Commission issued a Final Rule in October 2003 that requires Commissionregulated companies to maintain documentation and file their cash management 

agreements when they share their cash with affiliates. The Commission 

implemented quarterly financial reporting rules on a final basis in February 2004, 

to help the Commission meet its goal of vigilant oversight in energy markets by 

providing the Commission and the financial community with more timely, 

relevant and transparent financial information. These rulemakings will aid the 

Commission in its oversight and market monitoring responsibilities. 

Other Investigations. The Commission also recently conducted an internal, 

preliminary analysis of interstate natural gas pipeline equity earnings. Based on 

the results of that analysis, the Commission has initiated audits of selected 

pipelines to determine their actual costs and revenues, as well as how their 

earnings are being used, e.g., pipeline maintenance, investment in new pipeline 

facilities. If it appears that some pipelines have been earning excessive returns or 

not using earnings to maintain and expand pipeline capacity and services, the 

Commission has the option to exercise its authority under Section 5 of the Natural 

Gas Act to reduce the earnings. 

The Commission also has investigated several long-term power purchase 

agreements between affiliates to examine the propriety of such arrangements, to 

ensure the integrity of the competitive market for power.

Long-Term Responses

Infrastructure. A robust natural gas pipeline infrastructure is critical for the 

reliability of the Nation’s energy supply and for competitive market development. 

To meet growing demand for natural gas, the Commission must respond quickly 

to the need to expand and construct pipelines and related facilities. The 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Commission’s rate policies, consistently applied to transportation infrastructure 

projects, must give investors confidence that they will have an opportunity to 

recover their investments, and provide rate certainty to customers as well. 

For example, in 2004, the Commission issued certificates authorizing Colorado 

Interstate Gas Company’s Cheyenne Plains Pipeline Project and Northwest 

Pipeline Corporation’s Rocky Mountain Expansion Project, and began the 

environmental review of the Entrega Gas Pipeline Project to provide much needed 

pipeline capacity for transporting gas produced in the Rocky Mountain supply 

area. The Commission continues to receive and expeditiously process similar 

applications for all parts of the country. 

Another way our Nation can meet its growing need for natural gas is by importing 

liquefied natural gas (LNG). The Commission authorized several new LNG 

related projects in 2004, including: 

• AES Ocean Express, LLC (January); 

• Tractebel Calypso Pipeline, LLC (March); 

• Freeport LNG (June); 

• Sabine Pass LNG, L.P. (December); and 

• Cheniere Sabine Pass Pipeline Company (December). 

The Commission currently has twelve LNG projects pending before it, with more 

expected based on current and projected market conditions. In addition to these 

new projects, in September 2004, the Commission authorized a major capacity 

expansion of an existing LNG terminal owned by Trunkline LNG Company, 

LLC. 

Credit Policies. In a series of orders, the Commission clarified credit and 

collateral requirements that pipelines may impose on their customers. These 

policies allow for the construction of pipeline infrastructure needed to meet 

critical demand growth, such as new electric generation, while protecting the 

pipeline and its existing customers from the risks and costs of a non-creditworthy 

customer’s future default. Credit and collateral issues require prompt action to 

ensure that financial risks are allocated fairly among market participants. On 

February 11, 2004, the Commission proposed generic standards for natural gas 

pipeline companies intended to benefit customers by promoting consistent 

practices among interstate pipelines and to provide shippers with an objective and 

transparent creditworthiness evaluation. 

In another series of orders, the Commission clarified credit review and 

creditworthiness and collateral requirements that individual electric utilities and 

regional transmission organizations (RTOs) or independent system operators 

(ISOs) may impose on their customers. This clarification will help decrease the 

potential financial risk to the utilities and their customers, while protecting the 

customers from unduly burdensome creditworthiness standards. 

As for credit-related policy issues in the context of ISOs/RTOs, the Commission 

sought comment and convened a technical conference in July 2004 on credit11 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

related issues for service provided by jurisdictional transmission providers, ISOs, 

and RTOs. In November 2004, the Commission issued a policy statement to 

clarify its credit policy for transmission providers with electric open access tariffs 

(OATTs), ISOs and RTOs. The order encourages OATT transmission providers, 

ISOs and RTOs to: 

• make their credit-related procedures and standards more transparent; 

• post on their websites the procedures they use to perform their credit analysis; 

and 

• provide customers with a written analysis describing how the credit 

procedures and standards are applied to them. 

In addition, OATT transmission providers, ISOs and RTOs must consider both 

qualitative and quantitative measures in assessing credit risk. 

Transmission Pricing Policy. In 2003, the Commission proposed a pricing 

policy that would incite transmission owners to transfer operational control of 

their transmission facilities to independent companies, or pursue additional 

measures that promote efficient operation and expansion of the transmission grid. 

 Transmission owners would be allowed to earn higher rates of return on 

transmission assets turned over for such operation. This policy would foster 

independent regional grid operation and coordination to improve grid 

performance, reduce wholesale transmission and transactions costs, improve 

electric reliability, and make electric wholesale competition more effective in 

ways that benefit all customers. The Commission is reviewing the numerous 

comments received before finalizing its policy, including considering whether the 

use of performance based rates and/or other mechanisms would provide 

appropriate incentives for expanding transmission infrastructure. 

Energy Markets 

Crises can erupt quickly in energy markets, especially in electricity markets, and 

the Commission is acting to provide a much more stable long-term platform for 

these markets. Two important components of electric market regulation are 

market design, and a strong market oversight and investigations program. 

Market Design. After unprecedented outreach and dialogue with state 

commissions, the public, and customer groups, the Commission concluded that an 

ideal market design should meet certain customer-focused objectives, such as: 

• reliable service – sufficient power to meet demand; 

• fairness – transmission and power at just and reasonable rates; 

• stability – service in a marketplace marked by certainty and fairness; 

• innovative technology – future technological advances will be accommodated; 

• mitigation of market power – ensuring that customers are protected from

market power abuses; and 

• predictability – good price signals to encourage investment in needed 

generation and transmission infrastructure. 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Industry participants are implementing many similar elements through voluntary 

filings. These filings involve ISOs and RTOs that establish single-state or multistate regional power markets and market power mitigation within those markets.

Market Oversight and Investigations. One of the clearest lessons stemming from

the electricity crisis in the West is that we need to do a much better job of

policing natural gas and electric markets and addressing problems before they 

become severe. In August 2002, we established a new Office of Market 

Oversight and Investigations (OMOI). OMOI assesses market performance, 

ensures conformance with Commission rules, and reports on its findings to the 

Commission and the public. OMOI also analyzes overall energy markets to 

identify and remedy key issues before they become major problems, and serves as 

the “cop on the beat” to ensure that individual market participants play by the 

rules. The Commission has two main objectives in meeting this goal: 

• Provide vigilant and effective oversight of market operations; and 

• Prevent market manipulation and enforce Commission rules. 

OMOI has given the Commission the ability to track market conditions and 

address market problems quickly and effectively. This is a necessary part of 

restoring public confidence in energy markets. Commissioners are updated 

frequently on market developments. 

Program Performance Overview 

The performance measurement data samples and other achievements included 

below constitute a few of the Commission’s more significant achievements during 

FY 2004. The performance measures and targets were selected from the 

Commission’s FY 2005 Performance Budget Request, submitted to Congress in 

February 2004. A complete list of the Commission’s performance measurement 

data for fiscal years 2001, 2002, 2003, 2004, and 2005, is included in the 

Performance Report section of this report. 

Performance Measurement Data for Energy Infrastructure

Goal: Promote a Secure, High-Quality, Environmentally Responsible 

Infrastructure through Consistent Policies. 

Performance Measurement Performance Target Result 

Evaluate and improve the 

effectiveness of required 

environmental enhancement and 

mitigation measures in 

hydropower licenses 

< Conduct 5 site visits 

< Hold 2 outreach meetings with 

stakeholders 

< Disseminate 2 environmental 

effectiveness reports 

< 100% completed 

< 100% completed 

< Disseminated two reports 

To balance and protect competing project interests, the Commission evaluated the 

effectiveness of fish passage and recreation requirements at certain hydropower 

projects and disseminated two reports. 

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FY 2004 Performance and Accountability Report 

The final report on fish passage concluded that the technology for upstream

passage is better developed than the technology for downstream passage. In 

addition, the report found that downstream passage effectiveness was more 

variable than for upstream passage largely due to environmental factors and the 

method of passage. The final report emphasized the importance of effectiveness 

monitoring and the selection of suitable methods and criteria for evaluating the 

effectiveness of fish passage facilities. 

The draft report on recreation facilities used the Licensed Hydropower 

Development Recreation Reports (FERC Form 80’s) and the recreation 

monitoring reports filed by licensees, to evaluate the recreational mitigation 

measures. The report concluded that the recreational measures at the licensed 

projects are effective in meeting users’ needs. 

Performance Measurement Performance Target Result 

Percentage of pipeline certificate 

cases completed in specified time 

frames 

85% of cases completed within the 

following time frames: 

3⁄4 unprotested cases that involve 

no precedential issues, 159 days 

3⁄4 protested cases that involve no 

precedential issues, 304 days 

3⁄4 cases of first impression or 

containing larger policy

implications, 365 days 

3⁄4 cases requiring a major 

environmental assessment or 

environmental impact statement, 

480 days 

85% of the cases were completed 

in: 

3⁄4 111 days for unprotested cases 

that involve no precedential 

issues; 

3⁄4 190 days for protested cases 

that involve no precedential 

issues; 

3⁄4 217 days for cases of first 

impression or containing larger 

policy implications; 

3⁄4 448 days for cases requiring a 

major environmental assessment 

or environmental impact 

statement. 

The Commission was well within the case processing time goals for all categories 

of pipeline certificate cases. Although the numbers reflected above are based on 

completing 85% of the cases within the respective category goals, the 

Commission actually exceeded the goals by completing: 

3⁄4 97% of Category 1 cases in 159 days or less; 

3⁄4 100% of Category 2 cases in 304 days or less; 

3⁄4 100% of Category 3 cases in 365 days or less; and 

3⁄4 92% of Category 4 cases in 480 days or less. 

Other Accomplishments

In FY 2004, the Commission certificated 20 major pipeline projects, 3 storage 

projects and 2 LNG projects. The following table summarizes these facilities: 

Project Type Facilities / Added Capacity (approx.) 

Pipelines 611 miles, 91,000 hp of compression and 5,754 MMcf/d of additional capacity 

Storage 990 MMcf/d of peak-day deliverability 

LNG 7 Bcf of storage capacity and 2,100 MMcf/d of deliverability 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

At the same time the Commission was encouraging applicants to inform and 

engage the public and elected officials at the early stages of a project, it also made 

similar efforts through the NEPA Pre-Filing Process and other ongoing Outreach 

efforts. Under the NEPA Pre-Filing Process, the Commission can start its 

environmental review before the application is filed, and opportunities exist for 

maximum public involvement. The Commission continues to build on the 

success of the NEPA Pre-Filing Process, as nearly 60 percent of the major 

projects under review at the end of FY 2004 were using, or had completed the 

NEPA Pre-Filing Process. 

Also during FY 2004, the Commission strengthened its working relationships 

with key Federal agencies that are part of the NEPA review process. The 

Commission made specific efforts to engage other relevant federal agencies in the 

NEPA process regarding the development of a single document and record that 

could serve as the basis for each agency’s decision in the review of pipeline and 

onshore LNG projects. The Commission also cooperated with the U.S. Coast 

Guard (USCG) on the NEPA review of LNG facilities subject to the Deepwater 

Port Act. Finally, the Commission signed an Interagency Agreement with the 

USCG and the U.S. Department of Transportation to clarify each agency’s roles 

and responsibilities regarding safety and security at LNG import terminals. This 

agreement also established clear paths for coordination and communication. 

Performance Measurement Performance Target Result 

Inspect each major onshore 

pipeline project at least once every

four weeks during ongoing 

construction activity

100% of qualifying projects 

inspected per established 

schedule 

All three major onshore projects 

were inspected at least once every

four weeks. 

In FY 2004, the Commission conducted 203 inspections to ensure compliance 

with environmental regulations and certificate conditions. Of those 203, seventynine onshore construction projects measuring more than 2 miles long were 

inspected at least once. Of those 79, three involved additional environmental 

issues that affected a significant population in multiple states. Each of these 

three major projects involved the construction of at least 200 miles of pipeline 

and new compression facilities. Recognizing the significance of these projects, 

the Commission inspected them at least once every 4 weeks during construction, 

and at least once following completion. 

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FY 2004 Performance and Accountability Report 

Performance Measurement Performance Target Result 

Percentage of relicense filings 

based upon ALP’s 

25% of all relicense cases using 

ALP 

45% of the relicense applications 

filed during FY2004 used ALP. 

Percentage of final NEPA 

documents, required for 

hydropower license applications 

filed after FY 2002, completed 

within specified time frames 

75% of final NEPA documents 

prepared for licenses approved 

within the following time frames: 

< ALP case, less than 16 months 

< TLP case, less than 24 months 

< 83% of final NEPA documents 

were issued within 16 months of 

the date ALP license applications 

were deemed complete. 

< 100% of final NEPA documents 

were issued within 24 months of 

the date TLP license applications 

were deemed complete. 

Percent of final NEPA documents 

based upon comprehensive 

settlement agreements completed 

within specified time frames 

75% of final NEPA documents 

prepared for final comprehensive 

license settlement agreements are 

completed within 12 months 

100% of final NEPA documents 

were issued within 12 months of 

the date final settlement 

agreements were filed with the 

Commission. 

Realizing that the faster applications are processed, the sooner on-the-ground 

environmental enhancements can be implemented, the Commission made it a 

priority in FY 2004 to reduce the time required to process license applications. 

To this end, the Commission invested significant resources during FY 2004 

encouraging licensees to utilize the Alternative Licensing Process (ALP), a 

collaborative process designed to expedite the review process by ensuring 

applications are fully developed when they are filed. Almost half of the 

applications filed during FY 2004 were prepared using this process. To ensure 

that the license record is completed as expeditiously as possible, the Commission: 

3⁄4 issued environmental assessments in lieu of issuing draft and final 

documents; 

3⁄4 published licensing schedules to ensure stakeholder groups participate 

in the process in a more timely manner; and 

3⁄4 undertook outreach efforts with other agencies to enhance their 

participation in the process. 

Other Accomplishments

While the Commission strives to reduce the time it takes to process license 

applications, the process is dependent upon a multitude of other State and Federal 

processes outside the Commission’s jurisdiction. To minimize delays in this area, 

the Commission developed the Integrated Licensing Process (ILP) to ensure, in 

part, that a sufficient record is developed during the pre-filing process. During 

FY 2004, the challenging, yet successful, implementation of the Commission’s 

new ILP took place with a total of seven licensees (almost a third of the eligible 

projects) utilizing the ILP. 

16 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Performance Measurement Performance Target Result 

Establish clear cost recovery

process for transmission 

investment in each region 

Allow flexibility to ensure utilities or

pipelines have sufficient revenue 

stream to recover investment 

costs and provide rate certainty for 

customers 

The Commission approved over 

100 applications, including 42 in 

the Western U.S. alone, that 

ensured rate recovery for utilities 

and provided additional rate 

certainty to customers. 

The Commission also approved 

11 applications filed under NGA 

section 311 to establish rates for 

interstate gas transportation 

services provided over intrastate 

and Hinshaw pipeline systems and 

another 11 applications by

Western U.S. interstate pipelines 

to establish rate recovery for 

additional gas infrastructure 

investment. 

 

In the liquefied natural gas (LNG) 

industry, the Commission provided 

significant investment recovery

certainty by issuing orders 

establishing initial rates for three 

proposed LNG import terminal 

facility projects: 

 < Tractebel Calypso; 

 < AES Ocean Express; and 

 < Trunkline LNG. 

Below are examples of how the Commission provided both rate certainty to 

customers and rate recovery certainty to the pipelines for providing jurisdictional 

service and infrastructure investment. 

In the Northeast, the Commission accepted a Northeast Utilities Services 

Company proposal to establish a rate design formula to provide greater certainty 

of cost recovery of transmission infrastructure capital expenditures. The 

Commission also accepted comprehensive revisions to transmission cost 

allocation rules applicable to the New England region under the New England 

Power Pool Tariff that more accurately delineated cost responsibility for regional 

transmission investment. 

In the Midwest, the Commission approved a revision to the Midwest ISO’s Large 

Generator Interconnection Agreement to permit the deferral of transmission 

credit payments to the interconnection customer until the network upgrades built 

for the customer are actually needed or used to accommodate the demonstrated 

capacity of the generating facility. The flexibility of this approach permits a 

timelier match between transmission facility costs and facility utilization than 

previously provided for by the Midwest ISO’s tariff. 

Other Accomplishments

Although the Commission does not have any FY 2004 performance measures 

associated with the August 2003 Northeast electricity blackout, the investigation 

and subsequent studies and reports constituted a significant effort by the 

Commission. The accomplishments listed below display, in part, how the 

17 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Commission utilized the additional $5.0 million Congress added to the 

Commission’s FY 2004 appropriation. 

Immediately after the blackout, the Commission participated in the Joint U.S.-

Canada Power System Outage Task Force. The U.S. Department of Energy and 

Natural Resources Canada co-chaired the investigation which was a collaborative 

endeavor with industry and coordinated through the NERC. The following 

timeline lists the Commission’s actions since the blackout: 

3⁄4 On September 12, 2003, the Task Force released a chronology of the 

events relating to the blackout. 

3⁄4 On November 19, 2003, the Task Force released an interim report on 

the blackout. 

3⁄4 On December 18, 2003, the Task Force released an interim report on 

Utility Vegetation Management and its role in causing the 

blackout. 

3⁄4 On March 2, 2004, the Commission issued the Utility Vegetation 

Management Final Report. 

3⁄4 On April 5, 2004, the Task Force issued, “Final Report on the August 

2003 Blackout in the United States and Canada: Causes and 

Recommendations.” 

3⁄4 On September 7, 2004, the Commission submitted a report on utility 

vegetation management practices to Congress with 

recommendations for needed practices and guidance. 

In accordance with the recommendations made in the April 5, 2004 Blackout 

Final Report, the Commission: 

3⁄4 Issued a policy statement related to bulk power system reliability, in 

which the Commission recognized that many aspects of system

reliability are within the purview of the states and stated the 

necessity for all those with responsibility for the bulk electric 

system to work together to achieve the common goal of a reliable 

electric system. The Commission announced its intent to work 

closely with the states to address various reliability-related issues 

of mutual concern. 

3⁄4 Directed all designated transmission owners to file reports with the 

Commission – since inadequate vegetation management was a 

major contributor to the blackout – explaining their vegetation 

management practices for designated transmission facilities and 

rights-of-way. Commission staff worked with the leadership of the 

National Association of Regulatory Utility Commissioners to 

analyze these reports to look for significant patterns and potential 

problems in the vegetation management practices of the electric 

industry. 

3⁄4 Held a joint workshop with the U.S.-Canada Power System Outage 

Task Force, on May 14, 2004, focusing on steps needed to get 

enforceable reliability standards. 

18 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

3⁄4 Recommended the development of a regulator-approved mechanism

for funding NERC and the regional reliability councils to ensure 

their independence from the parties they oversee. 

Building on its blackout investigation work and prior work on infrastructure 

security, cyber-security, infrastructure evaluation and market design, the 

Commission began a number of projects designed to better understand and 

improve grid reliability and security, including: 

3⁄4 Establishing a Reliability Group staffed with experienced in-house 

engineers and high-level consultants with extensive expertise in 

grid operations, reliability and regulatory issues. 

3⁄4 Participating in NERC’s reliability and readiness audits of the 

transmission operations and reliability coordinators in the U.S. and 

Canada covering the grid operators for 80% of the Nation’s 

electricity users. 

3⁄4 Supporting the re-issuance of NERC standards to specific, definable 

terms used to judge the performance of the participating utilities. 

3⁄4 Identifying best practices tools available to industry to ensure the 

reliability of the interconnected power system along with the 

identification of “gaps” within the industry. 

3⁄4 Initiating development and implementation of cyber security tools and 

practices to prevent the disruption of the bulk power supply by 

outside attacks. 

3⁄4 Holding a technical conference on July 15, 2004, to address the steps 

taken to prevent a blackout recurrence and discuss related 

reliability issues in the Midwest for the summer 2004. 

Performance Measurement Data for Competitive Markets

Goal: Foster Nationwide Competitive Energy Markets 

as a Substitute for Traditional Regulation. 

Performance Measurement Performance Target Result 

Timely processing of filings to 

establish RTOs, ISOs, or 

Independent Transmission 

Companies (ITCs) 

All filings processed within 6 

months of filing, or before 

applicant’s proposed effective date 

(whichever is later) 

All three proposals to establish or 

expand an RTO that were filed in 

FY 2004 were processed within six 

months. 

In addition, three more electric 

utilities (First Energy, Ameren, and 

Northern Indiana Public Service) 

were added to the Midwest ISO in 

advance of the requested action 

dates. 

3⁄4 The Southwest Power Pool (SPP) was granted RTO status – conditioned upon 

fulfillment of certain requirements – on February 10, 2004, less than 4 

months after its filing with the Commission. 

3⁄4 ISO New England was granted RTO status – subject to the fulfillment of

certain requirements and the outcome of a hearing on limited issues – on 

March 24, 2004, less than 5 months after its filing with the Commission. 

19 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

3⁄4 Pennsylvania-New Jersey-Maryland (PJM) RTO filed to establish “PJM 

South” within its RTO by adding Dominion Virginia Power as a member. 

The Commission granted the application on October 5, 2004, less than 5 

months after the filing. 

Performance Measurement Performance Target Result 

Establish cost-effective elements 

of the wholesale electric market 

platform within 3 years of 

RTO/ISO approval 

For each approved RTO or ISO, 

additional wholesale market 

platform elements will be added: 

< Regional independent grid 

operation; 

< Regional transmission planning 

process; 

< Fair cost allocation for existing 

and new transmission; 

< Market monitoring and market 

power mitigation; 

< Spot markets to meet 

customers’ real-time energy

needs; 

< Transparency and efficiency in 

congestion management; 

< Firm transmission rights; and 

< Resource adequacy approaches 

The Commission approved new, 

or redesigned, cost-effective 

market elements for each of the 

six approved RTOs or ISOs, 

enhancing market operations 

efficiency.

In ISO NE, the Commission: 

3⁄4 Issued an order on the establishment of a forward reserve market. 

3⁄4 Directed an implementation date of January 1, 2006, on a proposal for 

the creation of a locational installed capacity (LICAP) market after 

certain market structure issues – including the merits of 

establishing additional capacity zones – are decided. 

3⁄4 Accepted a proposal to implement a weekly billing and payment 

system – rather than a monthly billing and payment cycle – as a 

means to improve liquidity and reduce the amount of market 

participants required collateral and exposure to a default. 

In NY ISO, the Commission: 

3⁄4 Accepted a proposal to add a component concerning the authority to 

terminate customers in default of transmission services payments 

to the Operating Requirement of NY ISO’s financial assurance 

policy. 

In PJM RTO, the Commission: 

3⁄4 Accepted both initial and annual financial transmission right (FTR) 

allocations for the newly added Commonwealth Edison zone. 

3⁄4 Addressed concerns regarding the underlying mitigation measures 

related to the inclusion of congestion charges in uplift payments in 

the Commonwealth Edison zone. 

3⁄4 Accepted interim FTR allocations for the AEP and Dayton Power 

Light zones. 

3⁄4 Acted on a proposal to establish a rate recovery mechanism for the 

cost of transmission enhancements and expansions under PJM 

regional transmission expansion plan. 

20 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

3⁄4 Issued an order regarding revisions to local market power mitigation 

provisions in response to issues concerning generating units within 

PJM that are required to run for reliability. 

In Midwest ISO, the Commission: 

3⁄4 Accepted the ISO’s Transmission and Energy Markets Tariff (TEMT) 

which contained the terms and conditions necessary to implement 

a market-based congestion management program and energy spot 

markets. The TEMT also allowed the Midwest ISO to add four 

primary wholesale electric market platform elements to its 

operations: (1) locational marginal pricing (LMP) for congestion 

management purposes; (2) Day-Ahead and Real-Time energy spot 

markets; (3) FTR allocations as a hedge against congestion costs; 

and (4) a transitional resource adequacy plan which can help to 

ensure new resource development, market efficiency, and reliable 

operation of the transmission network. 

In CA ISO, the Commission: 

3⁄4 Issued an order approving, in principle, additional wholesale platform

elements, including: Real-Time energy spot markets, FTRs, and 

congestion management transparency and efficiency. 

3⁄4 Issued orders containing guidance on replacing the ISOs incremental 

and decremental bid process with a single price curve. 

In SPP RTO, the Commission: 

3⁄4 Issued several orders concerning compliance issues with its earlier 

order that will allow SPP RTO to begin its independent 

transmission system operation as an RTO in early FY 2005. 

Performance Measurement Performance Target Result 

Facilitate construction of electric 

infrastructure by providing investor 

confidence of probable cost 

recovery

Issue Final Policy Statement, 

“Pricing Policy for Efficient 

Operation and Expansion of 

Transmission Grid” 

As the Commission considers 

whether additional incentives may

induce a more effective 

infrastructure response, a final 

policy statement has not been 

issued. However, the Commission 

in effect accomplished this 

measure by approving incentives – 

similar to those suggested in the 

proposed policy statement – in 

individual cases where companies 

have formed RTOs. 

For example: 

3⁄4 The inclusion of adders to the equity allowance was approved for new 

transmission facilities rates built in the PJM RTO as well as for 

ISO NE. 

3⁄4 A settlement agreement was approved that allows American 

Transmission Company to reflect its investment in transmission 

projects under construction – construction work in progress – in its 

rate base, which provided additional financial certainty to support 

the commencement of a significant transmission system expansion 

in the upper Midwest. 

21 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Performance Measurement Performance Target Result 

Encourage State representatives 

to establish multi-state regional 

organizations (e.g., Regional State 

Committees (RSCs)) 

Meet at least annually with state 

representatives in each region 

The Commission hosted and/or 

participated in numerous meetings 

with state representatives from 

each region with existing RTOs or 

ISOs. 

In the East, the Commission: 

3⁄4 Hosted a state regional panel for New England on January 8, 2004, to 

discuss various topical issues, including governance and 

independence, markets, filing rights, and rate design. 

3⁄4 Hosted a regional infrastructure conference in New York on June 3, 

2004, in which participants in the New York and New England 

markets discussed issues relating to the need for, and investment 

in, gas and electric infrastructure to meet future demand. 

3⁄4 Participated in the Mid-Atlantic Distributed Resources Initiative on 

September 27, 2004, which is a PJM/DOE joint effort with MidAtlantic states to develop distributed resources. 

In the Mid-West, the Commission: 

3⁄4 Met regularly with the Organization of MISO States (OMS) to discuss 

progress on various fronts including rates, transmission access and 

market implementation, as well as Commission and state activities. 

3⁄4 Attended the annual meeting of OMS. 

3⁄4 Met separately with representatives of the Missouri, Ohio, Michigan, 

Illinois, Minnesota, and Indiana state regulatory organizations to 

exchange regulatory ideas and discuss pending issues regarding 

operational and procedural activities of the Midwest ISO. 

3⁄4 Attended Regional State Committee (RSC) Board meetings of the 

SPP. 

3⁄4 Established a field office in Little Rock, Arkansas, to create a daily 

interface between the Commission and SPP market participants 

and regulators similar to the MISO field office in Carmel, Indiana. 

In the West, the Commission: 

3⁄4 Held a meeting with Southwestern state regulatory commissions and 

market participants regarding development of the WestConnect 

RTO. 

3⁄4 Held a technical conference on November 6, 2003 with the California 

Public Utilities Commission (CPUC), the California Energy 

Commission, the California Independent System Operator and 

interested parties to discuss the reformation of wholesale power 

markets in California, explore ways to flexibly meet regional 

electricity needs, and discuss issues related to a single state 

Regional State Committee. 

22 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Performance Measurement Data for Market Oversight

Goal: Protect Customers and Market Participants through Vigilant And Fair 

Oversight of Both Traditionally Regulated and Transitioning Energy Markets. 

Performance Measurement Performance Target Result 

Enhance institutional capability for 

overseeing energy markets 

Improve metrics/indicators of gas 

and electric market performance 

measures 

Staff developed standard 

performance metrics for all 

RTO/ISO markets that, beginning 

in calendar year 2004, became a 

part of the annual reporting done 

by the market monitoring units of 

each RTO/ISO. Additionally, a 

Daily Scorecard of metrics is 

posted on the Commission’s 

intranet indicating daily gas and 

electric prices, weather, and gas 

futures. 

In April 2004, the market monitoring units of each RTO/ISO presented five of the 

first common metrics to the Commission. These metrics provided for a regionby-region comparison of organized electricity markets and enhanced the 

Commission’s understanding of the overall markets. This information can, and 

will, be used in the Commission’s annual State of the Markets Report. 

Performance Measurement Performance Target Result 

Development of market expertise 

30% of OMOI staff have energy

market experience gained through 

direct activity in those markets 

30% of OMOI staff have gained 

energy market expertise by

engaging in energy market 

activities such as: 

 < attending RTO/ISO 

conferences and workshops; 

 < participating in monthly

conference calls with MMUs; 

 < attending weekly OMOI 

oversight meetings on energy

markets; and 

 < attending training sessions. 

In addition to attending the training above, OMOI coordinated several formal, 

technical training courses for Commission staff working in market related 

activities. This included courses on: 

3⁄4 Locational Marginal Pricing (LMP); 

3⁄4 Optimizing GENCO Assets for New LMP Markets; 

3⁄4 Energy Markets Trading; 

3⁄4 Risk Management; 

3⁄4 Market Intelligence; 

3⁄4 Negotiations; and 

3⁄4 Derivatives. 

Other Accomplishments

Investigations. The Commission opened over 300 investigations in FY2004 and 

was successful in reaching settlements that led to significant financial remedies 

and stringent compliance programs in many of those cases. Some of the more 

notable settlements involved the following issues: 

23 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

3⁄4 Anomalous Bidding in the California Markets. The Commission 

investigated inconsistent bidding behavior and practices in the 

California markets settling with four companies for a total of $77.5 

million in disgorged profits. 

3⁄4 California Refund Proceeding Settlements. The Commission was 

instrumental in achieving refund proceeding settlements that arose 

from the 2000 and 2001 California energy crisis. Pending 

approval, these settlements will result in $628 million in refunds to 

consumers. 

3⁄4 Gas Storage Information Investigation. The Commission investigated 

companies sharing non-public natural gas storage information data 

with affiliates and favored customers. A settlement was reached 

with three companies imposing $8.1 million in refunds and civil 

penalties and strict compliance stipulations to thwart future 

violations. 

Standards of Conduct. During 2004, the Commission adopted the new 

Standards of Conduct Order No. 2004. This order guides the behavior of 

Transmission Providers towards their affiliates who compete with non-affiliates 

for access to transmission capacity and compete in wholesale commodity markets. 

On September 22, 2004, the Commission began looking at the Internet and 

OASIS websites of 216 Transmission Providers to determine whether each of the 

providers posted their written procedures on how they are complying with the 

Standards of Conduct. Following this effort, the Commission will commence 

targeted on-site operational audits to determine if specific providers are 

complying with the remainder of the Standards of Conduct requirements. 

Price Transparency. In May 2004, the Commission finalized its Report on 

Natural Gas and Electricity Price Indices. This report was a study analyzing the 

effects of the Commission’s July 2003 Policy Statement on Natural Gas and 

Electric Price Indices. The Policy Statement set out standards for natural gas and 

electricity price index developers and the companies that report transaction data 

to index developers. The Commission found significant progress had been made 

in improving the index development process and required eleven energy 

companies identified in the report to reform their trade reporting processes or 

cease reporting. 

24 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Performance Measurement Data for Management Initiatives

Performance Measurement Performance Target Result 

Number of new hires from 

recruitment program 

Attract new talent through targeted 

recruitment, with 50% at entry

levels 

66% of all hires were at entrylevels 

New staff from summer intern 

program 

Hire 30% of participants into 

permanent positions 

25% of summer interns were hired 

into permanent positions 

This performance target was set at 

an approximate level, and the 

deviation from that level is slight. 

This difference had no effect on 

overall program performance. 

The Commission’s FY 2005 Human Capital Plan update focuses on one of the 

Plan’s primary targets, recruitment for entry level positions, which will address 

the Commission’s aging population problem (particularly in mainstream

occupations) and will become an integral part of the Commission’s succession 

planning strategy. 

Since this focus on entry level hiring began, the Commission has met or exceeded 

its goals by utilizing both its college recruitment and summer intern programs as 

sources for entry level hires. This strategy has been highly effective in providing 

an influx of new, young talent into mainstream occupations like engineering, 

auditing, energy analysis, environmental science, and law. These occupations are 

critical in supporting the Commission’s goals in its dam safety inspection, market 

monitoring, electric reliability, LNG, and infrastructure initiatives. 

To supplement this effort, the Commission is currently developing a Commissionwide employee retention program which will focus on entry level staff. This 

program will include a Commission-wide mentoring program, a structured 

“markets curriculum” training program that encompasses all aspects of the 

Commission’s energy industry work, and other staff retention components. This 

focus on succession planning through aggressive entry level recruitment and 

retention is reflected in the Commission’s FY 2005 performance measures. 

Performance Measurement Performance Target Result 

Increase diversity of staff in high 

grades 

Continue increasing diversity in 

GS-14, GS-15 and SES positions 

The net increase of 21 staff into 

high grade positions included 3 

minorities (14%) and 7 women 

(33%). 

The Commission continues to address the diversity of its high graded staff 

through direct recruitment efforts. Additionally, in an attempt to change the 

Commission’s overall population demographics relative to diversity, the 

Commission will ensure that our entry level recruitment efforts focus on diversity 

candidates as well. Over time, this effort will increase the diversity of the 

Commission’s in-house candidate pool from which to draw for our high grade 

selections. 

25 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Performance Measurement Performance Target Result 

Improved executive performance 

< Implement 360 degree 

assessment of senior staff 

< Expand training in leadership 

and management skills 

< Completed 360 degree 

assessments & feedback; 

< Implemented and completed 

FERC-wide training for all new

supervisors; 

< Developed a Leadership & 

Management Development 

Program; and 

< Initiated an Executive coaching 

pilot program. 

Although the accomplishments described above focus strictly on the 

Commission’s formally established or pilot programs, other initiatives are being 

developed to supplement these programs. For example, Commission-wide 

“business requirements” in the areas of both technical and supervisory/managerial 

(including executive) positions are being developed Commission-wide. 

Collectively, these requirements will form the basis for a Commission-wide 

identification of managerial skills areas and will lead to a more focused and 

consistent training and development program for both general and 

executive/managerial positions. On September 30, 2004, the Commission 

received provisional certification for its SES performance appraisal system. The 

Commission was one of the first government agencies to be certified by the 

Office of Personnel Management (OPM). 

Performance Measurement Performance Target Result 

Accuracy and completeness of 

annual financial statements Unqualified opinion Performance target achieved 

In accordance with the President’s Management Agenda, accurate financial 

reporting has become a critical element in depicting the Government’s financial 

position. The Commission has received an unqualified opinion for ten 

consecutive years and has received no material weaknesses during the FY 2004 

financial statement audit. This accomplishment validates the assertion that the 

Commission’s internal controls and financial reporting are effective and accurate. 

Performance Measurement Performance Target Result 

Network availability 99% Performance target achieved 

In order to achieve the highest network availability rate, the Commission has 

historically taken a comprehensive network management approach by: 

3⁄4 utilizing best rated hardware; 

3⁄4 using alert notification software to monitor the network; 

3⁄4 requiring system change notice policy and procedures; 

3⁄4 utilizing testing procedures prior to any patch deployment; 

3⁄4 providing risk analysis to any proposed changes; and 

3⁄4 incorporating a contractor/government team approach. 

26 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

In addition to the standard approach described above, the Commission made the 

following improvements during FY 2004: 

3⁄4 upgraded the interoffice routers; 

3⁄4 upgraded the infrastructure device operating system (IOS); 

3⁄4 upgraded the backup server and server controllers; and 

3⁄4 implemented enhancements to the network monitoring application. 

Performance Measurement Performance Target Result 

Implementation of Federal 

Information Security Management 

Act (FISMA) for small agencies 

95% 

Overall, the Commission had a 

93% performance rating according 

to the FISMA OMB metric. 

According to the Putman 

scorecard, the Commission had 

an 84% performance rating and 

moved from an F to a solid B. 

This performance target was set at 

an approximate level, and the 

deviation from that level is slight. 

This difference had no effect on 

overall program performance. 

While the Commission’s actual FISMA compliance rate of 84% did not meet the 

95% goal, it did mark a dramatic increase from last year’s rate of 3%. 

Additionally, the increase from an “F” to a “B” on the Putman scorecard, an 

extraordinary accomplishment particularly for a small agency, comes with no 

reportable problems or recommendations from the Department of Energy’s 

Inspector General 2 month review. 

Other Accomplishments

During FY 2004, the Commission continued to make progress on the 

implementation of FERC Online, the Commission’s system for: 

3⁄4 integrated receipt, storage, disposition (through Commission voting or 

delegated program support), publication, and dissemination of 

documents and other related information to the public and 

regulated industries; and 

3⁄4 workload tracking and business planning support for regulatory 

activities. 

Some of the FY 2004 FERC Online implementation milestones included: 

3⁄4 Completing development and beginning system testing of an eFiling 

system release that supports electronic service of documents and 

the electronic filing of tariffs; 

3⁄4 Completing development and beginning system testing of the first 

release of eService which will provide electronic distribution of

documents to parties in Commission proceedings, as required by 

18 CFR 385.2010(b); 

27 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

3⁄4 Deploying eLibrary releases to improve performance, reliability, and 

usability and beginning to digitize legacy microfilmed documents 

in order to reduce cost of operations; 

3⁄4 Deploying eForms updates to allow the quarterly filing of financial 

data previously filed only annually with FERC Forms 1, 2, and 6; 

3⁄4 Deploying an eTariff prototype application to provide a means for 

utilities to file tariffs with the Commission electronically and 

improve the ability of the public to retrieve those tariffs; 

3⁄4 Completing development and beginning system testing of the first 

phase of the Activity Tracking Management System (ATMS), an 

integrated, Commission-wide workload tracking system; and 

3⁄4 Deploying the Virtual Agenda system which provides Commission 

orders electronically to staff at different stages of the decisionmaking process, enables electronic notational voting, and provides 

orders to the public as they are finalized. 

In addition to these accomplishments, the Commission also implemented several 

Information Technology (IT) process improvements that will allow us to continue 

to achieve positive results in the future. For example, the Commission: 

3⁄4 Formalized and applied its Capital Planning and Investment Control 

(CPIC) process prior to developing the FY 2006 OMB 

Performance Budget Request; 

3⁄4 Developed an Enterprise Architecture (EA) appropriate for a small 

agency and began using it as part of the CPIC process; 

3⁄4 Improved its IT contingency planning and prepared to begin testing 

the plans; 

3⁄4 Improved its process for Certification and Accreditation (C&A) of IT 

systems; and 

3⁄4 Documented IT systems development processes to compliment the 

Systems Development Life Cycle (SDLC) guidelines and 

Configuration Management (CM) plans. The Commission then 

began training and implementing the processes to achieve 

Capability Maturity Model Index (CMMI) level two and, 

subsequently, level three certification of its systems development 

activities. 

Performance Measurement Performance Target Result 

Engage Stakeholders 

Provide 50 presentations to 

government or other groups of 

stakeholders 

The Commission made a total of 

94 presentations – in a variety of 

forums – to numerous 

stakeholders throughout FY 2004. 

The Commission’s presentations during FY 2004 included: 

3⁄4 the 19th World Energy Congress; 

3⁄4 the EarthSat/PIRA 2004 Energy Conference; 

3⁄4 the Risk Management for Energy Conference; 

3⁄4 the Committee of Chief Risk Officers Meeting; 

28 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

3⁄4 the 5th Annual Financing U.S. Power Conference; 

3⁄4 the Energy Finance Options for the State of California Conference; 

and 

3⁄4 the Annual Meeting of the North American Energy Standards Board 

(NAESB). 

Performance Measurement Performance Target Result 

Expand discussions with Canada 

and Mexico

Formal interaction with Canadian 

and Mexican regulators on policy

issues

The Commission held or 

participated in 10 different 

meetings with Canadian and/or 

Mexican officials on issues related 

to infrastructure, reliability, and 

other policy initiatives. 

The Commission signed a Memorandum of Understanding with the National 

Energy Board of Canada in which they expressed the intent to coordinate their 

efforts on significant energy infrastructure projects where related matters are 

pending before both agencies and, where practicable, coordinate the timing of the 

agencies’ respective decision making. The Commission also signed a similar 

agreement with the Mexican regulatory authorities in early FY 2005. 

The Commission also supports DOE and State Department energy related 

initiatives through its participation in: 

3⁄4 the North American Energy Working Group (NAEWG), which fosters 

improved trilateral collaboration on energy issues that have crossborder implications; 

3⁄4 the U.S.-Mexico Working Group on Electricity and Natural Gas 

Interconnections and Trade, which seeks ways to bolster bilateral 

energy trade; 

3⁄4 the U.S.-Mexico Binational Commission Energy Working Group's 

annual meeting on energy trade matters; and 

3⁄4 the U.S.-Canada Energy Consultative Mechanism's annual meeting on 

energy policy matters of mutual concern. 

In its April 19, 2004, Policy Statement on Reliability, the Commission stated that 

it would work closely with Mexican and Canadian officials toward maintaining a 

safe and reliable interconnected North American bulk electric system through 

consistent cross-border treatment of reliability standards and regulation. 

Accordingly, the Commission and DOE and the Canadian Federal, Provincial and 

Territorial Working Group organized the Bilateral Electricity Reliability 

Organization Oversight Group to develop recommendations on how the U.S. and 

Canada might coordinate their regulatory approaches to the funding and 

governance of NERC and their approval of NERC's reliability standards. 

29 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Financial Performance Overview 

As of September 30, 2004, the financial condition of the Commission was sound 

with sufficient funds to meet program needs and adequate control of these funds 

in place to ensure FERC obligations do not exceed budget authority. The 

Commission prepared its financial statements in accordance with the accounting 

standards codified in the Statements of Federal Financial Accounting Standards 

(SFFAS) and with Office of Management and Budget (OMB) Bulletin No. 01-09, 

Form and Content of Agency Financial Statements. 

Sources of Funds. The FERC receives an appropriation from Congress that is 

available until expended. The Commission’s FY 2004 new budget authority was 

$204.4 million. This represents an increase in new budget authority of 

approximately about $12.4 million over FY 2003. Additional funds available to 

obligate in FY 2004 were $3.6 million from prior-year appropriations. The sum

of all funds available to obligate in FY 2004 was $208.5 million. The 

Commission also receives an appropriation from Congress to pay states the fees it 

collected for the occupancy and use of public lands. The appropriation related to 

payments to states in FY 2004 and 2003 was $2.9M. 

Consistent with the requirements of the Omnibus Budget Reconciliation Act of 

1986, as amended, the Commission collected fees to offset 100% of its budget 

authority in FY 2004. 

Uses of Funds by Function. The Commission incurred expenditures of $213.2 

million in FY 2004, which was an increase of $10.5 million over FY 2003. 

Approximately 65 percent of obligations were used for salaries and benefits. The 

remaining 35 percent was used to obtain technical assistance for the 

Commission's principal regulatory programs, to cover operating expenses, (e.g., 

building rentals, transportation, printing, security services, supplies, office 

automation, and training), staff travel, and reimbursable work. The unobligated 

budget authority available at the end of FY 2004 was $6.2 million, which is an 

increase of $2.7 million over the FY 2003 amount of $3.5 million. 

Uses Of Funds By Function (millions)

Uses FY 2004 FY 2003 

Salaries and Benefits $138.5 128.1 

Travel/Transportation 2.8 2.5

Rent/Comm/ Utilities 21.7 20.5 

Contract Support 32.1 29.9 

Printing/Supplies/Other 17.9 21.4

Reimbursable Work .2 .3 

30 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Audit Results. The Commission received an unqualified audit opinion on its FY 

2004 financial statements. This was the tenth consecutive year the Commission 

has received an unqualified opinion. For FY 2004, no material weaknesses were 

identified by the audit. 

Financial Statement Highlights. The Commission's financial statements 

summarize the financial activity and financial position of the agency. The 

financial statements, footnotes, and the balance of the required supplementary 

information appear in Chapter 3 of this report. Analysis of the principal 

statements follows. 

Analysis of the Balance Sheet 

The Commission's assets were approximately $140.3 million as of September 30, 

2004. This is an increase of $1.7 million from the end of FY 2003. The assets 

reported in the Commission's Balance Sheet are summarized in the Asset 

Summary table. 

Asset Summary (millions)

Asset FY 2004 FY 2003 

Fund Balance with Treasury $104.7 87.7 

Accounts Receivables, Net 23.1 25.3 

Property, Plant, & Equipment, Net 8.3 10.5 

Due from Regulated Entities 4.2 15.1 

Total Assets $140.3 138.6 

The Fund Balance with Treasury represents the Commission's largest asset of 

$104.7 million as of September 30, 2004, an increase of $17 million from the FY 

2003 year-end balance. This balance represents appropriated funds, collected 

license fees, and other funds maintained at the U.S. Treasury until final 

disposition is determined. The increase in the fund balance is primarily the result 

of $18.4 million collected for from companies that were in violation of the 

Federal Power Act. 

Accounts Receivable, Net, as of September 30, 2004, were $64 million net of an 

offsetting allowance for doubtful accounts of $40.9 million.

The net book value of Property, Plant, and Equipment, Net, was $8.3 million. 

The balance is comprised of equipment, furniture, leasehold improvements, and 

computer hardware and software. 

The Due from Regulated Entities in the amount of $4.2 million represents the 

adjustment made to reconcile revenue with costs since FERC is a full cost 

recovery agency. 

31 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

The Commission's liabilities were $118.3 million as of September 30, 2004. The 

Liabilities Summary table shows an increase in total liabilities of $2 million from

the FY 2003 year-end balance of $116.3 million. 

Liabilities Summary (millions) 

Liabilities FY 2004 FY 2003 

Accounts Payable $9.1 7.9 

Federal Employee Benefits 4.8 5.5 

Other Liabilities 104.4 102.9 

Total Liabilities $118.3 116.3 

The difference between total assets and total liabilities, net position, was $22.0 

million as of September 30, 2004. The Net Position Summary table shows a 

decrease of $.3 million from the FY 2003 year-end balance. The decrease is net 

result of an increase in Unexpended Appropriations, which is the amount of 

authority granted by Congress that has not been expended, and a decrease in 

Cumulative Results of Operations, which represents the net results of operations 

since the Commission's inception. 

Net Position Summary (millions)

Position FY 2004 FY 2003 

Unexpended Appropriations $17.5 14.8 

Cumulative Results of Operations 4.5 7.5 

Total Net Position $22.0 22.3 

Analysis of the Statement of Net Cost 

The Statement of Net Cost presents the net cost of the Commission's three 

strategic goals as identified in the Commission’s Strategic Plan. The purpose of 

this statement is to show separately the components of the net cost of operations 

that will provide information that can be linked to program performance under 

GPRA reporting to the cost of programs. The Commission's net cost of 

operations for the year ended September 30, 2004, was $.07 million, which is a 

decrease of $.11 million over the FY 2003 net cost of $.18 million. In FY 2004, 

the Commission was more effective in reporting on the recovery of its costs. Net 

costs by strategic goal are shown in the Net Cost of Operations table. 

32 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Net Cost Of Operations (millions)

Operation FY 2004 FY 2003 

Goal 1 $.05 .11 

Goal 2 $.01 .04 

Goal 3 $.01 .03 

Analysis of Statement of Changes in Net Position 

The Statement of Changes in Net Position reports the change in net position 

during the reporting period. Net position is affected by changes in its two 

components: Cumulative Results of Operations and Unexpended Appropriations. 

The decrease in Net Position of $.3 million from FY 2003 to FY 2004 represents 

the net change in Cumulative Results and Unexpended Appropriations. 

Analysis of the Statement of Budgetary Resources 

The Statement of Budgetary Resources shows the sources of budgetary resources 

available and the status at the end of the period. It presents the relationship 

between budget authority and budget outlays, and reconciles obligations to total 

outlays. For FY 2004, the Commission had budgetary resources available of $211 

million, the majority of which was derived from new spending authority. This 

represents an increase of $14 million over FY 2003 budgetary resources available 

of $197 million. 

The status of budgetary resources includes obligations incurred of $204.7 million, 

or 97 percent of funds available. Similarly, FY 2003 obligations incurred were 

$193.4 million, or 98 percent of funds available. Total net inflows for FY 2004 

were $15.4 million, which represents a $7.4 million decrease from FY 2003 total 

net inflows of $8 million. 

Analysis of the Statement of Financing 

The Statement of Financing is designed to provide the bridge between financial 

(proprietary) accounting in the Statement of Net Cost and budgetary accounting 

information in the Statement of Budgetary Resources by reporting the differences 

and reconciling the two statements. This reconciliation ensures that the 

proprietary and budgetary accounts in the financial management system are in 

balance. The Statement of Financing reconciles budgetary obligations incurred of 

$205 million to the net cost of operations of $ .07 million by adding nonbudgetary 

resources, and deducting costs not requiring resources and financing sources yet 

to be provided. 

33 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Analysis of the Statement of Custodial Activity 

The Statement of Custodial Activity displays the total Custodial Revenue Activity 

of another entity and the Disposition of Collections related to that revenue 

activity. This statement ensures the proper revenue of another agency is not 

reported on the Commission’s Statement of Net Cost so the revenue will not be 

reported twice. In FY 2004, the Commission reported $ 23.9 in custodial activity 

compared to $ 36.6 in FY 2003. This decrease is primarily a result of a $20 

million dollar civil penalty issued in FY 2003. 

Controls, Systems, and Legal Compliance 

This section provides information on the Commission's compliance with the: 

< Federal Managers' Financial Integrity Act of 1982; 

< Federal Financial Management Improvement Act of 1996; 

< Prompt Payment Act; and 

< Debt Collection Improvement Act of 1996 

Federal Managers' Financial Integrity Act. The Federal Managers' Financial 

Integrity Act of 1982 (Integrity Act) mandates that agencies establish controls 

that reasonably ensure that: (i) obligations and costs comply with applicable law; 

(ii) assets are safeguarded against waste, loss, unauthorized use, or 

misappropriation; and (iii) revenues and expenditures are properly recorded and 

accounted for. This act encompasses program, operational, and administrative 

areas as well as accounting and financial management. The act requires the 

Chairman to provide an assurance statement on the adequacy of management 

controls and conformance of financial systems with Government wide standards. 

34 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Integrity Act Statement

 During fiscal year 2004, the Commission responded to the challenge of a changing 

energy industry as it becomes more competitive. Our strategic plan contains four 

primary Commission goals which reflect the Commission’s vision of “dependable, 

affordable energy through sustained competitive markets.” We are progressing on each 

goal and are tracking our achievements so that the real benefits of competition to 

consumers and the industry are not delayed. Our goals are: (1) Promote a secure, high 

quality, environmentally responsible infrastructure through consistent policies; (2) 

Foster nationwide competitive energy markets as a substitute for traditional regulation; 

(3) Protect customers and market participants through vigilant and fair oversight of the 

transitioning energy markets; and (4) Strategically manage agency resources. 

 To accomplish our goals, we must manage our resources efficiently and integrate our 

budget, business plan, performance measures, and management controls to improve 

performance and accountability. We have developed a business plan that outlines 

detailed objectives and resources for each goal and through this plan we track our 

progress. Problems that impede our progress continue to be brought to the attention of 

management and resolved within the Commission at the appropriate level. The auditors’ 

FY 2003 report on the Commission’s internal control structure disclosed no material 

weaknesses or reportable conditions and no instances of noncompliance with laws and 

regulations. We will continue to maintain a strong management control system. 

Pat Wood, III 

Chairman 

Federal Energy Regulatory Commission 

September 10, 2004

Management Control Review Program 

Managers throughout the Commission are responsible for ensuring that effective 

controls are implemented in their areas of responsibilities. Each office director 

and regional administrator prepared an annual assurance statement that identified 

any control weaknesses that required the attention of the Chairman. These 

statements were based on various sources and included: 

< Management knowledge gained from the daily operation of agency 

programs and reviews; 

< Management reviews; 

< Annual performance plans; and, 

< Inspector General and Government Accountability Office reports. 

The Commission's ongoing management control program requires, among other 

things, that management control deficiencies be integrated into office action 

plans. The action plan process has provisions for periodic updates and for 

attention from senior managers. The management control information in these 

plans, combined with the individual assurance statements discussed previously, 

35 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

provides the framework for monitoring and improving the agency's management 

controls on an ongoing basis. 

FY 2004 Integrity Act Results 

The Commission evaluated its management control systems for the fiscal year 

ending September 30, 2004. This evaluation provided reasonable assurance that 

the Commission’s management controls achieved their intended objectives. As a 

result, management concluded that the Commission did not have any material 

weaknesses in its programmatic or administrative activities. 

Federal Financial Management Improvement Act. The Federal Financial 

Management Improvement Act of 1996 (Improvement Act) requires each agency 

to implement and maintain systems that comply substantially with: (i) Federal 

financial management system requirements, (ii) applicable Federal accounting 

standards, and (iii) the U.S. Government standard general ledger at the transaction 

level. The act requires the Chairman to determine whether the agency's financial 

management systems comply with the Improvement Act and to develop 

remediation plans for systems that do not comply. 

FY 2004 Improvement Act Results 

As of September 30, 2004, the Commission evaluated its financial management 

system to determine if it complied with applicable federal requirements and 

accounting standards required by the Improvement Act. We found that the 

Commission’s financial management system was in substantial compliance with 

the Federal financial management system requirements. In making this 

determination we undertook financial reporting tests of the system and reviewed 

entries at the transaction level, determined compliance with Federal requirements 

and accounting standards required by the Improvement Act. 

Prompt Payment. The Prompt Payment Act requires Federal agencies to make 

timely payments to vendors for supplies and services, to pay interest penalties 

when payments are made after the due date, and to take cash discounts when they 

are economically justified. For FY 2004, the Commission made 98% of its 

payments that were subject to the Prompt Payment Act on-time. In FY 2003, the 

Commission made over 99% of its payments that were subject to the Prompt 

Payment Act on-time. The Commission incurred $1,183 in interest penalties in 

FY 2004, which was an increase over the FY 2003 amount of $ 45. The agency 

made 99.9% of its vendor payments electronically. 

Debt Collection. The Debt Collection Improvement Act of 1996 was enacted to 

enhance the ability of the Federal Government to service and collect debts. The 

agency goal is to maintain the delinquent debt owed to the Commission at yearend at less than two percent of its current annual billings. Delinquent debt at the 

end of FY 2004 was $3.1 million and less than two percent of its current annual 

billings. The Commission continues to aggressively pursue the collection of

36 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

delinquent debt and continues to meet the requirement that all eligible delinquent 

debt over 180 days is referred to the U.S. Treasury for collection. 

Possible Future Effects of Existing Events and Conditions 

Certain hydroelectric licensees have filed appeals on two basic grounds. First, 

some licensees contend that the Commission uses flawed methodology to 

calculate the “other agency costs” (costs incurred by other federal agencies in 

administering Part I of the Federal Power Act) component of the licensees’ annual 

charges. Second, some licensees dispute the dollar amount of the annual charges 

assessed by the Commission. The combined liability of these appeals total $47.5 

million as of September 30, 2004; this amount is included herein as revenue 

collected under protest. If the licensees ultimately prevail in their claims against 

the Commission, then the Commission might be obligated to grant legal or 

equitable relief not only to all appellants, but also to all other similarly situated 

licensees. If the Commission loses any of these cases, it would be liable for the 

amount(s) of the judgment(s) rendered against it. However, this contingent 

liability is fully funded and therefore poses no adverse or material future effect on 

the Commission’s financial position. 

Limitations of the Financial Statements 

The financial statements have been prepared to report the financial position and 

results of operations of the FERC, pursuant to the requirements of 31 U.S.C. 

3515(b). While the statements have been prepared from the books and records of 

the FERC in accordance with accounting principles generally accepted in the 

United States of America for Federal entities and the formats prescribed by OMB, 

the statements are in addition to the financial reports used to monitor and control 

budgetary resources which are prepared from the same books and records. The 

statements should be read with the realization that they are for a component of the 

U.S. Government, a sovereign entity. One implication of this is that liabilities 

cannot be liquidated without legislation that provides resources to do so. 

37 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

This page intentionally left blank. 

38 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Financial 

Statements 

39 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

This page intentionally left blank. 

40 
41 

KPMG LLP 

2001 M Street, NW

Washington, DC 20036 

Independent Auditors’ Report 

The Federal Energy Regulatory Commission and the 

Inspector General, United States Department of Energy: 

We have audited the accompanying balance sheets of the Federal Energy Regulatory Commission 

(the Commission) as of September 30, 2004 and 2003, and the related statements of net cost, 

changes in net position, budgetary resources, financing, and custodial activities for the years then 

ended. The objective of our audits was to express an opinion on the fair presentation of these

financial statements. In connection with our audits, we also considered the Commission’s internal

control over financial reporting and tested the Commission’s compliance with certain provisions 

of applicable laws, regulations, and contracts that could have a direct and material effect on its 

financial statements. 

SUMMARY 

As stated in our opinion on the financial statements, we concluded that the Commission’s 

financial statements as of and for the years ended September 30, 2004 and 2003 are presented 

fairly, in all material respects, in conformity with accounting principles generally accepted in the

United States of America. 

As discussed in Note 14 to the financial statements, the Commission restated the fiscal year 2003 

statements of budgetary resources and financing. 

Our consideration of internal control over financial reporting would not necessarily disclose all 

matters in the internal control over financial reporting that might be material weaknesses under 

standards issued by the American Institute of Certified Public Accountants. However, we noted 

no matters involving the internal control and its operation that we considered to be material 

weaknesses.

The results of our tests of compliance with certain provisions of laws, regulations, and contracts 

disclosed no instances of noncompliance or other matters that are required to be reported herein

under Government Auditing Standards, issued by the Comptroller General of the United States, or

Office of Management and Budget (OMB) Bulletin No. 01-02, Audit Requirements for Federal 

Financial Statements. 

KPMG LLP. KPMG LLP, a U.S. limited liability partnership, is

a member of KPMG International, a Swiss association.
42 

The following sections discuss our opinion on the Commission’s financial statements, our 

consideration of the Commission’s internal control over financial reporting, our tests of the 

Commission’s compliance with certain provisions of applicable laws, regulations, and contracts, 

and management’s and our responsibilities. 

OPINION ON THE FINANCIAL STATEMENTS 

We have audited the accompanying balance sheets of the Federal Energy Regulatory Commission 

as of September 30, 2004 and 2003, and the related statements of net cost, changes in net position, 

budgetary resources, financing, and custodial activity for the years then ended. 

In our opinion, the financial statements referred to above present fairly, in all material respects, 

the financial position of the Commission as of September 30, 2004 and 2003, and its net costs, 

changes in net position, budgetary resources, reconciliation of net costs to budgetary obligations, 

and custodial activities for the years then ended, in conformity with accounting principles 

generally accepted in the United States of America. 

As discussed in Note 14 to the financial statements, the Commission restated the fiscal year 2003 

statements of budgetary resources and financing. 

The information in the Management’s Discussion and Analysis and Note 15 to the financial 

statements is not a required part of the financial statements, but is supplementary information 

required by accounting principles generally accepted in the United States of America or OMB 

Bulletin No. 01-09, Form and Content of Agency Financial Statements. We have applied certain 

limited procedures, which consisted principally of inquiries of management regarding the methods 

of measurement and presentation of this information. However, we did not audit this information 

and, accordingly, we express no opinion on it. 

Our audits were conducted for the purpose of forming an opinion on the financial statements taken 

as a whole. The information in the Performance Report section and the Appendices is an integral 

part of the Commission’s Fiscal Year 2004 Performance and Accountability Report. However, 

this information is not a required part of the financial statements and is presented for purposes of 

additional analysis. This information has not been subjected to the auditing procedures applied in 

the audits of the financial statements and, accordingly, we express no opinion on it. 

INTERNAL CONTROL OVER FINANCIAL REPORTING

Our consideration of internal control over financial reporting would not necessarily disclose all 

matters in the internal control over financial reporting that might be material weaknesses under 

standards issued by the American Institute of Certified Public Accountants. Material weaknesses 

are conditions in which the design or operation of one or more of the internal control components 

does not reduce to a relatively low level the risk that misstatements, in amounts that would be 

material in relation to the financial statements being audited, may occur and not be detected 

within a timely period by employees in the normal course of performing their assigned functions. 

However, we noted no matters involving the internal control and its operation that we considered 

to be material weaknesses as defined above. 
43 

We did, however, note other matters involving internal control over financial reporting and its 

operation that we have reported to the management of the Commission in a separate letter dated 

February 4, 2005. 

COMPLIANCE AND OTHER MATTERS 

The results of our tests of compliance with certain provisions of laws, regulations, and contracts 

described in the Responsibilities section of this report, exclusive of those referred to in Federal 

Financial Management Improvement Act of 1996 (FFMIA), disclosed no instances of 

noncompliance or other matters that are required to be reported herein under Government Auditing 

Standards or OMB Bulletin No. 01-02.

The results of our tests of FFMIA disclosed no instances in which the Commission’s financial 

management systems did not substantially comply with the three requirements discussed in the 

Responsibilities section of this report. 

RESPONSIBILITIES 

Management’s Responsibilities

 

Management is responsible for the financial statements, including: 

 

• Preparing the financial statements in conformity with accounting principles generally accepted 

in the United States of America; 

• Establishing and maintaining internal controls over financial reporting, and preparing the 

Management’s Discussion and Analysis (including the performance measures) and Required 

Supplementary Information, and 

• Complying with laws, regulations, and contracts, including FFMIA. 

In fulfilling this responsibility, estimates and judgments by management are required to assess the 

expected benefits and related costs of internal control policies. Because of inherent limitations in 

internal control, misstatements, due to error or fraud, may nevertheless occur and not be detected. 

Auditors’ Responsibilities

Our responsibility is to express an opinion on the fiscal year 2004 and 2003 financial statements 

of the Commission based on our audits. We conducted our audits in accordance with auditing 

standards generally accepted in the United States of America, the standards applicable to financial 

audits contained in Government Auditing Standards, and OMB Bulletin No. 01-02. Those 

standards and OMB Bulletin No. 01-02 require that we plan and perform the audits to obtain 

reasonable assurance about whether the financial statements are free of material misstatement. 
44 

An audit includes: 

• Examining, on a test basis, evidence supporting the amounts and disclosures in the financial 

statements; 

• Assessing the accounting principles used and significant estimates made by management; and 

• Evaluating the overall financial statement presentation. 

We believe that our audits provide a reasonable basis for our opinion. 

In planning and performing our fiscal year 2004 audit, we considered the Commission’s internal 

control over financial reporting by obtaining an understanding of the Commission’s internal 

control, determining whether internal controls had been placed in operation, assessing control risk, 

and performing tests of controls in order to determine our auditing procedures for the purpose of 

expressing our opinion on the financial statements. We limited our internal control testing to those 

controls necessary to achieve the objectives described in Government Auditing Standards and 

OMB Bulletin No. 01-02. We did not test all internal controls relevant to operating objectives as 

broadly defined by the Federal Managers’ Financial Integrity Act of 1982. The objective of our 

audit was not to provide assurance on internal control over financial reporting. Consequently, we 

do not provide an opinion thereon. 

As required by OMB Bulletin No. 01-02 with respect to internal control related to performance 

measures determined by management to be key and reported in the Management’s Discussion and 

Analysis section, we obtained an understanding of the design of significant internal controls 

relating to the existence and completeness assertions. Our procedures were not designed to 

provide assurance on internal control over performance measures and, accordingly, we do not 

provide an opinion thereon. 

As part of obtaining reasonable assurance about whether the Commission’s fiscal year 2004 

financial statements are free of material misstatement, we performed tests of the Commission’s 

compliance with certain provisions of laws, regulations, and contracts, noncompliance with which 

could have a direct and material effect on the determination of financial statement amounts, and 

certain provisions of other laws and regulations specified in OMB Bulletin No. 01-02, including 

certain provisions referred to in FFMIA. We limited our tests of compliance to the provisions 

described in the preceding sentence, and we did not test compliance with all laws, regulations, and 

contracts applicable to the Commission. Providing an opinion on compliance with laws, 

regulations, and contracts was not an objective of our audit and, accordingly, we do not express 

such an opinion. 

Under OMB Bulletin No. 01-02 and FFMIA, we are required to report whether the Commission’s 

financial management systems substantially comply with (1) Federal financial management 

systems requirements, (2) applicable Federal accounting standards, and (3) the United States 

Government Standard General Ledger at the transaction level. To meet this requirement, we 

performed tests of compliance with FFMIA Section 803(a) requirements. 
45 

DISTRIBUTION

This report is intended for the information and use of the Commission’s management, the

Department of Energy’s Office of the Inspector General, OMB, the Government Accountability 

Office, and the U.S. Congress, and is not intended to be and should not be used by anyone other 

than these specified parties. 

February 4, 2005
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

2004 2003

Assets

Intragovernmental assets:

Fund balances with Treasury (note 4) $ 104,689,587 $ 87,704,134

Intragovernmental receivables (note 5) - 249,664

Total intragovernmental assets 104,689,587 87,953,798

Accounts receivable, net (note 5) 23,086,707 25,022,971

Due from regulated entities (note 6) 4,155,134 15,094,967

Property and equipment, net (note 7) 8,292,117 10,531,658

Other assets 28,425 2,048

Total assets $ 140,251,970 $ 138,605,442

Liabilities and net position

Intragovernmental liabilities:

Accounts payable $ 2,709,493 $ 1,489,726

Accrued payroll benefits 744,160 527,391

Resources transferable to Treasury and other

Federal entities (note 6) 17,320,540 40,238,611

Miscellaneous receipts transferable to Treasury 15,783 25,700

Workers' compensation payable (note 9) 568,456 521,508

Total intragovernmental liabilities 21,358,432 42,802,936

Accounts payable 6,411,849 6,408,615

Accrued payroll and benefits 4,102,110 4,406,338

Collections due to states 1,257 267,468

Revenue collected under protest (note 12) 45,034,808 48,477,802

Resources transferable to other entities from disgorged funds 28,416,937 -

Refunds and other amounts due 2,497,804 4,177,329

Accrued leave (note 9) 10,450,527 9,760,361

Advances from others - 29,855

Total liabilities 118,273,724 116,330,704

Commitments and contingencies (notes 8 and 12)

Net position:

Unexpended appropriations 17,482,193 14,802,030

Cumulative results of operations 4,496,053 7,472,708

Total net position 21,978,246 22,274,738

Total liabilities and net position $ 140,251,970 $ 138,605,442

The accompanying notes are an integral part of these statements

FEDERAL ENERGY REGULATORY COMMISSION

Balance Sheets

September 30, 2004 and 2003

46 
Federal Energy Re

FY 2004 Performance and A

FEDERAL ENERGY REGULATORY COMMISSION

Statements of Net Cost

Years ended September 30, 2004 and 2003

Total 

Costs:

Regulation:

Intragovernmental $ 35,522,400 $ 9,013,146 $ 8,482,961 $ 53,018,507 $ 32,837,214 $ 11,122,282 $ 

Public 107,217,145 27,204,350 25,604,094 160,025,589 92,637,712 31,377,290 

Total 142,739,545 36,217,496 34,087,055 213,044,096 125,474,926 42,499,572 

Less earned revenue – with the public 142,739,303 36,217,435 34,086,997 213,043,735 125,363,750 42,461,916 

Net program costs 242 61 58 361 111,176 37,656 

Other programs:

Intragovernmental 5,377 1,364 1,284 8,025 1,978 670 

Public 121,721 30,884 29,068 181,673 181,598 61,509 

Total 127,098 32,248 30,352 189,698 183,576 62,179 

Less earned revenue – intragovernmental 79,332 20,129 18,945 118,406 183,576 62,179 

Net other program costs 47,766 12,119 11,407 71,292 - - 

Total net cost of operations $ 48,008 $ 12,180 $ 11,465 $ 71,653 $ 111,176 $ 37,656 $ 

The accompanying notes are an integral part of these statements

2004 200

Competitive 

markets

Market

oversight

Energy 

infrastructure

Competitive 

markets

Energy

infrastructure

47 
Federal Energy Re

FY 2004 Performance and A

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Changes in Net Position

Years Ended September 30, 2004 and 2003

Beginning balances $ 7,472,708 $ 14,802,030 $ 11,466,

Budgetary financing sources:

Appropriations received - 204,400,000 

Appropriations used 201,656,613 (201,656,613) 188,825,

Unexpended appropriation – adjustment - (63,224) 

Other financing sources:

Transfers – out to Treasury without reimbursement (211,585,030) - (202,772,Imputed financing from costs absorbed by others 7,023,415 - 10,132,

Total financing sources (2,905,002) 2,680,163 (3,814,

Net cost of operations (71,653) - (179,

Ending balances $ 4,496,053 $ 17,482,193 $ 7,472,

The accompanying notes are an integral part of these statements

2004 

Cumulative res

of operation

Cumulative results 

of operation

Unexpended 

appropriations

48 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FEDERAL ENERGY REGULATORY COMMISSION

Statements of Budgetary Resources

Years Ended September 30, 2004 and 2003

2003

2004

(Restated - see 

note 14)

Budgetary resources:

Budget authority $ 2,928,592 $ 2,866,943

Unobligated balance, beginning of period 3,587,488 1,805,305

Spending authority from offsetting collections earned 204,400,000 192,000,000

Reimbursements and other collections earned 76,814 292,407

Total budgetary resources $ 210,992,894 $ 196,964,655

Status of budgetary resources:

Obligations incurred $ 204,744,433 $ 193,377,167

Unobligated balances available and apportioned 6,248,461 3,524,264

Unobligated balances – not available - 63,224

Total status of budgetary resources $ 210,992,894 $ 196,964,655

Relationship of obligations to outlays (inflows):

Obligated balance, net – beginning of period $ 24,212,895 $ 34,046,107

 204,744,433 193,377,167

 (204,476,814) (192,292,407)

Obligated balance, net – end of period (note 11) (25,161,699) (24,212,895)

Total outlays (inflows) $ (681,185) $ 10,917,972

Outlays (inflows):

Disbursements $ 203,919,415 $ 203,133,815

Collections (204,600,600) (192,215,843)

Total outlays (inflows) before offsetting receipts (681,185) 10,917,972

Less: offsetting receipts (14,704,360) (18,916,145)

Net inflows $ (15,385,545) $ (7,998,173)

The accompanying notes are an integral part of these statements

Obligations incurred

Spending authority from offsetting collections

49 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Financing

Years Ended September 30, 2004 and 2003

2003

2004

(Restated - see

note 14)

Resources used to finance activities:

Budgetary resources obligated:

Obligations incurred $ 204,744,433 $ 193,377,167

Less: spending authority from offsetting collections (204,476,814) (192,292,407)

Obligations, net of offsetting collections 267,619 1,084,760

Less: offsetting receipts (14,704,360) (18,916,145)

Net obligations (14,436,741) (17,831,385)

Other resources:

Transfers-out, net of appropriations received (7,185,030) (10,772,655)

Imputed financing from costs absorbed by others 7,023,415 10,132,936

Net other resources used to finance activities (161,615) (639,719)

Total resources used to finance activities (14,598,356) (18,471,104)

Resources used to finance items not part of the

net cost of operations

Change in budgetary resources obligated for

goods/services/benefits ordered but not yet provided 31,014 (1,505,058)

Resources that finance the acquisition of assets (188,748) (183,102)

Budgetary offsetting receipts that do not affect the net

cost of operations 14,704,360 18,916,145

Payments to States (2,991,816) (2,891,743)

Total resources used to finance items not part of the

net cost of operations 11,554,810 14,336,242

Total resources used to finance the net cost of operations (3,043,546) (4,134,862)

Components of the net cost of operations that will not

require or generate resources in the current period:

Components requiring or generating resources in the future periods –

increase in unfunded liabilities 737,113 321,132

Components not requiring or generating resources:

Depreciation and amortization 2,428,289 3,855,789

Other (50,203) 137,257

Total components of net cost of operations that will not 

require or generate resources 2,378,086 3,993,046

Total net cost of operations that do not require or

generate resources in the current period 3,115,199 4,314,178

Net cost of operations $ 71,653 $ 179,316

The accompanying notes are an integral part of these statements

50 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Custodial Activity

Years Ended September 30, 2004 and 2003

2004 2003

Sources of collections:

Cash collections – annual charges $ 28,198,826 $ 20,645,218

Accrual adjustment (4,256,613) 15,924,643

Total custodial revenue 23,942,213 36,569,861

Disposition of collections:

Transferred to others:

United States Army – Corps of Engineers (6,627,009) (7,164,221)

Department of Interior (6,338,461) (5,991,877)

United States Treasury (12,261,615) (4,813,878)

Various states (2,993,073) (2,891,743)

Decrease (increase) in amounts to be transferred 4,277,945 (15,708,142)

Net custodial activities $ - $ -

The accompanying notes are an integral part of these statements

51 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FEDERAL ENERGY REGULATORY COMMISSION

Notes to Financial Statements 

September 30, 2004 and 2003 

(1) Description of Reporting Entity 

The Federal Energy Regulatory Commission (the Commission) is an independent federal agency that 

oversees key operating functions of the United States’ natural gas and oil pipeline transportation, 

electric utility, and hydroelectric power industries. 

The Commission was created through the Department of Energy’s (DOE) Organization Act on 

October 1, 1977. The Commission’s predecessor, the Federal Power Commission (FPC), established in

1920, was abolished, and the Commission inherited a significant portion of FPC’s energy agenda. 

The Commission administers laws and regulations involving key energy issues. These include 

transportation and sale of natural gas and oil in interstate commerce; regulation of electric utility

wholesale rates and transactions; licensing and inspection of private, municipal, and state hydroelectric

projects; and oversight of related environmental matters. 

The Commission’s main legal authority is derived from the Federal Power Act of 1935 (FPA), the 

Natural Gas Act of 1938, the Natural Gas Policy Act of 1978, and the Public Utility Regulatory

Policies Act of 1978. 

The Commission’s activities are separated into the following three segments. 

Energy Infrastructure 

The Commission’s overall objective is to encourage investment in the infrastructure needed to 

sustain energy markets by removing roadblocks, providing cost recovery clarity and welcoming

innovative thinking about rates and use of new technology. By focusing on infrastructure, this 

segment covers many of the Commission’s important traditional activities, for example, pipeline 

certificates, hydropower licenses and preliminary permits, compliance activities, environmental

and other licensing conditions, dam safety inspections and most rate determinations. 

Competitive Markets 

Another Commission objective is to complete the transition to competitive energy markets as 

quickly and comprehensively as possible. This requires the growth of certain new institutions, 

particularly clearly defined and independent regional transmission organizations (RTOs), to 

make electric markets work. The Commission also needs to establish balanced, self-enforcing 

market rules in wholesale electric markets, and encourage continued efforts by industry groupsto 

standardize reliability and business practice standards, promote the use of demand-side 

participation in energy markets, and establish regional transmission planning. Along with some

traditional work in the area of rate determinations, this segment includes work on initiatives 

begun in the last couple of years such as RTOs and new policies for natural gas. 

Market Oversight 

The Commission also needs to ensure that competitive energy markets benefit the Nation over 

the long run. The Commission must offer the public and market participants credible assurance 

that the Commission will identify and remedy energy market problems to maintain just and 

reasonable rates. At the systemic level, the Commission needs to recognize problems when or 

before they develop and craft solutions quickly. The Commission must be able to police 

52 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

individual behavior in markets much more effectively than in the past. Work in this segment 

includes activities related to litigation, dispute resolution, complaints, mergers and auditing. 

Cost Recovery 

As described below, the Commission recovers 100% of its annual appropriation from the U.S. Treasury

(the Treasury) through annual charges and filing fees authorized by the Omnibus Budget Reconciliation 

Act of 1986 and other laws. 

Annual Charges 

The Commission recovers most of its administrative program costs through allocated annual charges to 

the entities it regulates, regardless of the number or type of services rendered to any particular entity

during the year. The annual charge assessed in a fiscal year is based on an estimate of costs to be 

incurred during that year. Final program costs are determined from year-end accounting reports and 

time distribution reports by office and program. The difference in assessments that results from

estimated versus final program costs is an adjustment to the following fiscal year’s assessments. 

The authority and related implementation methods for the annual changes are summarized as follows: 

Hydropower 

Authority – Section 10(e) of FPA makes the general provision that licensees under Part I of FPA 

shall pay reasonable annual charges to compensate the federal government for the costs of 

administering Part I. 

Implementation – The methods for assessing annual charges to hydropower licensees are codified

at 18 Code of Federal Regulations (C.F.R.) Part 11. Costs are prorated based on capacity

(municipal projects), on capacity and generation (nonmunicipal projects), or on a flat rate per 

horsepower under 1,000 (minor projects). 

Gas, Electric, and Oil 

Authority – Section 3401 of the Omnibus Budget Reconciliation Act of 1986 provides that the 

Commission shall “assess and collect fees and annual charges in any fiscal year in amounts equal 

to all of the costs incurred by the Commission in that fiscal year.” It further provides that “fees or 

annual charges assessed shall be computed on the basis of methods that the Commission 

determines, by rule, to be fair and equitable.” 

Implementation – The methods for assessing annual charges to gas and oil pipelines and to 

electric utilities and power marketing administrations are codified at 18 C.F.R. 

Parts 382.201-203. Costs are prorated to gas pipelines based on volume transported and sold, to 

electric utilities and power marketing administrations based on energy sold, and to oil pipelines 

based on operating revenues. 

Filing Fees 

Filing fees are calculated annually. Regulated entities pay the current fee when filing with the 

Commission for a specific service. The fees are based on the average time spent to perform the 

particular type of service and the average cost per employee, including salary, benefits, and indirect 

costs. Fee structure and procedures are codified in 18 C.F.R. Part 381. 

The Independent Offices Appropriations Act of 1952 (IOAA) authorizes agencies to prescribe 

regulations establishing charges for services, benefits, or items of value provided by an agency. In 

establishing a fee under the IOAA, the Commission must: 

53 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

• Identify the service for which the fee is to be assessed; 

• Explain why that particular service benefits an identifiable recipient more than it benefits 

the general public; 

• Base the fee on as small a category of service as possible; and 

• Demonstrate what direct and indirect costs are incurred by the Commission in rendering 

the service. 

Section 3401 of the Omnibus Budget Reconciliation Act of 1986 also provides for fees and annual 

charges “computed on the basis of methods that the Commission determines, by rule, to be fair and 

equitable.” 

(2) Summary of Significant Accounting Policies 

(a) Basis of Presentation 

The accompanying financial statements have been prepared to report the financial position of the 

Commission and its net costs, changes in net position, budgetary resources, reconciliation of net

costs to budgetary obligations, and custodial activity in accordance with accounting principles 

generally accepted in the United States of America applicable to federal government entities. 

These financial statements have also been prepared in accordance with the form and content for 

financial statements specified by Office of Management and Budget (OMB) in Bulletin No. 01-

09, Form and Content of Agency Financial Statements.

The financial statements include all activity related to the Commission’s portion of appropriation 

(89X0212), including the budget authority allotted by DOE to other DOE agencies. In addition, 

the Commission receives small allotments from DOE appropriation (89X5105). Both of the 

Commission’s appropriations relate to budget functional classification code 276, Energy

Information Policy and Regulation. 

Entity assets disclosed in notes 3 and 5 include those assets that the Commission has the 

authority to use in its operations. 

Non-entity assets disclosed in notes 3 and 5 include those assets that result from the 

Commission’s custodial billing activities for other federal agencies, including the Army Corps of 

Engineers, the Department of Treasury and the Department of Interior. 

(b) Budgets and Budgetary Accounting 

Congress annually adopts a budget appropriation that provides the Commission with authority to 

use funds from the Treasury to meet its operating and capital expenditure requirements. The 

appropriated funds are not restricted to use in a specific fiscal year. All revenue from annual 

charges and filing fees is remitted to the Treasury when received. 

(c) Basis of Accounting 

The Commission’s financial statements are prepared using the accrual method of accounting. The 

accrual method of accounting requires recognition of the financial effects of transactions, events, 

and circumstances in the period(s) when those transactions, events, and circumstances occur, 

regardless of when cash is received or paid. The Commission also uses budgetary accounting to 

54 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

facilitate compliance with legal constraints and to monitor its budget authority at the various 

stages of execution, including allotment, obligation, and eventual outlay.

(d) Revenue and Financing Sources 

As described above, the Commission receives funds for its operating and capital expenditures 

through an appropriation allotment from DOE. For financial statement purposes, the 

appropriation allotment is recognized as a financing source when operating expenses (primarily

salaries and benefits), other than depreciation, are incurred and when capital assets are purchased. 

The Commission recognizes revenue for hydropower, gas, oil, and electric annual charges when

earned. Annual charges are based on estimated current year program costs and adjustmentsfrom

the prior year. At year-end, the Commission records a due from or to regulated entities to reflect 

the difference between the charges and the actual program costs for the year. The Commission 

adjusts the subsequent year’s charge for such amount. Revenue is recognized for filing fees when 

received. 

The Commission recognizes an imputed financing source for the estimated annual pension and 

life and health insurance costs in excess of contributions made by the Commission during the 

year. These costs will ultimately be funded by the Office of Personnel Management. 

Reimbursable work agreement revenue, included in other programs’ earned revenue, is 

recognized when the related services are rendered. 

Transfers-out represent receipts collected and remitted to the Treasury during the year and net 

accounts receivable that, once collected, will be returned to the Treasury, less any amounts due to 

regulated entities for the excess of estimated and billed costs over actual costs incurred. 

 (e) Fund Balances with Treasury 

The Commission does not maintain cash in commercial bank accounts. Cash receipts and 

disbursements are processed by the Treasury. The balance of funds with the Treasury represents

appropriated funds that are available to pay current liabilities and finance authorized purchase 

commitments relative to goods or services that have not been received. 

 (f) Allowance for Doubtful Accounts 

The Commission calculates its allowance for doubtful accounts using historical collection data 

and specific account analysis. 

 (g) Property and Equipment 

Property and equipment are stated at cost less accumulated depreciation. The Commission 

capitalizes property (other than furniture) and equipment purchases with a cost greater than 

$25,000 and a total useful life exceeding two years. The Commission capitalizes furniture 

purchases with a cost greater than $50,000, and commercially purchased or developed software 

with a cost greater than $25,000. Depreciation is calculated based on an estimated useful life of 

20 years for leasehold improvements, 10 years for furniture, 2 to 5 years for commercially

purchased or developed software, and 5 years for all remaining assets. Expenditures for repairs 

and maintenance are charged to program costs as incurred. 

55 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

 (h) Liabilities 

Liabilities represent amounts owed by the Commission as the result of transactions or events that

have occurred as of year-end. Liabilities for which Congress has not appropriated funds are 

disclosed in note 9 as liabilities not covered by budgetary resources. 

 (i) Revenue Collected Under Protest 

Revenue collected under protest is deferred and recorded as a liability until the protest is 

resolved. 

 (j) Collections Due to States 

The Commission disburses 50% of the fees it collects from licensees for the occupancy and use 

of public lands to affected states in the year following collection. These collections are initially

deposited into the Treasury’s miscellaneous receipts fund. 

 (k) Accrued Leave 

Annual leave is accrued as a liability as it is earned. The accrual is reduced as leave is taken. 

Each year, the balance in the accrued annual leave account is adjusted to reflect current year pay

rates. To the extent that the current or prior year appropriations are not available to fund annual 

leave earned but not taken, funding will be obtained from future appropriations. Sick leave and 

other types of nonvested leave are charged to expense as the leave is used. 

 (l) Workers’ Compensation Payable 

The Federal Employees Compensation Act (FECA) provides income and medical cost protection

to cover federal civilian employees injured on the job, employees who have incurred a workrelated occupational disease and beneficiaries of employees whose death is attributable to a jobrelated injury or occupational disease. Claims incurred for benefits for the Commission’s 

employees under FECA are administered by the Department of Labor (DOL) and are ultimately

paid by the Commission. The workers’ compensation payable represents unpaid billings to DOL.

An actuarial estimate of unbilled claims is recorded by DOE at the departmental level and was 

not separately calculated for the Commission. 

(m) Disgorged Funds 

The Commission seeks to detect abuses of market power or statutory or rule violations by

investigating observed market anomalies, complaints, and referrals from regional transmission 

organizations and/or independent system operators, and by conducting both targeted and random

audits. Once the Commission identifies violations, it applies remedies to mitigate the effects of 

market power, requires disgorgement of unjust profits where appropriate, and imposes civil 

penalties or other sanctions when available under existing laws. 

(n) Net Position Accounts 

Net position account balances consist of the following components: 

Unexpended appropriations – Represents amounts of spending authority that are 

unobligated and available to the Commission, or obligated but not expended. 

Cumulative results of operations – Represents the Commission’s net results of operations 

since inception, including (1) the amount in the Special Receipts Fund Balance with 

Treasury, (2) the cost of property and equipment acquired that has been financed by

56 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

appropriations, less accumulated depreciation, and (3) the amount of appropriated funding 

that will be needed in future periods to liquidate liabilities incurred through the current 

fiscal year. Funding for these items is generally received in the year that amounts become

due and payable. 

(o) Classification of Costs 

On the Statement of Net Cost, costs classified as “Intragovernmental” represent the cost of goods 

or services obtained from Federal entities. Costs classified as “Public” represent the cost of 

goods or services obtained from non-Federal entities. 

(p) Tax Status 

The Commission, as a Federal agency, is not subject to Federal, state, or local income taxes, and 

accordingly, no provision for income tax is recorded. 

(q) Use of Estimates 

The preparation of financial statements in conformity with accounting principles generally

accepted in the United States of America requires management to make estimates and 

assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 

assets and liabilities at the date of the financial statements, and the reported amounts of revenues

and expenses during the reporting period. Actual results could differ from these estimates. 

(r) Comparative Data 

Certain FY 2003 amounts have been reclassified to conform to the FY 2004 presentation. In 

addition, adjustments identified in FY 2004 resulted in the restatement of several FY 2003 

reported amounts (see note 14). 

(3) Non-Entity Assets 

Non-entity assets at September 30, 2004 and 2003 consisted of: 

2004 2003

Fund balances with Treasury:

Appropriated fund balance with Treasury $ - $ 63,223

Collections due to states 1,257 210,327

Disgorged funds 18,399,845 -

Special receipts fund 7,222,919 7,222,919

Receipts held to pay refunds and other amounts due 2,497,804 4,177,329

 Other 122,793 25,700

Accounts receivable, net 22,254,689 16,559,936

Total non-entity assets 50,499,307 28,259,434

Total entity assets 89,752,663 110,346,008

Total assets $ 140,251,970 $ 138,605,442

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

(4) Fund Balances with Treasury 

Fund balances with Treasury at September 30, 2004 and 2003 consisted of: 

2004 2003

Fund balances:

Appropriated funds $ 31,410,161 $ 27,590,057

Revenue collected under protest 45,034,808 48,477,802

Disgorged funds 18,399,845 -

Special receipts fund 7,222,919 7,222,919

Other 2,621,854 4,413,356

Total $ 104,689,587 $ 87,704,134

Unobligated balance:

Available $ 6,248,461 $ 3,524,264

Unavailable 73,279,427 59,966,975

Obligated balance not yet disbursed 25,161,699 24,212,895

Total $ 104,689,587 $ 87,704,134

(5) Accounts Receivable 

Entity and nonentity accounts receivable at September 30, 2004 and 2003 consisted of: 

Annual 

charges

(note 6) Other Total 

Entity

Uncollected billings $ 6,990,365 $ 22,343 $ 7,012,708

Allowance for doubtful accounts (6,169,717) (10,973) (6,180,690)

Total entity accounts receivable, net 820,648 11,370 832,018

Nonentity

Uncollected billings 14,389,068 42,596,266 56,985,334

Allowance for doubtful accounts (2,169,205) (32,561,440) (34,730,645)

Total nonentity accounts receivable, net 12,219,863 10,034,826 22,254,689

Total accounts receivable, net $ 13,040,511 $ 10,046,196 $ 23,086,707

2004

58 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Annual

charges 

(note 6) Other Total 

Entity

Uncollected billings $ 13,516,825 $ 99,646 $ 13,616,471

Allowance for doubtful accounts (4,875,976) (27,796) (4,903,772)

Total entity accounts receivable, net 8,640,849 71,850 8,712,699

Nonentity

Uncollected billings 18,543,962 253,962 18,797,924

Allowance for doubtful accounts (2,171,280) (66,708) (2,237,988)

Total nonentity accounts receivable, net 16,372,682 187,254 16,559,936

Total accounts receivable, net $ 25,013,531 $ 259,104 $ 25,272,635

2003

(6) Resources Transferable to Treasury and Other Federal Entities 

Resources transferable to Treasury and other entities at September 30, 2004 and 2003 consist of: 

2004 2003

Net accounts receivable, related to annual charges (note 5) $ 13,040,511 $ 25,013,531

Due from regulated entities 4,155,134 15,094,967

Accounts receivable and amounts due from regulated 

entities transferable to Treasury 17,195,645 40,108,498

Net accounts receivable transferable to other Federal entities 124,895 130,113

Total resources transferable to Treasury

and other Federal entities $ 17,320,540 $ 40,238,611

(7) Property and Equipment, Net 

Property and equipment and related accumulated depreciation at September 30, 2004 and 2003 

consisted of: 

Acquisition Accumulated

amount depreciation Net

Equipment $ 5,074,381 $ 3,770,729 $ 1,303,652

Furniture 9,070,773 8,025,742 1,045,031

Leasehold improvements 9,491,415 4,231,828 5,259,587

Software 11,321,496 10,637,649 683,847

Total $ 34,958,065 $ 26,665,948 $ 8,292,117

2004

59 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Acquisition Accumulated

amount depreciation Net

Equipment $ 4,885,633 $ 3,375,716 $ 1,509,917

Furniture 9,070,773 7,118,665 1,952,108

Leasehold improvements 9,491,415 3,757,257 5,734,158

Software 11,321,496 9,986,021 1,335,475

Total $ 34,769,317 $ 24,237,659 $ 10,531,658

2003

(8) Building Leases 

The General Services Administration (GSA) enters into lease agreements for government buildings and

maintains those lease agreements. The Commission pays GSA a standard level users charge for the 

annual rental of building space. The standard level users charge approximates the commercial rental 

rates for similar properties. The Commission is not legally a party to any building lease agreements; 

therefore, the Commission does not disclose future minimum lease payments on buildings. Expenses 

incurred for building leases amounted to $19.5 million and $18.5 million for fiscal years ended 

September 30, 2004 and 2003, respectively.

(9) Liabilities Not Covered by Budgetary Resources 

Liabilities not covered by budgetary resources at September 30, 2004 and 2003 consisted of: 

2004 2003

Intragovernmental — workers’ compensation payable $ 568,456 $ 521,508 

Accrued leave 10,450,527 9,760,361 

Total $ 11,018,983 $ 10,281,869 

(10) Pension Expense 

Commission employees participate in either the Civil Service Retirement System (CSRS) or the Federal 

Employees’ Retirement System (FERS). Employees participating in CSRS contribute 7% of their basic

pay to the plan, and the Commission makes a matching contribution. For employees participating in 

the FERS program, the Commission makes a contribution of 10.7% of basic pay.

On January 1, 1987, FERS went into effect pursuant to Public Law 99-335. Most employees hired after

December 31, 1983, are automatically covered by FERS and Social Security. Employees hired prior to

January 1, 1984, could elect either to join FERS and Social Security or remain in CSRS. FERS offers a

savings plan in which the Commission automatically contributes 1% of employees’ basic pay and 

matches any employee contribution up to an additional 4% of basic pay. For most employees hired 

since December 31, 1983, the Commission also contributes the employer’s matching share for Social 

Security. 

The actuarial present value of accumulated benefits, assets available for benefits, and unfunded pension 

liability of CSRS and FERS is not allocated to individual departments and agencies and is therefore not

disclosed by the Commission. Total pension expense paid by the Commission for both plans for fiscal 

years 2004 and 2003 was approximately $10.0 million and $9.9 million, respectively. During fiscal 

years 2004 and 2003, an additional $7.0 million and $10.1 million, respectively, of pension and life and 

health insurance expense was recognized by the Commission for amounts that will ultimately be funded 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

through the Office of Personnel Management. This amount is also recorded as an imputed financing 

source. 

(11) Statement of Budgetary Resources 

The obligated balance, net – end of period at September 30, 2004 and 2003 is comprised of the 

following components: 

2004 2003

Accounts receivable $ - $ (110,834)

Unfilled customer orders from Federal sources (100,140) (113,092)

Undelivered orders 11,294,227 11,394,424

Accounts payable 13,967,612 13,042,397

Total obligated balance, net – end of period $ 25,161,699 $ 24,212,895

(12) Contingencies 

Certain hydroelectric licensees have filed appeals on two basic grounds. First, some licensees contend 

that the Commission uses flawed methodology to calculate the “other agency costs” (costs incurred by 

other federal agencies in administering Part I of the FPA component of the licensees’ annual charges. 

Second, some licensees dispute the dollar amount of the annual charges assessed by the Commission. 

The combined liability of these appeals total $45.035 million and $48.478 million as of September 30, 

2004 and 2003, respectively; those amounts are included herein as revenue collected under protest. If 

the licensees ultimately prevail in their claims against the Commission, then the Commission might be

obligated to grant legal or equitable relief not only to all appellants, but also to all other similarly

situated licensees. 

In addition, the Commission has two cases pending in the United States District Court for the District of 

Columbia and two cases pending at the Equal Employment Opportunity Commission. If the 

Commission loses any of these cases, it would be liable for the amount(s) of the judgment(s) rendered 

against it. Related losses cannot be estimated at this time. 

(13) Custodial Activity 

The Commission currently bills regulated companies annual charges as a custodian for certain Federal

agencies, including the Army Corps of Engineers, the Department of Interior’s Bureau of Reclamation, 

and the Department of Treasury. The receivables are maintained by the Commission, and the 

collections are processed directly to each Federal agency on a monthly basis. In addition to the annual 

charges billed yearly, penalty and administrative costs are assessed on past-due bills and remitted to the 

Treasury when received. For fiscal years 2004 and 2003, these custodial transactions totaled 

approximately $23.9 million and $36.6 million, respectively. In 2003, the Commission issued a 

significant civil penalty against one of its regulated companions that is still largely uncollected. Upon 

collection the money will be remitted to Treasury. 

(14) Restatement 

Federal reporting standards require that “offsetting receipts” be disclosed as a reduction to outlays on 

the Statement of Budgetary Resources. In fiscal year 2003, the Commission collected and reported to 

Treasury offsetting receipts of $18.9 million comprised largely of annual charges and filing fees 

collected during fiscal year 2003 (see note 1). The Commission, however, did not report these 

offsetting receipts on its Statement of Budgetary Resources or its Statement of Financing for the year 

ended September 30, 2003. 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

As a consequence, the Commission’s total net outlays reported for the year ended September 30, 2003 

were overstated by $18.9 million. Furthermore, the Commission’s Resources Used to Finance 

Activities and the Resources Used to Finance Items Not Part of the Net Cost of Operations sections of 

its fiscal year 2003 Statement of Financing were overstated and understated, respectively, by the same 

amount, resulting in a net effect of zero on the Statement of Financing. Accordingly, the Commission 

has restated the Statement of Budgetary Resources and the Statement of Financing for the year ended 

September 30, 2003. 

Balance

(as restated)

Statement of Budgetary Resources

 Relationship of obligations to outlays (inflows)

Outlays (inflows):

Disbursements $ 203,133,815 $ - $ 203,133,815

Collections (192,215,843) - (192,215,843)

Total outlays (inflows) before offsetting receipts 10,917,972 - 10,917,972

Less: offsetting receipts - (18,916,145) (18,916,145)

Net outlays (inflows) $ 10,917,972 $ (18,916,145) $ (7,998,173)

Statement of Financing

Resources used to finance activities

Budgetary resources obligated:

 Obligations incurred $ 193,377,167 $ 193,377,167

 Less: spending authority from offsetting collections (192,292,407) (192,292,407)

 Obligations, net of offsetting collections 1,084,760 1,084,760

 Less: offsetting receipts - (18,916,145) (18,916,145)

 Net obligations 1,084,760 (18,916,145) (17,831,385)

Other resources:

 Transfers-out, net of appropriations received (10,772,655) (10,772,655)

 Imputed financing from costs absorbed by others 10,132,936 10,132,936

 Net other resources used to finance activities (639,719) - (639,719)

 Total resources used to finance activities 445,041 (18,916,145) (18,471,104)

Resources used to finance items not part of the net cost of operations

Change in budgetary resources obligated for 

 goods/services/benefits ordered but not yet provided (1,505,058) (1,505,058)

Resources that finance the acquisition of assets (183,102) (183,102)

Budgetary offsetting receipts that do not affect the net cost

 of operations 18,916,145 18,916,145

Payments to States (2,891,743) (2,891,743)

 Total resources used to finance items not part of the net

 cost of operations (4,579,903) 18,916,145 14,336,242

 Total resources used to finance the net cost of operations $ (4,134,862) $ - $ (4,134,862)

Restatement

Balance as

reported in the

FY 2003 

financial

Financial Statements statements

62 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

(15) Required Supplementary Information – Intragovernmental Balances (Unaudited) 

Intragovernmental receivables at September 30, 2004 and 2003 consists of:

2004 2003

Department of Interior $ - $ 50,834

Nuclear Regulatory Commission - 60,000

United States Army – Corps of Engineers - 138,830

$ - $ 249,664

Intragovernmental accounts payable at September 30, 2004 and 2003 consists of: 

2004 2003

Government Printing Office $ 943,452 $ 570,536

General Services Administration 1,367,182 768,066

Veterans Administration 125,179 -

Office of Personnel Management 88,653 80,400

Department of Health and Human Services - 9,361

Department of Energy Washington Headquarters 185,027 61,363

$ 2,709,493 $ 1,489,726

Intragovernmental accrued payroll benefits at September 30, 2004 and 2003 consists of: 

2004 2003

Office of Personnel Management $ 545,952 $ 389,484 

Social Security Administration 198,208 137,907 

$ 744,160 $ 527,391 

Intragovernmental workers’ compensation payable at September 30, 2004 and 2003 totals $568,456 

and $521,508, respectively, and is due to the Department of Labor. 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Performance 

Report 

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FY 2004 Performance and Accountability Report 

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66 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Introduction 

In accordance with the Government Performance and Results Act of 1993 

(GPRA), the Commission developed its Strategic and Business Plans, as well as 

its performance measures, to ensure it is fulfilling its mission. When comparing 

the planned and actual performance according to the guidelines set forth in 

Section 230 of OMB Circular A-11, the Commission: 

• determined that its performance results are complete and reliable based on the 

fact that results are listed for every performance measure and target, that 

decision makers use the information contained in the results “on an ongoing 

basis in the normal course of their duties,” and that the information contained 

in the results are derived via internal tracking mechanisms. 

• identified no “significant or material” performance shortfalls based on the fact 

that none of the Commission’s unmet performance measures or targets had an 

adverse effect on overall program performance. 

• made no adjustments to its FY 2005 performance plan as a result of its FY 

2004 performance results. 

In addition to the FY 2004 performance results that were highlighted in the 

Management’s Discussion and Analysis, the tables on the following pages include 

the Commission’s complete performance measurement data for fiscal years 2001 

through 2005. 

67 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Performance Measurement Data for Energy Infrastructure (Goal 1)

FY 2001 

Performance Measurement Performance Target Result 

Percentage of cases completed in 

specified time 

82% of cases completed within specified 

time frames: 

3⁄4 Category 1 - Cases that involve no 

precedential issues and are unprotested, 

159 days; 

3⁄4 Category 2 - Cases that involve no 

precedential issues and are protested, 

304 days; and 

3⁄4 Category 3 - Cases of first impression 

or containing larger policy implications, 

365 days 

Number of days to complete 82% of the 

cases: 

3⁄4 Category 1 - 136 days; 

3⁄4 Category 2 - 200 days; and 

3⁄4 Category 3 - 277 days. 

Number of major onshore projects 

inspected at least every four weeks 

Inspect each major onshore project at 

least once every four weeks 

All six major onshore projects were 

inspected at least once every four weeks 

Percentage of hydropower licenses 

issued that contain adaptive 

management provisions 

5% increase over baseline 18% increase over baseline 

Percentage of filings containing some 

form of collaboration 5% increase over baseline 33% increase over baseline 

License processing time when prefiling 

collaboration occurred compared to 

license processing time when prefiling 

collaboration did not occur 

10% less processing time 63% less processing time 

Percentage of high- and significanthazard potential dams meeting all current 

structural safety standards 

90% of qualifying dams 

94% of high- and significant-hazard 

potential dams met all current structural 

safety standards 

Percentage of dams requiring EAPs that 

have tested, evaluated plans 99% of qualifying dams 99.9% of dams requiring EAPs had 

tested, evaluated plans 

Percentage of dams with EAPs that have 

acceptance and certification from 

licensees and emergency response 

agencies 

90% of qualifying dams 

100% of dams with EAPs had 

acceptance and certification from 

licensees and emergency response 

agencies 

FY 2002 

Performance Measurement Performance Target Result 

Percentage of cases completed in 

specified time 

85% of cases completed within specified 

time frames: 

3⁄4 cases that involve no precedential 

issues and are unprotected, 159 days; 

3⁄4 cases that involve no precedential 

issues and are protested, 304 days; and 

3⁄4 cases of first impression or containing 

larger policy implications, 365 days 

3⁄4 cases requiring a major environmental 

assessment or environmental impact 

statement, 480 days 

Number of days to complete 85% of the 

cases: 

3⁄4 119 days for Category 1 

3⁄4 188 days for Category 2 

3⁄4 293 days for Category 3 

3⁄4 475 days for Category 4 

Inspect each major onshore construction 

projects at least once every four weeks 

during construction and at least once 

after construction completion 

100% of qualifying projects inspected per 

established schedule 

All six major onshore projects were 

inspected at least once every four weeks 

Increase the percentage of licenses 

issued for applications using alternative 

licensing process (ALP) 

2% increase over FY 2001 9.4% increase over FY 2001

68 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2002 

Performance Measurement Performance Target Result 

Percentage of filings addressing the 

development of increased capacity

25% of all relicense cases using ALP or 

other collaborative process 

26% of licenses issued resulted in an 

increase in capacity; 27% of licenses 

issued based upon collaborative process 

(ALP) resulted in an increase in capacity

Percentage of high- and significanthazard potential dams meeting all current 

structural safety standards 

Percentage remains uniformly high 

94% of high- and significant-hazard 

potential dams met all current structural 

safety standards 

Conduct 5 site visits to evaluate 

effectiveness 

Conducted 5 site visits and evaluated the 

effectiveness of the targeted 

environmental mitigation measures 

Hold 2 regional meetings with 

stakeholders 

Held 3 outreach meetings, i.e., shoreline 

management workshop in August 2002, 

American Fisheries Society meeting in 

August 2002, and water quality workshop 

in September 2002 

Evaluate and improve effectiveness of 

required environmental enhancement 

and mitigation measures 

Initiate annual reports to evaluate the 

effectiveness of this effort 

Issued 2 reports titled “Mitigation 

Effectiveness Studies at the FERC; An 

Overview"; and “Mitigation Effectiveness 

Studies at the FERC: Draft Water Quality

Report.” 

Percentage of high- and significanthazard potential dams inspected annually100% of qualifying dams inspected 

annually

100% of high- and significant-hazard 

potential dams inspected in FY 2002

Percentage of high- and significanthazard potential dams in compliance with 

 emergency action plan requirements 

100% of qualifying dams in compliance 

100% of high- and significant hazard 

potential dams in compliance with 

emergency action plan requirements

Update and add new chapters to the 

Engineering Guidelines, as appropriate 

Complete revisions to Chapter 3 Gravity

Dams 

Chapter 3 – Gravity Dams and Chapter 8 

– Hydrology were completed

Complete development of the dam 

performance monitoring program 

Performance monitoring program 

established 

Performance monitoring program was 

established and a pilot program was 

implemented

FY 2003 

Performance Measurement Performance Target Result 

Percentage of natural gas pipelines with 

approved Order No. 637 compliance 

filings 

100% of pipelines subject to Order No. 

637 

By the end of FY 2003, the Commission 

issued orders approving and establishing 

effective dates for 92 out of a total 94 

(98%) pending Order No. 637 compliance 

filings. The two pipeline filings that were 

not completed were Northern Natural Gas 

Pipeline Company, Docket No. RP00-

404, and El Paso Natural Gas Co., 

Docket No. RP00-336. The Northern 

Natural Order is scheduled for the 

October 22, 2003 Commission agenda. 

Action on the Order No. 637 compliance 

issues in El Paso are delayed pending 

resolution of pre-existing capacity

allocation issues. Those allocation 

issues need to be resolved before the 

Commission can move forward on the 

Order No. 637 compliance issues. 

Statutory cases by workload category All cases competed by statutory action 

date 

Of the nearly 3,000 statutory items whose 

due date fell in FY 2003, 99.7% were 

completed by the statutory action date. 

69 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2003 

Performance Measurement Performance Target Result 

Merger and qualifying facilities (QF) 

workload (regulatory cases) 

80% of cases completed by regulatory

deadline 

Approximately 325 QF filings were 

received in FY 2003. Of these 325, 9 

filings were applications for Commission 

QF certification or re-certification. The 

Commission completed 100% of the 

applications for certification or recertification within 90 days specified in 

the Commission’s regulations (18 C.F.R. 

§ 202.207(b) (3) (2003)). Orders were 

issued in response to all 9 applications, 3 

of which were issued pursuant to 

delegated authority and 6 of which were 

Commission issued orders. No merger 

applications were received in FY 2003. 

Number of cases requiring additional 

remedial action 

Less than 20% of all cases processed in 

FY 2003 require additional remedial 

action 

The Commission received no merger 

applications in FY 2003; therefore, we

have no results to report for this 

performance measure. 

Timely processing of filings seeking 

recovery of security and safety expenses 

in jurisdictional rates 

Process filings: 

3⁄4 within 30 days for gas and oil rate 

filings 

3⁄4 within 60 days for electric filings 

The following filings were acted on in FY

2003: 

RP02-129-000, Southern LNG

Filed: December 21, 2001 

Order Issued: January 31, 2002 

(Suspension order setting case for 

hearing) 

Case settled: Letter order issued 

October 10, 2002, accepting a settlement 

and closing out the case. 

Target: While this case was not acted on 

within 30 days, action did meet our 

statutory guidelines as we acted prior to 

the proposed effective date of February

1, 2002. The suspension order was 

dated January 31, 2002; the case was 

settled in early FY 2003. 

IS03-457, Plantation Pipe Line Co.

Filed: July 31, 2003 

Order Issued: August 29, 2003 

Target: Met 

IS03-475, West Shore Pipe Line Co.

Filed: August 12, 2003 

Order Issued: September 30, 2003 

Target: While this case was not acted on 

within the 30-day target, it met our 

statutory guidelines as we acted prior to 

the proposed effective date of October 1, 

2003. 

Implement generic policy on Large 

Generator Interconnections and Small 

Generator Interconnections 

Issue final rules on both policies in FY

2003 

The Large Generator Interconnection 

final rule was issued on July 24, 2003, 

and became effective on October 20, 

2003. The Small Generator Notice of 

Proposed Rulemaking was also issued 

on July 24, 2003. The final rule will be 

issued in FY 2004. 

70 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2003 

Performance Measurement Performance Target Result 

Percentage of pipeline certificate cases 

completed in specified time frames 

85% of cases completed within the 

following time frames: 

3⁄4 unprotested cases that involve no 

precedential issues, 159 days 

3⁄4 protested cases that involve no 

precedential issues, 304 days 

3⁄4 cases of first impression or containing 

larger policy implications, 365 days 

3⁄4 cases requiring a major environmental 

assessment or environmental impact 

statement, 480 days 

3⁄4 148 days for Category 1 

3⁄4 193 days for Category 2 

3⁄4 272 days for Category 3 

3⁄4 469 days for Category 4 

Percentage of filings addressing the 

development of increased hydropower 

capacity

25% of all relicense cases using ALP 

29% of licenses issued based on the 

collaborative process resulted in an 

increase in capacity.

Increase non-federal hydropower 

capacity

Complete license amendments proposing 

increased capacity/generation in less 

than 12 months 

5 amendments authorizing an increase in 

capacity were processed in less than 8 

months. 

Percentage of hydropower licenses 

approved within specified time frames 

75% of licenses approved within the 

following time frames: 

3⁄4 ALP median case, less than 16 months 

3⁄4 Traditional median case, less than 43 

months 

3⁄4 100% of the ALP, or collaboratively

prepared license applications, were 

completed within 15 months when 

external factors (i.e., water quality

certificate, Coastal Zone Management 

reviews) did not delay processing. Of the 

pending cases in which collaboratively

prepared amendments to license 

applications were filed and were not 

delayed by external factors, 80% were 

completed within 16 months after receipt 

of the settlement. 

3⁄4 For traditionally prepared license 

applications for which no external factors 

contributed to the delay, 77% of the 

cases were processed in less than 43 

months. 

Inspect each major onshore pipeline 

project at least once every four weeks 

during ongoing construction activity

100% of qualifying projects inspected per 

established schedule 

All 7 major onshore pipeline projects 

were inspected at least once every 4 

weeks during ongoing construction 

activity. 

Increase the percentage of hydropower 

licenses issued using ALP 2% increase over FY 2002 13% increase over FY 2002 

Conduct 5 site visits 

Conducted 5 site visits and evaluated the 

effectiveness of the targeted 

environmental mitigation measures. 

Hold 2 regional meetings with 

stakeholders 

Held 3 regional outreach meetings with 

stakeholders, i.e., 2 shoreline 

management outreach meetings in 

Wisconsin and South Carolina, and a 

water quality mitigation effectiveness 

outreach meeting in New York. 

Evaluate and improve the effectiveness 

of required environmental enhancement 

and mitigation measures in hydropower 

licenses 

Disseminate 2 environmental 

effectiveness reports 

Disseminated 2 environmental 

effectiveness reports: “Mitigation 

Effectiveness Studies at the Federal 

Energy Regulatory Commission: Final 

Water Quality Report”; and “Mitigation 

Effectiveness Studies at the Federal 

Energy Regulatory Commission: Draft 

Fish Passage Report”. 

71 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2003 

Performance Measurement Performance Target Result 

Percentage of high- and significanthazard-potential dams inspected annually100% of high- and significant-hazardpotential dams inspected annually100% of high- and significant-hazardpotential dams were inspected. 

Percentage of high- and significanthazard-potential dams meeting all current 

structural safety standards 

Percentage of high- and significanthazard-potential dams meeting all current 

structural safety standards remains 

uniformly high 

95% of high- and significant-hazardpotential dams met all current structural 

safety standards 

Percentage of high- and significanthazard-potential dams in compliance with 

EAP requirements 

100% of qualifying dams in compliance 

with EAP requirements 

100% of qualifying dams were in 

compliance with EAP requirements 

Update and add new chapters to the 

Engineering Guidelines, as appropriate 

Issue new or revised Engineering 

Guidelines chapters, as appropriate 

Developed and issued a new Engineering 

Guidelines chapter on the Dam Safety

Performance Monitoring Program. 

FY 2004 

Performance Measurement Performance Target Result 

Inspect each major onshore pipeline 

project at least once every four weeks 

during ongoing construction activity

100% of qualifying projects inspected per 

established schedule 

All three major onshore projects were 

inspected at least once every four weeks. 

Percentage of relicense filings based 

upon ALP’s 25% of all relicense cases using ALP 45% of the relicense applications filed 

during FY2004 used ALP. 

Complete implementation process of 

Large Generator Interconnection Policies 

By year end, process 90% of all 

compliance tariff filings submitted by July

31 

89% of the 87 compliance tariff filings 

were completed by the end of FY 2004. 

The remainder involve cases where 

additional time was needed to evaluate 

protests and unique compliance issues, 

and will be completed by the end of first 

quarter of FY 2005. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Implement generic policy on Small 

Generator Interconnection Issue final rule 

Although the Commission expected to 

issue a final rule by the end of FY 2004, 

we delayed development and issuance in 

response to ongoing stakeholder activity

to reach a consensus on important 

technical and legal issues. The 

extension for stakeholders to submit 

additional comments will ensure broad 

industry consensus on the final rule. 

This, in turn, will speed the ability to 

implement the requirements of the final 

rule we now plan to issue in FY 2005. 

These procedures and agreements, when 

issued, will provide certainty about the 

costs market participants will bear and 

the terms and conditions that will affect 

interconnection to the electric 

transmission system thereby hastening 

the interconnection process. 

72 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2004 

Performance Measurement Performance Target Result 

Percentage of pipeline certificate cases 

completed in specified time frames 

85% of cases completed within the 

following time frames: 

3⁄4 unprotested cases that involve no 

precedential issues, 159 days 

3⁄4 protested cases that involve no 

precedential issues, 304 days 

3⁄4 cases of first impression or containing 

larger policy implications, 365 days 

3⁄4 cases requiring a major environmental 

assessment or environmental impact 

statement, 480 days 

85% of the cases were completed in: 

3⁄4 111 days for unprotested cases that 

involve no precedential issues; 

3⁄4 190 days for protested cases that 

involve no precedential issues; 

3⁄4 217 days for cases of first impression 

or containing larger policy implications; 

3⁄4 448 days for cases requiring a major 

environmental assessment or 

environmental impact statement. 

Percentage of final NEPA documents, 

required for hydropower license 

applications filed after FY 2002, 

completed within specified time frames 

75% of final NEPA documents prepared 

for licenses approved within the following 

time frames: 

3⁄4 ALP case, less than 16 months 

3⁄4 TLP case, less than 24 months 

3⁄4 83% of final NEPA documents were 

issued within 16 months of the date ALP 

license applications were deemed 

complete. 

3⁄4 100% of final NEPA documents were 

issued within 24 months of the date TLP 

license applications were deemed 

complete. 

Percent of final NEPA documents based 

upon comprehensive settlement 

agreements completed within specified 

time frames 

75% of final NEPA documents prepared 

for final comprehensive license 

settlement agreements are completed 

within 12 months 

100% of final NEPA documents were 

issued within 12 months of the date final 

settlement agreements were filed with the 

Commission. 

Statutory cases by workload category All cases competed by statutory action 

date 

Over 99.6% of the 2,900 statutory cases 

were completed by the required date. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Establish clear cost recovery process for

transmission investment in each region 

Allow flexibility to ensure utilities or

pipelines have sufficient revenue stream 

to recover investment costs and provide 

rate certainty for customers 

The Commission approved over 100 

applications, including 42 in the Western 

U.S. alone, that ensured rate recovery for 

utilities and provided additional rate 

certainty to customers. 

The Commission also approved 11 

applications filed under NGA section 311 

to establish rates for interstate gas 

transportation services provided over 

intrastate and Hinshaw pipeline systems 

and another 11 applications by Western 

U.S. interstate pipelines to establish rate 

recovery for additional gas infrastructure 

investment. 

 

In the liquefied natural gas (LNG) 

industry, the Commission provided 

significant investment recovery certainty

by issuing orders establishing initial rates 

for three proposed LNG import terminal 

facility projects: 

 3⁄4 Tractebel Calypso; 

 3⁄4 AES Ocean Express; and 

 3⁄4 Trunkline LNG. 

Process qualifying facilities workload 

(regulatory cases) 

100% of cases processed by regulatory

deadline 

100% of QF certification or re-certification 

applications were completed within the 

regulatory 90-day time frame prescribed 

in 18 CFR § 292.207(b)(3)(i). 

73 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2004 

Performance Measurement Performance Target Result 

Evaluate and improve the effectiveness 

of required environmental enhancement 

and mitigation measures in hydropower 

licenses 

3⁄4 Conduct 5 site visits 

3⁄4 Hold 2 outreach meetings with 

stakeholders 

3⁄4 Disseminate 2 environmental 

effectiveness reports 

3⁄4 100% completed 

3⁄4 100% completed 

3⁄4 Disseminated two reports 

Update and add new chapters to the 

Engineering Guidelines, as appropriate 

Issue new or revised Engineering 

Guidelines chapters, as appropriate 

Although no updates or new chapters 

were added, the Commission developed 

substantial portions of two new chapters 

that will be issued in FY 2005: 

 3⁄4 Seismicity; and 

 3⁄4 Penstock and Water Conveyance 

Facilities. 

Update the FERC Security Program for 

Hydropower projects as appropriate Make program changes as appropriate 

Although no security program changes 

were made, the Commission continued to 

coordinate with DHS and other Federal 

dam owners to ensure the adequacy of 

the current program. 

Percentage of high- and significanthazard-potential dams inspected annually100% of high- and significant-hazardpotential dams inspected annually100% of high- and significant-hazard 

potential dams were inspected. 

Percentage of high- and significanthazard-potential dams meeting all current 

structural safety standards 

Percentage of high- and significanthazard-potential dams meeting all current 

structural safety standards remains 

uniformly high 

95% of high- and significant-hazardpotential dams met all current structural 

safety standards. 

Percentage of high- and significanthazard-potential dams in compliance with 

EAP requirements 

100% of qualifying dams in compliance 

with EAP requirements 

99.8% of qualifying dams were in 

compliance with EAP requirements. The 

two dams that were not in compliance 

(because of overdue EAP filings) were 

promptly issued non-compliance letters 

and are being closely monitored to bring 

them back into compliance as soon as 

possible. 

Timely processing of filings seeking 

recovery of security and safety costs in 

jurisdictional rates by statutory action 

date 

All 17 oil pipeline applications to either 

establish or revise security cost recovery

mechanisms or charges were processed 

within the 30-day statutory period. In 

addition, both of the gas pipeline 

applications to recover security-related 

costs as part of a general rate increase 

were processed by statutory action date. Recovery of companies’ prudently

incurred costs to safeguard the reliability

and security of energy transportation and 

supply infrastructure 

Encourage innovative proposals to 

recover prudently incurred security costs 

Commission staff has met, and continues 

to meet, with industry representatives, 

such as the Association of Oil Pipe Lines, 

to develop innovative recovery methods 

that reflect the diversity of rate designs, 

services and system configurations of 

companies that have identified a need for 

additional security measures. 

74 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2005 

Performance Measurement Performance Target Data Source 

Percentage of pipeline certificate cases 

completed in specified time frames 

85% of cases completed within the 

following time frames: 

3⁄4 unprotested cases that involve no 

precedential issues, 159 days 

3⁄4 protested cases that involve no 

precedential issues, 304 days 

3⁄4 cases of first impression or containing 

larger policy implications, 365 days 

3⁄4 cases requiring a major environmental 

assessment or environmental impact 

statement, 480 days 

Office of Energy Projects 

Percentage of relicense filings based 

upon alternative licensing process (ALP) 25% of all relicense cases using ALP Office of Energy Projects 

Percentage of final NEPA documents, 

required for hydropower license 

applications filed after FY 2002, 

completed within specified time frames 

75% of final NEPA documents prepared 

for licenses approved within the following 

time frames: 

3⁄4 ALP case, less than 16 months 

3⁄4 Traditional case, less than 24 months 

Office of Energy Projects 

Inspect each major onshore pipeline 

project at least once every four weeks 

during ongoing construction activity

100% of qualifying projects inspected per 

established schedule Office of Energy Projects 

Percent of final NEPA documents based 

upon comprehensive settlement 

agreements completed within specified 

time frames 

75% of final NEPA documents prepared 

for final comprehensive license 

settlement agreements are completed 

within 12 months 

Office of Energy Projects 

Average processing times for hydropower 

relicensing Additional 5% reduction each year Office of Energy Projects 

Reduction in the number of barriers to 

entry for new generators and reduction in 

the potential for undue discrimination 

against new generators, by streamlining 

and standardizing interconnection terms 

and conditions in non-independent 

transmission provider tariffs 

75% of all open access transmission 

tariffs will have standard generator 

interconnection procedures in compliance 

with Order No. 2003 (and small generator 

final rule) by the end of FY 2005 

Office of Markets, Tariffs and Rates 

Effectiveness of regional planning 

processes in each region of the country

Establish benchmarks assessing how

well each region is meeting the 

necessary criteria for regional planning, 

which includes: 

3⁄4 an open and inclusive process for 

stakeholder involvement 

3⁄4 objective cost allocation criteria 

3⁄4 equal opportunity for a variety of 

technologies 

3⁄4 a process to reduce congestion 

Office of Markets, Tariffs and Rates 

Timeliness of processing requests for 

cost recovery, new services, or changes 

to existing services 

100% of all cases processed by statutory

action date Office of Markets, Tariffs and Rates 

Timeliness of Commission Opinions, to 

provide ratepayers with regulatory

certainty with respect to rates set for 

hearing 

85% of all Commission Opinions issued 

within 12 months of Briefs Opposing 

Exceptions to Initial Decisions on rates 

set for hearing 

Office of Markets, Tariffs and Rates 

Timeliness of resolving cost recovery

proposals for new infrastructure, to 

provide investors with regulatory certainty

85% of all merits orders accepting, 

modifying, or rejecting timely filed 

proposals, including time for hearing, 

ADR, or settlement judge participation, 

issued by date requested by applicant to 

meet its construction/financing schedule 

Office of Markets, Tariffs and Rates 

75 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2005 

Performance Measurement Performance Target Data Source 

Implementation of rate flexibility or

incentives to encourage needed additions 

to energy infrastructure 

Increase in the number of innovative or 

flexible rate designs in effect, by

approving rate proposals or issuing policy

statements providing rate flexibility or

incentives needed for infrastructure 

additions 

Office of Markets, Tariffs and Rates

Evaluate the effectiveness of 

Commission required resources 

protection measures, and disseminate 

information on the results. 

Conduct a workshop and disseminate 

one report on the results of the 

evaluation. 

Office of Energy Projects 

Maintain environmental quality at 

hydropower projects. 

Resource protection measures 

constructed and implemented according 

to license requirements. 

Office of Energy Projects 

Time to complete NEPA Prefiling Process 8 months after a complete application is 

filed Office of Energy Projects 

Yearly increase in the percentage of 

hydropower projects using the ILP prefiling process 25% Office of Energy Projects 

Participation with NERC in reliability

readiness reviews over next 3 years to 

ensure grid reliability

One-third of the Nation’s control areas 

reviewed with NERC annually Office of Markets, Tariffs and Rates 

Timeliness of processing proposals to 

recover prudently incurred costs to 

improve the reliability of the transmission 

grid 

100% of all filings, including innovative 

proposals, seeking recovery of reliability

costs in transmission rates processed by

the statutory action date 

Office of Markets, Tariffs and Rates 

Assess each region’s reliability rules and 

penalties to determine whether they

specify reliability violations and include 

enforceable and effective penalties Clarity and enforceability of reliability

rules, with effective penalties for noncompliance Require each new RTO or ISO to 

address reliability considerations prior to 

becoming operational 

Office of Markets, Tariffs and Rates 

Enhance reliability oversight by creating a 

new reliability division Division operational by end of fiscal year Office of Markets, Tariffs and Rates 

Timeliness of processing proposals to 

recover prudently incurred costs to 

safeguard the security and safety of 

energy transportation and supply

infrastructure 

100% of all filings, including innovative 

proposals, seeking recovery of security

and safety costs in jurisdictional rates 

processed by statutory action date 

Office of Markets, Tariffs and Rates 

100% of high- and significant-hazardpotential dams inspected annually

Percentage of high- and significanthazard-potential dams meeting all current 

structural safety standards remains 

uniformly high 

Enhance dam safety

100% of qualifying dams in compliance 

with EAP requirements 

Office of Energy Projects 

Timely handling of CEII without disrupting 

requesters’ participation rights in other 

proceedings 

 No requester’s failure to obtain CEII in a 

timely manner will affect requester’s 

ability to participate effectively in a 

proceeding 

Office of General Counsel 

76 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2005 

Performance Measurement Performance Target Data Source 

Prevent unauthorized access to securityrelated documents No instances of unauthorized access to 

security-related documents Office of General Counsel 

Number of instances of improved 

regulation to facilitate security and 

emergency response 

Number of specific measures (e.g., 

number of security surcharge requests 

approved and gas allocation principles 

set)

Office of General Counsel 

77 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Performance Measurement Results for Competitive Markets (Goal 2)

FY 2001 

Performance Measurement Performance Target Result 

3⁄4 Number and size of capacity holders 

by system 

3⁄4 Number and size of natural gas and 

electric secondary market participants 

3⁄4 Number and size of pipeline suppliers 

by region and major customer 

3⁄4 Number and size of electric power 

marketers 

Analyze the number and sizes, in 

conjunction with the measures for all 

indicators 

Increase in types of tariffed services 

offered (e.g., parking and lending in 

natural gas) 

Increased services in the market 

(develop a time line for different services, 

e.g., new futures exchanges), new types 

of products (e.g., weather derivatives) 

and independent exchanges 

By their very nature, innovations cannot 

be specified. The Commission will look 

for patterns of innovation, track and 

report on them. 

Response of prices to external conditions 

in natural gas and electricity (e.g., events, 

weather, plant outages) 

Large price changes should normally be 

associated with some clear external 

event 

Incidence of pricing anomalies for natural 

gas (where price and quantity appear to 

move in opposite directions) 

Anomalies may indicate real market 

problems, problems in data, or 

unanticipated changes in how the market 

is working 

Level of price volatility and changes in 

price volatility in electricity and gas 

Very high or very low prices can give an 

early warning for investigation 

Correlation of commodity prices across 

regions 

Narrowing of commodity price differences 

in the absence of transmission 

constraints 

Increased market integration (price 

changes appear to reflect inter-regional 

trading) 

Correlations should be near 1.0, except 

when transmission constraints bind and 

prevent free flow of commodities 

Increased use of market hub services in 

natural gas and electricity

Growth of electronic services for the 

commodity and/or transportation 

Increased economic transmission 

distance 

Establish a baseline 

The Commission created a suite of 

performance indicators designed to track 

our success at developing energy

markets. The indicators chosen were 

based on attributes we perceived to be 

necessary for markets to function. As 

noted previously, the events of the last 

year in the Western energy markets 

demonstrated that, while many of our 

perceptions were correct (i.e., prices 

certainly responded to external 

conditions), the dynamics of the markets 

exceeded our understanding. For this 

reason, we view this suite of indicators as 

a valid, but ultimately unsuccessful 

experiment, one which we are seeking to 

revise in concert with our new strategic 

direction. 

78 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2002 

Performance Measurement Performance Target Result 

Increase in types of tariffed services 

offered (e.g., parking and lending in 

natural gas) 

Innovation indicates markets are working 

and market participants are creating their 

own solutions 

In its Annual Performance Report for 

Fiscal Year 2001, the Commission 

acknowledged the ineffectiveness of this 

performance measurement to evaluate 

the agency's success at developing 

energy markets. New measurements will 

be in effect for FY 2003 with attributes the 

Commission perceives to be necessary

for markets to function. 

3⁄4 Number and size of capacity holders 

by market 

3⁄4 Number and size of natural gas and 

electric secondary market participants 

3⁄4 Number and size of pipeline suppliers 

by region and major customer 

3⁄4 Number and size of electric power 

marketers 

3⁄4 Reasonable range of suppliers should 

lead to competitive pricing 

3⁄4 Participation indicates confidence in 

market rules and oversight 

Several significant energy marketers 

have announced either plans to exit the 

energy trading business, or consideration 

of exit. Generally sited reasons include 

financial underperformance and credit 

concerns. The resulting contraction can 

have negative effects on liquidity in 

energy markets. 

Companies that have announced 

complete or partial exits from energy

trading in recent months include large 

players like: 

3⁄4 American Electric Power 

3⁄4 Aquila 

3⁄4 Dynegy

3⁄4 El Paso 

Companies considering exit include 

3⁄4 Allegheny

3⁄4 CMS 

Some players have announced interest in 

entering as well, including the Bank of 

America. 

79 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2002 

Performance Measurement Performance Target Result 

Increased services in the market 

(develop a time line for different services, 

e.g., new futures exchanges), new types 

of products (e.g., weather derivatives) 

and independent exchanges 

New service offerings show adaptation to 

price volatility and help to stabilize 

markets through hedging of risks 

With the end of Enron Online and Dynegy

Direct, wholesale energy services largely

shifted toward stronger, higher-quality

services, including the New York 

Mercantile Exchange (NYMEX) and the 

Intercontinental Exchange (ICE). 

Enron Online and Dynegy Direct were not 

exchanges, but extensions of Enron’s 

and Dynegy’s marketing efforts. 

Consequently, they were susceptible to 

the credit weaknesses of their owners. 

Exchanges like NYMEX and ICE have 

better approaches to managing credit 

risk, and consequently are better for the 

industry.

For example, NYMEX extended its credit 

clearing ability to certain over-the-counter 

natural gas and electricity trades. On 

October 22, 2002, NYMEX announced 

that it had cleared more than $1.1 billion 

of these deals since inception of the 

service on May 31, 2002. 

In addition, on June 17, 2002, NYMEX 

and the Chicago Mercantile Exchange 

(CME) introduced their e-miNY natural 

gas contracts that handle smaller 

volumes than standard NYMEX natural 

gas contracts, extending the reach of 

exchange-traded futures contracts to 

smaller energy companies. E-miNY

contracts are traded on CME’s GLOBEX 

electronic trading platform. 

ICE began over-the counter clearing as 

well, in March 2002. On November 7, 

2002, ICE announced that total cleared 

notional value of natural gas contracts in 

the United States had surpassed $10 

billion. 

Success of these higher-quality products 

is a positive sign for energy markets. 

Volume of financial risk-hedging 

transactions, e. g. futures contracts 

Viable financial markets provide critical 

support for physical markets 

Futures contracts for natural gas have 

shown promise in 2002, strengthening to 

what appears to be record levels. 

To date, however, there has been no 

attempt to revive electric futures markets 

in the U.S. 

80 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2002 

Performance Measurement Performance Target Result 

Response of prices to external conditions 

in natural gas and electricity (e.g., events, 

weather, plant outages) 

Large price changes should normally be 

associated with some clear external 

event 

Price differences that have been 

associated with external events in 2002 

included: 

3⁄4 The Leona fire in California in 

September 2002 caused a key

transmission path to be taken out of 

service, and caused price differences 

between Northern and Southern 

California. 

3⁄4 Hurricanes in the Gulf (Isidore and Lilli) 

caused temporary price increases in 

natural gas prices in September, but 

prices returned to normal levels after the 

storms. 

3⁄4 Natural gas pipeline capacity into New

York City is sometimes constrained, 

causing significant price increases. Price 

increases occurred at the end of July

2002 and early in August, with prices 

rising to a daily midpoint price of $7.65. 

Although these price increases were 

related to capacity constraints on the 

pipeline system, they were nevertheless 

unusual for the season and are still being 

investigated to assess their cause. 

3⁄4 Natural gas prices in Florida have 

spiked due to capacity problems that are 

exacerbated by lack of storage capacity. 

These price increases have occurred 

under higher load conditions or when 

Operational Flow Orders have limited 

pipeline capacity.

Level of price volatility and changes in 

price volatility in electricity and gas 

Changes in price patterns over time can 

reveal underlying market conditions 

Futures price information indicates a 

slight lowering of price volatility for

natural gas since June 2002, in 

comparison to 2001. From June to 

September, 30-day volatilities for the 

near-month contract have ranged from 40 

to 70, compared with 80 to 100 during the 

last quarter of 2001. 

Without futures prices, similar 

calculations cannot be made for 

electricity; however, volatility has clearly

dropped from pre 2002 levels. 

Correlation of commodity prices across 

regions; narrowing of commodity price 

differences in the absence of 

transmission constraints 

Correlations should be near 1.0, except 

when transmission constraints bind and 

prevent free flow of commodities 

This performance measure is intended to 

gauge the extent to which arbitrage is 

causing prices to clear across regions – if 

arbitrage is effective, price difference 

should narrow. For 2002, this measure 

was studied by examining price 

difference identifying causes that were 

preventing arbitrage from being effective, 

or conducting further study to identify

causes. These analyses of external 

conditions are described above under the 

performance measure for the 

responsiveness of prices to external 

conditions. 

81 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2002 

Performance Measurement Performance Target Result 

Increased use of market hub services in 

natural gas and electricity

Use has been affected negatively by

contraction in the industry (see 

performance measure 1 of this section). 

Growth of electronic services for the 

commodity and/or transportation 

Higher quality options have replaced 

lower quality options and are showing 

some strength (see performance 

measure 3 of this section). 

Increased economic transmission 

distance 

3⁄4 Increased usage of market 

infrastructure indicates market depth and 

liquidity

3⁄4 Increased electronic commerce 

reduces transactions costs and allows

broader market participation 

Growth in RTOs and the associated 

development of regional markets in the 

Midwest (MISO) and through additions to 

Pennsylvania-New Jersey-Maryland (PJM)

have begun to provide the basis for the 

needed market infrastructure. PJM has 

added one additional utility as part of PJM 

west and is beginning the process of 

adding AEP and other utilities. MISO has 

begun operation and is planning the 

development of markets along the lines of 

the Commission’s Standard Market Design 

(SMD.) In addition, there are designs 

being discussed among MISO and PJM for

the operation of a joint market. These 

developments will begin to reduce the 

transactions costs of participation in a 

broader power market. 

Investment in generation and 

transmission 

Investment should be adequate to meet 

market needs 

There has been substantial growth of 

generation capacity in 2002. Nationwide, 

approximately 71,000 megawatts of 

electricity capacity is expected to be 

added in 2002, on top of around 42,000 

megawatts added in 2001. The total 

capacity added in these two years 

(113,000 MW) is greater than the total 

capacity added from 1990 to 1999 

(87,000 MW.) At the same time, many

future projects have been cancelled or 

tabled as a result of lower prices in 

forward markets and the financial 

problems of many companies. The 

current outlook is for adequate 

generation supplies in the near term, but 

an uncertain outlook in the longer term 

that will require continued assessment. 

Transmission investment increased in 

2002 compared with previous years, 

roughly in proportion to the growth in 

generation. Thus, transmission capacity

remains adequate for basic reliability and 

to accommodate the basic needs of 

interconnecting new generation capacity.

However, there has been no evidence 

that transmission capacity has been 

expanded to address the needs of a 

changing market structure. 

Number and type of reliability-related 

incidents (emergencies, involuntary load 

reductions, TLRs) 

‘Emergencies’ should be infrequent; 

routine market rules should be able to 

handle most situations 

TLR events have not decreased in 2002. 

 This is one of the issues that the 

Commission is addressing in the 

Standard Market Design rulemaking. 

Amount of load covered by regional 

institutions 20% increase over FY 2001 Performance target achieved. 

82 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2002 

Performance Measurement Performance Target Result 

Amount of load with congestion 

management systems 20% increase over FY 2001 Performance target achieved. 

Number of wholesale service options 

available Increase 

Prior to FY 2002, the Commission 

believed tracking the number of 

wholesale service options available 

would provide a measure for increased 

pricing efficiency. This indicator became 

invalid once the Commission began 

advancing competitive markets through 

development of a standard market 

design. When a standard market design 

(SMD) is implemented, electric markets 

will have a strong long-term basis for 

providing customers with the very real 

and significant benefits that come from 

competition. After the country is required 

to adopt some form of SMD, new

measurements will be developed to track 

its success (e.g., lowering costs through 

standardized features, etc.). 

FY 2003 

Performance Measurement Performance Target Result 

Timely processing of RTO filings Benchmarks to be established in FY

2003 

Upon review, we have concluded that it is 

impractical to put to put into effect an 

average processing time for filings as 

dissimilar in scope, complexity, and 

number of issues needing resolution as 

are RTO filings. For example, it took 26 

months to grant RTO status to PJM 

(Pennsylvania-New Jersey-Maryland); 11 

months for Midwest ISO. 

A sampling of other RTO filings or 

petitions for declaratory orders also 

revealed significant variances in 

processing times, as shown below: 

3⁄4 SeTrans – Filed on 6/27/02; 

Commission issued initial order on 

10/9/02 (less than 4 months). (SeTrans 

has not yet formally requested authority

to form, or to operate an RTO.) 

3⁄4 RTO West – filed on 10/16/00; first 

order was issued on 4/26/01 (over 6 

months); order on Stage 2 issued on 

9/18/02 (23 months). 

3⁄4 WestConnect – filed on 10/16/01; order 

issued on 10/10/02 (12 months) (Neither 

RTO West nor WestConnect has filed a 

Section 205 requesting RTO status). 

3⁄4 Cal ISO – filed on 6/1/01; no order has 

been issued in this proceeding. 

Percentage of country covered by

approved RTOs or ISOs (percentage of 

electricity load) 

70% of electricity load in regions where 

we have jurisdiction 

59% of load in jurisdictional areas under 

an RTO/ISO. 

83 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2003 

Performance Measurement Performance Target Result 

Timely processing of proposed 

rulemakings adopting consensus 

industry-wide business practice and 

reliability standards (North American 

Energy Standards Board (NAESB) and 

North American Electric Reliability

Council (NERC)) 

Benchmarks to be established in FY

2003 

Target is established for FY 2004 as 

follows: Non-controversial rulemakings 

completed within 9 months/controversial 

rulemakings completed within 12 months 

of external party action. 

3⁄4 During October 2002, NAESB filed 

natural gas industry standards with the 

Commission. The Commission codified 

the standards, on which all segments of 

the natural gas industry had reached 

consensus, in its Regulations in a Final 

Rule issued in March 2003, five months 

after submission. 

3⁄4 In June 2003, NAESB filed 

creditworthiness standards on which all 

segments of the natural gas industry

participants were able to reach 

consensus; NAESB also reported 

additional proposed creditworthiness 

standards on which consensus was not 

reached. Action is pending on the 

creditworthiness standards. 

Establish RTOs/ISOs with sufficient 

market monitoring and mitigation 

measures in place 

Fewer complaints about rates in RTOs 

filed with the Commission 

3⁄4 In FY 2002, 19 complaints were filed 

against ISO/RTOs (ISO-NE 10, NYISO 5, 

and CAISO 4). 

3⁄4 In FY 2003, 6 complaints were filed 

against ISO/RTOs (ISO-NE/NEPOOL 3, 

NYISO 1, CAISO 1, and PJM 1). 

While complaints are fewer when 

comparing FY 2002 and 2003, we do not 

expect this to be the case in the future; 

rather, we anticipate more complaints as 

numbers of participants increase, and as 

RTOs mature beyond current stages. 

We will review this performance target for

appropriateness. Focusing on the 

number of complaints about rates in 

RTOs does not highlight the fact that 

market monitoring units exist in all 

RTOs/ISOs and that they work together 

with the Commission to evaluate market 

performance and identify problems with 

proposed and existing market rules, 

market operations, and individual 

participant behavior. 

84 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2003 

Performance Measurement Performance Target Result 

RTO/ISO wholesale market design 

includes demand-response features 

Measure increasing percentage of 

operating RTOs and ISOs with demand 

response programs 

During FY 2003, four ISOs/RTOs (Cal 

ISO, NYISO, PJM, and ISO New

England) operated demand response 

programs, and one RTO which does not 

yet run any energy market (Midwest ISO) 

did not. Since these four RTOs/ISOs 

operated demand response programs in 

FY 2002, there was no increase in the 

percentage of operating RTOs and ISOs 

during FY 2003. Nevertheless, 

throughout the year, FERC has 

encouraged and approved improvements 

in both the number and design of 

demand response in PJM, NYISO and 

ISO-NE. For example, FERC supported 

the New England Demand Response 

Initiative, a broad stakeholder process in 

New England, to provide a detailed 

assessment of ISO demand response 

programs and to develop recommended 

improvements. 

Adopt market design standards for 

wholesale electric markets Issue final Standard Market Design rule 

In April 2003, the Commission issued a 

White Paper in the Standard Market 

Design proceeding that emphasized its 

strong commitment to customer-based, 

competitive wholesale power markets, 

while underscoring an increasingly

flexible approach to regional needs and 

outlining step-by-step elaborations of its 

key market design proposal. The 

Commission intends to focus on the 

formation of RTOs and on ensuring that 

all independent transmission 

organizations have sound wholesale 

market rules. The final rule will allow

implementation schedules to vary

depending on local needs and will allow

for regional differences. During the 

remainder of FY 2003, the Commission 

continued its dialogue on market design 

by holding a number of regional 

conferences to exchange ideas with 

stakeholders. 

Creation of OMOI OMOI established 

Enhanced regulatory support for market 

institutions Creation of market performance 

indicators 

Market performance indicators created 

with an ongoing process to add or delete 

metrics as appropriate. 

FY 2004 

Performance Measurement Performance Target Result 

Timely processing of filings to establish 

RTOs, ISOs, or Independent 

Transmission Companies (ITCs) 

All filings processed within 6 months of 

filing, or before applicant’s proposed 

effective date (whichever is later) 

All three proposals to establish or expand 

an RTO that were filed in FY 2004 were 

processed within six months. 

In addition, three more electric utilities 

(First Energy, Ameren, and Northern 

Indiana Public Service) were added to 

the Midwest ISO in advance of the 

requested action dates. 

85 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2004 

Performance Measurement Performance Target Result 

Timely processing of proposed 

rulemakings adopting consensus 

industry-wide business practice and 

reliability standards (North American 

Energy Standards Board (NAESB) and 

North American Electric Reliability

Council (NERC)) 

Non-controversial rulemakings completed 

within 9 months and controversial 

rulemakings completed within 12 months 

In February 2004, the Commission 

issued a Notice of Proposed Rulemaking 

to adopt creditworthiness business 

practice standards developed by NAESB, 

as well as other standards developed by

the Commission. The final rule for this 

controversial rulemaking is scheduled to 

be issued within the target 12-month time 

frame. 

Establish cost-effective elements of the 

wholesale electric market platform within 

3 years of RTO/ISO approval 

For each approved RTO or ISO, 

additional wholesale market platform 

elements will be added: 

3⁄4 Regional independent grid operation; 

3⁄4 Regional transmission planning 

process; 

3⁄4 Fair cost allocation for existing and 

new transmission; 

3⁄4 Market monitoring and market power 

mitigation; 

3⁄4 Spot markets to meet customers’ realtime energy needs; 

3⁄4 Transparency and efficiency in 

congestion management; 

3⁄4 Firm transmission rights; and 

3⁄4 Resource adequacy approaches. 

The Commission approved new, or 

redesigned, cost-effective market 

elements for each of the six approved 

RTOs or ISOs, enhancing market 

operations efficiency.

Facilitate construction of electric 

infrastructure by providing investor 

confidence of probable cost recovery

Issue Final Policy Statement, “Pricing 

Policy for Efficient Operation and 

Expansion of Transmission Grid” 

As the Commission considers whether 

additional incentives may induce a more 

effective infrastructure response, a final 

policy statement has not been issued. 

However, the Commission in effect 

accomplished this measure by approving 

incentives – similar to those suggested in 

the proposed policy statement – in 

individual cases where companies have 

formed RTOs. 

Encourage State representatives to 

establish multi-state regional 

organizations (e.g., Regional State 

Committees (RSCs)) 

Meet at least annually with state 

representatives in each region 

The Commission hosted and/or 

participated in numerous meetings with 

state representatives from each region 

with existing RTOs or ISOs. 

Advance well-functioning markets that 

deliver the benefits of competition 

Complete revisions to interim marketbased ratemaking policy

In orders issued in AEP Power 

Marketing, Inc., et al., 107 FERC & 

61,018 (2004), order on reh’g,108 FERC 

61,026 (2004), the Commission adopted 

a new interim generation market power 

analysis to be applied to market-based 

rate applications. 

86 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2004 

Performance Measurement Performance Target Result 

All markets have in place rules that 

permit and encourage qualified demand 

response participation on an equal basis 

with supply

All RTOs and ISOs have rules, permitting 

demand response participation in 

RTO/ISO-controlled markets, in place 

and approved by the Commission within 

1 year of commencing day-ahead 

markets 

ISO NE, NY ISO and PJM RTO have 

market rules permitting, and operate, 

demand response programs that allow

customers and load serving entities to 

participate (bid) in energy and capacity

markets. In addition, enhancements to 

the market rules and demand response 

programs are in development or have 

already been filed with the Commission. 

On August 6, 2004, the Commission 

accepted a demand response 

mechanism framework as part of the 

Midwest ISO’s open access transmission 

tariff. Although the Commission required 

further specification of certain aspects of 

the mechanism, the revisions will be filed 

well in advance of the March 1, 2005, 

date the Midwest ISO is scheduled to 

commence its day-ahead market. 

The CA ISO, through its Participating 

Load Program (Supplemental and 

Ancillary Services), manages a demand 

response program that allows loads to 

participate as price-responsive demand 

in the CA ISO Non-Spinning Reserves, 

Replacement Reserves, and 

Supplemental Energy markets. 

FY 2005 

Performance Measurement Performance Target Data Source 

Timeliness of processing filings to 

establish RTOs, ISOs, or Independent 

Transmission Companies (ITCs)

75% of all filings processed within 6 

months of filing, or before applicant’s 

proposed effective date (whichever is 

later) 

Office of Markets, Tariffs and Rates 

Establishment of cost-effective elements 

of market design 

Within 3 years of commencement of 

operation, approved RTO or ISO will 

implement, if cost effective: 

3⁄4 regional independent grid operation 

3⁄4 regional transmission planning process 

3⁄4 fair cost allocation for existing and new

transmission 

3⁄4 market monitoring and market power 

mitigation 

3⁄4 spot markets to meet customers’ realtime energy needs 

3⁄4 transparency and efficiency in 

congestion management 

3⁄4 firm transmission rights 

3⁄4 resource adequacy approaches 

Office of Markets, Tariffs and Rates 

Frequency of meetings with multi-state 

regional organizations (Regional State 

Committees) to resolve regional policy

and planning issues 

Participate in at least one meeting 

annually with multi-state organizations 

established for each approved RTO/ISO 

Office of Markets, Tariffs and Rates 

87 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2005 

Performance Measurement Performance Target Data Source 

Demonstrable improvements in regional 

competitive market structures 

In any region of the country at least one 

of the following will occur:

3⁄4 addition of a new or expansion of an 

existing RTO 

3⁄4 adoption by an RTO of additional 

market-oriented features, programs or 

rules

3⁄4 in regions primarily without RTOs, an 

increase in the degree of transmission 

independence (ownership or control) from 

generation 

3⁄4 increase in the amount of competitive 

solicitation for supply

3⁄4 improvement of open access tariff to 

reduce entry barriers of foster competition 

Office of Markets, Tariffs and Rates 

Movement toward competitive markets in 

each region, including greater 

interregional coordination of broader, 

more efficient, and non-discriminatory

energy markets 

Increase in: 

3⁄4 coordination of joint operating 

agreements between RTOs or an RTO 

and neighboring non-member utilities 

3⁄4 new, independent regional 

transmission providers 

3⁄4 new product markets within RTOs or 

ISOs 

3⁄4 RTO membership through the 

integration of the transmission facilities of 

additional transmission owners 

Office of Markets, Tariffs and Rates 

Elimination of multiple, or “pancaked,” 

transmission rates through the 

implementation of new rate designs to 

promote efficient trade across RTO and 

utility boundaries 

The elimination of multiple charges for 

transmission service between PJM and 

Midwest ISO 

Office of Markets, Tariffs and Rates 

Transition existing regulatory constructs 

into competitive markets 

Approval of an energy market that 

minimizes cost shifts while preserving 

existing contractual rights and creating 

efficiency gains 

Office of Markets, Tariffs and Rates 

Timeliness of corporate application 

orders 

100% of all section 203 applications 

processed within 90 days of the date 

comments are filed 

Office of Markets, Tariffs and Rates 

Timeliness of processing market-based 

rate filings to advance well-functioning 

markets that deliver the benefits of 

competition 

100% of all market-based ratemaking 

filings processed within statutory deadline Office of Markets, Tariffs and Rates 

Existence of RTO/ISO rules that 

encourage qualified demand response 

participation on an equal basis with 

supply options 

All RTOs and ISOs have rules that do not 

inhibit demand response participation in 

RTO/ISO-controlled markets within 1 year 

of commencing day-ahead markets 

Office of Markets, Tariffs and Rates 

Frequency of meetings to support 

development of robust customer 

demand-side participation in energy

markets 

In areas where there is no opportunity for 

robust customer demand-side 

participation in energy markets, meet with 

appropriate state commission officials at 

least annually to discuss demand 

response issues 

Office of Markets, Tariffs and Rates 

Percentage of market-based rates 

triennial review cases resolved 

Resolve 80% of triennial review cases 

using the new generation market power 

screens within 1 year of the order on 

rehearing on the new screens 

Office of Markets, Tariffs and Rates 

88 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2005 

Performance Measurement Performance Target Data Source 

Timeliness of processing proposed 

rulemakings adopting industry-wide 

business practice standards (North 

American Energy Standards Board 

(NAESB)) and proposed rulemakings 

related to reliability

Non-controversial rulemakings completed 

within 9 months of receipt of NAESB 

proposal, and controversial rulemakings 

completed within 12 months 

Office of Markets, Tariffs and Rates 

Removal of barriers to entry into 

wholesale power markets for renewable 

energy resources 

Approval of tariff provisions, both for 

transmission and generator 

interconnection, that grant all energy

sources an opportunity to compete in the 

wholesale market 

Office of Markets, Tariffs and Rates 

Provide timely resolution of third-party

complaints 

Issue initial order on 80% of all third-party

complaints within 60 days of filing and 

90% of all requests meeting fast-track 

requirements within prescribed time 

frame 

Office of Markets, Tariffs and Rates 

89 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Performance Measurement Results for Market Oversight (Goal 3)

FY 2001 

Performance Measurement Performance Target Result 

Percentage of respondents perceiving a 

lack of market power Establish baseline 

The Commission created a suite of 

performance indicators designed to track 

our success at developing energy

markets. The indicators chosen were 

based on attributes we perceived to be 

necessary for markets to function. As 

noted previously, the events of the last 

year in the Western energy markets 

demonstrated that, while many of our 

perceptions were correct (i.e., prices 

certainly responded to external 

conditions), the dynamics of the markets 

exceeded our understanding. For this 

reason, we view this suite of indicators as 

a valid, but ultimately unsuccessful 

experiment, one which we are seeking to 

revise in concert with our new strategic 

direction. 

Percentage of customers satisfied with 

ADR procedures at the Commission 75% satisfaction rate 

OALJ: Participants report near 100% 

satisfaction with ADR1

 procedures. 

Satisfaction is indicated by calls from 

participants and by continuing and 

increasing requests for the appointment 

of settlement judges and mediators. 

DRS: 90% (20 out of 22 completed 

cases).

2

Percentage of contested proceedings 

that achieve consensual agreements 25% increase over FY 2000 

OALJ: During FY2001 80% of cases set 

for hearing were resolved through some 

form of ADR vs. 76.7% during FY2000. 

DRS: 90% vs. 89% during FY 2000. 

Number of requests and referrals for 

ADR services Increase by 50% over FY 2000 

OALJ: During FY2001 60 out of 77 cases 

(77.9%) terminated by OALJ were 

resolved through some means of ADR 

vs. 60 out of 83 cases (72.3%) during 

FY2000 

DRS: 52 requests vs. 40 requests in 

FY 2000, a 30% increase. This includes 

simple inquiries about ADR, cases 

referred to DRS in which the parties 

indicated no interest in pursuing ADR, 

cases referred to Enforcement, and 

ongoing cases. 

 1

 ADR is considered the ‘umbrella’ of dispute resolution. Many forms of dispute resolution are 

encompassed within ADR, such as mediation, settlement judge procedures, mini-trials, arbitration, and combinations 

of these methods. Cases referred to OALJ for ADR involve disputes of hotly contested issues and millions of 

dollars. Due to the size and complexity of cases referred to OALJ for ADR, the process of achieving consensual 

resolution often involves considerable time and effort.

2

 This includes 5 cases begun in FY 2000 and completed in FY 2001. It does not include simple inquiries 

about ADR or cases in which parties expressed no interest in using ADR (11 cases), cases that were referred to 

Enforcement (2 cases), cases in which the DRS only coached parties, or cases that were ongoing into FY 2002 (17 

cases).

90 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2001 

Performance Measurement Performance Target Result 

Percentage of ADR cases resolved or 

terminated within established time frames 

3⁄4 50% within 100 days 

3⁄4 75% within 150 days 

3⁄4 100% within 200 days 

OALJ: Of 60 cases: 

3⁄4 10 cases settled within 100 days (17%) 

3⁄4 10 cases settled within 150 days (17%) 

3⁄4 11 cases settled within 200 days (18%) 

3⁄4 29 cases settled after 200 days 

(48.3%) 

DRS: Of 22 completed cases: 

3⁄4 8 cases completed within 100 days 

(36%) 

3⁄4 4 cases completed within 150 days 

(54%) 

3⁄4 5 cases completed within 200 days 

(77%) 

3⁄4 5 cases completed in over 200 days 

FY 2002 

Performance Measurement Performance Target Result 

Number of market monitoring institutions 

and systems Increase over FY 2001 Performance target achieved. 

Number of public utilities separating 

ownership or operation of transmission 

facilities from generation 

Increase over FY 2001 Performance target achieved. 

Number of requests and referrals for ADR 

services 25% increase over FY 2001 

DRS: There were 52 requests in FY

2001, and 51 requests in FY 2002. This 

represents a slight decrease. However, 

this amount also reflects an increase in 

the DRS non-case projects and 

development of stakeholder programs. 

The 51 requests or active cases include 

simple inquiries about ADR, cases in 

which persons eventually indicated that 

they were not interested in using ADR, 

cases referred to Enforcement Hotline, 

and ongoing cases. 

Percentage of customers satisfied with 

ADR processes 85% 

OALJ/OAL: Participants report near 

100% satisfaction with ADR procedures. 

Satisfaction is indicated by calls from 

participants and by the increase in ADR 

procedures. 

DRS: 90% (21 out of 23 completed 

cases). 

Note: This includes 10 cases that were 

begun prior to FY 2002 but completed in 

FY 2002. It does not include simple 

inquiries about ADR (6), cases in which 

persons eventually said they were not 

interested in using ADR (7), cases 

referred to Enforcement Hotline (1), or 

cases that were ongoing into FY 2003 

(14). 

91 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2002 

Performance Measurement Performance Target Result 

Percentage of processes that achieve 

consensual agreements 

3⁄4 ADR processes 

3⁄4 Cases set for litigation resolved, at 

least in part, through consensual 

agreement 

3⁄4 25% increase over FY 2001 

3⁄4 5% increase over FY 2001 

OALJ/OAL: Settlements were achieved 

in 69 out of 79 cases through ADR 

procedures. 

During FY-2002: 69 out of 79 cases 

(86.3%) were completed through ADR. 

In FY-2001: 62 out of 77 cases were 

completed through ADR (80.5%) 

DRS: 20 of 23 cases (87%) that were 

completed in FY 2002 achieved 

settlement. Note: This includes 10 

cases that were begun prior to FY 2002 

but completed in FY 2002. It does not 

include simple inquiries about ADR (6), 

cases in which persons eventually said 

they were not interested in using ADR 

(7), cases referred to Enforcement 

Hotline (1), or cases that were ongoing 

into FY 2003 (14). 

Percentage of cases in time frames 

3⁄4 ADR processes completed 

3⁄4 litigated cases reaching initial decision 

3⁄4 20% of ADR cases within 60 days 

3⁄4 30% of ADR cases within 100 days 

3⁄4 75% of ADR cases within 150 days 

3⁄4 100% of ADR cases within 200 days 

3⁄4 95% of simple litigated cases within 

206 days (29.5 weeks) 

3⁄4 95% of complex litigated cases within 

329 days (47 weeks) 

3⁄4 95% of exceptionally complex cases, 

441 (63 weeks) 

3⁄4 95% of regular complaints, 60 days 

3⁄4 95% of ‘fast track’ complaints, 8 days 

ADR Cases – OALJ/OAL: 69 cases 

were completed by settlement:

4 out of 69 cases were settled within 60 

days (5.8%). 

11 out of 69 cases sere settled within 100 

days (15.9%). 

18 out of 69 cases were settled within 

150 days (26%). 

11 out of 69 cases were settled within 

200 days (16%). 

25 out of 69 cases were settled after 200 

days (36%). 

ADR Cases - DRS : Of 23 completed 

cases: 

5 were completed within 60 days (21% 

total). 

7 more were completed within 100 days 

(52% total). 

1 more was completed within 150 days 

(57% total). 

2 more were completed within 200 days 

(60% total). 

The remaining 8 were completed in over 

200 days. 

Litigated Cases – OALJ/OAL:

Track I Cases – Standard processing 

Time = 29.5 weeks – None during FY2002. 

Track II Cases – Standard Processing 

time = 47 weeks – FY-2002 average 

Processing Time 32.5 weeks 

Track III Cases – Standard Processing 

Time = 63 weeks – FY-2002 Average 

39.42 weeks 

Complaint Cases – FY-2002 Complaints 

All took > 60 days to resolve. 

92 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2003 

Performance Measurement Performance Target Result 

Establish the Office of Market Oversight 

and Investigations Complete 

Publish regular summer and winter 

Seasonal Market Assessments 

Reported winter 2002-2003 and summer 

2003 assessments in formal 

presentations to the Commission and 

published on Commission’s website. 

Enhance institutional capability for 

overseeing energy markets 

Develop metrics/indicators of gas and 

electric market performance measures 

Developed 5 standard metrics for electric 

markets that agreed with market 

monitoring units. 

Top to bottom review of all existing 

information systems to monitor markets Complete entire review The complete review has been delayed 

until FY 2004. 

Development or acquisition of usable 

electronic baselines and databases to 

support market oversight objectives 

Complete development of all baselines 

and databases by end of FY 2003 Complete 

Training on market issues for 40% of 

OMOI and 20% of OMTR, OGC, and 

other staff 

OMOI: 50% of OMOI staff received 

training explicitly related to markets. 

OMTR: Target met through a combination 

of formal and informal training 

opportunities available to or required of 

OMTR staff. Examples of informal 

training: attendance at events sponsored 

by OMOI such as presentations by guest 

speakers with market expertise and 

courses on the operations of ISOs in New

York and New England; market 

development discussions at selected 

Commission meetings which are aired 

live as well as videotaped for later 

viewing; access to material relevant to 

Commission conferences posted on the 

web site; speakers brought in by group 

managers to discuss various topics—

including market-related issues—at their 

group meetings; and hands-on training 

conducted in our divisions. 

Hiring of staff with market expertise Hiring target achieved 

Development of market expertise 

Issuance of market assessment products 

and data analysis demonstrating market 

understanding 

Produced comprehensive market 

surveillance report for each closed 

Commission meeting (every two to three 

weeks); seasonal assessments; and daily

market reports for Commission staff. 

Also analyzed key issues in detail, for 

example, natural gas spike and energy

price index reaction. 

Establishment of protocols between the 

Commission and independent market 

monitoring units of RTOs 

All approved RTOs Target achieved 

Timeliness of corporate application 

orders 

Less than 20% of merger applications will 

require examination or the imposition of 

mitigation measures beyond the initial 

review period, with such percentage 

targeted to decrease as further policy

guidance is issued in cases requiring 

more time to address market power 

Since the Commission received no 

merger requests in FY 2003, it has no 

results to report for this performance 

measure. 

Timeliness of audits Complete 90% of audits on time Target achieved 

93 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2003 

Performance Measurement Performance Target Result 

Timeliness of Hotline calls resolutions Resolve 80% within 1 week of initial 

contact 

74% of Hotline calls were closed by the 

end of the two-week period in which they

were received during FY 2003. 

Timeliness of formal complaints 

resolutions 

Complete 80% within target time frames 

for various paths for resolution of 

complaints as specified by the 

Commission 

OALJ/OAL: Issued six initial decisions on 

complaints set for hearing. 84% were 

completed within expected targets (4 out 

of 6). OALJ also handled 17 additional 

complaints; 12 settled; 5 were either 

returned to the Commission for further 

action or set for hearing before a judge 

(no targets were set for those cases while 

in settlement mode). 

Number of requests and referrals for ADR 

services 

Maintain at or increase levels achieved in 

 FY 2001 

DRS: 38 requests or active cases were 

initiated in FY 2003. This number 

includes simple inquiries about ADR, 

cases in which persons eventually

indicated that they were not interested in 

using ADR, cases referred to 

Enforcement Hotline, and cases that are 

ongoing into FY 2004. Note: There were 

51 requests in FY 2002, and 38 requests 

in FY 2003. While this represents a 

decrease in cases, the DRS efforts 

devoted to outreach projects have 

increased dramatically by comparison. 

Percentage of customers satisfied with 

ADR processes 85% 

DRS: 14 of 20 cases (70%) that were 

completed in FY 2003 achieved 

settlement. 

Percentage of processes that achieve 

consensual agreements 

Maintain at or increase levels achieved in 

 FY 2001 

OALJ/OAL: 112 cases were closed in 

OALJ. Out of the 112 cases, 16 cases 

were terminated by initial decision, 

leaving 94 cases where ADR was used. 

Of the 94 cases, settlement was 

achieved in 76 cases (81% success). 

Settlement was not successful in 18 of 

the 94 cases. 

DRS: 14 of 20 cases (70%) that were 

completed in FY 2003 achieved 

settlement. Note: This includes 7 cases 

that were begun prior to FY 2003 but 

completed in FY 2003. It does not 

include simple inquires about ADR (1), 

cases in which persons eventually said 

they were not interested in trying ADR or 

ADR was determined to be inappropriate 

(11), cases referred to Enforcement 

Hotline (3), or cases that were ongoing 

into FY 2004 (14). 

94 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2003 

Performance Measurement Performance Target Result 

Percentage of cases in time frames 

3⁄4 ADR processes completed 

3⁄4 litigated cases reaching initial decision 

3⁄4 20% of ADR cases within 60 days 

3⁄4 30% of ADR cases within 100 days 

3⁄4 75% of ADR cases within 150 days 

3⁄4 100% of ADR cases within 200 days 

3⁄4 95% of simple litigated cases within 

206 days (29.5 weeks) 

3⁄4 95% of complex litigated cases within 

329 days (47 weeks) 

3⁄4 95% of exceptionally complex cases, 

441 (63 weeks) 

3⁄4 95% of regular complaints, 60 days 

ADR Cases – OALJ/OAL: 76 cases were

successfully completed through the use 

of ADR: 

3⁄4 2 cases completed in < 60 days (2.6%) 

3⁄4 10 cases completed in < 100 days 

(13%) 

3⁄4 15 cases completed in <150 days 

(20%) 

3⁄4 14 cases completed in < 200 days 

(18%) 

3⁄4 35 cases completed in >200 days 

ADR Cases – DRS: 20 cases completed 

through the use of ADR: 

3⁄4 8 cases completed in < 60 days (40%) 

3⁄4 2 cases completed in < 100 days 

(10%) 

3⁄4 5 cases completed in < 150 days 

(25%) 

3⁄4 3 cases completed in < 200 days 

(15%) 

3⁄4 2 cases completed in > 200 days 

(10%) 

Litigated Cases – OALJ/OAL:

3⁄4 Track I Cases: Standard processing 

time = 29.5 weeks. FY 2003 Average 

processing time = 24.3 weeks 

3⁄4 Track II Cases: Standard processing 

time = 47 weeks. FY 2003 Average 

processing time = 38.4 weeks 

3⁄4 Track III Cases: Standard processing 

time = 63 weeks. FY 2003 Average 

processing time = 46.2 weeks 

Regular Complaints – OGC: 97% 

FY 2004 

Performance Measurement Performance Target Result 

Enhance institutional capability for 

overseeing energy markets 

Improve metrics/indicators of gas and 

electric market performance measures 

Staff developed standard performance 

metrics for all RTO/ISO markets that, 

beginning in calendar year 2004, became 

a part of the annual reporting done by the 

market monitoring units of each 

RTO/ISO. Additionally, a Daily Scorecard 

of metrics is posted on the Commission’s 

intranet indicating daily gas and electric 

prices, weather, and gas futures. 

Development of market expertise 

30% of OMOI staff have energy market 

experience gained through direct activity

in those markets. 

30% of OMOI staff have gained energy

market expertise by engaging in energy

market activities such as: 

3⁄4 attending RTO/ISO conferences and 

workshops; 

3⁄4 participating in monthly conference 

calls with MMUs; 

3⁄4 attending weekly OMOI oversight 

meetings on energy markets; and 

3⁄4 attending training sessions. 

95 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2004 

Performance Measurement Performance Target Result 

Track Performance of Natural Gas and 

Electric Markets 

Issue Market Surveillance Reports to the 

Commission twice each month 

In accordance with the change in the 

Commission Meeting schedule – from 

once every two weeks to once every

three weeks – the Surveillance Report 

schedule changed from twice each month 

to 16 times each year – once every three 

weeks not including August. Therefore, 

the 16 Surveillance Reports that were 

completed, in effect, accomplish this 

measure’s original intent. In addition, 

these reports were redacted and 

presented to Commission staff and 

multiple external stakeholders, including 

state public utilities. 

Assess Performance of Natural Gas and 

Electric Markets 

Publish regular summer and winter 

Seasonal Market Assessments, State of 

the Market Reports, and other reports as 

conditions warrant. 

3⁄4 The Winter Energy Market 

Assessment, published in November 

2003, reported on the upcoming winter 

heating season. 

3⁄4 The State of the Markets Report, 

published in January 2004, analyzed the 

state of the energy markets for an 18-

month span. 

3⁄4 The Summer Energy Market 

Assessment, published in June 2004, 

reported on the upcoming summer 

cooling season. 

3⁄4 The Commission also published, in 

May 2004, the results of an investigation 

into the January 2004 New England gas 

price spike. 

Timeliness of corporate application 

orders 

Process all section 203 applications 

within 90 days of the date comments are 

filed 

3⁄4 98% (158 out of 162) of the section 

203 corporate applications were 

completed by the target completion date. 

 The four applications that were not 

completed within a 90-day period raised 

fundamental policy issues and protests 

that required additional time to evaluate. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Timeliness of industry wide financial 

audits Complete 90% of audits within 120 days 

3⁄4 88% of the financial audits (22 out of 

25) that were opened and closed this 

fiscal year were completed within the 120 

day timeframe. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Timeliness of Hotline call resolutions Resolve 80% within 1 week of initial 

contact 

72% of all Hotline matters were resolved 

within 2 weeks of initial contact. 

Although the target called for most 

resolutions to occur in 1 week, Hotline 

information is only collected on a biweekly basis. Future performance 

measures were previously revised to 

account for this process change. In 

addition, this performance target was set 

at an approximate level, and the 

deviation from that level is slight. 

96 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2004 

Performance Measurement Performance Target Result 

Timeliness of formal complaint 

resolutions 

Complete 80% within target time frames 

for various paths for resolution of 

complaints as specified by the 

Commission 

3⁄4 Issued three initial decisions on 

complaints set for hearing, all within the 

established deadlines. 

3⁄4 The Commission also handled eight 

additional complaints, though no targets 

were set for their completion due to their 

complexity. Of those eight: 

 3⁄4 four were settled; 

 3⁄4 two were returned to the 

Commission for further action or set for 

hearing before a judge; 

 3⁄4 one was dismissed; and 

 3⁄4 one was withdrawn. 

Number of requests and referrals for ADR 

services 

Maintain at or increase levels achieved in 

 FY 2001 

There were 54 requests or active cases 

in FY 2004, 2 more than in FY 2001. 

This number includes simple inquiries 

about ADR, cases in which persons 

eventually indicated that they were not 

interested in using ADR or ADR was 

deemed inappropriate, and cases that 

are ongoing into FY 2005. 

Percentage of customers satisfied with 

ADR processes 85% 

86% of the cases (21 out of 24) that were 

completed in FY 2004 achieved 

settlement. 

Percentage of processes that achieve 

consensual agreements 

Maintain at or increase levels achieved in 

 FY 2001 

OALJ/OAL: Of the 113 cases closed in 

FY 2004, 29 cases were terminated by

initial decision, leaving 84 cases where 

ADR was used. Of those 84 cases, 

settlement was achieved in 90% (76) of 

the cases. This was greater than the 

80% rate achieved in FY 2001. 

DRS: Of the 24 cases3

 that were 

completed in FY 2004, 86% (21) of the 

cases achieved settlement. This was 

slightly less than the 90% rate achieved 

in FY 2001. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

 

3 This includes 9 cases that began prior to FY 2004 but were completed in FY 2004, but does not include 

simple inquiries about ADR (8), cases in which persons eventually said they were not interested in trying ADR or 

ADR was determined to be inappropriate (10), or ongoing cases (12). 

97 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2004 

Performance Measurement Performance Target Result 

Percentage of cases in time frames 

3⁄4 ADR processes completed 

3⁄4 litigated cases reaching initial decision 

3⁄4 20% of ADR cases within 60 days 

3⁄4 30% of ADR cases within 100 days 

3⁄4 75% of ADR cases within 150 days 

3⁄4 100% of ADR cases within 200 days 

3⁄4 95% of simple litigated cases within 

206 days 

3⁄4 95% of complex litigated cases within 

329 days 

3⁄4 95% of exceptionally complex cases 

within 441 days 

3⁄4 95% of regular complaints within 60 

days 

ADR Cases4

 – OALJ/OAL: 76 cases 

were successfully completed through the 

use of ADR: 

3⁄4 4 of the 76 cases (5%) were completed 

in < 60 days; 

3⁄4 13 of the 76 cases (17%) were 

completed in < 100 days; 

3⁄4 20 of the 76 cases (26%) were 

completed in < 150 days; 

3⁄4 36 of the 76 cases (47%) were 

completed in < 200 days; and 

3⁄4 40 cases (53%) were completed in > 

200 days. 

ADR Cases3

 - DRS: 24 cases were

successfully completed through the use 

of ADR: 

3⁄4 9 of the 24 cases (37%) were 

completed in < 60 days; 

3⁄4 12 of the 24 cases (50%) were 

completed in < 100 days; 

3⁄4 14 of the 24 cases (58%) were 

completed in < 150 days; 

3⁄4 16 of the 24 cases (67%) were 

completed in < 200 days; and 

3⁄4 8 cases (37%) were completed in > 

200 days. 

Litigated Cases – OALJ/OAL:

3⁄4 Track I Cases: No Track I cases 

during FY 2004. 

3⁄4 Track II Cases: FY 2004 Average 

processing time was 324 days. 

3⁄4 Track III Cases: FY 2004 Average 

processing time was 448 days. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Regular Complaints – OGC: 95% 

FY 2005 

Performance Measurement Performance Target Data Source 

The Electronic Quarterly Report of 

electric transactions will be fully

functional. Enhance institutional capability for 

overseeing energy markets The Commission will identify further key

data requirements needed to analyze 

energy markets. 

Office of Market Oversight and 

Investigations 

 

98 

4 As the results show, the performance targets for ADR cases are unrealistic. These cases are very 

complex, multi-party, multi-issue cases that involve lengthy, often heated, negotiations over hotly contested issues 

and/or millions of dollars. Given the Commission’s success rate, we do not feel that the deviation from the target 

level had an adverse affect on the overall performance of this program. Future targets for this performance measure 

will be reviewed and/or revised.
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2005 

Performance Measurement Performance Target Data Source 

MMUs will produce standardized market 

metrics. 

Development of market expertise The Commission will use standard 

metrics developed by the MMUs to 

develop a balanced scorecard to 

determine how well energy markets are 

working 

Office of Market Oversight and 

Investigations 

Issue Market Surveillance Reports to the 

Commission in conjunction with the 

Commission’s public meeting schedule. Enhance the Commission’s and public’s 

understanding of energy markets Publish Market Assessments, State of 

the Market Reports, and other reports as 

conditions warrant. 

Office of Market Oversight and 

Investigations 

Identify and remedy market problems Provide analysis and recommendations 

on major market problems. 

Office of Market Oversight and 

Investigations 

Timeliness of industry wide financial 

audits Complete 90% of audits within 120 days Office of Executive Director 

Timeliness of Hotline call resolutions Close 60% within 2 weeks of initial 

contact 

Office of Market Oversight and 

Investigations 

Timeliness of formal complaint 

resolutions 

Complete 80% within target time frames 

for various paths for resolution of 

complaints as specified by the 

Commission 

Office of General Counsel / 

Office of Administrative Law Judges / 

Office of Administrative Litigation/ 

Office of Market Oversight and 

Investigations 

Number of requests and referrals for ADR 

services 

Maintain at or increase levels achieved in 

FY 2004 Dispute Resolution Service 

Percentage of processes that achieve 

consensual agreements 

Maintain at or increase levels achieved in 

FY 2004 

Dispute Resolution Service / 

Office of General Counsel / 

Office of Administrative Law Judges/ 

Office of Administrative Litigation 

Number of major rule violations for a 

particular set of business practices None or Few Office of Market Oversight and 

Investigations 

Timely resolution of allegations of market 

misconduct 

Resolution within established timeframes 

for FERC investigations and litigation, as 

posted on the Commission internet site 

Office of Administrative Litigation 

99 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Performance Measurement Results for Management Initiatives

FY 2001 

Performance Measurement Performance Target Result 

Percentage of filings that FERC is 

capable of receiving electronically

Capability to receive 50% of filings 

electronically

Capability to receive 38% of filings 

electronically by the end of FY 2001. 

Percentage brought to 46% by midNovember 2001. 

Percentage of filings submitted 

electronically

50% of filings FERC is capable of 

receiving electronically are submitted 

electronically

17% of filings FERC is capable of 

receiving electronically are submitted 

electronically. 30% reached by October 

31. 

Timely issuance of notices/orders 95% of gas and electric notices and 

orders issued within 5 workdays 

97% of gas and electric notices/orders 

issued within 5 workdays 

Unqualified opinion on external audits Unqualified opinion Unqualified opinion received for FY 2001. 

Percentage of office directors operating 

within designated salary budgets 80% 100% of office directors operated within 

designated salary budgets. 

Percentage of payments made within 

Prompt Payment Act requirements 95% 81%

Number of days to award purchase 

orders Within 5 days of receipt of notification 98% of purchase orders awarded within 5 

days of receipt of requisition 

Number of days to award contracts Within 30 days of receipt of notification 95% of contracts awarded within 30 days 

of receipt of requisitions 

Number of award fee contracts Increase by 10% over FY 2000 

Award fee contracts and firm fixed price 

contracts increased by 10% over 

FY 2000 levels. 

Percentage of respondents giving 

positive ratings for ‘FERC focusing on the 

right things’ 

10% increase over baseline 

The Commission adopted a new

Strategic Plan to focus on important 

issues arising from the Western Market 

meltdown. No surveys were done during 

these times of great pressure and 

uncertainty. 

Percentage of employees in underrepresented groups Increase Hispanic employee population 

by 5% 

The Commission increased its Hispanic 

employee population by 10 percent. 

Percentage of senior executives 

participating in FERC’s diversity initiative 

100% of the office directors will have 

participated in the first phase 

3⁄4 100 percent of office directors 

participated in discussions with the 

Diversity Council concerning the direction 

of diversity at FERC. 

3⁄4 25 percent of office directors actively

participated in minority recruitment 

activities. 

Percentage of supervisory participation in 

LEaD 

100% of supervisors and managers will 

have completed training on the 5 

leadership behaviors 

100% of supervisors and managers 

(including new supervisors, managers, 

and team leaders) have completed 

training on the 5 leadership behaviors. 

Number of learning agreements 5% increase over FY 2000 29 employees on learning agreements in 

FY 2001, the first year of reporting 

Number of mentor/protégé teams 10 mentor/protégé teams At least 15 mentor/protégé teams 

100 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2002 

Performance Measurement Performance Target Result 

Number of documents and filings 

available and received electronically 10% increase over FY 2001 

3⁄4 The percent of qualified documents 

received electronically increased from 

11.6% to 34.38% 

3⁄4 Number of filings received in FY 2001 

was 1,968; in FY 2002 we reach 8,903. 

Reliability of IT infrastructure services 

3⁄4 98% network availability

3⁄4 33% annual PC replacement 

3⁄4 98% Internet site availability

3⁄4 98.5% network availability

3⁄4 33% annual PC replacement 

3⁄4 99.5% Internet site availability

Percentage of agenda items issued 

within 5 working days of a Commission 

meeting 

100% 100%

Percentage of electric notices issued 

within 5 working days of receipt of filing 95% 95%

Unqualified opinion on annual financial 

statements Unqualified opinion 

Commission received an unqualified 

opinion on its FY 2001 financial 

statements 

Monitor manage-to-budget concept Track biweekly; review quarterly

Performed bi-weekly updates to manageto-budget spreadsheets used by

managers to track spending, and 

reviewed status quarterly

Effective and efficient financial and 

administrative support 

3⁄4 Collect annual charges within 45 days 

of billing 

3⁄4 98% of invoices paid by electronic 

funds transfer 

3⁄4 1% increase in contract awards and 

purchase orders to small, minority, and 

women-owned businesses 

3⁄4 All contracts advertised online 

3⁄4 All contracts performance-based 

3⁄4 Collected 98% of the annual charges 

assessed in FY 2002 within 45 days of 

billing 

3⁄4 Processed 100% of payments 

electronically

3⁄4 92% increase 

3⁄4 All contracts were advertised online 

3⁄4 All contracts were performance-based 

Increase diversity of staff in high grades 

Increase diversity in GS-14, GS-15, and 

SES positions by 10% over current 

baseline 

Increased the number of minorities in 

GS-14, GS-15 and SES positions by five 

(or 6 percent). 

Number of new hires from recruitment 

program 

Meet the Commission’s need for new

talent through targeted recruitment, with 

50% at entry levels 

Exceeded 50% target level by 2%. Of the 

103 permanent hires in FY 2002, 54 were 

entry level recruits. Met the 

Commission’s need for new talent 

through targeted recruitment. 

Staff participation in learning and 

development programs 

3⁄4 Expand leadership development 

program 

3⁄4 Implement development plans for 20% 

of staff 

3⁄4 Initiate employee rotational 

development program 

3⁄4 Completed 360-degree feedbacks with 

senior staff 

3⁄4 Developmental plans for all new

Federal Career Intern Program (FCIP) 

interns 

3⁄4 Draft proposal for a pilot rotational 

development program in OED 

Periodic manager-staff discussions about 

performance accomplishments and 

improvements 

Expand to 3 major offices the program for 

quarterly discussions on performance 

objectives 

Made available to major offices the 

program for quarterly discussions on 

performance objectives. Completed the 

program in two offices. 

Percentage of awards presented for 

helping accomplish specific Commission 

goals 

More than 50% of awards for quality

service based on accomplishments 

supporting strategic objectives 

The target level was met. Based on the 

responses regarding FY 2002 incentive 

awards more than 50% of awards were 

given for quality service based on 

accomplishments supporting strategic 

objectives. 

101 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2003 

Performance Measurement Performance Target Result 

Number of new hires from recruitment 

program 

Attract new talent through targeted 

recruitment, with 50% at entry levels 

Exceeded target level by 2%. Of the 60 

permanent hires in targeted positions in 

FY 2003, 31 were entry level recruits. 

Met the Commission’s need for new

talent through targeted recruitment. 

New staff from summer intern program Hire 30% of participants into permanent 

positions 

Exceeded target level by 3%. Of the 33 

summer interns eligible to be hired, 11 

were hired into permanent positions. 

Increase diversity of staff in high grades Continue increasing diversity in GS-14, 

GS-15 and SES positions 

Increased the number of women and 

minorities in GS-14, GS-15 and SES 

positions by 35 (18%). Of the 35, 13 

(37%) were minorities. 

Encourage knowledge sharing Conduct informal training workshops Conducted 184 informal training 

workshops in 5 offices. 

Improved executive performance Implement 360 degree assessment of 

senior staff 

Completed 360 degree assessments for 

129 supervisors and managers, including 

senior staff. Completed targeted 

individual executive coaching sessions. 

Percentage of transactions accepted 

electronically

95% of transactions accepted 

electronically

57% of all documents received were 

eligible to be e-filed; 53% of the 

documents eligible to be e-filed were 

actually e-filed; 33% of all documents 

received (paper and electronic) were efiled. We expect to have 95% of 

transactions eligible to be accepted 

electronically in December 2003. 

Percentage of e-issuance versus paper 90% of Commission documents issued 

electronically 100% 

Redesigned Web site 

The redesigned web site, sponsored by

the Office of External Affairs, was 

deployed in August, 2003. 

Improved Web site 

99% availability

The site was 99% available in FY 2003 

based on contract performance 

evaluation server availability reporting by

FERC IT Support Services contractor. 

Timeliness of getting public documents 

online 

99% within 24 hours of receipt or 

issuance 

3⁄4 99% of FERC issuances are available 

online within 24 hours or less. 

3⁄4 99% of electronic submissions to 

FERC are published within 24 hours of 

review by the Office of the Secretary.

3⁄4 99% of paper submissions to FERC 

are published within 48 hours. 

Network availability 99%

File and Printer servers (where all Office 

Automation applications and network 

drives reside) were available for use 

99.93% of the Prime Period of 

Maintenance (PPM). The PPM is defined 

as the 11 hour period from 7:00 a.m. to 

6:00 p.m. on all days the FERC is open 

for business. 

102 
Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2003 

Performance Measurement Performance Target Result 

Standard office automation platform and 

PC rate of refresh 33% 

During this performance period, in an 

effort to reduce costs, the replace cycle 

has been changed from 3 years to 3.5 

years. During this period 335 CPUs were 

replaced that were 3.5 years or older. All 

primary FERC workstations are now

newer than 3.5 years old. The 

performance measure should reflect the 

new 28.5% target. 

Timeliness of virus definition files updates 

on servers and workstations 

Updates within 24 hours from release by

vendors 

The performance target has been met. 

We currently have our servers set up to 

Auto Update each morning at 1 a.m. for 

any Virus Engine Updates and at 2 a.m. 

for any DAT (virus definition file) 

Updates. They are set to update daily

and to scan local drives ‘On Access’ and 

boot sectors and floppy drives on 

shutdown. Updates are received via the 

internal FERC ‘McAfee/NetShield’ FTP 

server which in turn is getting the updates 

straight from the secure Network 

Associates, Inc. (NAI) site. We update to 

this server and use it as an internal 

update point for security and ease of 

configuration. All workstations are 

configured to check virus update from 

FTP server hourly. 

IT system changes to comply with 

enterprise IT architecture and 

configuration management practices 

Implement 98% reviews 

Although an Enterprise IT Architecture 

has not been completed for FERC, 100% 

of configuration changes are reviewed 

and approved or rejected by the FERC 

DCIO Configuration Control Board. All 

change requests and approvals are 

documented in the FERC configuration 

management library. 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2003 

Performance Measurement Performance Target Result 

Improved integration of work processes 

and electronic filing 

Refresh integrated filing, docket, and 

document management system 

Software releases of the FERC eFiling 

system were deployed in FY 2003 that 

increased the types of documents 

accepted electronically, improved the 

interface used by stakeholders to submit 

documents electronically, and improved 

the integration with the FERC document 

management system, eLibrary, and the 

FERC Online eRegistration system. 

A business case for the Activity

Management Tracking System (ATMS) is 

under review by the FERC Online 

Executive Steering Committee. ATMS 

will allow FERC to align FTE time 

reporting with business planning goals 

and objectives. 

Two releases of the FERC document 

management system, eLibrary, were 

deployed that improved systems 

availability, reliability, and usability as 

documented in weekly reporting by the 

FERC IT Support Services Contractor 

and reflected in comments received 

through customer surveys. 

eSubscription, a facility that allows

stakeholders to receive email 

notifications and document links 

whenever a document is received or 

issued in a case to which they subscribe, 

was deployed and has improved the work 

processes of external and internal 

stakeholders. 

Monitoring of manage-to-budget (MTB) 

process 

Bi-weekly tracking of office salary levels 

and quarterly review of salary levels 

between CFO and Office Directors 

The Commission met its performance 

target of bi-weekly tracking of the MTB 

process. However, the quarterly reviews 

between the CFO and Office Directors 

did not take place. This was due to the 

open and constant communication 

between the Division of Budget and the 

individual office MTB points-of-contact. 

As a result, managers were able to make 

quicker and more informed decisions on 

the resources within their particular 

program. No issues were raised during 

these discussions that necessitated 

involvement from the CFO or Office 

Directors. 

Timeliness of annual charges collections Within 45 days of billing 

The Commission collected 74% of the 

total dollar value of current year annual 

charge billings within the 45 day billing 

period; however, by the close of the fiscal 

year, the Commission collected 96% of 

the total dollar value of current year 

billings. 

Invoices paid by electronic funds transfer 98% 

The Commission processed over 99% of 

its disbursements via electronic funds 

transfer. 

Accuracy and completeness of annual 

financial statements Unqualified opinion 

The Commission received an unqualified 

opinion on its FY 2002 financial 

statements. 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2003 

Performance Measurement Performance Target Result 

Percentage of contracts performancebased 100% 100% of all contracts were performance 

based. 

Percentage of contracts advertised online 100% 

100% of all competitive contract 

requirements advertised in the Fed Biz 

Ops.

FY 2004 

Performance Measurement Performance Target Result 

Number of new hires from recruitment 

program 

Attract new talent through targeted 

recruitment, with 50% at entry levels 66% of all hires were at entry-levels 

New staff from summer intern program Hire 30% of participants into permanent 

positions 

25% of summer interns were hired into 

permanent positions 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Increase diversity of staff in high grades Continue increasing diversity in GS-14, 

GS-15 and SES positions 

The net increase of 21 staff into high 

grade positions included 3 minorities 

(14%) and 7 women (33%). 

Improved executive performance 

3⁄4 Implement 360 degree assessment of 

senior staff 

3⁄4 Expand training in leadership and 

management skills 

3⁄4 Completed 360 degree assessments & 

feedback; 

3⁄4 Implemented and completed FERCwide training for all new supervisors; 

3⁄4 Developed a Leadership & 

Management Development Program; and 

3⁄4 Initiated an Executive coaching pilot 

program. 

Mentoring program Implement FERC-wide mentoring 

program for all employees 

Although still being developed, the 

program’s scheduled completion date is 

November 2004. 

This performance target was set for an 

approximate date, and the deviation from 

that date is slight. This difference had no 

effect on overall program performance. 

Average IT costs per FTE Below industry average for Federal 

agencies Performance target achieved 

Percentage of transactions accepted 

electronically

95% of transactions accepted 

electronically

The Commission received 75.7% of 

qualified documents (25,343 out of 

33,469) electronically. Qualified 

documents represent 57% of the total 

documents (33,469 out of 59,114) 

submitted to the Commission in FY 2004. 

Although we did not meet the target level, 

the deviation had no effect on overall 

program performance. Besides 

submitting transactions electronically, 

parties have the option to submit 

transactions via digital media (i.e. CD). 

In addition, the percentage represents an 

increase over the FY 2003 result of 53%. 

Improved Internet Website 99% availability Performance target achieved 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2004 

Performance Measurement Performance Target Result 

Timeliness of getting public documents 

online 

99% within 24 hours of receipt or 

issuance 

97.3% of public documents were 

available online within 24 hours of receipt 

or issuance. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Improved reliability and availability of 

FERRIS 

Increase customer satisfaction 25% over 

FY 2003 87.5% customer satisfaction rate 

Network availability 99% Performance target achieved 

Desktop reliability Increase reliability by 5% per year Performance target achieved 

Standard office automation platform and 

PC rate of refresh 33% Performance target achieved 

Timeliness of virus file updates on 

servers and workstations 

Updates within 24 hours from release by

vendors 

92% of updates were completed within 24 

hours of release. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Implementation of Federal Information 

Security Management Act (FISMA) for 

small agencies 

95% 

Overall, the Commission had a 93% 

performance rating according to the 

FISMA OMB metric. According to the 

Putman scorecard, the Commission had 

an 84% performance rating and moved 

from an F to a solid B. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Develop Communications Plan 

Increase number of proactive interactions 

with the Press, Elected Officials, and 

Industry by 25% 

Increased the number of Press releases 

by 16%, the number of briefings with 

Elected Officials (i.e. Senate and House 

of Representatives) by 1%, but 

decreased the number of Industry

interactions by 38%. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Redesign Internet Website Make internet site more useful and userfriendly

Implemented new features (i.e. Public 

Event Calendar and Energy Projects 

Database) that are extremely popular 

with users. 

Engage Stakeholders Provide 50 presentations to government 

or other groups of stakeholders 

The Commission made a total of 94 

presentations – in a variety of forums – to 

numerous stakeholders throughout FY

2004. 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2004 

Performance Measurement Performance Target Result 

Report Market Conditions 

Publish regular summer and winter 

Seasonal Market Assessments, and 

other reports as conditions warrant 

3⁄4 The Winter Energy Market 

Assessment, published in November 

2003, reported on the upcoming winter 

heating season. 

3⁄4 The State of the Markets Report, 

published in January 2004, analyzed the 

state of the energy markets for an 18-

month span. 

3⁄4 The Summer Energy Market 

Assessment, published in June 2004, 

reported on the upcoming summer 

cooling season. 

3⁄4 The Commission also published, in 

May 2004, the results of an investigation 

into the January 2004 New England gas 

price spike. 

Discussions with State regulatory bodies 

on Commission policies and actions

Formal, effective interactions between 

FERC and state officials on policy issues

The Commission held 23 different 

meetings with State regulators. 

Expand discussions with Canada and 

Mexico

Formal interaction with Canadian and 

Mexican regulators on policy issues

The Commission held or participated in 

10 different meetings with Canadian 

and/or Mexican officials on issues related 

to infrastructure, reliability, and other 

policy initiatives. 

Foster communication with States and 

Governors on infrastructure

Hold infrastructure conferences in each 

region

The Commission held one infrastructure 

conference in the Northeast. 

Maintain liaison with market monitors in 

RTOs and ISOs 

Meet at least twice annually with RTO 

and ISO market monitors 

Commission staff meets regularly with 

market monitors early in the winter 

heating season (usually in December) 

and the summer cooling season (usually

in June) and also participates in monthly

conference calls with RTO/ISO market 

monitors. 

Outreach to stakeholder groups to 

encourage use of conflict resolution 

mechanisms 

Increase number of outreach 

opportunities with stakeholders by 25% 

The 64 outreach opportunities during FY

2004 represent an 8% increase over FY

2003. 

Monitoring of manage-to-budget process 

Bi-weekly tracking of office salary levels 

and quarterly review of salary levels 

between CFO and Office Directors 

Manage-to-budget (MTB) information was 

tracked and provided to office contacts 

on a bi-weekly basis. However, ongoing 

reviews and discussions between the 

Budget Division, individual office MTB 

contacts, and the Chief Financial Officer 

did not necessitate the need for quarterly

reviews with Office Directors. 

Monitoring of business plan 

3⁄4 Clarity of fit between projects, 

activities, and objectives 

3⁄4 Periodic monitoring of completions and 

adjustments to plan and related 

resources 

3⁄4 In order to better align work and 

resources between the various goals and 

objectives of the Commission, several 

changes were made to the Business Plan 

in FY 2004. This increased the logical 

arrangement and clarity of projects and 

activities within the Commission’s goals 

and objectives. 

3⁄4 The Business Plan was updated twice 

during FY 2004 to adjust workload 

completions and reflect resource 

reallocations based on workload priority

changes. 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2004 

Performance Measurement Performance Target Result 

Timeliness of annual charges collections Collect 98% of outstanding receivables 

within 45 days of billing 

97% of annual charge collections were 

made within 45 days of billing. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Invoices paid by electronic funds transfer 98% Over 99% of invoices were paid by

electronic funds transfer. 

Percentage of payments accomplished 

without error 98% Over 99% of payments were 

accomplished without error. 

Accuracy and completeness of annual 

financial statements Unqualified opinion Performance target achieved 

Percentage of contracts performancebased 100% Performance target achieved 

Percentage of contracts advertised online 100% 

76% of contracts were advertised on-line. 

The deviation from the performance 

target is not significant and had no effect 

on overall program performance. The 

contracts that were not advertised on-line 

were sole source contracts for highly

technical and specialized personnel 

primarily in the reliability and dam safety

program areas. 

FY 2005 

Performance Measurement Performance Target Data Source 

Number of new hires from recruitment 

program 

Attract new talent in mainstream 

occupations through targeted 

recruitment, with 50% at entry levels 

Office of Executive Director 

New staff from summer intern program Hire 30% of participants into permanent 

positions Office of Executive Director 

Increase diversity of staff in high grades Continue increasing diversity in GS-14, 

GS-15 and SES positions Office of Executive Director 

Improved executive/managerial 

development 

Expand training in leadership and 

management skills by implementing an 

experienced supervisors leadership 

program 

Office of Executive Director 

Improved technical development Implement second phase of “markets 

curriculum” for experienced staff Office of Executive Director 

Mentoring program Implement FERC-wide mentoring 

programs 

Office of Executive Director 

Improved human capital processes 

Implement selected human resources 

flexibilities provided by new SES Pay-forPerformance legislation Office of Executive Director 

Improved employee morale 

Conduct baseline FERC-wide employee 

survey; identify issues and conduct 

follow-up survey; set improvement targets 

for follow-up survey in FY 2006 

Office of Executive Director 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2005 

Performance Measurement Performance Target Data Source 

Improved services to employees Successful implementation of payroll 

services and integration with HR services Office of Executive Director 

Average IT costs per FTE Below industry average for federal 

agencies Office of Executive Director 

Percentage of transactions accepted 

electronically

95% of transactions accepted 

electronically Office of the Secretary

Improved Internet Website 99% availability Office of Executive Director

Timeliness of getting public documents 

online 

99% within 24 hours of receipt or 

issuance Office of Executive Director 

Improved reliability and availability of 

FERRIS 

Increase customer satisfaction 25% over 

FY 2003 Office of Executive Director 

Network availability 99% Office of Executive Director

Desktop reliability Increase reliability by 5% per year Office of Executive Director

Standard office automation platform and 

PC rate of refresh 33% Office of Executive Director

Timeliness of virus file updates on 

servers and workstations 

Updates within 24 hours from release by

vendors Office of Executive Director

Implementation of Federal Information 

Security Management Act (FISMA) for 

small agencies 

95% Office of Executive Director

Development of initial enterprise 

architecture Complete by October 30, 2004 Office of Executive Director

Develop Communications Plan 

Increase number of proactive interactions 

with the Press, Elected Officials, and 

Industry by 25% 

Office of External Affairs 

Redesign Internet Website Make internet site more useful and userfriendly

Office of External Affairs / Office of 

Executive Director 

Engage Stakeholders Provide 50 presentations to government 

or other groups of stakeholders 

Office of Market Oversight and 

Investigations / Office of Energy Projects 

/ Office of the General Counsel 

Discussions with State regulatory bodies 

on Commission policies and actions

Formal, effective interactions between 

FERC and state officials on policy issues

Office of External Affairs / Office of the 

General Counsel 

Support further discussions with Canada 

and Mexico

Formal interaction with Canadian and 

Mexican regulators on policy issues

Office of External Affairs / Office of 

Energy Projects / Office of Markets, 

Tariffs and Rates 

Foster communication with States and 

Governors on infrastructure

Hold infrastructure conferences in each 

region

Office of External Affairs / Office of 

Energy Projects 

Maintain liaison with market monitors in 

RTOs and ISOs 

Meet at least twice annually with RTO 

and ISO market monitors 

Office of Market Oversight and 

Investigations 

Outreach to stakeholder groups to 

encourage use of conflict resolution 

mechanisms 

Increase number of outreach 

opportunities with stakeholders by 25% Dispute Resolution Service 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

FY 2005 

Performance Measurement Performance Target Data Source 

Monitoring of manage-to-budget process 

Bi-weekly tracking of office salary levels 

and quarterly review of salary levels 

between CFO and Office Directors 

Office of Executive Director 

Monitoring of business plan 

3⁄4 Clarity of fit between projects, 

activities, and objectives 

3⁄4 Periodic monitoring of completions and 

adjustments to plan and related 

resources 

Office of Executive Director 

Timeliness of annual charges collections Collect 98% of outstanding receivables 

within 45 days of billing Office of Executive Director 

Invoices paid by electronic funds transfer 98% Office of Executive Director 

Percentage of payments accomplished 

without error 98% Office of Executive Director 

Accuracy and completeness of annual 

financial statements Unqualified opinion Office of Executive Director 

Percentage of contracts performancebased 85% Office of Executive Director 

Percentage of contracts advertised online 85% Office of Executive Director 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Appendix A 

Organizational Chart 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

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Federal Energy Regulatory Commission 

FY 2004 Performance and Accountability Report 

Appendix B 

Strategic Plan 

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116 
 Federal Energy Regulatory Commission 

 FY 2004 Performance and Accountability Report 

Federal Energy Regulatory Commission 

Strategic Plan FY 2004 – FY 2008 

6/17/2004 

Vision 

Dependable, affordable energy through sustained competitive markets 

Mission 

The Federal Energy Regulatory Commission regulates and oversees energy industries in the economic and environmental 

interest of the American public. 

Goals and Objectives 

Goal 1: Promote a Secure, High-Quality, Environmentally 

Responsible Infrastructure through Consistent Policies. 

Objective 1.1: Expedite Appropriate Infrastructure Development to Ensure Sufficient Energy 

Supplies.

• Identify projects with high public interest benefits and facilitate their speedy completion, consistent with 

the Commission’s statutory mandates and due process. 

• Implement power plant interconnection rules; complete small plant interconnection rules. 

• Firmly establish regional electric system expansion planning, with a variety of technology solutions to meet 

reliability, security and market needs. 

• Implement integrated licensing process and interagen

pipeline certification and LNG facility authorization. 

cy agreements facilitating hydropower licensing, 

•

m competitive markets, through formula rate or other administratively efficient means, 

• Encourage balanced innovative proposals that provide incentives for appropriate infrastructure investment. 

Objec e

• ntial applicants for licenses or certificates to utilize the Commission’s collaborative pre-

• onmental conditions into permits, licenses and certificates and ensure 

compliance with conditions.

Objective 1.2: Provide for Timely Cost Recovery to Infrastructure Investors.

• Establish clear cost recovery process for transmission investment. 

Ensure that revenue levels and rate designs for regulated company services are just and reasonable and 

support long-ter

when possible. 

tiv 1.3: Address Landowner and Environmental Concerns Fairly.

Encourage pote

filing process. 

Incorporate reasonable envir

117 
 Federal Energy Regulatory Commission 

 FY 2004 Performance and Accountability Report 

Objective 1.4: Protect the Reliability, Security and Safety of the Energy Infrastructure. 

• Oversee the development and enforcement of mandatory grid-reliability standards to protect the bulk 

power supply. 

• Complete the establishment of the Commission’s Reliability Division. 

• Serve as the lead U.S. agency on the siting and authorization of LNG facilities, hydroelectric facilities, and 

interstate natural gas pipelines, and ensure adherence to prudent safety practices by the same. 

• Work with other agencies and industry to address and improve infrastructure security. 

• Allow prompt recovery of prudently-incurred expenses to safeguard reliability, security and safety of the 

energy infrastructure. 

Ob

•

velopment of 

e California) regions.

ams issues.

erest.

Ob

• ergy markets.

ease market entry and

where appropriate. 

Goal 3: Protect Customers and Market Participants through Vigilant and Fair 

gy Markets.

Ob s.

hnologies through maintaining expert skills,

• ditions using objective benchmarks. 

•

Goal 2: Foster Nationwide Competitive Energy Markets 

as a Substitute for Traditional Regulation. 

jective 2.1: Advance Competitive Market Institutions Across the Entire Country.

Encourage continued development of cost-effective wholesale regional power markets in ISO-New England, New

York ISO, PJM Interconnection, Midwest ISO, Southwest Power Pool and California, and further de

Regional Transmission Organizations in Southeastern and Western (outsid

• Support creation of regional state committees to advise ISOs and RTOs. 

• Coordinate operation of RTOs and ISOs to reduce or eliminate se

• Promote transparency of competitive electric and gas markets. 

• Ensure that mergers and consolidations are consistent with the public int

jective 2.2: Establish Balanced, Self-Enforcing Market Rules.

• Complete revisions to market-based ratemaking policy to prevent exercise of market power. 

Work with states to support robust programs for customer demand-side participation in en

• Encourage standardized business rules and practices to maximize market efficiency,

reduce transactions costs, relying on NAESB, NERC and the RTO/ISOs

• Provide regulatory certainty through clear market rules and case specific decisions. 

• Prevent undue preference and self dealing in affiliate transactions. 

• Ensure renewable energy resources are accommodated in interconnection and transmission rules. 

Oversight of Both Traditionally Regulated and Transitioning Ener

jective 3.1: Provide Vigilant and Effective Oversight of Market Operation

• Promote understanding of energy market operations and tec

keeping abreast of trends and innovations, and reporting findings as appropriate. 

Assess and report on market and infrastructure con

Encourage effective RTO and ISO market monitoring units.

• Identify and remedy problems with market structure and operations, and periodically review market rules for 

consistency with long-term market development.

118 
 Federal Energy Regulatory Commission 

 FY 2004 Performance and Accountability Report 

Objective 3.2: Prevent Market Manipulation and Enforce Commission Rules.

• Investigate statutory and rule violations, and impose appropriate remedies. 

• Use expedited dispute resolution to accelerate settlements and minimize customer expense. 

• Act swiftly on third-party complaints, using litigation before Administrative Law Judges as needed to determine 

factual issues. 

• Advocate enhanced penalty authority. 

Management Initiatives Supporting all Goals and Objectives 

Human Capital

• Implement the Human Capital Plan to meet challenges of new Commission roles and changing workforce 

• racted services from the private sector to meet the agency’s 

statutory mandates efficiently and effectively. 

Info

• /time-management and case-processing systems to expedite work processes. 

Age c

ility. 

urate and timely financial information to support operating, budget, and policy decisions. 

Co

• Reach out to groups affected by agency actions in a timely manner. 

• Build strong partnerships with all stakeholders, legislators and regulators. 

demographics. 

Use the right mix of internal workforce and cont

rmation Technology

• Complete the implementation of e-government initiatives to expedite interactions with customers. 

Build effective electronic workload

n y Resources

• Integrate budget, business plan, and performance measurement to improve performance and accountab

• Generate acc

mmunication

119