FY 2005 

PERFORMANCE AND 

ACCOUNTABILITY REPORT

FEDERAL ENERGY REGULATORY COMMISSION 

DECEMBER 2005

Joseph T. Kelliher 

Chairman 

FEDERAL ENERGY REGULATORY COMMISSION 

WASHINGTON, DC 20426 

OFFICE OFTHE CHAIRMAN 

Letter from Chairman Kelliher 

I am pleased to present the Federal Energy Regulatory Commission's Performance 

and Accountability Report for fiscal year 2005. This report was prepared in accordance 

with the guidelines set forth in OMB Circular No. A-136 and Section 230 of Circular No. 

A-1 1. 

This report details the progress the Commission has made in achieving its mission 

to regulate and oversee energy industries in the economic, environmental, and safety 

interests of the American public. The strategic goals, objectives, and strategies that 

support the Commission's mission are included in Appendix B. 

The Commission has completed evaluations of its management controls and 

financial management systems and, based on these evaluations, I am providing a 

statement of assurance that the Commission meets the objectives required by the Federal 

Managers' Financial Integrity Act and that our financial systems conform with 

government-wide standards. In addition, I can provide assurance that the performance 

information contained in this report is complete and reliable and describes the results 

achieved towards our goals. 

uderal Energy Regulatory Commission 
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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 .........................................................................................7 

Guarding the Consumer .........................................................................7 

Energy Infrastructure that Serves the Nation’s Needs.........................10 

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

Financial Performance Overview ........................................................23 

Controls, Systems, and Legal Compliance ..........................................28 

Possible Future Effects of Existing Events and Conditions ................30 

Limitations of the Financial Statements ..............................................31 

Financial Section......................................................................................33

Chief Financial Officers’ Letter...........................................................35 

Independent Auditors’ Report .............................................................37 

Balance Sheets .....................................................................................41 

Statements of Net Cost.........................................................................42 

Statements of Changes in Net Position................................................43 

Statements of Budgetary Resources ....................................................44 

Statements of Financing.......................................................................45 

Statements of Custodial Activity .........................................................46 

Notes to Financial Statements..............................................................47 

Performance Report ................................................................................61

Introduction..........................................................................................63 

Performance Measurement Data for Energy Infrastructure: 

FY 2002 – FY 2006 .............................................................................64 

Performance Measurement Data for Competitive Markets: 

FY 2002 – FY 2006 .............................................................................76 

Performance Measurement Data for Market Oversight: 

FY 2002 – FY 2006 .............................................................................89 

Performance Measurement Data for Management Initiatives: 

FY 2002 – FY 2006 ...........................................................................100 

Appendix A: Organizational Chart......................................................115

Appendix B: Strategic Plan...................................................................119 

Appendix C: Statutory Authority ........................................................123 

Appendix D: Acronym Glossary ..........................................................127 
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Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

1 

Management’s 

Discussion 

and Analysis 

(Unaudited) 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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Introduction 

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

(OMB) Circular No. A-136 and Section 230 of Circular No. A-11, this report 

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

FERC’s) FY 2005 audited annual financial statements and program performance 

report. The financial section includes the Commission’s audited balance sheet; 

statements of net cost, changes in net position, budgetary resources, financing, 

and custodial activity; and notes to the financial statements. The performance 

report section includes performance measurement data for fiscal years 2002 

through 2006. 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 2005 and beyond. 

Overview of the Commission 

The Commission is an independent regulatory agency within the U.S. Department 

of Energy (DOE) whose function is to oversee the Nation’s electric, natural gas, 

hydroelectric, and oil pipeline industries. 

The Commission was created through the DOE Organization Act on October 1, 

1977. At that time, the Federal Power Commission (FPC), the Commission’s 

predecessor that was established in 1920, was abolished and the Commission 

inherited most of the FPC’s regulatory mission. The following paragraphs 

highlight the Commission’s federal statutory authority, with a more 

comprehensive listing available in Appendix C. 

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. 

Vision

Reliable, affordable energy through reliance on 

competition and effective regulation. 

Mission

The Federal Energy Regulatory Commission regulates 

and oversees energy industries in the economic, 

environmental, and safety interests 

of the American public. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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Since 1935, the Commission has regulated certain electric industry 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. Under FPA sections 203, 205 and 206, the Commission primarily 

regulates investor-owned utilities and independent power producers. 

Government-owned utilities (e.g., Tennessee Valley Authority, federal power 

marketing agencies, and municipal utilities) and most cooperatively-owned 

utilities are not, in large part, subject to Commission 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 the responsibility of state and local governments. However, under 

the Energy Policy Act of 2005 (EPAct 2005), the Commission now has the 

backstop authority to permit the construction or modification of electric 

transmission facilities under certain conditions. 

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

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

the construction of new liquefied natural gas (LNG) import terminals and 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. The 

Commission’s jurisdiction over wholesale sales of natural gas, however, is limited 

by the Natural Gas Policy Act of 1978 and the Wellhead Decontrol Act of 1989. 

Pipeline siting and construction are authorized by the Commission if found to be 

required for public convenience and necessity. As with hydropower licensing, the 

Commission’s actions on LNG and pipeline projects typically require 

consideration of factors under the National Environmental Policy Act of 1969 

(NEPA), the Endangered Species 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 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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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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 no net 

appropriations. 

Organizational Structure 

Approximately 1,258 full time equivalents (FTEs) carried out the Commission’s 

mission in FY 2005 using a budget of $210 million. 

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

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

2005, is included in Appendix A. 

Office of Energy Projects – 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 this office 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 – Deals with matters involving markets, 

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

services. This office includes the Commission’s Reliability Division. 

Office of Market Oversight and Investigation – Oversees and assesses the 

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

Office of Administrative Law Judges – Resolves contested cases effectively, 

efficiently and expeditiously, while ensuring that the rights of all parties are 

preserved. This is accomplished through an impartial hearing and decision or 

through a negotiated settlement, as directed by the Commission. 

Office of the General Counsel – Provides legal services to the Commission, 

represents the Commission before the courts and Congress, and is responsible for 

the legal phases of the Commission’s activities. Included in this office is the 

Commission’s Dispute Resolution Service (DRS), which assists participants to 

achieve resolution of disputes through consensual decision making. 

Office of Administrative Litigation – Represents the public interest in 

administrative proceedings at the Commission. This office also provides 

testimony, exhibits and studies on electric rate, transmission, open access and 

restructuring cases and in natural gas rate-design cases. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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Office of External Affairs – Responsible for all external communications with the 

public and media for the Commission. 

Office of the Secretary – Serves as the official focal point through which all 

filings are made for proceedings before the Commission. 

Office of the Executive Director – 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 vision is to promote 

reliable, affordable energy through a reliance on competition and effective 

regulation, thereby supporting a strong, stable national economy. To accomplish 

this, the Commission has three main goals: 

• Adequate infrastructure. Promote development of a robust energy 

infrastructure consistent with statutory mandates and due process. 

• Competitive energy markets. Prevent exercise of market power by relying on 

effective competition and establishing clear market rules. 

• Vigilant market oversight. Prevent exercise of market power through the firm 

but fair enforcement of Commission rules. 

The Commission’s Strategic Plan describes these goals as follows: 

1. Energy Infrastructure. Goal: Promote Development of a Robust Energy 

Infrastructure.

This goal encourages investment in the infrastructure needed to sustain energy 

markets by expediting the decision-making process, maintaining regulatory and 

cost certainty, protecting the energy infrastructure, 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 

such as, pipeline certificates, hydropower licenses and preliminary permits, 

compliance activities, environmental and other licensing conditions, dam safety 

inspections and most rate determinations. 

2. Competitive Markets. Goal: Prevent Exercise of Market Power by 

Reliance on Effective Competition.

This goal focuses on the competitive forces within the electric and gas markets, 

and the rules that govern those markets. This involves the Commission 

establishing clear market rules in wholesale electric markets, promoting 

transparency in electric and gas markets, and reforming market policies where 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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necessary. Along with some traditional work in the area of rate determinations, 

this goal includes various initiatives in the electric and natural gas markets. 

3. Market Oversight. Goal: Prevent Exercise of Market Power by Reliance 

on Effective Regulation.

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

long run by ensuring that the Commission will identify and remedy energy market 

problems. This entails recognizing problems when - or before - they develop and 

developing effective solutions to police individual behavior, all to maintain just 

and reasonable rates. 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 

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. 

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. During FY 2005, the Commission reported estimated and actual 

FTE usage at a detailed activity level in its Business Plan, which improved 

Offices’ ability to organize and allocate resources. 

Guarding the Consumer 

The Commission is charged with regulating the electric and natural gas industries 

under the FPA and NGA, laws that were written in the 1930s. The central charge 

of the Commission in the area of electric regulation, expressed in the 30 year-old 

quote to the left, is the same today – protecting wholesale power customers and 

transmission customers from unjust and unreasonable rates and from undue 

discrimination and preference. With respect to natural gas regulation, the 

Commission is charged with the same duty – protecting gas pipeline shippers 

from unjust and unreasonable rates and from undue discrimination and 

“Of the Commission’s 

primary task there is 

no doubt, however, 

and that is to guard the 

consumer from 

exploitation by noncompetitive electric 

power companies.” 

NAACP vs. Federal 

Power Commission 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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preference. In discharging these duties, the Commission relies on both regulation 

and competition. 

Despite perceptions to the contrary, deregulation has never been the 

Commission’s policy with respect to electric or natural gas markets. Competitive 

markets are not completely unregulated, and public utilities are not completely 

free of rivalry. The notion that a regulatory entity must choose between relying 

on regulation or competition is false, as markets subject to the Commission’s 

jurisdiction are subject to both competition and regulation. 

Developing the best possible mixture between reliance on competition and 

regulation is exactly what the Commission has been doing over the past four 

years, particularly in the area of electric regulation. 

In wholesale power markets, Commission policies have promoted effective 

competition as a means to assure just and reasonable rates. The Commission first 

pursued this goal in the 1980’s by authorizing wholesale power sales at marketbased rates, rather than cost-based rates. This marked a fundamental change in 

Commission policy, with the objective to lower wholesale power prices through a 

greater reliance on competitive pressures. The courts ultimately affirmed this 

policy change. 

Recognizing that competition is a means to an end – lower wholesale prices – not 

an end unto itself, the Commission did not make a break from regulation. Rather, 

public utilities authorized to make market-based sales, for example, continued to 

be subject to Commission regulation. 

The Commission also promoted effective competition in wholesale power 

markets by requiring jurisdictional transmitting utilities to provide open access. 

Beginning in the 1980’s, the Commission began to impose open access 

requirements in market-based rate cases and mergers, with Order No. 888 

extending the open access requirements to all jurisdictional public utilities. The 

logic of the policy was that the open access transmission tariff (OATT) would 

mitigate not only transmission market power, but also in many cases generation 

market power. That underlying logic has been called into question, and the 

Commission has recently reformed its generation market power test and begun the 

process of reforming Order No. 888 itself. 

The Commission also promoted development of regional transmission 

organizations (RTOs) and independent transmission system operators (ISOs). 

Initially, the role of RTOs and ISOs was expected to be limited to running the 

transmission grid in a certain region, thereby eliminating rate pancaking (or 

multiple rates) and providing for regional planning. However, the role of RTOs 

and ISOs has evolved over time, to the point where most RTOs and ISOs now run 

markets. In some respects, they operate more like (and some say even resemble) 

securities and commodities exchanges like the New York Stock Exchange or the 

Chicago Board of Trade than a traditional public utility. 

“The two principal 

institutions of social 

control in a private 

enterprise economy 

are competition and 

direct regulation. 

Rarely do we rely on 

either of these 

exclusively; no 

competitive markets 

are totally 

unregulated, and no 

public utilities are free 

of some elements of 

rivalry. The proper 

object of search, in 

each instance, is the 

best possible mixture 

of the two.” 

Alfred Kahn, 

Economics of 

Regulation
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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During this period, Commission policies resulted in significant entry and 

construction of new generation capacity by independent power producers, with 

some regions now overbuilt with generation capacity. Commission policies also 

encouraged development of RTOs in many regions, although progress has slowed 

considerably in other regions. At the same time, investment in transmission 

infrastructure has not kept pace, resulting in increased transmission congestion in 

some regions. This raises a significant concern for the Commission since 

transmission congestion acts like an import quota, resulting in higher energy 

prices. There are also concerns about the costs of RTOs and ISOs. 

One reason the Commission developed these policies was the need to respond to 

the significant changes within the electricity and gas markets over the past 25 

years. During this time, the Commission adopted orders establishing rules for 

open access gas transportation and electric transmission; and, on the natural gas 

side required pipelines to “unbundle” their gas sales from their transportation. 

The Commission increasingly used competitive market forces, to the extent 

possible, to benefit customers and to achieve just and reasonable rates. There has 

been a significant movement away from cost-based ratemaking and toward a 

reliance on market-based rates for suppliers. This allows them to take advantage 

of short and long term opportunities for setting prices for the commodities of 

natural gas and electricity. 

Over time, the natural gas and electric industries have transformed from 

companies using their monopoly-owned transportation and transmission facilities 

to supply all the needs of their wholesale customers, to companies providing open 

and non-discriminatory access to their facilities, under Commission approved 

tariffs. The foundation for today’s wholesale gas and electric energy markets lies 

in the reliance on open-access transportation and transmission service. This 

allows independent suppliers to compete for gas and electricity sales at marketbased prices and to offer market choices for customers. 

In many instances, the Commission needed to react to these changes and reform 

its policies. Accordingly, the Commission began changing the balance between 

competition and regulation in its electric market-based rate program. Since 2001, 

the Commission has steadily increased its reliance on regulatory tools to prevent 

the exercise of market power by focusing on its generation market power policies. 

In particular, the Commission has strengthened its reporting requirements (Orders 

No. 2001 and 652), acted to prohibit and sanction market manipulation through its 

Market Behavior Rules, bolstered its generation market power test by issuing 

interim market power screens in 2004, and initiated a rulemaking on all four 

prongs of its market power test (i.e., generation market power, transmission 

market power, affiliate abuse, and barriers to entry). 

To continue this electric policy reform effort, the Commission is initiating an 

effort to reform its transmission open access policies to eliminate the remaining 

potential to engage in undue discrimination and preference in transmission 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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service. The Commission will also begin taking steps to lower RTO costs by 

encouraging greater cost accountability at RTOs and ISOs. 

In addition to these reforms, the Commission also has new regulatory tools to 

guard the consumer. EPAct 2005 provided the Commission significant new 

regulatory authority to prevent market manipulation and the exercise of market 

power. Because of the dramatic changes that have occurred in the electric and 

gas industries over the past 25 years, the Commission needed these new 

regulatory tools to discharge its historic duties to protect consumers against unjust 

and unreasonable rates and undue discrimination and preference. 

In particular, EPAct 2005 established an express prohibition of market 

manipulation in electricity and gas markets, expanded the Commission’s authority 

to review mergers and generation facility sales, and granted the Commission 

authority to impose significant civil penalties. The Commission will judiciously 

exercise this new authority to prevent market manipulation and the exercise of 

market power. 

Energy Infrastructure that Serves the Nation’s Needs 

A robust energy infrastructure is critical to the health of the U.S. economy, as 

evidenced by the immediate impact Hurricanes Katrina and Rita had (and 

continue to have) on the Nation’s economy. With damage to offshore oil and gas 

production facilities leading to higher prices and the disruption to oil and 

petroleum product pipelines causing a surge in gasoline prices, public fears about 

the adequacy of the Nation’s energy supply soared. Therefore, the stronger and 

more resilient we make our energy infrastructure the sounder our economy will 

be. 

The Commission has an important role in the development of a strong energy 

infrastructure. Nearly two-thirds of the energy consumed by the United States is 

transported by pipelines, most of which are regulated by the Commission. This 

network of pipelines transports oil, petroleum products, and natural gas to meet 

the needs of our economy. The Commission’s rate policies, consistently applied 

to transportation infrastructure projects, must give investors the confidence that 

they will have an opportunity to recover their investments, and must provide rate 

certainty to oil and natural gas customers as well. 

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

quickly to the Nation’s need to expand existing, or construct new, pipelines and 

related facilities. Once natural gas reserves are located and developed, the 

Commission’s role is to evaluate proposals to expand or construct interstate 

pipelines, enabling companies to bring those supplies to market. 
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FY 2005 Performance and Accountability Report 

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In that role, among others, the Commission has been extremely effective over the 

years as the timeline for approving major pipeline projects has decreased steadily. 

The average time to complete the Commission’s certification process of a major 

pipeline project, including environmental review, now averages about 111⁄2 

months. Pre-filing allows the environmental review process to start earlier in the 

project review and allows the public, governmental agencies, and other entities to 

get involved at a time when fundamental decisions are being made; all of which 

help to open the communication earlier in the project review process so that 

problems can be averted later in the process. 

As an example, the Commission recently considered a project in the Eastern 

United States consisting of a 275-mile long mainline with a few short laterals. 

While not one of the Commission’s largest projects, the environmental analysis 

for this project determined that the project: 

3⁄4 would affect about 4,200 acres, including the clearing of up to 3,090 forested 

acres; 

3⁄4 would have a total water-crossing length of nearly 12 miles, including more 

than 620 streams and rivers (four of which would be major crossings of 

rivers more than 100 feet wide), more than 500 freshwater wetlands; and 

3⁄4 could occur in the vicinity of 22 federally listed endangered or threatened 

species, 11 federal species of concern, 25 state-listed endangered and 

threatened species, and three state natural heritage habitats. 

Additionally, the applicant identified 126 archaeological sites, six historic 

structures, and eight cemeteries along the route. In total, more than 50 of the 

locations would require additional study to determine if they are eligible for 

listing on the National Register of Historic Places. In the end, Commission staff 

evaluated seven major route alternatives, two project system alternatives, 16 route 

variations, two access road variations, a no-action alternative, and a postponedaction alternative, taking final action on the proposal within 18 months. 

Although our processes are more effective and efficient than in the past, the 

Commission will continue to search for ways to reduce the processing time for 

applications, including removing impediments to this process. This, in turn, will 

lend greater certainty to the certification process and to those investing in a 

project. 

The Commission also regulates natural gas storage projects, which provide 

natural gas during peak periods in order to reduce price volatility. Unfortunately, 

gas storage capacity additions have slowed in recent years with total U.S. capacity 

increasing only one percent between 1988 and 2003. 

Fulfilling the obligations required by the Alaska Natural Gas Pipeline Act, the 

Commission issued a final rule in February 2005 establishing requirements 

governing the conduct of open seasons for capacity on proposals for Alaska 

natural gas pipeline projects. Designated Order No. 2005, the rule encourages the 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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prudent development and delivery of a clean domestic natural gas resource and 

provides a stimulus for exploration, development and production of gas. The rule 

provides a 120-day window for an open season, special consideration for in-state 

transportation needs, adherence to broad standards of conduct among affiliates, 

presumption of rolled-in rates for subsequent expansions, and other 

accommodations for future capacity needs by producers with unproven reserves. 

The Commission also has an important role in assuring a robust electricity 

infrastructure. In setting rates for both wholesale power sales and interstate 

transmission, the Commission intends its pricing policy to encourage investment 

in generation and transmission facilities. Per the Commission’s 2004 State of the 

Markets Report, although transmission investment rose in dollar terms it 

remained much lower than generation investment. In capacity terms, the 

approximately 931 miles of new transmission lines of 230 kV or greater that were 

built in 2004, adding roughly 0.6 percent of installed capacity per mile, pales in 

comparison to the more than 20 gigawatts of new generation capacity that entered 

operation, adding 2.3 percent to the electric generating fleet. 

EPAct 2005 granted the Commission new regulatory authority to promote an 

energy infrastructure that serves the Nation’s needs. First, the new law grants the 

Commission – for the first time – the authority to site electric transmission 

facilities under certain conditions. While this new authority is more limited than 

the Commission’s gas pipeline siting authority, it should lower the regulatory 

barriers to investment in the transmission grid. The Commission will work to 

implement this new authority in accordance with the specific criteria established 

in EPAct 2005. 

In addition, EPAct 2005 adopts procedures that better coordinate the review 

process for natural gas infrastructure, allowing final decisions to be rendered in a 

timely manner. Specifically, the Commission is designated as the lead agency for 

the purpose of coordinating all applicable authorizations and in performing the 

environmental review. In its role as the lead agency, the Commission establishes 

a schedule that all other permitting agencies must adhere to, and maintains one 

consolidated record to be used for any judicial reviews of any actions taken. The 

U.S. Court of Appeals for the District of Columbia has exclusive jurisdiction over 

any action concerning the failure of an agency to act in accordance with the 

Commission’s established schedule and will act in an expedited fashion. 

With regard to LNG import facilities, EPAct 2005 clarified the Commission’s 

exclusive jurisdiction to authorize such facilities. This removes the doubt cast 

over the Commission’s jurisdiction by a California lawsuit that threatened to halt 

much-needed development of LNG import facilities. Subsequent to the passage 

of EPAct 2005, the lawsuit was dismissed. 

In the area of hydropower, EPAct 2005 grants tax incentives for hydropower 

developed at dams existing prior to enactment of the law. This will have the 

potential to increase infrastructure through the construction of generating 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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facilities at non-hydropower dams and the addition of new facilities at existing 

hydro projects. EPAct 2005 also authorizes licensees or other participants to 

offer cost or power-saving alternatives to mandatory license conditions of the 

U.S. Departments of the Interior, Commerce, or Agriculture. In considering any 

alternatives, the Departments must document that they gave “equal consideration” 

to the effects of the mandatory conditions on a variety of factors, such as energy 

supply, distribution, cost, and use; flood control; navigation; water supply; and 

environmental quality. Should this result in significant cost and power savings, 

while maintaining resource protections as expected, it could promote interest in 

hydropower development. 

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 2005. The performance measures and targets were selected from the 

Commission’s FY 2006 Performance Budget Request, submitted to Congress in 

February 2005. A complete list of the Commission’s performance measurement 

data for fiscal years 2002, 2003, 2004, 2005, and 2006, is included in the 

Performance Report section of this report. 

Performance Measurement Data for Energy Infrastructure

Goal: Promote Development of a Robust Energy Infrastructure. 

Performance Measurement Performance Target Result 

Time to complete NEPA Prefiling 

Process 

8 months after a complete 

application is filed 

Target Met. During FY 2005, 

100% of applications completed 

the NEPA Prefiling Process within 

the stated target. 

In FY 2005, the Commission continued to emphasize the importance of the PreFiling Process for the identification and resolution of both environmental and 

non-environmental issues prior to the filing of an application. As a whole, the 

program has been successful and generally accepted by the industry. For each of 

the six projects that entered the Pre-Filing Process in FY 2005 and filed complete 

applications, the Commission issued environmental impact statements or 

environmental assessments within the eight month target. 

For the Questar Pipeline Company Southern System Expansion Project, the 

Commission completed the environmental assessment in less than seven weeks of 

the filing of the completed application. This represented a significant 

achievement by the Commission since considerable cooperation and consultation 

was required with the U.S. Bureau of Land Management, which manages a large 

portion of the land affected by the project. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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For the Ingleside Energy Center LNG Project, the Commission completed the 

environmental impact statement in less than eight months of the filing of the 

completed application despite delays in receiving certain information from the 

applicant and cooperating agencies. 

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 

Target Met. During FY 2005, the 

following percentages of cases 

were completed within the stated 

targets: 

3⁄4 93% 

3⁄4 100% 

3⁄4 100% 

3⁄4 89%. 

In addition to meeting these targets, the Commission also coordinated with other 

Federal agencies to communicate hurricane-related service interruptions to the 

White House, Congress, and other interested agencies. In doing so, the 

Commission designated an official point of contact to communicate with the 

various agencies and to compile daily Energy Reliability Situation Reports on all 

energy sectors. 

 

Also in FY 2005, the Commission certificated 28 major pipeline projects, 11 

storage projects and 6 LNG projects. The following table summarizes the 

projects authorized in FY 2005: 

Type of 

Project Added Capacity (approx.)

New Pipeline 935 miles, 147,408 hp of compression and 14,550 million cubic feet per day 

(MMcf/d) of additional capacity

New Storage 4,444 MMcf/d of peak-day deliverability

New LNG 44.8 billion cubic feet (Bcf) of storage capacity and 6,500 MMcf/d of 

deliverability

Performance Measurement Performance Target Result 

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 

Target Met. During FY 2005, The 

Commission issued 98% of the 

224 merits orders to resolve cost 

recovery proposals for new 

infrastructure by requested date 

or, in the case of gas pipeline 

certificate applications, contributed 

rate inserts to allow timely 

completion. 

For example, the Commission accepted or approved several innovative rate 

proposals by electric utilities that have already spurred the development of badly 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

15 

needed new transmission capacity in California (TransElect’s Path 15 expansion), 

or will facilitate the development of new transmission to serve the capacity 

constrained areas of San Francisco (Trans Bay Cable between Pittsburg, 

California and San Francisco) and the Olympic peninsula in Washington state 

(Sea Breeze’s cable between Vancouver, British Columbia and Port Angeles, 

Washington). The Commission also approved, in part, Southern California 

Edison’s proposal to construct and roll-in to its rate base the costs of a new trunk 

line designed to serve wind power generators. 

Lastly, the Commission approved market-based transportation rates for niche 

services in the Rendevous pipeline certificate proceeding. This case represented 

the first time such an authorization was based on an ease of entry finding, which 

applies to circumstances without the large sunk costs of major construction, and 

can be an important factor in the Commission’s market power analysis. 

Performance Measurement Performance Target Result 

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 

Target Met. During FY 2005, the 

Commission approved several 

rate proposals and issued a policy 

statement on independent 

transmission companies, which 

collectively accomplished the 

stated targets. 

In Southwest Power Pool (SPP), the following pricing and cost allocation 

proposals were implemented to provide needed funding for new infrastructure: 

3⁄4 an experimental transmission service prepayment procedure allowing 

transmission customers who frequently use short-term transmission 

service to prepay for service, on a voluntary basis, in order to fund 

transmission expansion needed to permit the provision of requested 

short-term service; 

3⁄4 a regional cost allocation plan for transmission upgrades to maintain 

system reliability (Base Plan Upgrades), which splits the cost of 

network upgrades in excess of $100,000, on a 1/3-2/3 regional-zonal 

basis (i.e., 1/3 rolled into an SPP wide regional rate and 2/3 rolled into 

the zonal rate); and 

3⁄4 an aggregate transmission study process and cost allocation method to 

respond to requests for transmission service, under which SPP 

aggregates 4 months of transmission service requests and determines 

the required upgrades on an aggregate basis and allocates the costs 

among the requesters. For network transmission customers, SPP 

directly assigns the costs of network upgrades but also provides 

revenues/credits from subsequent transmission service that uses the 

excess capacity created by the upgrades (point- to-point customers’ 

upgrade costs are priced under traditional higher of pricing). 

In PJM Regional Transmission Organization (PJM), the Commission 

conditionally accepted a proposal by the RTO and its transmission owners to 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

16 

establish the general methodology to recover costs incurred under PJM’s 

Regional Transmission Expansion Program (RTEP). The Commission found that 

the proposal would provide the transmission owners with the ability to fully 

recover all reasonably incurred costs under the RTEP and would provide the 

necessary incentives for transmission owners to build RTEP upgrades quickly. 

In addition to the SPP and PJM proposals, the Commission: 

3⁄4 issued a June 2005 policy statement clarifying and removing barriers to 

the formation of independent transmission companies; 

3⁄4 processed applications by three utilities providing accounting for RTO 

integration and start-up costs to facilitate cost recovery and encourage 

investment in RTOs; and 

3⁄4 approved ITC Holdings Corp.’s restructuring proposal that allowed it to 

‘go public’ and remain independent and qualify for favorable rate 

treatment, serving as an encouragement to other independent 

transmission companies which are likely to build badly needed 

transmission infrastructure and to operate their transmission facilities 

in a non-discriminatory and efficient manner. 

Other Accomplishments

Pursuant to EPAct 2005, the Commission issued a Notice of Proposed 

Rulemaking (NOPR) on September 16, 2005, entitled “Repeal of the Public 

Utility Holding Company Act of 1935 and Enactment of the Public Utility 

Holding Company Act of 2005,” to repeal the 70-year-old Holding Company Act 

(PUHCA), which established a regulatory regime overseen by the U.S. Securities 

and Exchange Commission (SEC), and replace it with a new regulatory regime 

involving access to holding company books and records by FERC and state utility 

regulators. PUHCA repeal will free up new avenues of capital investment in the 

electricity and gas industries to strengthen the country’s energy infrastructure and 

support competitive markets. 

Congress mandated that the new Holding Company Act (PUHCA 2005) take 

effect within six months of EPAct 2005 being signed into law. The Commission 

is required to finalize PUHCA 2005 rules and to report recommendations on any 

necessary technical and conforming statutory amendments to Congress. After 

PUHCA 2005 is effective, the Commission has 90 days to finalize a rule 

exempting certain holding company systems with qualifying facilities, exempt 

wholesale generators and foreign utility companies from the federal access to 

books and records provisions of PUHCA 2005. In its NOPR, the Commission 

addressed all rulemaking requirements of PUHCA 2005 and also requested 

comments on what SEC requirements under PUHCA should be maintained under 

PUHCA 2005. The Commission is also seeking comment on a proposal to 

remove its exempt wholesale generator rules, as they are unnecessary under 

PUHCA 2005 regulatory regime established by EPAct 2005. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

17 

Performance Measurement Data for Competitive Markets

Goal: Prevent Exercise of Market Power by Reliance on Effective Competition. 

Performance Measurement Performance Target Result 

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 

Target Met. During FY 2005, the 

Commission accomplished several 

of the stated targets, including: 

3⁄4 the expansion of PJM; 

3⁄4 adding SPP and ISO-NE as 

RTOs; 

3⁄4 accepting new ISO-NE 

operating agreements; and 

3⁄4 the adoption of multiple rule 

and/or tariff revisions within 

several RTOs/ISOs. 

For example: 

3⁄4 On October 1, 2004, the Commission granted full recognition to SPP 

as a RTO subject to limited compliance issues. 

3⁄4 On February 1, 2005, Independent Transmission System Operator - 

New England, Inc (ISO-NE) commenced operations as an RTO. 

In addition, ISO-NE and Maine Electric Power Company 

(MEPCO) entered into an agreement under which ISO-NE would 

operate MEPCO’s transmission system. 

3⁄4 On May 1, 2005, PJM expanded by adding Virginia Electric and 

Power Company as a transmission owner to form PJM South. In 

addition, PJM adopted revisions to its OATT and restated 

operating agreement which would create a special membership to 

reduce the cost of participation of (smaller) Curtailment Service 

Providers that wish to participate in PJM’s real-time economic 

load response program. 

In Midwest Independent Transmission System Operator (Midwest ISO), several 

market rule changes and refinements were implemented that related to the start-up 

of its energy markets, including: 

3⁄4 refinements to its allocation process for assigning financial 

transmission rights; 

3⁄4 refinements to its creditworthiness policies and related invoicing, 

billing, and default provisions to promote a balance between 

finding a market participant creditworthy and the risk of default; 

and 

3⁄4 revisions to its tariff to implement a reactive power rate schedule that 

permits independent power producers to sell reactive power under 

the same terms and conditions as transmission owners, as well as 

proposals that allow compensation for the rescheduling of 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

18 

generator outages and compensation for generators that are called 

on during emergency situations. 

In New England, revisions to Market Rule 1 were adopted to implement: 

3⁄4 provisions that would allow the partial de-listing of capacity resources 

for sales to neighboring control areas; 

3⁄4 special provisions related to the dispatch and operation of the New 

England bulk power system during extreme cold weather 

conditions; and 

3⁄4 a test program for a seams reduction initiative involving short-notice 

intra-hour scheduling of energy between the New England and 

New York control areas. 

In New York, New York Independent Transmission System Operator (NYISO) 

adopted revisions to implement: 

3⁄4 a comprehensive planning process for reliability; 

3⁄4 provisions that reduce the amount of collateral required by virtual 

transactions; and 

3⁄4 provisions to reduce the price volatility in NYISO’s real-time market 

that is attributable to real-time forecasting uncertainties rather than 

to actual market conditions. 

Also during FY 2005, the Commission took several steps to improve the OATT to 

reduce entry barriers or foster competition in energy markets. Specifically, the 

Commission: 

3⁄4 reaffirmed and clarified its procedures for large generators; 

3⁄4 proposed a new generator imbalance service schedule for intermittent 

generation resources, such as wind; 

3⁄4 issued final rules implementing standard procedures for the 

interconnection of small generators and large wind generators; and 

3⁄4 instituted a broad inquiry into whether and how the OATT needs 

reform in light of the changes in the electric utility industry since 

the OATT was instituted in 1996. The Commission also sought 

comment on whether it should collect certain generator 

information in order to help foster competition in the markets. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

19 

Performance Measurement Performance Target Result 

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’ real-time energy needs 

3⁄4 transparency and efficiency in 

congestion management 

3⁄4 firm transmission rights 

3⁄4 resource adequacy approaches 

Target Not Met. Although the 

Midwest ISO planned to start its 

energy markets on December 1, 

2004 (within three years of 

receiving RTO status), the 

Commission approved a fourmonth delay to permit additional 

time for software testing and 

market participant training. The 

updated April 1, 2005 date was 

met. 

The Midwest ISO energy markets that started during FY 2005 include: 

3⁄4 firm transmission rights; 

3⁄4 market monitoring and mitigation; 

3⁄4 transitional resource adequacy plan; 

3⁄4 day-ahead and real-time energy markets; and 

3⁄4 transparent and efficient congestion management system using locational 

marginal pricing. 

Performance Measurement Performance Target Result 

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 

Target Met. During FY 2005, the 

Commission completed three 

important actions that met the 

stated targets, including: 

3⁄4 issuing a final rule adopting the 

Wholesale Gas Quadrant’s 

Version 1.7 business practice 

standards (within 41⁄2 months of 

being proposed); 

3⁄4 issuing a NOPR which proposes 

criteria for the establishment of an 

Electric Reliability Organization 

(ERO) to enforce reliability 

standards under the regulatory 

review and oversight of the 

Commission; and 

3⁄4 issuing a policy statement on 

creditworthiness standards that 

reiterates policies articulated in 

recent cases decided by the 

Commission. 

With regard to the ERO NOPR, entitled “Rules Concerning Certification of the 

Electric Reliability Organization; and Procedures for the Establishment, Approval 

and Enforcement of Electric Reliability Standards,” the Commission proposed: 

3⁄4 regulations pertaining to the funding of the ERO; 

3⁄4 procedures governing enforcement actions by the ERO and the 

Commission; 

3⁄4 regulations for issuing periodic reports by the ERO on reliability 

assessment and adequacy; 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

20 

3⁄4 procedures under which the ERO may delegate authority to a regional 

entity to enforce reliability standards;

3⁄4 criteria for the establishment of an ERO, an entity that will propose 

and enforce reliability standards for the bulk power system in the 

United States; and

3⁄4 procedures for the establishment of regional advisory bodies that may 

advise the Commission, the ERO or a regional entity on 

governance and reliability standards, and propose fees within a 

region, or undertake other responsibilities designated by the 

Commission. 

Other Accomplishments

In order to allow FERC jurisdictional electricity transmission providers and 

natural gas pipelines in the areas affected by Hurricanes Katrina and Rita to focus 

on recovery efforts instead of paperwork, the Commission issued four notices that 

waived specific aspects of its standards of conduct rules and extended deadlines 

for posting and record keeping requirements. The first three notices followed 

Hurricane Katrina, while the final notice was in anticipation of Hurricane Rita. 

Notice Granting Extension of Time to Comply with Posting and Other 

Requirements, issued August 31, 2005 

The Commission’s Standards of Conduct regulations require that 

“Transmission providers must report to the Commission and post on the 

Open Access Same-time Information System (OASIS) or Internet website, 

as applicable, each emergency that resulted in any deviation from the 

standards of conduct, within 24 hours of such deviation.” As a result of 

emergency conditions in the Gulf Coast area created by Hurricane Katrina, 

the Commission granted transmission providers an extension of time until 

September 30, 2005, to comply with posting and other requirements. 

Notice Waiving Record Keeping Requirements, issued September 7, 

2005 

Due to the extreme nature of the Hurricane Katrina emergency, the 

Commission also waived, until September 16, 2005, the requirement by 

transmission providers to record and retain a record of each deviation of 

the standards of conduct. The Commission stated it would consider 

extending this waiver if the need continued. 

Notice Granting Extension of Waiver of Record Keeping 

Requirements, issued September 16, 2005 

The Commission granted Entergy Services’ request on behalf of Entergy 

Operating Companies for an extension through September 30, 2005, for 

waiver of record keeping requirements due to the emergency conditions in 

the Gulf Coast area. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

21 

Notice Granting Extension of Time to Comply with Posting and Other 

Requirements, issued September 23, 2005 

In anticipation of Hurricane Rita, the Commission granted additional 

extensions of time and waivers to comply with posting and other 

requirements through October 7, 2005, to transmission providers in the 

geographic areas potentially affected. 

In addition to these notices, the Commission also extended filing deadlines in 

certain cases pending before the Commission involving companies affected by the 

hurricanes. 

Performance Measurement Data for Market Oversight

Goal: Prevent Exercise of Market Power by Reliance on Effective Regulation. 

Performance Measurement Performance Target Result 

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. 

Target Met. In addition to the fully 

functional Electric Quarterly 

Report (EQR) for electric 

transactions, the Commission also 

identified several key data 

requirements to analyze energy 

markets via its Market Monitoring 

Center (e.g., Dow Jones’ real time 

data, Genscape’s alert system 

data, U.S. Waterborne LNG 

Report, NE Power Data, CERA’s 

energy advisory service, CoalDat, 

and AirDaily). 

The Commission is working with RTOs and ISOs to prepare more user friendly 

EQR member reports and to develop other reporting requirement modifications 

and clarifications, both as a means to reduce the burden and to increase the 

consistency of EQR filings. 

Performance Measurement Performance Target Result 

Percentage of processes that 

achieve consensual agreements 

Maintain at or increase levels 

achieved in FY 2004 

Target Met. The Administrative 

Law area maintained their FY 

2004 success rate as 90.2% of 

cases achieved settlement in FY 

2005. DRS increased their FY 

2004 success rate as 95.8% of 

cases achieved settlement in FY 

2005. 

Of the 117 cases that were closed in the Administrative Law area in FY 2005, 102 

cases qualified for settlement procedures (15 were terminated by initial decision). 

Of those 102 cases, 92 cases achieved settlement. 

Of the 24 cases that were closed by DRS in FY 2005, 23 achieved settlement. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

22 

Performance Measurement Performance Target Result 

Number of major rule violations for 

a particular set of business 

practices 

None or Few 

Target Not Met. During FY 2005, 

the Commission conducted 29 

investigations, eight of which were 

settled. 

Although this result did not meet 

the “None or few” target, the 

performance measure and target 

do not reflect the true goal of the 

Commission’s enforcement 

function, which is to investigate 

and remedy violations of the 

Commission’s statutes, orders, 

and regulations. While the 

Commission acknowledges that 

“deterrence” is an important part of 

enforcement, we do not believe it 

is reasonable to assume that no 

violations will occur. 

In future years, this measure has 

been removed and replaced with 

better performance measures and 

targets to evaluate the 

enforcement function. 

These investigations involved violations such as undue preference in violation of 

the FPA and NGA and the Standards of Conduct regulations. The settled 

investigations resulted in disgorgement of profits, penalties, and other payments 

totaling approximately $35 million. In addition to monetary penalties, 

compliance plans were put into place to help prevent future violations from 

occurring. 

Performance Measurement Data for Management Initiatives

Performance Measurement Performance Target Result 

Improved human capital 

processes 

Implement selected human 

resources flexibilities provided by 

new SES Pay-for-Performance 

legislation 

Target met. On April 7, 2005, the 

Commission received provisional 

certification to implement SES 

Pay-for-Performance for calendar 

year 2005 by demonstrating that 

our SES performance appraisal 

system made meaningful 

distinctions in pay and 

performance, demonstrated clear 

alignment to strategic goals, and 

included good measures of 

performance for each executive. 

In December 2004, the Office of Personnel Management issued final regulations 

on the Performance-Based Senior Executive Service (SES) Pay System. With 

these new regulations, agencies that have certified performance appraisal systems 

for senior executives were permitted to pay their highest-performing SES 

members up to the rate of Level II of the Executive Schedule. As detailed above, 

the Commission met this target within 4 months of the final regulations being 

issued. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

23 

Performance Measurement Performance Target Result 

Improved services to employees 

Successful implementation of 

payroll services and integration 

with HR services 

Target Met. In March 2005, the 

Commission successfully migrated 

its processing of payroll 

distributions to the National 

Finance Center. Also in March 

2005, the Commission’s Employee 

Maintenance Helpdesk was 

established to provide a central 

point of contact for all human 

resources and payroll related 

inquiries. 

The transition to the National Finance Center occurred with less than a 1% 

margin of error and with no adverse impact on employees. 

Performance Measurement Performance Target Result 

Timeliness of virus file updates on 

servers and workstations 

Updates within 24 hours from 

release by vendors Target Met 

The Commission’s network is configured to obtain the latest virus (.dat) file 

updates twice per day. In addition, each server and workstation is configured to 

poll the master server for .dat file updates on an hourly basis. Therefore, once the 

master server receives a new virus signature, the .dat file updates are retrieved by 

all turned-on servers and workstations, typically within a 1 hour timeframe. In 

the event of a system failure (network or otherwise), hourly verifications take 

place until the system is updated. 

Financial Performance Overview 

As of September 30, 2005, 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 Commission obligations did 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 

and with OMB Circular No. A-136, Financial Reporting Requirements. 

Sources of Funds. The Commission receives an appropriation from Congress 

that is available until expended. The Commission’s FY 2005 new budget 

authority was $210 million. This represents an increase in new budget authority 

of approximately about $5.6 million over FY 2004. Additional funds available to 

obligate in FY 2005 were $6.3 million from prior-year appropriations. The sum 

of all funds available to obligate in FY 2005 was $216.3 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 2005 and 2004 was $3 million. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

24 

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 2005. 

Costs by Function. The Commission incurred costs of $222.9 million in FY 

2005, which was an increase of $9.7 million over FY 2004. Approximately 71 

percent of costs were used for salaries and benefits and the increase in FY 2005 

salaries accounts for the majority of the increased costs over last year. The 

remaining 29 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 2005 was $8.9 million, which is an 

increase of $2.7 million over the FY 2004 amount of $6.2 million. 

Costs by Function (millions) 

Costs FY 2005 FY 2004 

Salaries and Benefits $158.9 $138.5 

Travel/Transportation 3.5 2.8 

Rent/Comm/ Utilities 20.0 21.7 

Contract Support 34.0 32.1 

Printing/Supplies/Other 6.4 17.9 

Reimbursable Work .05 .2 

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

2005 financial statements. This was the twelfth consecutive year the Commission 

has received an unqualified opinion. For FY 2005, 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 the financial section of this report. Analysis of the 

principal statements follows. 

Analysis of the Balance Sheet 

The Commission's assets were approximately $140.7 million as of September 30, 

2005. This is an increase of $.4 million from the end of FY 2004. The assets 

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

Summary table. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

25 

Asset Summary (millions) 

Asset FY 2005 FY 2004 

Fund Balance with Treasury $111.3 $104.7 

Accounts Receivables, Net 20.0 23.1 

Property and Equipment, Net 9.3 8.3 

Due from Regulated Entities .1 4.2 

Total Assets $140.7 $140.3 

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

$111.3 million as of September 30, 2005, an increase of $6.6 million from the FY 

2004 September 30th balance. This balance represents appropriated funds, 

collected license fees, and other funds maintained at the Treasury until final 

disposition is determined. The increase from FY 2004 to FY 2005 is due mostly 

because of increased collections from disgorgement activities and the increase in 

carryover. 

Accounts Receivable, Net, as of September 30, 2005, were $60.5 million net of an 

offsetting allowance for doubtful accounts of $40.5 million. The Commission 

collected more of its outstanding receivables in FY 2005 as compared to FY 

2004, which accounts for the decrease.

The net book value of Property and Equipment, Net, was $9.3 million. The 

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

computer hardware and software. The Commission capitalized approximately $3 

million of internally developed software in FY 2005. This in conjunction with the 

current year depreciation accounts for the net increase from the prior year. 

The Due from Regulated Entities in the amount of $.1 million represents the 

adjustment made to properly report potential costs the Commission may need to 

bill in the future since the Commission is a full cost recovery agency. The 

decrease of $4.1 million is due to the full recovery of current year costs through 

annual charge assessments and the resolution of prior year appeals filed by 

industry regarding prior year annual charge assessments. 

The Commission's liabilities were $121.3 million as of September 30, 2005. The 

Liabilities Summary table shows an increase in total liabilities of $3 million from 

the FY 2004 September 30, 2004 balance of $118.3 million. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

26 

Liabilities Summary (millions) 

Liabilities FY 2005 FY 2004 

Accounts Payable $9.4 $9.1 

Other Liabilities 111.9 109.2 

Total Liabilities $121.3 $118.3 

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

approximately $19.4 million as of September 30, 2005. The Net Position 

Summary table shows a decrease of $2.6 million from the FY 2004 year-end 

balance. The decrease is directly related to a decrease in Unexpended 

Appropriations, which is the amount of authority granted by Congress that has not 

been expended, and an increase in Cumulative Results of Operations, which 

represents the net results of operations since the Commission's inception. 

Net Position Summary (millions) 

Position FY 2005 FY 2004 

Unexpended Appropriations $13.7 $17.5 

Cumulative Results of Operations 5.7 4.5 

Total Net Position $19.4 $22.0 

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 the 

Government Performance and Results Act of 1993 (GPRA) reporting to the cost 

of programs. The Commission's net cost of operations for FY 2005 was $.01 

million, which is a decrease of $.06 million over the FY 2004 net cost of $.07 

million. This decrease is a result of the Commission billing more of its 

reimbursable costs in FY 2005 than in FY 2004. Net costs by strategic goal are 

shown in the Net Cost of Operations table. 

Net Cost Of Operations (millions) 

Operation FY 2005 FY 2004 

Energy Infrastructure $.009 $.05 

Competitive Markets .003 .01 

Market Oversight .002 .01 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

27 

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 $2.8 million from FY 2004 to FY 2005 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 2005, the Commission had budgetary resources available of 

$219.3 million, the majority of which was derived from new spending authority. 

This represents an increase of $8.3 million over FY 2004 budgetary resources 

available of $211.0 million. 

The status of budgetary resources includes obligations incurred of $210.3 million, 

or 96 percent of funds available. Similarly, FY 2004 obligations incurred were 

$204.7 million, 97 percent of funds available. Total net inflows for FY 2005 were 

$9.2 million, which represents a $6.2 million decrease from FY 2004 net inflows 

of $15.4 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 

$210.3 million to the net cost of operations of $.014 million by adding nonbudgetary resources, and deducting costs not requiring resources and financing 

sources yet to be provided. 

Analysis of the Statement of Custodial Activity 

The Statement of Custodial Activity displays the total Custodial Revenue and the 

Disposition of Collections related to that revenue activity. This statement ensures 

that 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 2005, the Commission 

reported $45.4 million in custodial activity compared to $23.9 million in FY 

2004. The majority of the increase is due to the increase of approximately $22 

million in civil penalties in FY 2005 over FY 2004. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

28 

Controls, Systems, and Legal Compliance 

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

3⁄4 Federal Managers' Financial Integrity Act of 1982; 

3⁄4 Federal Financial Management Improvement Act of 1996; 

3⁄4 Prompt Payment Act; and 

3⁄4 Debt Collection Improvement Act of 1996. 

Integrity Act Statement

 During fiscal year 2005, the Commission responded to the challenge of a changing 

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

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 development of 

a robust energy infrastructure; (2) Prevent exercise of market power by reliance on 

effective competition; (3) Prevent exercise of market power by reliance on effective 

regulation. 

 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 2004 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. 

 The concept of reasonable assurance recognizes that management controls must be 

cost effective, and there is always some potential for errors or irregularities to go 

undetected. The results of the review indicate there is reasonable assurance that the 

management controls were working effectively, that our financial systems conform 

with government-wide standards, and that the program and administrative functions 

were performed in an economical and efficient manner consistent with applicable laws; 

property, funds and other resources were safeguarded against waste, loss, unauthorized 

use, or misappropriation; obligations and costs were proper; and accountability for assets 

was maintained. 

Joseph T. Kelliher 

Chairman 

Federal Energy Regulatory Commission 

September 2005

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 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

29 

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 Integrity Act requires 

the Chairman to provide an assurance statement on the adequacy of management 

controls and conformance of financial systems with Government wide standards. 

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: 

3⁄4 Management knowledge gained from the daily operation of agency 

programs and reviews; 

3⁄4 Management reviews; 

3⁄4 Annual performance plans; and, 

3⁄4 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, 

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

controls on an ongoing basis. 

FY 2005 Integrity Act Results 

The Commission evaluated its management control systems for the fiscal year 

ending September 30, 2005. 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 Improvement 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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

30 

FY 2005 Improvement Act Results 

As of September 30, 2005, 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, applicable Federal 

accounting standards and the U.S. standard general ledger at the transaction level. 

 In making this determination, we undertook financial reporting tests of the 

system and reviewed entries at the transaction level, and 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 2005, the Commission made 97% of its 

payments that were subject to the Prompt Payment Act on-time. The Commission 

incurred $390 in interest penalties in FY 2005, which was an increase over the FY 

2004 amount of $247. The agency made 99% 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 2005 was $5.2 million, which was approximately two percent of its 

current annual billings. The Commission continues to aggressively pursue the 

collection of 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 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 approximately 

$44 million as of September 30, 2005; this amount is included in the financial 

statements 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 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

31 

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 Commission 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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

33 

Financial 

Section 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

34 

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FEDERAL ENERGY REGULATORY COMMISSION 

WASHINGTON, D.C. 20426 

Office of the 

Executive Director 

Letter from the Chief Financial Officer 

I am pleased to present the Commission's comparative financial results for fiscal years 

2005 and 2004. The Commission is continuing to make progress in achieving measurable 

improvements in its financial management practices. With the submission of this report we have 

successfblly issued our Performance and Accountability Report in accordance with the Office of 

Management and Budget's requirements. 

The Commission's financial statements provided in this report have been reviewed by 

independent auditors and received an unqualified opinion. During fiscal year 2005, we overcame 

the challenge of upgrading our core financial management system and increased our 

management control capabilities with the establishment of an internal audit hction. 

The Commission did not have any material weaknesses reported with regard to its 

financial management practices from previous years. We have addressed findings identified in 

the previous year's audit report and have enhanced review procedures in key areas related to 

these findings. In addressing these findings, we feel confident we have strengthened our internal 

control processes and practices and financial reporting capabilities. Moving forward, we will 

continue to set aggressive time tables for correcting audit findings within a year so we will meet 

our goal of effective financial management. 

Our commitment is to manage our resources wisely so we may effectively regulate and 

oversee energy industries in the economic, environmental and safety interests of the American 

public. I believe you will find this Performance and Accountability Report demonstrates that the 

Commission takes this responsibility seriously and, through a sustained focus on results, is 

working diligently to ensure that resources are well managed. We look forward to continued 

improvement in meeting our commitment to the American people in the years to come. 

Sincerely, 

I 

Thomas R. Herlihy 

Chief Financial Officer 

0 

Federal Energy Regulatory Commission 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

36 

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KPMG LLP 

2001 M Street, NW 

Washington, DC 20036 

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

a member of KPMG International, a Swiss association. 

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, 2005 and 2004, and the related statements of net cost, changes in net 

position, budgetary resources, financing, and custodial activity, 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 these 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, 2005 and 2004, are presented fairly, in all material 

respects, in conformity with accounting principles generally accepted in the United States of America. 

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. 

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, 2005 and 2004, and the related statements of net cost, changes in net position, budgetary 

resources, financing, and custodial activity, for the years then ended. 
 (Continued) 

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, 2005 and 2004, 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. 

The information in the Management’s Discussion and Analysis 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 Circular No. A-136, Financial Reporting Requirements, Part A, Form 

and Content of the Performance and Accountability Report. 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 Performance Report section and the Appendices are an integral part of the Commission’s 

Fiscal Year 2005 Performance and Accountability Report. However, this information is not a required part 

of the financial statements and is presented for purposes of additional analysis. The information in the 

Performance Section and the Appendices 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. 

We did, however, note other matters that we reported to the management of the Commission in a separate 

letter dated November 15, 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.
 (Continued) 

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; 

• Preparing the Management’s Discussion and Analysis (including the performance measures); 

• Establishing and maintaining internal controls over financial reporting; and 

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

In fulfilling this responsibility, management is required to make estimates and judgments 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 2005 and 2004 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. An audit includes consideration of internal control 

over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 

but not for the purpose of expressing an opinion on the effectiveness of the Commission’s internal control 

over financial reporting. Accordingly, we express no such opinion. 

An audit also 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 2005 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 the Commission’s 

internal control over financial reporting. Consequently, we do not provide an opinion thereon. 

As required by OMB Bulletin No. 01-02, in our fiscal year 2005 audit, with respect to internal control 

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

Discussion and Analysis and Performance Report sections, 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 reported performance measures and, accordingly, 

we do not provide an opinion thereon. 

As part of obtaining reasonable assurance about whether the Commission’s fiscal year 2005 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. However, 

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. 

Distribution 

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

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

the United States Congress and is not intended to be and should not be used by anyone other than these 

specified parties. 

November 15, 2005 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

41 

2005 2004

Assets (note 3)

Intragovernmental:

Fund balance with Treasury (note 4) $ 111,328,121 $ 104,689,587 

Accounts receivable, net (note 5) 2,635,221 - 

Total intragovernmental 113,963,342 104,689,587 

Accounts receivable, net (note 5) 17,281,896 23,086,707 

Property and equipment, net (note 8) 9,343,478 8,292,117 

Other (note 6) 119,154 4,183,559 

Total assets $ 140,707,870 $ 140,251,970 

Liabilities (notes 7 and 10)

Intragovernmental:

Accounts payable $ 2,492,461 $ 2,709,493 

Other intragovernmental liabilities (notes 7 and 10):

Accrued payroll benefits 912,400 744,160 

Resources transferable to Treasury and other 

Federal entities 14,898,128 17,320,540 

Workers' compensation payable 539,555 568,456 

Other 8,102 15,783 

Total intragovernmental 18,850,646 21,358,432 

Accounts payable 6,916,645 6,411,849 

Other liabilities (notes 7 and 10):

Accrued payroll and benefits 5,084,000 4,102,110 

Revenue collected under protest 44,423,159 45,034,808 

Resources transferable to other entities from disgorged funds 34,147,570 28,416,937 

Accrued leave 10,280,921 10,450,527 

Other 2,499,061 1,629,764 

Total liabilities 121,332,705 118,273,724 

Commitments and contingencies (notes 9 and 12)

Net position:

Unexpended appropriations 13,629,244 17,482,193 

Cumulative results of operations 5,745,921 4,496,053 

Total net position 19,375,165 21,978,246 

Total liabilities and net position $ 140,707,870 $ 140,251,970 

The accompanying notes are an integral part of these statements

FEDERAL ENERGY REGULATORY COMMISSION

Balance Sheets

As of September 30, 2005 and 2004
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

42 

2005 2004

Energy Infrastructure:

Gross costs (Note 14) $ 146,869,168 $ 142,866,643 

 Less earned revenue (Note 14) 146,859,935 142,818,635 

Net program costs $ 9,233 $ 48,008

Competetive markets:

Gross costs (Note 14) $ 44,041,530 $ 36,249,744 

 Less earned revenue (Note 14) 44,038,732 36,237,564 

Net program costs $ 2,798 $ 12,180

Market oversight:

Gross costs (Note 14) $ 32,012,348 $ 34,117,407 

 Less earned revenue (Note 14) 32,010,389 34,105,942 

Net program costs $ 1,959 $ 11,465

Total:

Gross costs (Note 14) $ 222,923,046 $ 213,233,794 

 Less earned revenue (Note 14) 222,909,056 213,162,141 

Net program costs $ 13,990 $ 71,653

The accompanying notes are an integral part of these statements

FEDERAL ENERGY REGULATORY COMMISSION

Statements of Net Cost

For the Years Ended September 30, 2005 and 2004
Federal Energy Re

FY 2005 Performance and A

43 

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Changes in Net Position

For the Years Ended September 30, 2005 and 2004

Beginning balances $ $ 17,482,193 4,496,053 $ 7,472,

 

Budgetary financing sources:

Appropriations received 210,000,000 - 

 

Appropriations used (213,852,949) 213,852,949 201,656,

 

Other adjustments - unexpended appropriations - - 

 

Other financing sources:

Transfers – out to Treasury without reimbursement - (223,758,625) (211,585,

 

Imputed financing from costs absorbed by others - 11,169,533 7,023,

 

Total financing sources 1,263,857 (3,852,949) (2,905,

 

Net cost of operations - (13,990) (71,

 

Net change (3,852,949) 1,249,868 (2,976,

 

Ending balances $ $ 13,629,244 5,745,921 $ 4,496,

 

The accompanying notes are an integral part of these statements

2005 

Cumulative Res

of Operation

Cumulative Results 

of Operations

Unexpended 

Appropriations
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

44 

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Budgetary Resources

For the Years Ended September 30, 2005 and 2004

2005 2004

Budgetary resources:

Budget authority, appropriations received $ 2,968,924 $ 2,928,592 

Unobligated balance, beginning of period 6,248,461 3,587,488 

Spending authority from offsetting collections: 

Earned:

 Collected 210,025,317 204,630,453 

 Receivable from Federal sources - (110,834) 

 Change in unfilled customer orders:

 Advance received - (29,854) 

 Without advance from Federal sources 38,112 (12,953) 

Total budgetary resources $ 219,280,814 $ 210,992,894 

Status of budgetary resources:

Obligations incurred:

Direct $ 210,292,373 $ 204,491,778

Reimbursable 26,646 252,655

Subtotal 210,319,019 204,744,433 

Unobligated balances available and apportioned 8,961,795 6,248,461 

Total status of budgetary resources $ 219,280,814 $ 210,992,894 

Relationship of obligations to outlays (inflows):

Obligated balance, net – beginning of period $ 25,161,699 $ 24,212,895 

Obligated balance, net – end of period 

Unfilled customer orders from Federal sources (138,252) (100,140) 

Undelivered orders 4,802,932 11,294,227 

Accounts payable 15,405,507 13,967,612 

Total obligated balance, net - end of period $ 20,070,187 $ 25,161,699 

Outlays (inflows):

Disbursements 215,372,420 203,919,415 

Collections (210,025,317) (204,600,600) 

Subtotal 5,347,103 (681,185) 

Less: distributed offsetting receipts (14,595,982) (14,704,360) 

Net inflows $ (9,248,879) $ (15,385,545) 

The accompanying notes are an integral part of these statements
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

45 

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Financing

For the Years Ended September 30, 2005 and 2004

2005 2004

Resources used to finance activities:

Budgetary resources obligated:

Obligations incurred $ 210,319,019 $ 204,744,433 

Less: spending authority from offsetting collections (210,063,429) (204,476,814) 

Obligations, net of offsetting collections 255,590 267,619 

Less: offsetting receipts (14,595,982) (14,704,360) 

Net obligations (14,340,392) (14,436,741) 

Other resources:

Transfers-out, net of appropriations received (13,758,625) (7,185,030) 

Imputed financing from costs absorbed by others 11,169,533 7,023,415 

Net other resources used to finance activities (2,589,092) (161,615) 

Total resources used to finance activities (16,929,484) (14,598,356) 

Resources used to finance items not part of the 

net cost of operations

Change in budgetary resources obligated for

goods, services and benefits ordered but not yet provided 6,533,364 31,014 

Resources that fund expenses recognized in prior periods 198,507 - 

Budgetary offsetting receipts that do not affect the net

cost of operations 14,595,982 14,704,360 

Resources that finance the acquisition of assets (3,697,908) (188,748) 

Payments to States (2,968,924) (2,991,816) 

Total resources used to finance items not part of the

net cost of operations 14,661,021 11,554,810 

Total resources used to finance the net cost of operations (2,268,463) (3,043,546) 

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 annual leave liability - 690,165 

Other 46,948 -

Total components of net cost of operations that will require or

generate resources in future periods - 737,113

Components not requiring or generating resources:

Depreciation and amortization 2,627,684 2,428,289

Other (345,231) (50,203)

Total components of net cost of operations that will not 

require or generate resources 2,282,453 2,378,086

Total net cost of operations that do not require or

generate resources in the current period 2,282,453 3,115,199

Net cost of operations $ 13,990 $ 71,653 

The accompanying notes are an integral part of these statements
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

46 

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Custodial Activity

For the Years Ended September 30, 2005 and 2004

2005 2004

Sources of collections:

Cash collections – annual charges $ 48,436,049 $ 28,198,826 

Accrual adjustment (3,076,985) (4,256,613) 

Total custodial revenue (note 13) 45,359,064 23,942,213 

Disposition of collections:

Transferred to others:

United States Army – Corps of Engineers (4,926,352) (6,627,009) 

Department of Interior (4,685,479) (6,338,461) 

United States Department of Treasury (33,304,005) (12,261,615) 

Various states (2,968,978) (2,993,073) 

Decrease in amounts yet to be transferred 525,750 4,277,945

Net custodial activity $ - $ - 

The accompanying notes are an integral part of these statements
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

47 

FEDERAL ENERGY REGULATORY COMMISSION

Notes to Financial Statements 

September 30, 2005 and 2004 

(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 groups to 

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 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

48 

before they develop and craft solutions quickly. The Commission must be able to police 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

49 

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: 

3⁄4 Identify the service for which the fee is to be assessed; 

3⁄4 Explain why that particular service benefits an identifiable recipient more than it benefits the 

general public; 

3⁄4 Base the fee on as small a category of service as possible; and 

3⁄4 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) Circular No. A-136, 

Financial Reporting Requirements.

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 United States 

Army Corps of Engineers, the United States Department of Treasury and the United States 

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, 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

50 

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 

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 adjustments from 

the prior year. At year-end, the Commission records a financial statement adjustment to 

accurately reflect the amount to be billed or credited to regulated entities based on 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 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 Balance 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 and monies held in 

suspense until final disposition is determined. 

(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 internally 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 internally developed software, and 5 years for all remaining assets. 

Expenditures for repairs and maintenance are charged to program costs as incurred. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

51 

(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 10 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 United States Department of Labor (DOL) and 

are ultimately paid by the Commission. The workers’ compensation payable represents billings 

from DOL that are unpaid at year-end. 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. The Commission records 

disgorged funds as a liability until they are disbursed to appropriate entities. 

(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, 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

52 

(2) the cost of property and equipment acquired that has been financed by 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) 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. 

(p) 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. 

(q) Changes in Presentation 

Certain FY 2004 amounts have been reclassified to conform to the FY 2005 presentation 

requirements prescribed by OMB Circular No. A-136. 

(3) Non-Entity Assets 

Non-entity assets at September 30, 2005 and 2004 consisted of: 

2005 2004

Intragovernmental:

 Accounts receivable $ 2,590,005 $ - 

 Fund balance with Treasury:

 Collections due to states 55 1,257 

 Revenue collected under protest 44,423,159 45,034,808 

 Disgorged funds 29,130,478 18,399,845 

 Miscellaneous receipts held in suspense 1,511,426 2,497,804 

 Special receipts fund 7,222,919 7,222,919 

 Other 8,102 122,793 

Total Intragovernmental 84,886,145 73,279,426 

Accounts receivable, net 13,610,269 22,254,689 

 Total non-entity assets 98,496,414 95,534,115 

Total entity assets 42,211,456 44,717,855 

 Total assets $ 140,707,870 $ 140,251,970 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

53 

(4) Fund Balance with Treasury 

Fund balances with Treasury at September 30, 2005 and 2004 consisted of: 

2005 2004

Fund balances:

 Appropriated funds $ 29,031,981 $ 31,410,161 

 Revenue collected under protest 44,423,159 45,034,808 

 Disgorged funds 29,130,478 18,399,845 

 Special receipts fund 7,222,919 7,222,919 

 Other 1,519,583 2,621,854 

 Total $ 111,328,121 $ 104,689,587 

Status of fund balance with Treasury:

 Unobligated balance:

 Available $ 8,961,795 $ 6,248,461 

 Unavailable 82,296,139 73,279,427 

Obligated balance not yet disbursed 20,070,187 25,161,699 

 Total $ 111,328,121 $ 104,689,587 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

54 

(5) Accounts Receivable, net 

Entity and nonentity accounts receivable at September 30, 2005 and 2004 consisted of: 

2005

Annual Charges Other Total

Entity

Uncollected billings $ 8,988,231 $ 45,847 $ 9,034,078 

Uncollected intragovernmental billings 26,482 18,734 45,216 

Allowance for doubtful accounts (5,353,234) (9,217) (5,362,451) 

 Total entity accounts receivable, net 3,661,479 55,365 3,716,843 

Nonentity

Uncollected billings 10,788,572 37,915,612 48,704,184 

Uncollected intragovernmental billings 2,590,005 - 2,590,005 

Allowance for doubtful accounts (2,565,096) (32,528,819) (35,093,915) 

Total non-entity accounts receivable, net 10,813,481 5,386,793 16,200,274 

 Total accounts receivable, net $ 14,474,960 $ 5,442,158 $ 19,917,117 

2004

Annual Charges Other Total

Entity

Uncollected billings $ 6,990,365 $ 22,343 $ 7,012,708 

Uncollected intragovernmental billings - - - 

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 

Uncollected intragovernmental billings - - - 

Allowance for doubtful accounts (2,169,205) (32,561,440) (34,730,645) 

Total non-entity 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 

(6) Other Assets 

Other assets at September 30, 2005 and 2004 consisted of: 

2005 2004

Due from regulated entities $ 94,687 $ 4,155,134 

Advances to others 24,467 28,425 

 Total other assets $ 119,154 $ 4,183,559 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

55 

(7) Other Liabilities 

Other liabilities at September 30, 2005 and 2004 consisted of: 

2005

Non-Current Current Total

Intragovernmental

 Accrued payroll and benefits $ - $ 912,400 $ 912,400 

 Resources transferable to Treasury and other - 14,898,128 14,898,128 

 Federal entities

 Miscellaneous receipts transferable to Treasury - 8,102 8,102 

 Workers' compensation 271,675 267,880 539,555 

 Total Intragovernmental other liabilities 271,675 16,086,510 16,358,185 

Non-intragovernmental

 Accrued payroll and benefits - 5,084,000 5,084,000 

 Revenue collected under protest 44,423,159 - 44,423,159 

 Resources transferable to other entities from 34,147,570 - 34,147,570 

 disgorged funds

 Accrued leave - 10,280,921 10,280,921 

 Other:

 Refunds and other amounts due - 1,627,278 1,627,278 

 Collections due to states - 2,486 2,486 

 Total non-intragovernmental other liabilities 78,570,729 16,994,685 95,565,414 

 Total other liabilities $ 78,842,404 $ 33,081,195 $ 111,923,599 

2004

Non-Current Current Total

Intragovernmental

 Accrued payroll benefits $ - $ 744,160 $ 744,160 

 Resources transferable to Treasury and other - 17,320,540 17,320,540 

 Federal entities

 Miscellaneous receipts transferable to Treasury - 15,783 15,783 

 Workers' compensation 274,268 294,188 568,456 

 Total Intragovernmental other liabilities 274,268 18,374,671 18,648,939 

Non-intragovernmental

 Accrued payroll and benefits - 4,102,110 4,102,110 

 Revenue collected under protest 45,034,808 - 45,034,808 

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

 disgorged funds

 Accrued leave - 10,450,527 10,450,527 

 Other:

 Refunds and other amounts due - 2,497,804 2,497,804 

 Collections due to states - 1,257 1,257 

Total non-intragovernmental other liabilities 73,451,745 17,051,698 90,503,443 

 Total other liabilities $ 73,726,013 $ 35,426,369 $ 109,152,382 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

56 

Resources transferable to Treasury represents future collections on accounts receivable that will be 

forwarded to Treasury upon receipt. 

Collections due to states represents future collections on accounts receivable that will be forwarded 

to the states upon receipt. 

Revenue collected under protest represent monies that may be forwarded to the Commission or 

protesting entities once the protest is resolved. 

Refunds and other amounts due represents monies that ultimately will be returned to entities due to 

overpayments of prior billings. 

Resources transferable to other entities from disgorged funds represents monies that will be 

disbursed to specific entities in the future. 

(8) Property and Equipment, Net 

Property and equipment and related accumulated depreciation at September 30, 2005 and 2004 

consisted of: 

2005

Acquisition Accumulated

Amount depreciation Net

Equipment $ 5,346,313 $ 4,222,436 $ 1,123,877

Furniture 9,070,773 8,932,371 138,402

Leasehold improvements 9,491,415 4,706,399 4,785,016

ADP software 14,589,358 11,293,174 3,296,183

 Total $ 38,497,859 $ 29,154,381 $ 9,343,478

2004

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 

ADP software 11,321,496 10,637,649 683,847 

 Total $ 34,958,065 $ 26,665,948 $ 8,292,117 

(9) Building Lease 

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, of which Commission Headquarters is in Washington, DC and several 

other regional offices are located in various parts of the country. The standard level users charge 

approximates the commercial rental rates for similar properties. The Commission generally does not 

execute an agreement with GSA; the Commission, however, is normally required to give 30-120 days 

notice to vacate. Expenses incurred for building leases amounted to $19.7 million and $19.5 million 

for fiscal years ended September 30, 2005 and 2004, respectively. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

57 

Real Property Operating Leases

 Fiscal Year GSA

 2006 $ 22,506,019 

 2007 23,923,133 

 2008 24,585,898 

 2009 25,289,909 

 2010 26,191,846 

 Beyond 2010 109,848,711

 Total future minimum lease payments $ 232,345,516

 (10) Liabilities Not Covered by Budgetary Resources 

Liabilities not covered by budgetary resources at September 30, 2005 and 2004 consisted of: 

2005 2004

Intragovernmental - other liabilities:

 Workers' compensation payable $ 539,555 $ 568,456 

Total intragovernmental 539,555 568,456 

Nonintragovernmental - other liabilities:

 Accrued leave 10,280,921 10,450,527 

Total liabilities not covered by budgetary resources $ 10,820,476 $ 11,018,983 

(11) 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 2005 and 2004 was approximately $14.3 million and $10.0 million, respectively. During 

fiscal years 2005 and 2004, an additional $11.2 million and $7.0 million, respectively, of pension and 

life and health insurance expense was recognized by the Commission for amounts that will ultimately 

be funded through the Office of Personnel Management. This amount is also recorded as an imputed 

financing source. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

58 

(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, unasserted claims, and monies held in the Commission’s 

escrow account for parking and other refunds total $44.4 million and $45.0 million as of September 30, 

2005 and 2004, 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 a Freedom of Information Act case pending in the United States 

District Court for the District of Columbia where the probability of success for the claimants is 

reasonably possible. The amount of any monetary relief at this time is unknown. Also, the 

Commission has an Equal Employment Opportunity Commission case pending where the claimant’s 

likelihood of success is reasonably possible. The claimant is seeking $300,000 in monetary relief plus 

attorney fees. 

(13) Custodial Activity 

The Commission currently bills regulated companies annual charges as a custodian for certain Federal 

agencies, including the United States Army Corps of Engineers, the Department of Interior’s Bureau of 

Reclamation, and 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 2005 and 2004, these custodial transactions totaled approximately $45.4 

million and $23.9 million, respectively. 

(14) Intragovernmental Costs and Exchange Revenue 

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. Revenues classified as “Intragovernmental earned” are generated when the buyer and seller of 

services are Federal entities. Revenues classified as “Public earned” are generated when the buyer of 

services is a non-Federal entity.
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

59 

Intragovernmental costs and exchange revenue as of September 30, 2005 and 2004 consisted of:

Regulation 2005 2004

Energy infrastructure:

 Intragovernmental costs $ 39,199,121 $ 35,527,777 

 Public costs 107,670,047 107,338,866 

Total energy infrastructure costs $ 146,869,168 $ 142,866,643 

 Intragovernmental earned revenue $ 34,257 $ 79,332 

 Public earned revenue 146,825,678 142,739,303 

Total energy infrastructure earned revenue $ 146,859,935 $ 142,818,635 

Competitive markets:

 Intragovernmental costs $ 11,757,356 $ 9,014,510 

 Public costs 32,284,174 27,235,234 

Total competitive markets costs $ 44,041,530 $ 36,249,744 

 Intragovernmental earned revenue $ 10,275 $ 20,129 

 Public earned revenue 44,028,457 36,217,435 

Total competitive markets earned revenue $ 44,038,732 $ 36,237,564 

Market oversight:

 Intragovernmental costs $ 8,544,314 $ 8,484,245 

 Public costs 23,468,034 25,633,162 

Total market oversight costs $ 32,012,348 $ 34,117,407 

 Intragovernmental earned revenue $ 7,467 $ 18,945 

 Public earned revenue 32,002,922 34,086,997 

Total market oversight earned revenue $ 32,010,389 $ 34,105,942 

(15) Apportionment Categories of Obligations Incurred 

Apportionment categories of obligations incurred as of September 30, 2005 and 2004 consisted of: 

2005 2004

Category A:

 Direct $ 210,292,373 $ 204,491,778 

 Reimbursable 26,646 252,655 

Total obligations incurred $ 210,319,019 $ 204,744,433 

Category A apportionments distribute budgetary resources by fiscal quarters.
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

60 

(16) Explanation of Differences Between Liabilities Not Covered by Budgetary Resources and 

Components Requiring or Generating Resources in Future Periods

Liabilities that are not covered by realized budgetary resources and for which there is not certainty that 

budgetary authority will be realized, such as enactment of an appropriation, are considered liabilities 

not covered by budgetary resources. These liabilities totaling $10.8 million and $11.0 million on 

September 30, 2005 and 2004, respectively, are discussed in Note 10, Liabilities Not Covered by 

Budgetary Resources. Decreases in these liabilities result from current year budgetary resources that 

were used to fund expenses recognized in prior periods. Increases in these liabilities represent 

unfunded expenses that were recognized in the current period. These increases represent components 

of current period net cost of operations that will require or generate budgetary resources in future 

periods. Any decreases represent resources that fund expenses recognized in the prior period. The 

changes in liabilities not covered by budgetary resources are comprised of the following: 

Fiscal years ended September 2005 and 2004: 

2005 2004

Components requiring or generating resources in future

 periods:

 Increase in workers' compensation payable $ - $ 46,948 

 Increase in accrued annual leave liability - 690,165 

Total components requiring or generating resources in 

 future periods $ - $ 737,113 

(17) Explanation of Differences Between the Statement of Budgetary Resources and the Budget of 

the United States Government 

The Commission had no differences between the Statement of Budgetary Resources and the Budget 

of the United States as of September 30, 2004. The statement can be reconciled to the President’s 

budget by combining both of the budgets for Federal Energy Regulatory Commission (89-0212-0-

1-176) and Payments to States under Federal Power Act (89-5105-0-2-806). The reconciliation as 

of September 30, 2005 is not presented, because the submission of the FY 2007 budget occurs after 

publication of these financial statements. The Commission’s Budget Appendix can be found under 

the Department of Energy on the OMB website (http://www.whitehouse.gov/omb/budget) and will 

be available in early February 2006.
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

61 

Performance 

Report 

(Unaudited) 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

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Introduction 

In accordance with 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 No. 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 2006 performance plan as a result of its FY 

2005 performance results. 

In addition to the FY 2005 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 2002 

through 2006. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

64 

Performance Measurement Data for Energy Infrastructure

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 unprotested, 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

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 annually 100% 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
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

65 

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. 

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. 

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. 

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 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

66 

FY 2003 

Performance Measurement Performance Target Result 

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. 

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 

Percentage of high- and significanthazard-potential dams inspected annually 100% of high- and significant-hazardpotential dams inspected annually 100% of high- and significant-hazardpotential dams were inspected. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

67 

FY 2003 

Performance Measurement Performance Target Result 

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 

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”. 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

68 

FY 2004 

Performance Measurement Performance Target Result 

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. 

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. 

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. 

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. 

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). 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

69 

FY 2004 

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: 

 3⁄4 Tractebel Calypso; 

 3⁄4 AES Ocean Express; and 

 3⁄4 Trunkline LNG. 

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 annually 100% of high- and significant-hazardpotential dams inspected annually 100% 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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

70 

FY 2005 

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 

Target Met. During FY 2005, the 

following percentages of cases were 

completed within the stated targets: 

3⁄4 93% 

3⁄4 100% 

3⁄4 100% 

3⁄4 89%. 

Inspect each major onshore pipeline 

project at least once every four weeks 

during ongoing construction activity 

100% of qualifying projects inspected per 

established schedule 

Target Met. During FY 2005, 100% of 

qualifying projects were inspected per the 

established schedule. 

Time to complete NEPA Prefiling Process 8 months after a complete application is 

filed 

Target Met. During FY 2005, 100% of 

applications completed the NEPA 

Prefiling Process within the stated target. 

Percentage of relicense filings based 

upon alternative licensing process (ALP) 25% of all relicense cases using ALP Target Met. During FY 2005, 39% of relicense cases used the ALP. 

Yearly increase in the percentage of 

hydropower projects using the ILP prefiling process 25% 

Target Met. Due in large part to staff 

outreach efforts, the percentage of 

hydropower projects using the ILP 

increased by 450% during FY 2005. 

Average processing times for hydropower 

relicensing Additional 5% reduction each year 

Target Met. During FY 2005, the average 

processing time for hydropower 

relicensing reduced by 5.5%. 

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 

Target Met. 100% of final NEPA 

documents were prepared within the 

stated targets for both the ALP and TLP 

cases during FY 2005. 

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 

Target Met. 92% of final NEPA 

documents were completed within 12 

months during FY 2005. 

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 

Target Met. During FY 2005, the 

Commission completed 96.9% (31 of 32) 

of the open access transmission tariff 

compliance filings received, which also 

have standard generator interconnection 

procedures that comply with Order No. 

2003. 

Note: Filings required under Order No. 

2006 (small generator final rule) were not 

reflected in these results since they are 

contingent upon the issuance of the final 

rule on electronic tariff filing, which was 

not completed by the end of FY 2005. 

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 

Target Met. In March 2005, benchmarks 

that meet the stated targets were 

developed and presented to the RTO and 

ISO Boards of Directors during a meeting 

at the Commission. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

71 

FY 2005 

Performance Measurement Performance Target Result 

Timeliness of processing requests for 

cost recovery, new services, or changes 

to existing services 

100% of all cases processed by statutory 

action date 

Target Not Met. Almost 99.9% of the 

more than 3,000 statutory cases were 

completed by the statutory action 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. 

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 

Target Met. During FY 2005, 100% of 

Commission Opinions were issued within 

12 months of the Briefs Opposing 

Exceptions to Initial Decisions on rates 

set for hearing. 

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 

Target Met. During FY 2005, The 

Commission issued 95% of the 224 

merits orders to resolve cost recovery 

proposals for new infrastructure by 

requested date or, in the case of gas 

pipeline certificate applications, 

contributed rate inserts to allow timely 

completion. 

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 

Target Met. During FY 2005, the 

Commission approved several rate 

proposals and issued a policy statement 

on independent transmission companies, 

which collectively accomplished the 

stated targets. 

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 

Target Met. During FY 2005, the 

Commission participated in 35 of the 44 

NERC scheduled control area audits, 

which exceeds one-third of the Nation’s 

approximately 100 control areas. 

This result is based on an estimate since 

NERC continues to re-define what 

constitutes a “control area.” In future 

years, the Commission is no longer 

basing its performance on the number of 

“control areas,” but rather on “load 

capacity.” 

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 

Target Not Met. The Commission 

processed 99.7% (313 out of 314) of 

these filings by the statutory action date 

during 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. 

Assess each region’s reliability rules and 

penalties to determine whether they 

specify reliability violations and include 

enforceable and effective penalties 

Target met. After assessing the reliability 

rules of the six existing RTOs/ISOs in 

various regions of the country, the 

Commission determined that the rules 

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 

Target Met. Prior to becoming 

operational, each of the six existing 

RTOs/ISOs addressed reliability 

considerations.

Enhance reliability oversight by creating a 

new reliability division Division operational by end of fiscal year Target met. The Commission’s Reliability Division was operational in October 2004. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

72 

FY 2005 

Performance Measurement Performance Target Result 

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 

Target Met. The Commission processed 

100% of the fourteen oil pipeline and 

three gas pipeline filings by the statutory 

action date. 

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. 

Target Met. During FY 2005, the 

Commission conducted a workshop on 

shoreline management and issued a 

report on its evaluation of recreation 

mitigation effectiveness. 

Maintain environmental quality at 

hydropower projects. 

Resource protection measures 

constructed and implemented according 

to license requirements. 

Target Met. Environmental inspections 

during FY 2005 indicated that all 

resource protection measures at 

inspected projects were constructed and 

implemented according to license 

articles. 

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 

Target Met. During FY 2005, the 

following percentage of dams met the 

stated targets: 

3⁄4 100% 

3⁄4 95% 

3⁄4 100% 

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 

Target Met. The Commission received 

no complaints from requesters regarding 

their ability to participate effectively in a 

proceeding during FY 2005. 

Prevent unauthorized access to securityrelated documents No instances of unauthorized access to 

security-related documents 

Target Met. During FY 2005, the 

Commission did not have an instance of 

unauthorized access to security-related 

documents reported. 

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) 

Target Met. During FY 2005, the 

Commission improved regulation to 

facilitate security and emergency 

responses by: 

3⁄4 approving all security surcharge 

requests received from oil pipelines; 

3⁄4 approving recovery of software costs to 

meet security requirements for an electric 

public utility; 

3⁄4 approving surcharges to recover 

capital costs (including costs to enhance 

security) for two natural gas pipelines; 

and 

3⁄4 issuing notices in response to 

Hurricanes Katrina and Rita, waiving 

certain reporting requirements and nonstatutory deadlines for specified periods. 

FY 2006 

Performance Measurement Performance Target Data Source 

Percentage of qualifying, major, onshorepipeline projects inspected during 

ongoing construction activity 

100% of projects inspected at least once 

every four weeks Office of Energy Projects 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

73 

FY 2006 

Performance Measurement Performance Target Data Source 

Percentage of pipeline certificate cases 

with no precedential issues completed 

3⁄4 90% of unprotected cases within 159 

days of filing 

3⁄4 90% of protested cases within 304 

days of filing 

Office of Energy Projects 

Percentage of pipeline certificate cases 

of first impression or containing larger 

policy implications completed 

90% within 365 days of filing Office of Energy Projects 

Percentage of pipeline certificate cases 

requiring a major environmental 

assessment or environmental impact 

statement completed 

90% within 480 days of filing Office of Energy Projects 

Percentage of qualifying LNG plants 

inspected during ongoing construction 

activity 

100% of plants inspected quarterly Office of Energy Projects 

Percentage of LNG import terminals 

inspected 100% inspected annually Office of Energy Projects 

Percentage of LNG peak-shaving 

terminals inspected 50% inspected annually Office of Energy Projects 

Percentage of ILP pre-filing notices for 

NOI/PAD and initial scoping document 

issued 

85% within 60 days of NOI/PAD filing Office of Energy Projects 

Percentage of ILP pre-filing scoping 

meetings and site visits completed 85% within 90 days of NOI/PAD filing Office of Energy Projects 

Percentage of ILP pre-filing study plan 

determinations completed 85% within 315 days of NOI/PAD filing Office of Energy Projects 

Percentage of final NEPA documents 

issued for ALP/TLP cases with settlement 

agreements 

85% within 12 months Office of Energy Projects 

Percentage of final NEPA documents 

issued for ALP/TLP cases without 

settlement agreements 

85% within 24 months Office of Energy Projects 

Percentage of non-independent 

transmission provider open access 

transmission tariffs that have standard 

generator interconnection procedures in 

compliance with Order No. 2003 and 

small generator final rule 

75% by September 30, 2006 Office of Markets, Tariffs and Rates / 

Office of the General Counsel 

Percentage of regional planning process 

elements (e.g., stakeholder involvement, 

cost allocation, technological innovation, 

and congestion reduction) implemented 

in each region 

50% Office of Markets, Tariffs and Rates 

Percentage of cases for cost recovery, 

new services, or changes to existing 

services processed 

3⁄4 100% of NGA Section 4 cases in 30 

days 

3⁄4 100% of FPA Section 205 cases in 60 

days 

Office of Markets, Tariffs and Rates / 

Office of the General Counsel 

Percentage of rate cases set for hearing 

completed according to the established 

schedule 

3⁄4 75% of Track I cases in 29.5 weeks 

3⁄4 75% of Track II cases in 47 weeks 

3⁄4 75% of Track III cases in 63 weeks 

Office of Administrative Law Judges / 

Office of Administrative Litigation 

Percentage of rate cases set for hearing 

that achieve partial or complete 

consensual agreement 

75% Office of Administrative Law Judges / 

Office of Administrative Litigation 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

74 

FY 2006 

Performance Measurement Performance Target Data Source 

Percentage of Commission Opinions 

issued once Briefs Opposing Exceptions 

to Initial Decisions are filed 

90% within 12 months Office of Markets, Tariffs and Rates / 

Office of the General Counsel 

Percentage of merit orders accepting, 

modifying, or rejecting timely filed cost 

recovery proposals for new infrastructure 

submitted (including time for hearing, 

ADR, or settlement judge participation) 

95% by applicant request date Office of Markets, Tariffs and Rates / 

Office of the General Counsel 

Number of innovative or flexible rate 

designs in effect to encourage energy 

infrastructure development 

Increase over FY 2005 Office of Markets, Tariffs and Rates 

Timeliness of issuing environmental 

licensing requirements 

Licensing responsibility letters sent within 

45 business days of license issuance 

date 

Office of Energy Projects 

Percentage of NEPA documents 

completed for projects utilizing the Prefiling Processes 

85% within 8 months of determining a 

pipeline or LNG facility application 

complete 

Office of Energy Projects 

Percentage of NERC reliability readiness 

reviews in which FERC participates 

3⁄4 100% of the Reliability Coordinators 

3⁄4 80% of the Nation's total load capacity 

(by Control Area) 

Office of Markets, Tariffs and Rates 

Issue final rule on Electric Reliability 

Organization (ERO) certification and 

mandatory reliability standards 

enforcement 

Final rule issued within 180 days of 

enactment of reliability legislation 

Office of Markets, Tariffs and Rates / 

Office of the General Counsel 

Formalize working relationship with 

NERC to facilitate consistent treatment of 

reliability standards throughout North 

America 

Execute MOA/MOU by September 30, 

2006 Office of Markets, Tariffs and Rates 

Develop and hold international 

workshops to increase bi-national 

coordination in preparation of an 

international ERO 

Conduct two workshops by September 

30, 2006 Office of Markets, Tariffs and Rates 

Percentage of merit orders accepting, 

modifying, or rejecting timely filed 

proposals to recover prudently incurred 

reliability costs submitted (including time 

for hearing, ADR, or settlement judge 

participation) 

95% by applicant request date Office of Markets, Tariffs and Rates / 

Office of the General Counsel 

Percentage of new RTOs or ISOs 

performing reliability functions included in 

Orders No. 2000 or No. 888, respectively 

100% Office of Markets, Tariffs and Rates / 

Office of the General Counsel 

Conduct review of existing RTOs or ISOs 

to ensure that reliability rules specify what 

constitutes a reliability violation and 

include effective and enforceable 

penalties consistent with NERC 

standards 

100% reviewed by September 30, 2006 Office of Markets, Tariffs and Rates / 

Office of the General Counsel 

Percentage of merit orders accepting, 

modifying, or rejecting timely filed 

proposals to recover prudently incurred 

safety and security costs submitted 

(including time for hearing, ADR, or 

settlement judge participation) 

95% by applicant request date Office of Markets, Tariffs and Rates / 

Office of the General Counsel 

Percentage of high- and significanthazard-potential dams inspected annually 100% Office of Energy Projects 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

75 

FY 2006 

Performance Measurement Performance Target Data Source 

Percentage of high- and significanthazard-potential dams that either meet all 

current structural safety standards or are 

undergoing investigation or remediation 

100% Office of Energy Projects 

Percentage of qualifying dams that either 

comply with EAP requirements or are 

conducting follow-up action(s) on 

outstanding item(s) 

100% Office of Energy Projects 

Number of instances of unauthorized 

access to Critical Energy Infrastructure 

Information (CEII) 

No instances Office of the General Counsel 

Number of complaints from CEII 

requesters on inability to participate in a 

proceeding due to failure to obtain CEII in 

a timely manner 

No complaints Office of the General Counsel 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

76 

Performance Measurement Results for Competitive Markets

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. 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

77 

FY 2002 

Performance Measurement Performance Target Result 

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. 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

78 

FY 2002 

Performance Measurement Performance Target Result 

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. 

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. 

Amount of load covered by regional 

institutions 20% increase over FY 2001 Performance target achieved. 

Amount of load with congestion 

management systems 20% increase over FY 2001 Performance target achieved. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

79 

FY 2002 

Performance Measurement Performance Target Result 

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 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 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

80 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

81 

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. 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

82 

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. 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

83 

FY 2004 

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. 

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. 

FY 2005 

Performance Measurement Performance Target Result 

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) 

Target Met. The initial applications for 

both Southwest Power Pool (SPP) and 

ISO-New England (ISO-NE) were 

processed within six months of filing. 

These were the only applications 

processed in FY 2005. 

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 

Target Not Met. Although Midwest ISO 

planned to start its energy markets on 

December 1, 2004 (within three years of 

receiving RTO status), the Commission 

approved a four-month delay to permit 

additional time for software testing and 

market participant training. The updated 

April 1, 2005 date was met. 

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 

Target Met. Effective December 1, 2004, 

the Commission established hearing 

procedures and accepted filings to 

eliminate through and out rates from the 

combined Midwest ISO and PJM regions 

for service commencing on or after April 

1, 2004. In addition, the Commission 

established a December 1, 2004 through 

April 1, 2006 transition period for the 

collection of lost revenues resulting from 

the elimination of the regional through 

and out rates based on the Seams 

Elimination Charge Adjustment (SECA) 

methodology. At the end of the transition 

period, the through and out rates will be 

eliminated for all transactions under the 

open access transmission tariffs. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

84 

FY 2005 

Performance Measurement Performance Target Result 

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 

Target Met. As mentioned in the 

previous performance result, Midwest 

ISO commenced operation of its regional 

energy markets on April 1, 2005, in 

accordance with the terms of its recently 

approved Transmission and Energy 

Markets Tariff. The markets are 

designed to provide for an optimal 

dispatch of all generation resources 

within the region based on a security 

constrained economic dispatch which will 

enable Midwest ISO to ensure that all 

load requirements in its region are met 

reliably and efficiently. 

In addition, the Commission approved a 

California ISO proposal to resolve 

existing transmission contract rights. The 

proposal removed a major impediment to 

completion and implementation of 

California ISO’s market redesign by 

specifying scheduling rights under the 

contracts and holding the contract 

holders financially harmless from 

congestion costs. 

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 

Target Met. During FY 2005, Midwest 

ISO and PJM entered into a Joint 

Operating Agreement (JOA) to coordinate 

the market-to-market operations between 

the entities pending implementation of 

the joint and common market which is 

under development. In addition to the 

JOA, the Commission conditionally 

accepted a utility-to-utility interconnection 

agreement between Indiana Michigan 

Power Company, a PJM transmission 

owner, and Northern Indiana Public 

Service Company, a Midwest ISO 

transmission owner. Lastly, Midwest ISO 

also entered into joint operating and/or 

coordination agreements with Southwest 

Power Pool (SPP), Mid-Continent Area 

Power Pool (MAPP), Tennessee Valley 

Authority (TVA), and Manitoba-Hydro to 

coordinate market-to-nonmarket seams 

resulting from the start of its energy 

markets. 

In New England, the Commission 

accepted a transmission operating 

agreement between ISO-NE and Maine 

Electric Power Company (MEPCO) in 

which MEPCO granted ISO-NE authority 

to operate its 345 kV intertie between 

Central Maine Power Company and 

Bangor Hydro Electric Company, thus 

integrating MEPCO into the New England 

Control Area. 

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 

Not applicable. During FY 2005, no 

RTO/ISO-controlled market was within 

one-year of its day-ahead markets 

commencing date. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

85 

FY 2005 

Performance Measurement Performance Target Result 

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 

Target Met. During FY 2005, the 

Commission accomplished several of the 

stated targets, including: 

3⁄4 the expansion of PJM; 

3⁄4 adding SPP and ISO-NE as RTOs; 

3⁄4 accepting new ISO-NE operating 

agreements; and 

3⁄4 the adoption of multiple rule and/or 

tariff revisions within several RTOs/ISOs. 

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 

Target Met. During FY 2005, 100% of 

the 434 market-based ratemaking filings 

were completed by the statutory deadline. 

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 

Target Met. During FY 2005, over 98% 

(342 out of 346) of market-based rates 

triennial review cases were completed. 

Timeliness of corporate application 

orders 

100% of all section 203 applications 

processed within 90 days of the date 

comments are filed 

Target Not Met. During FY 2005, over 

99% (124 out of 125) of the section 203 

corporate applications were processed by 

the target completion date. The 

remaining application was completed in 

93 days with the delay due to the 

applicant’s failure to file the required 

concurrent petition for declaratory order. 

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 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 

Target Met. During FY 2005, the 

Commission completed three important 

actions that met the stated targets, 

including: 

3⁄4 issuing a final rule adopting the 

Wholesale Gas Quadrant’s Version 1.7 

business practice standards (within 41⁄2 

months of being proposed); 

3⁄4 issuing a NOPR which proposes 

criteria for the establishment of an 

Electric Reliability Organization (ERO) to 

enforce reliability standards under the 

regulatory review and oversight of the 

Commission; and 

3⁄4 issuing a policy statement on 

creditworthiness standards that reiterates 

policies articulated in recent cases 

decided by the Commission. 

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 

Target Met. During FY 2005, both the 

Small Generator Interconnection and the 

Wind Generation final rules were issued. 

 In addition, the wind tariff services 

NOPR (Imbalance Provisions for 

Intermittent Resources) was issued. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

86 

FY 2005 

Performance Measurement Performance Target Result 

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 

Target Met. The Commission hosted 

and/or participated in numerous meetings 

with state representatives from each 

region. 

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 

Target Met. In June 2005, the 

Commission co-sponsored a National 

Town Meeting on Demand Response, 

which included state participation and live 

web casts to state commissions 

throughout the U.S. In addition, the 

Commission conducted a September 

2005 technical conference with California 

state officials. 

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 

Target Not Met. During FY 2005, 50% 

(30 of 60) of initial orders were issued 

within 60 days. The reasons for the 

difference include: 

3⁄4 extension requests by the parties; 

3⁄4 complainants withdrawal of complaints; 

3⁄4 deferral requests by the parties to 

pursue settlement; and 

3⁄4 the 60th day falling on a weekend or 

holiday. 

This performance target was set at an 

approximate level, and the deviation from 

that level, while not slight, had no effect 

on overall program performance. 

FY 2006 

Performance Measurement Performance Target Data Source 

Percentage of filings to establish RTOs, 

ISOs, or Independent Transmission 

Companies (ITCs) processed 

100% within 6 months of filing or before 

applicants’ proposed effective date 

(whichever is later) 

Office of Markets, Tariffs and Rates / 

Office of the General Counsel 

RTO / ISO establishment of cost-effective 

market design elements per Order No. 

2000 

Within three years of commencement of 

operation, each approved RTO or ISO 

will implement (if cost effective): 

3⁄4 firm transmission rights 

3⁄4 resource adequacy approaches 

3⁄4 regional independent grid operation 

3⁄4 regional transmission planning process 

3⁄4 market monitoring and market power 

mitigation 

3⁄4 transparency and efficiency in 

congestion management 

3⁄4 spot markets to meet customers’ realtime energy needs 

3⁄4 fair cost allocation for existing and new 

transmission 

Office of Markets, Tariffs and Rates 

Demonstrable improvements in regional 

competitive market transparency and 

independence 

In each region of the country, there will 

be: 

3⁄4 RTO expansion or creation 3⁄4 increase 

in competitive solicitation for supply 

3⁄4 RTO adoption of additional marketoriented features, programs or rules 

3⁄4 improvement of open access tariff to 

reduce entry barriers or foster 

competition 

3⁄4 increase in the degree of transmission 

independence (ownership or control) from 

generation in regions primarily without 

RTOs 

Office of Markets, Tariffs and Rates 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

87 

FY 2006 

Performance Measurement Performance Target Data Source 

Movement toward competitive markets in 

each region, including greater 

interregional coordination of broader, 

more efficient, and non-discriminatory 

energy markets 

Increase in: 

3⁄4 new product markets within RTOs or 

ISOs 

3⁄4 new, independent regional 

transmission providers 

3⁄4 coordination between RTOs or 

between RTOs and neighboring nonmember utilities 

3⁄4 RTOs membership through the 

integration of transmission facilities of 

additional transmission owners 

Office of Markets, Tariffs and Rates 

Promote efficient trade across RTO and 

utility boundaries through the 

implementation of new rate designs 

Eliminate multiple, or “pancaked” 

transmission rate charges at one 

additional RTO seam 

Office of Markets, Tariffs and Rates 

Transition existing regulatory constructs 

into competitive markets 

Approve an additional energy market that 

minimizes cost shifts while preserving 

existing contractual rights and creating 

efficiency gains 

Office of Markets, Tariffs and Rates 

Increased presence at RTOs, to improve 

relationships with and knowledge of 

existing RTOs 

Creation and staffing of an office at one 

existing RTO each year and at any new 

RTO within 6 months of commencement 

of operations 

Office of Markets, Tariffs and Rates 

Percentage of Section 203 applications 

processed 

98% within 90 days of the comments 

filing date 

Office of Markets, Tariffs and Rates / 

Office of the General Counsel 

Percentage of market-based rate filings 

processed 100% within 60 days of filing date Office of Markets, Tariffs and Rates / Office of the General Counsel 

Improve cost effectiveness of expenses 

associated with ISO / RTO functions and 

market activities 

Establish accounting rule changes to 

accommodate increased transparency of 

expenses and specific characteristics of 

ISO / RTOs and functional business 

segments that allow for meaningful 

examination of cost effectiveness of 

products and services 

Office of Markets, Tariffs and Rates 

Percentage of competitive energy 

markets and market institution cases set 

for hearing completed according to the 

established schedule 

3⁄4 75% of Track I cases in 29.5 weeks 

3⁄4 75% of Track II cases in 47 weeks 

3⁄4 75% of Track III cases in 63 weeks 

Office of Administrative Law Judges / 

Office of Administrative Litigation 

Percentage of competitive energy 

markets and market institution cases set 

for hearing that achieve partial or 

complete consensual agreement 

75% Office of Administrative Law Judges / 

Office of Administrative Litigation 

Percentage of RTOs and ISOs with rules 

that do not inhibit demand response 

participation in RTO/ISO-controlled 

markets 

100% within 1 year of commencing dayahead markets Office of Markets, Tariffs and Rates 

Conduct meetings to support 

development of robust customer 

demand-side participation in energy 

markets in areas where it does not exist 

Meet at least annually to discuss demand 

response issues with appropriate state 

commission officials 

Office of Markets, Tariffs and Rates 

Percentage of pending market-based 

rates triennial review cases resolved 

Initial action taken on 80% of cases by 

June 21, 2006 

Office of Markets, Tariffs and Rates / 

Office of the General Counsel 

Percentage of proposed NAESB 

business practice standards rulemakings 

completed 

3⁄4 100% of non-controversial rulemakings 

within 9 months 

3⁄4 100% of controversial rulemakings 

within 12 months 

Office of Markets, Tariffs and Rates / 

Office of the General Counsel 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

88 

FY 2006 

Performance Measurement Performance Target Data Source 

Develop open access tariff modifications 

to increase competitive market 

opportunities of alternative energy 

technologies (including wind generation) 

Issue open access tariff final rule Office of Markets, Tariffs and Rates / 

Office of the General Counsel 

Percentage of initial orders issued on 

third-party complaints 

3⁄4 80% within 60 days 

3⁄4 95% within 180 days 

Office of Markets, Tariffs and Rates / 

Office of the General Counsel 

Percentage of initial orders issued on fast 

track third-party complaints 90% within prescribed time frame Office of Markets, Tariffs and Rates / Office of the General Counsel 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

89 

Performance Measurement Results for Market Oversight

FY 2002 

Performance Measurement Performance Target Result 

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 ADR1

, 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). 

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). 

Number of market monitoring institutions 

and systems Increase over FY 2001 Performance target achieved. 

 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

90 

FY 2002 

Performance Measurement Performance Target Result 

Number of public utilities separating 

ownership or operation of transmission 

facilities from generation 

Increase over FY 2001 Performance target achieved. 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

91 

FY 2003 

Performance Measurement Performance Target Result 

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 

Timeliness of audits Complete 90% of audits on time Target achieved 

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 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). 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

92 

FY 2003 

Performance Measurement Performance Target Result 

Percentage of customers satisfied with 

ADR processes 85% 

DRS: 14 of 20 cases (70%) that were 

completed in FY 2003 achieved 

settlement. 

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 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% 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

93 

FY 2003 

Performance Measurement Performance Target Result 

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). 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

94 

FY 2004 

Performance Measurement Performance Target Result 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

95 

FY 2004 

Performance Measurement Performance Target Result 

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 cases2

 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. 

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. 

 

2 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). 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

96 

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 Cases3

 – 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 Cases2

 - 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 Result 

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. 

Target Met. In addition to the fully 

functional Electric Quarterly Report 

(EQR) for electric transactions, the 

Commission also identified several key 

data requirements to analyze energy 

markets via its Market Monitoring Center 

(e.g. Dow Jones’ real time data, 

Genscape’s alert system data, U.S. 

Waterborne LNG Report, NE Power 

Data, CERA’s energy advisory service, 

CoalDat, and AirDaily). 

 

3 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 2005 Performance and Accountability Report 

97 

FY 2005 

Performance Measurement Performance Target Result 

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 

Target Met. During FY 2005, the 

Commission completed the development 

of 13 standardized market metrics and 

used those metrics to analyze and report 

on how well the energy markets are 

working in the State of the Markets report 

and the MMU Metrics paper. 

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. 

Target Met. In conjunction with the 

Commission’s public meeting schedule, 

fifteen Market Surveillance Reports were 

completed in FY 2005. In addition, the 

Commission published a Winter and 

Summer Seasonal Assessment Report 

(November 2004 and May 2005, 

respectively) along with its June 2005 

State of the Markets report. 

Identify and remedy market problems Provide analysis and recommendations 

on major market problems. 

Target Met. During FY 2005, analysis 

and recommendations on major market 

problems were provided at Closed 

Commission meetings via Market 

Surveillance Reports. The problems 

included EIA’s storage reporting process, 

major weather disturbances (e.g., 

Hurricanes Katrina and Rita), and presummer markets issues in California and 

the West. 

Timeliness of industry wide financial 

audits Complete 90% of audits within 120 days 

Target Not Met. During FY 2005, none of 

the financial audits were completed within 

the 120 day targeted timeframe. This 

was due to the increasing complexities 

and management oversight of the audits, 

and due to a stricter interpretation of the 

audit timeframe (e.g., total days under 

audit as opposed to audit field-work 

days). 

In future years, this target has been 

narrowed to require a report to the 

Commission within 120 days of the audit 

Commencement Letter. 

Timeliness of Hotline call resolutions Close 60% within 2 weeks of initial 

contact 

Target Met. During FY 2005, 74% of 

Hotline calls were closed within 2 weeks 

of initial contact. 

Timely resolution of allegations of market 

misconduct 

Resolution within established timeframes 

for FERC investigations and litigation, as 

posted on the Commission internet site 

Target Met. Of the 5 cases under this 

performance measure in FY 2005, three 

cases were settled; one case is pending 

Commission consideration of the global 

Enron proceeding; and one case 

terminated by initial decision within the 

established timeframe, which varies from 

case-to-case based on the outlook of the 

Chief Judge and the Commission. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

98 

FY 2005 

Performance Measurement Performance Target Result 

Number of major rule violations for a 

particular set of business practices None or Few 

Target Not Met. During FY 2005, the 

Commission conducted 29 investigations, 

eight of which were settled. 

Although this result did not meet the 

“None or few” target, the performance 

measure and target do not reflect the true 

goal of the Commission’s enforcement 

function, which is to investigate and 

remedy violations of the Commission’s 

statutes, orders, and regulations. While 

the Commission acknowledges that 

“deterrence” is an important part of 

enforcement, we do not believe it is 

reasonable to assume that no violations 

will occur. 

In future years, this measure has been 

removed and replaced with better 

performance measures and targets to 

evaluate the enforcement function. 

Number of requests and referrals for ADR 

services 

Maintain at or increase levels achieved in 

FY 2004 

Target Met. The 65 requests or active 

cases in FY 2005 represented a 20.4% 

increase over the 54 logged in FY 2004. 

Percentage of processes that achieve 

consensual agreements 

Maintain at or increase levels achieved in 

FY 2004 

Target Met. The Administrative Law area 

maintained their FY 2004 success rate as 

90.2% of cases achieved settlement in 

FY 2005. DRS increased their FY 2004 

success rate as 95.8% of cases achieved 

settlement in FY 2005. 

Timeliness of formal complaint 

resolutions 

Complete 80% within target time frames 

for various paths for resolution of 

complaints as specified by the 

Commission 

Target Met. During FY 2005, all three of 

the Commission’s initial decisions on 

complaints were completed within the 

specified deadlines, which vary from 

case-to-case based on the outlook of the 

Chief Judge and the Commission. 

Of the six additional complaints the 

Commission handled during FY 2005, 

three were settled, two were withdrawn, 

and one was returned to the Commission 

for further action. 

FY 2006 

Performance Measurement Performance Target Data Source 

Frequency of Market Surveillance 

Reports issued to the Commission 

Report issued for each public 

Commission meeting 

Office of Market Oversight and 

Investigations 

Frequency of Market Snapshot Reports 

issued to State Public Utility 

Commissions 

Quarterly Office of Market Oversight and 

Investigations 

Number of regions receiving the Market 

Snapshot Reports Increase over FY2005 Office of Market Oversight and Investigations 

Publish an annual State of the Markets 

Report Complete by June 30, 2006 Office of Market Oversight and Investigations 

Publish public market reports (including 

summer and winter seasonal 

assessments) 

At least 2 reports Office of Market Oversight and 

Investigations 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

99 

FY 2006 

Performance Measurement Performance Target Data Source 

Number of Daily Energy Reports 

distributed to Commission staff At least 225 Office of Market Oversight and Investigations 

Timeliness of verification of EQR 

submissions Within 10 business days of submission Office of Market Oversight and Investigations 

Review EQR submissions for 

completeness and contact companies 

that make up at least 80% of reported 

revenue for incomplete submissions 

Within 10 business days of submission Office of Market Oversight and 

Investigations 

Conduct follow up reviews of companies 

that make up at least 80% of reported 

revenue on exercise of market power or 

market manipulation 

Within 60 days of final submission Office of Market Oversight and 

Investigations 

Timeliness of reporting to Commission on 

important market events 

Analysis complete within 60 days of 

event 

Office of Market Oversight and 

Investigations 

Number of corporate profiles completed At least 10 Office of Market Oversight and 

Investigations 

Percentage of Hotline calls resolved 60% within 2 weeks of initial contact Office of Market Oversight and 

Investigations 

Percentage of non-environmental 

disputes sent to ADR resolved 75% within 120 days Dispute Resolution Service 

Number of ADR requests and referrals to 

the Dispute Resolution Service 

Minimum number of requests and 

referrals equal to FY 2005 Dispute Resolution Service 

Favorable Dispute Resolution Service 

customer satisfaction 80% customer satisfaction rate Dispute Resolution Service 

Percentage of market manipulation cases 

set for hearing completed according to 

the established schedule 

3⁄4 75% of Track I cases in 29.5 weeks 

3⁄4 75% of Track II cases in 47 weeks 

3⁄4 75% of Track III cases in 63 weeks 

Office of Administrative Law Judges / 

Office of Administrative Litigation 

Percentage of market manipulation cases 

set for hearing that achieve partial or 

complete consensual agreement 

75% Office of Administrative Law Judges / 

Office of Administrative Litigation 

Timeliness of reporting to the 

Commission on operational audits 

85% reported to the Commission within 

120 days of Commencement Letter 

Office of Market Oversight and 

Investigations 

Percentage of operational audit 

recommendations issued and 

implemented 

85% Office of Market Oversight and 

Investigations 

Timeliness of reporting to the 

Commission on financial audits 

85% reported to the Commission within 

120 days of Commencement Letter 

Office of Market Oversight and 

Investigations 

Percentage of financial audit 

recommendations issued and 

implemented 

85% Office of Market Oversight and 

Investigations 

Timeliness of reporting to the 

Commission on Standards of Conduct 

compliance audits 

85% reported to the Commission within 

120 days of Commencement Letter 

Office of Market Oversight and 

Investigations 

Percentage of enforcement investigations 

completed 75% within one year Office of Market Oversight and Investigations 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

100 

Performance Measurement Results for Management Initiatives

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

101 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

102 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

103 

FY 2003 

Performance Measurement Performance Target Result 

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. 

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. 

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%). 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

104 

FY 2004 

Performance Measurement Performance Target Result 

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 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

105 

FY 2004 

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. 

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. 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

106 

FY 2004 

Performance Measurement Performance Target Result 

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. 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

107 

FY 2005 

Performance Measurement Performance Target Result 

Number of new hires from recruitment 

program 

Attract new talent in mainstream 

occupations through targeted 

recruitment, with 50% at entry levels 

Target Met. 57% of new employees (42 

of 74) were hired into mainstream 

occupations at the entry-level. 

New staff from summer intern program Hire 30% of participants into permanent 

positions 

Target Not Met. 20% (6 0f 29) of interns 

eligible for conversion were hired into 

permanent positions. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. In light of the increase 

in the number of entry-level new hires 

during FY 2005, 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 

Target Met. Overall diversity in grades 

GS-14 and -15, SES, and equivalent 

level positions increased from 93 to 95 

during FY 2005. This figure includes 

both women and minorities. 

Improved executive/managerial 

development 

Expand training in leadership and 

management skills by implementing an 

experienced supervisors leadership 

program 

Target Met. Beginning in June 2005, the 

Commission launched a Business 

Acumen Course that was designed for 

supervisors. The curriculum, which was 

developed through a series of focus 

group meetings with SES managers, 

addresses the linkage between strategic 

plans, budgets, human capital plans, and 

operational plans in order to manage 

performance at both the organizational 

and individual levels. 

In August 2005, the first of four Business 

Acumen Courses were taught. Out of a 

target audience of 133 non-SES 

supervisors, 81 or 61% have completed 

or are enrolled to complete this course. 

Improved technical development Implement second phase of “markets 

curriculum” for experienced staff 

Target Met. From March 2005 to June 

2005, a second markets curriculum titled 

“FERC’s Role in the Energy Markets and 

Infrastructure” was implemented through 

a series of four separate modules. 

Mentoring program Implement FERC-wide mentoring 

programs 

Target Not Met. Although a draft 

mentoring program was prepared in late 

January 2005, a decision was made to 

merge the mentoring program with a 

larger training/developmental program 

that is being developed in FY 2006. 

This difference had no effect on overall 

program performance. 

Improved human capital processes 

Implement selected human resources 

flexibilities provided by new SES Pay-forPerformance legislation 

Target Met. On April 7, 2005, the 

Commission received provisional 

certification to implement SES Pay-forPerformance for calendar year 2005 by 

demonstrating that our SES performance 

appraisal system made meaningful 

distinctions in pay and performance, 

demonstrated clear alignment to strategic 

goals, and included good measures of 

performance for each executive. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

108 

FY 2005 

Performance Measurement Performance Target Result 

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 

Target Met. Based on the analysis of a 

baseline Commission-wide employee 

survey conducted in early FY 2005, 

specific survey issues were identified and 

addressed (through action plans) by the 

Commission and each office. In 

accordance with a FY 2006 NDAA 

requirement, a follow-up survey is 

planned that will address and include 

those issues identified in the FY 2005 

baseline survey (including improvement 

targets). 

Improved services to employees Successful implementation of payroll 

services and integration with HR services 

Target Met. In March 2005, the 

Commission successfully migrated its 

processing of payroll distributions to the 

National Finance Center. Also in March 

2005, the Commission’s Employee 

Maintenance Helpdesk was established 

to provide a central point of contact for all 

human resources and payroll related 

inquiries. 

Average IT costs per FTE Below industry average for federal 

agencies 

Target Met. The Commission’s FY 2005 

average IT cost per FTE of $12,154 is 

below the FY 2005 industry average for 

federal agencies of $14,590. 

Percentage of transactions accepted 

electronically 

95% of transactions accepted 

electronically 

Target Not Met. The Commission 

received 80.2% of qualified documents 

(27,934 out of 34,817) electronically. 

Qualified documents represented about 

56% of the total documents submitted to 

the Commission in 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 

since parties have the option to submit 

transactions via digital media (i.e. CD) 

rather than hard-copy form. In addition, 

the percentage represents an increase 

over the FY 2004 result of 75.7%. 

Improved Internet Website 99% availability 

Target Met. The Commission did not 

experience a major Internet outage in FY 

2005, with average uptime reported at 

100% (per contractor FY 2005 selfevaluation reports). 

Timeliness of getting public documents 

online 

99% within 24 hours of receipt or 

issuance 

Target Not Met. During FY 2005, 96.6% 

of all documents presented to the 

Commission’s eLibrary operations staff 

were published within 24 hours. Of the 

documents the Commission receives or 

issues electronically, 99.88% were 

published within 24 hours. As the volume 

of electronic filings increases, the current 

96.6% will rise. 

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 

Target Met. During FY 2005, customer 

feedback from the eLibrary Helpdesk 

showed that 100% of customers felt they 

received a high quality of service. 
Federal Energy Regulatory Commission 

FY 2005 Performance and Accountability Report 

109 

FY 2005 

Performance Measurement Performance Target Result 

Network availability 99% 

Target Met. The Commission did not 

experience a major network outage in FY 

2005, with average uptime reported at 

100% (per contractor FY 2005 selfevaluation reports). 

Desktop reliability Increase reliability by 5% per year 

Target Met. Compared to FY 2004 , the 

number of PC breakdowns (or re-images) 

during FY 2005 reduced by 9.2% from 54 

re-images to 49 re-images. 

With no means to capture positive 

reliability data (e.g. reliability increases 

from FY 2004 to FY 2005), the current 

performance measure and target do not 

appear in future performance plans. 

Standard office automation platform and 

PC rate of refresh 33% Target Met. The Commission’s FY 2005 upgrade percentage was 37%. 

Timeliness of virus file updates on 

servers and workstations 

Updates within 24 hours from release by 

vendors Target Met 

Implementation of Federal Information 

Security Management Act (FISMA) for 

small agencies 

95% 

Target Met. According to the Putnam 

scorecard, the measurement used to 

grade implementation of FISMA, the 

Commission earned a 100% (or A) rating 

for FY 2005. 

Development of initial enterprise 

architecture Complete by October 30, 2004 

Target Met. The Commission’s IT 

Enterprise Architecture was completed 

and in place by October 31, 2004. 

Develop Communications Plan 

Increase number of proactive interactions 

with the Press, Elected Officials, and 

Industry by 25% 

Target Met. In FY 2005, the total number 

of proactive interactions increased by 

27.6%. 

Redesign Internet Website Make internet site more useful and userfriendly 

Target Met. In addition to several new 

user-friendly features, the Commission 

added eleven new project- / initiativetargeted web pages during FY 2005. 

Engage Stakeholders Provide 50 presentations to government 

or other groups of stakeholders 

Target Met. The Commission provided 

over 70 presentations to government 

and/or other stakeholder groups during 

FY2005. 

Discussions with State regulatory bodies 

on Commission policies and actions

Formal, effective interactions between 

FERC and state officials on policy issues

Target Met. The Commission 

participated in 61 different meetings with 

state officials during FY 2005. 

Foster communication with States and 

Governors on infrastructure

Hold infrastructure conferences in each 

region

Target Not Met. The Commission held a 

total of seven infrastructure related 

conferences during FY 2005 in the 

Northeast, Western, Appalachian, and 

Rocky Mountain regions. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. The Commission’s 

inability to hold a conference in each 

region did not have an effect on overall 

program performance. 

Maintain liaison with market monitors in 

RTOs and ISOs 

Meet at least twice annually with RTO 

and ISO market monitors 

Target Met. The Commission met with 

RTO and ISO market monitors twice 

during FY 2005, both at Commissionhosted conferences (December 2004 and 

July 2005). 
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FY 2005 

Performance Measurement Performance Target Result 

Outreach to stakeholder groups to 

encourage use of conflict resolution 

mechanisms 

Increase number of outreach 

opportunities with stakeholders by 25% 

Target Met. The 83 active projects in FY 

2005 represent a 29.7% increase over 

the 64 projects in FY 2004. 

Support further discussions with Canada 

and Mexico

Formal interaction with Canadian and 

Mexican regulators on policy issues

Target Met. The Commission held or 

participated in 20 different meetings with 

Canadian and/or Mexican officials on 

issues related to infrastructure, reliability, 

and other policy initiatives during FY 

2005. 

Monitoring of manage-to-budget process 

Bi-weekly tracking of office salary levels 

and quarterly review of salary levels 

between CFO and Office Directors 

Target Not Met. Due to the National 

Finance Center processing of payroll 

distributions migration in March 2005, biweekly tracking information was briefly 

delayed. In addition, ongoing reviews 

and discussions between the Budget 

Division, individual office contacts, and 

the Chief Financial Officer did not 

necessitate the need for quarterly reviews 

with Office Directors. 

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. 

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 

Target Met. Both of the business plan 

updates that took place during FY 2005 

accomplished the stated targets. A final 

FY 2005 update will be completed during 

the first week in November. 

Timeliness of annual charges collections Collect 98% of outstanding receivables 

within 45 days of billing 

Target Not Met. The Commission 

received 92.7% of its annual charge 

collections within 45 days of billing. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. Since the collections 

during the 45-day period off-set the 

Commission’s FY 2005 appropriation and 

the Commission received 97.3% of its 

annual charge collections prior to the end 

of FY 2005, this difference had no effect 

on overall program performance, 

Invoices paid by electronic funds transfer 98% 

Target Met. The Commission paid 99% 

of its invoices via electronic funds 

transfer during FY 2005. 

Percentage of payments accomplished 

without error 98% 

Target Not Met. The Commission made 

97% of its payments without error during 

FY 2005. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. Since all incorrect 

payments were recovered via internal or 

Department of Treasury collection 

actions, this difference had no effect on 

overall program performance. 

Accuracy and completeness of annual 

financial statements Unqualified opinion 

Target Met. The Commission received 

an unqualified opinion on its FY 2004 

financial statement audit. 
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FY 2005 

Performance Measurement Performance Target Result 

Percentage of contracts performancebased 85% 

Target Met. Of the 118 procurement 

actions that required a performancebased statement of work, 100% were 

awarded as performance-based. 

Percentage of contracts advertised online 85% 

Target Met. Of the 3 procurement 

actions eligible for advertising, 100% 

were advertised online. 

FY 2006 

Performance Measurement Performance Target Data Source 

Percentage of summer interns hired into 

permanent positions 30% Office of Executive Director 

Percentage of new hires that are at entrylevel 50% Office of Executive Director 

Number of Senior Professional staff 

involved in on-campus recruitment Increase over FY 2005 Office of Executive Director 

Implement entry-level Professional 

Development Program Complete by September 30, 2006 Office of Executive Director 

Percentage of minorities among summerintern and entry-level positions Increase over FY 2005 Office of Executive Director 

Percentage of minorities among seniorlevel positions (GS-14, GS-15, SL, and 

SES positions) 

Increase over FY 2005 Office of Executive Director 

Implement Commission-wide Business 

Requirements guidelines Complete by September 30, 2006 Office of Executive Director 

Percentage of employees that receive at 

least 40 hours of training 100% Office of Executive Director 

Percentage of new supervisors (those 

with < 2 years experience) that receive at 

least 40 hours of management and/or 

leadership training 

100% Office of Executive Director 

Federal Protective Service rating on 

evacuations and shelter-in-place 

procedures 

Rating of satisfactory or above Office of Executive Director 

Reliability of IT infrastructure 99% network availability rate Office of Executive Director 

Timeliness of virus file updates upon 

notification 

3⁄4 Headquarters updated within 24 hours 

3⁄4 Regional Offices updated within 48 

hours 

Office of Executive Director 

FISMA compliance according to the 

Putnam scorecard Grade of “A” Office of Executive Director

Integrate the Business Plan, CPIC 

process, and IT architecture into the 

Commission’s Enterprise Architecture 

Complete by September 30, 2006 Office of Executive Director 

Percentage of approved IT initiatives with 

supporting documentation per the 

Commission's CPIC process 

100% Office of Executive Director 
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FY 2006 

Performance Measurement Performance Target Data Source 

Establish earned value management 

schedule and cost performance indices 

for all major projects 

Complete by September 30, 2006 Office of Executive Director 

Develop and implement automated 

Business plan Complete by September 30, 2006 Office of Executive Director 

Percentage of qualified-procurements 

that are performance-based 100% Office of Executive Director 

Percentage of qualified-procurements 

that are advertised on-line 100% Office of Executive Director 

Percentage of total procurement dollars 

awarded to small, women-owned, and 

minority businesses 

5% increase over FY 2005 Office of Executive Director 

Percentage of invoices paid via electronic 

funds transfer 99% Office of Executive Director 

Percentage of payments in compliance 

with Prompt Payment Act deadlines 100% Office of Executive Director 

Percentage of payments made without 

error 100% Office of Executive Director 

Timeliness of collecting accounts 

receivable 90% of invoices collected by due dates Office of Executive Director 

Complete and accurate annual financial 

statements 

Unqualified opinion on audited financial 

statements Office of Executive Director 

Percentage of filings capable of being 

received electronically 95% Office of the Secretary 

Percentage of Commission orders 

approved during open meetings issued 99% within 5 business days Office of the Secretary 

Percentage of Commission orders 

approved by notational vote issued 

99% within 1 business day of adoption 

date Office of the Secretary 

Percentage of legally required notices 

issued 

95% within 3 business days of being 

posted on eLibrary Office of the Secretary 

Percentage of speeches or presentations 

to external stakeholder groups 

3⁄4 20% to Infrastructure groups 

3⁄4 50% to Competitive Markets groups 

3⁄4 30% to Oversight and Investigation 

groups 

Office of External Affairs 

Percentage of press releases on 

important agency actions issued 

95% within 24 hours of order being 

issued Office of External Affairs 

Percentage of responses to international 

delegation meeting requests 

3⁄4 60% within 3 business days 

3⁄4 100% within 5 business days Office of External Affairs 

Percentage of responses to public 

inquiries 

3⁄4 60% within 3 business days 

3⁄4 100% within 5 business days Office of External Affairs 

Percentage of agency actions and timesensitive content posted on the FERC 

Internet Website 

95% within 1 hour of order being issued Office of External Affairs 
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FY 2006 

Performance Measurement Performance Target Data Source 

Timeliness of notices to NEB (Canada) 

and CRE (Mexico) of FERC activities 

pursuant to Memorandum of 

Understanding 

Within 1 business day Office of External Affairs 

Timeliness of regional hearings or 

conferences email notifications sent to 

State officials and Governors 

Within 1 business day Office of External Affairs 

Submit FY 2005 Annual Report to 

Congress Complete by June 30, 2006 Office of External Affairs 

Submit FY 2005 international exchange 

and training activity data to U.S. 

Department of State 

Complete by April 1, 2006 Office of External Affairs 

Submit FY 2005 FOIA Annual Report to 

Department of Justice Complete by February 1, 2006 Office of External Affairs 

Submit FY 2005 Information Quality 

Agency Annual Report to OMB Complete by January 1, 2006 Office of External Affairs 
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Appendix A 

Organizational Chart 
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Appendix B 

Strategic Plan 
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Federal Energy Regulatory Commission 

Strategic Plan FY 2005 – FY 2008 

7/26/2005 

Vision

Reliable, affordable energy through reliance on competition and effective regulation. 

Mission

The Federal Energy Regulatory Commission regulates and oversees energy industries in the economic, 

environmental, and safety interests of the American public. 

Goals and Objectives

Goal 1: Promote Development of a Robust Energy Infrastructure. 

Objective 1.1: Expedite Development of Energy Infrastructure Projects. 

• Implement the infrastructure provisions of the Energy Policy Act of 2005. 

• Make final decisions on proposed projects in a timely manner, consistent with statutory mandates and due 

process, and continue to seek improvements in the Commission’s processing of project applications. 

• Enforce power plant interconnection rules. 

• Implement integrated licensing and pre-filing processes and interagency agreements facilitating hydropower 

licensing, pipeline and storage certification and LNG facility authorization. 

• Encourage regional electric system planning to meet reliability, security and market needs. 

Objective 1.2: Encourage Investment in Energy Infrastructure. 

• Maintain high level of regulatory certainty in Commission policies. 

• Establish pricing policies that encourage investment in electric generation and transmission, natural gas 

pipelines, LNG import facilities, gas storage, and oil pipelines. 

• Ensure that revenue levels and rate designs for regulated company services are just and reasonable and 

support long-term competitive markets. 

• Encourage balanced innovative proposals that provide incentives for appropriate infrastructure investment. 

Objective 1.3: Address Landowner and Environmental Concerns Fairly. 

• Encourage potential applicants for licenses or certificates to utilize the Commission’s collaborative pre-filing 

process. 

• Incorporate reasonable environmental conditions into permits, licenses and certificates and regulate 

compliance with conditions. 

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. 

• Regulate the safety of hydropower projects and LNG import facilities licensed by the Commission. 

• Serve as lead Federal agency on siting and authorization of LNG import facilities, hydropower facilities, and 

interstate natural gas pipelines and storage facilities. 

• Work with other agencies and industry to address and improve infrastructure security. 

• Allow prompt recovery of prudently-incurred expenses to safeguard and enhance the reliability, security and 

safety of the energy infrastructure. 
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Goal 2: Prevent Exercise of Market Power by Reliance on Effective Competition. 

Objective 2.1: Promote Effective Competition in Electric and Gas Markets. 

• Promote effective competition in wholesale power markets in regions with and without voluntary, organized 

markets. 

• Encourage the reduction or elimination of seams between organized markets. 

• Support creation of regional state committees to advise RTOs and ISOs. 

• Promote transparency of competitive electric and gas markets. 

• Ensure that mergers and jurisdictional facility sales are consistent with the public interest. 

Objective 2.2: Establish Clear Market Rules to Govern Electric Markets. 

• Reform transmission open access policy to prevent undue discrimination and preference. 

• Reform market-based ratemaking policy to prevent exercise of market power and provide regulatory certainty. 

• Provide regulatory certainty through clear market rules and case specific decisions. 

• Prevent undue preference and self dealing in affiliate transactions. 

• Encourage the development of business rules and practices that maximize market efficiency, ease market 

entry and reduce transactions costs, relying on NAESB, NERC and the RTO/ISOs where appropriate. 

• Promote development of policies that accommodate effective demand response programs. 

• Remove unduly discriminatory barriers to entry affecting renewable energy. 

Goal 3: Prevent Exercise of Market Power by Reliance on Effective Regulation. 

Objective 3.1: Vigilant and Effective Oversight of Market Operations. 

• Strengthen the Commission’s ability to perform market monitoring. 

• Encourage effective RTO and ISO market monitoring units, as permitted by law. 

• Identify and remedy problems with market structure and operations, and periodically review market rules for 

consistency with long-term market development. 

• Assess market and infrastructure conditions and incorporate analysis into Commission decisions. 

Objective 3.2: Firm but Fair Enforcement of Commission Rules. 

• Improve the Commission’s enforcement capabilities. 

• Implement the market power and enforcement provisions of the Energy Policy Act of 2005. 

• Investigate statutory and rule violations, imposing penalties where appropriate and promptly terminating 

investigations when no violations are identified. 

• Encourage settlements to resolve disputes in an expeditious manner. 

• Act swiftly on complaints, using administrative litigation as needed to determine factual issues. 

• Encourage self-reporting of violations by regulated entities and improve processes to allow regulated entities 

to seek clarifications of Commission rules. 

Management Initiatives Supporting all Goals and Objectives 

Human Capital 

• Implement the Human Capital Plan to meet challenges of new Commission roles and changing workforce 

demographics. 

• Use the right mix of internal workforce and contracted services from the private sector to meet the agency’s 

statutory mandates efficiently and effectively. 

Information Technology 

• Complete the implementation of e-government initiatives to expedite interactions with customers. 

• Build effective electronic workload/time-management and case-processing systems to expedite work 

processes. 

Agency Resources 

• Integrate budget, business plan, and performance measurement to improve performance and accountability. 

• Generate accurate and timely financial information to support operating, budget, and policy decisions. 

Communication 

• Reach out to groups affected by agency actions in a timely manner. 

• Build strong partnerships with all stakeholders, legislators and regulators. 
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Appendix C 

Statutory Authority 
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As mentioned in Management’s Discussion and Analysis, below is a listing of federal statutes 

applicable to the Commission. Links to these statutes are available on the Commission’s website 

at www.ferc.gov under Legal Resources. 

General 

Title 18 Chapter I of the Code of Federal Regulations (CFR)

Americans with Disabilities Act (ADA)

Department of Energy Organization Act 

Electric Consumers Protection Act (ECPA)

Electronic Freedom of Information Act of 1996

Energy Policy Act of 2005

Energy Policy Act of 1992

Federal Power Act

Information Technology Management Reform Act of 1996 (ITMRA/Clinger-Cohen Act)

Public Utility Holding Company Act of 1935 (PUHCA)

Public Utility Regulatory Policies Act of 1978 (PURPA)

Power Plant & Industrial Fuel Use Act

Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)

Environmental 

Clean Air Act

Clean Water Act

Coastal Zone Management Act 

Endangered Species Act

16 USC 661, Fish and Wildlife Coordination Act

National Environmental Policy Act (NEPA)

National Historic Preservation Act 

Rivers and Harbors Act 

Wild and Scenic Rivers Act

Natural Gas 

Alaska Natural Gas Pipeline Act of 2004

Alaska Natural Gas Transportation Act of 1976

Natural Gas Act of 1938

Natural Gas Policy Act of 1978

Natural Gas Wellhead Decontrol Act of 1989 (NGWDA)

Outer Continental Shelf Lands Act (OCSLA)

Oil 

Oil Pipeline Regulatory Reform

Interstate Commerce Act
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Appendix D 

Acronym Glossary 
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Acronym Full Description Page Reference(s) 

ADR alternative dispute resolution 14, 71, 74, 89-90, 92-93, 95-96, 98-99 

ALP alternative licensing process 64, 66-67, 70, 73 

Bcf billion cubic-feet 14 

CAISO California Independent Transmission 

System Operator 80-81 

CEII critical energy infrastructure 

information 72, 75 

DOE U.S. Department of Energy 3, 47, 49-51 

DRS Dispute Resolution Service 5, 21, 89-90, 92-93, 95-96, 98 

EAP Emergency Action Plan 67, 69, 72, 75 

EIA Energy Information Administration 97 

EPAct 2005 Energy Policy Act of 2005 4, 10, 12-13, 16 

EQR Electric Quarterly Report 21, 96, 99 

ERO Electric Reliability Organization 19-20, 74, 85 

FPA Federal Power Act 4-5, 7, 22, 30, 47-48, 58, 73 

FPC Federal Power Commission 3, 47 

FTE full-time equivalent 5, 7, 102, 104, 108 

GPRA Government Performance and Results 

Act of 1993 26, 63 

ILP integrated licensing process 70, 73 

ISO Independent Transmission System 

Operator 

8-10, 17-19, 21, 70-71, 74, 78-87, 91, 93, 

106, 109, 122 

ISO-NE Independent Transmission System 

Operator - New England, Inc 17, 81, 83-85 

LNG liquefied natural gas 4, 12, 14, 21, 66, 69, 73-74, 96, 121 

MEPCO Maine Electric Power Company 17, 84 

Midwest ISO Midwest Independent Transmission 

System Operator 17, 19, 78, 80-84 

MMcf/d million cubic-feet per day 14 

MMU Market Monitoring Unit 93, 97 

MOA Memorandum of Agreement 74 

MOU Memorandum of Understanding 74 

NAESB North American Energy Standards 

Board 19, 80, 82, 85, 87, 122 

NEPA National Environmental Policy Act of 

1969 4, 13, 67-68, 70, 73-74 
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Acronym Full Description Page Reference(s) 

NERC North American Electric Reliability 

Council 71, 74, 80, 82, 122 

NGA Natural Gas Act of 1938 4, 7, 22, 69, 73 

NOI Notice of Intent 73 

NOPR Notice of Proposed Rulemaking 16, 19, 85 

NYISO New York Independent Transmission 

System Operator 18, 81 

OASIS Open Access Same-time Information 

System 20 

OATT Open Access Transmission Tariff 8, 17-18 

OMB Office of Management and Budget 3, 23, 31, 49, 52, 60, 63, 105, 113 

PAD pre-application document 73 

PJM PJM Regional Transmission 

Organization 15-17, 78, 80-85 

PUHCA Public Utility Holding Company Act of 

1935 16 

PUHCA 2005 Public Utility Holding Company Act of 

2005 16 

RTO Regional Transmission Organization 8-10, 15-17, 19, 21, 47, 70-71, 74, 78-87, 

91, 93, 106, 109, 122 

SEC U.S. Securities and Exchange 

Commission 16 

SPP Southwest Power Pool 15-17, 83-85 

TLP traditional licensing process 67, 70, 73