FY 2007 

PERFORMANCE AND 

ACCOUNTABILITY REPORT

FEDERAL ENERGY REGULATORY COMMISSION 

NOVEMBER 2007

Joseph T. Kelliher 

Chairman 


This page intentionally left blank.
CONTENTS

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

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

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

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

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

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

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

Guarding the Consumer .........................................................................8 

Energy Infrastructure that Serves the Nation’s Needs.........................11 

Program Performance Overview..........................................................16 

Financial Performance Overview ........................................................28 

Controls, Systems, and Legal Compliance ..........................................32 

Improper Payments Information Act Reporting ..................................35 

Possible Future Effects of Existing Events and Conditions ................35 

Limitations of the Financial Statements ..............................................35 

Financial Section......................................................................................37 

Message from the Chief Financial Officer...........................................39 

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

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

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

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

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

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

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

Performance Report ................................................................................69 

Introduction..........................................................................................71 

Performance Measurement Data for Energy Infrastructure: 

FY 2004 – FY 2007 .............................................................................72 

Performance Measurement Data for Competitive Markets: 

FY 2004 – FY 2007 .............................................................................86 

Performance Measurement Data for Enforcement: 

FY 2004 – FY 2007 .............................................................................98 

Performance Measurement Data for Supporting Initiatives: 

FY 2004 – FY 2007 ...........................................................................106 

Appendix A: Organizational Chart......................................................121 

Appendix B: Strategic Plan...................................................................125

Appendix C: Statutory Authority ........................................................129

Appendix D: Acronym Glossary ..........................................................133
This page intentionally left blank.
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

1 

Management’s 

Discussion 

and Analysis 

(Unaudited) 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

2 

This page intentionally left blank. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

3 

Introduction 

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

(OMB) Circular A-136 and Section 230 of Circular A-11, this report presents the 

Federal Energy Regulatory Commission’s (the Commission’s, FERC’s) FY 2007 

audited annual financial statements and program performance report. The 

financial section includes the Commission’s audited balance sheets, statements of 

net cost, changes in net position, budgetary resources, custodial activity, and 

notes to the financial statements. The performance report section includes 

performance measurement data for fiscal years 2004 through 2007. 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 during FY 2007. 

Overview of the Commission 

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

of Energy (DOE) whose function is to oversee major aspects of the Nation’s 

electric, natural gas, hydroelectric, and oil pipeline industries. 

The Commission was created through the Department of Energy Organization 

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

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

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

paragraphs will highlight the Commission’s federal statutory authority, with a 

more comprehensive listing available in Appendix C. 

Mission

Regulate and oversee energy industries in the 

economic, environmental, and safety interests of the 

American public. 

Vision

Abundant, reliable energy in a 

fair competitive market. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

4 

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

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

includes authorizing the construction of projects in interstate commerce and 

overseeing their operation and safety. 

Since 1935, the Commission has regulated certain electric industry activities 

under the Federal Power Act (FPA). Under FPA sections 205 and 206, the 

Commission ensures that the rates, terms and conditions of sales for resale of 

electric energy and transmission service in interstate commerce by public utilities 

are just, reasonable, and not unduly discriminatory or preferential. Under FPA 

section 203, as amended by the Energy Policy Act of 2005 (EPAct 2005), the 

Commission reviews mergers and acquisitions, and certain corporate transactions 

involving public utilities and public utility holding companies. Under each of 

these sections, the Commission primarily regulates investor-owned utilities. 

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

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

utilities are not subject to Commission regulation (with certain exceptions). 

Regulation of retail sales and local distribution of electricity are matters left 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) as regulation of such construction is the responsibility of state and local 

governments. EPAct 2005 gave the Commission authority to permit the 

construction or modification of transmission facilities in national interest electric 

transmission corridors designated by the Secretary of Energy, if certain conditions 

are met. 

A major new area of Commission regulation as a result of EPAct 2005, the largest 

grant of authority to the Commission in 70 years, is assuring the reliability of the 

bulk power system. The law authorizes the Commission to certify an Electric 

Reliability Organization (ERO) to establish and enforce mandatory reliability 

standards for the Nation’s bulk power system, subject to Commission approval. 

In July 2006, the Commission certified the North American Electric Reliability 

Corporation (NERC) as the ERO and in March 2007 approved the first mandatory 

and enforceable reliability standards. All owners, users and operators of the bulk 

power system are subject to the mandatory reliability standards approved by the 

Commission. 

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

the Natural Gas Act (NGA). Under sections 3 and 7 of the NGA, the Commission 

regulates the construction of new on-shore liquefied natural gas (LNG) import 

terminals and natural gas pipelines and related facilities. Under sections 4 and 5 

of the NGA, it 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 is authorized by the Commission if found to be required by 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

5 

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 similar statutes. Regulation of the production and gathering of natural gas, 

as well as 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. 

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 1,303 full time equivalents (FTEs) carried out the Commission’s 

mission in FY 2007 using a budget of $221.9 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 

2007, 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 Energy Markets and Reliability – Deals with matters involving the 

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

and services. A main focus of this office is the reliability of the interstate 

transmission grid. 

Office of Enforcement – Serves the public interest by guiding the evolution and 

operation of energy markets to ensure effective regulation and by protecting 

customers. This is primarily done through understanding markets and their 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

6 

regulation, identifying and remedying market problems timely, assuring 

compliance with rules and regulations, and detecting and crafting penalties to 

address market manipulation. 

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. 

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. 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 External Affairs – Responsible for all external communications with the 

public and media for 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. 

Included in this office is the Secretary of the Commission that serves as the focal 

point through which all filings are made for proceedings before the Commission. 

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 

abundant, reliable energy in a fair, competitive market thereby supporting a 

strong, stable national economy. To accomplish this, the Commission has three 

main goals: 

• Energy Infrastructure. Promote the development of a strong and reliable 

energy infrastructure consistent with statutory mandates and due process. 

• Competitive Markets. Support competitive markets by developing rules that 

encourage fair and efficient competitive markets and prevent the accumulation 

and exercise of market power. 

• Enforcement. Prevent market manipulation through vigilant oversight and 

firm but fair enforcement of Commission rules. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

7 

Beginning in FY 2007, the Commission was guided by its revised Strategic Plan. 

The revised plan contains new strategic objectives and related activities within the 

three program goals. It also captures new responsibilities resulting from the 

EPAct 2005. A significant addition to the Strategic Plan was the inclusion of a 

guiding principles section. These five principles were identified as underlying 

values that impact the Commission’s work on a daily basis. 

The revised Strategic Plan describes the Commission’s goals as follows: 

1. Energy Infrastructure 

Goal: Promote the Development of a Strong 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, and protecting the energy infrastructure. This goal, which focuses 

on infrastructure, covers many of the Commission’s important responsibilities 

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

siting and inspections, compliance activities, environmental and other licensing 

conditions, dam safety inspections and most rate determinations. As a result of 

the EPAct 2005, this goal also captures many new Commission responsibilities 

such as the reliability of the interstate transmission grid. 

2. Competitive Markets 

Goal: Support Competitive Markets.

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

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

employing best practices in market rules, promoting transparency in electric and 

gas markets, and reforming market policies where necessary. Along with some 

traditional work in the area of rate determinations, this goal includes various 

initiatives to address market power. 

3. Enforcement 

Goal: Prevent Market Manipulation.

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 quickly and addressing them before 

they become severe. Effective internal compliance programs within companies 

and self-policing will also help achieve this goal. The Commission will conduct 

traditional investigations and apply its new and expanded penalty authority where 

appropriate. 

The Commission’s Strategic Plan also includes several initiatives that support 

each of the strategic goals. 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. Additionally, the initiatives include the Commission’s 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

8 

litigation, alternative dispute resolution services, communication, outreach and 

other collaboration efforts. 

As the Commission works to achieve its mission, its focus remains on the five 

guiding principles: organizational excellence, due process and transparency, 

regulatory certainty, stakeholder involvement, and timeliness. Whether the 

Commission is adjudicating a rate filing, ruling on a permit application, or 

developing a new policy, it strives to meet these criteria as a means of ensuring 

that each of its actions is consistent with the public interest. 

Business Plan 

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

allocated 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. The Business Plan is an iterative process that helps to identify which 

activities are leading the Commission towards achieving particular goals and 

objectives. During FY 2007, the Commission reported actual FTE usage at a 

detailed activity level in its Business Plan, which improved offices’ ability to 

organize and allocate resources effectively. 

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. These 1930-era 

laws have undergone important reforms, most recently, in EPAct 2005, which, 

among other things, gave the Commission new reliability oversight authority. 

The Commission’s electric regulatory responsibilities also include portions of the 

Public Utility Regulatory Policies Act of 1978 (as modified by EPAct 2005) and 

the Public Utility Holding Company Act of 2005 (adopted in EPAct 2005). 

Nevertheless, the FPA and NGA remain the Commission’s core statutory 

responsibilities with respect to guarding the consumer. 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 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 preference. In carrying out 

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 utilities or natural gas pipelines. 

While the Commission has encouraged competitive wholesale markets, 

“Of the 

Commission’s 

primary task 

there is no 

doubt, however, 

and that is to 

guard the 

consumer from 

exploitation by 

non-competitive 

electric power 

companies.” 

NAACP vs. 

Federal Power 

Commission 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

9 

competitive markets are not completely unregulated. The notion that a regulatory 

agency 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 of reliance on competition and regulation is 

exactly what the Commission has been doing over the past decade, particularly in 

the area of electric regulation. In wholesale power markets, Commission policies 

have promoted effective competition as a means to ensure just and reasonable 

rates. The Commission first pursued this goal in the 1980s by authorizing 

wholesale power sales at market-based 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 affirmed this policy change. 

Recognizing that competition is a means to an end, reasonable wholesale prices, 

and not an end unto itself, the Commission did not end regulation. Rather, public 

utilities that are authorized to make power sales at market-based rates, for 

example, continue to be subject to Commission regulation. 

The Commission has also promoted effective competition in wholesale power and 

natural gas markets by issuing orders establishing rules for open access gas 

transportation and electric transmission. Open access transportation in gas 

markets was completed in 1992 with the adoption of Order No. 636. The 

Commission began to impose electric open access transmission requirements in 

market-based rate cases and mergers in the 1980’s. In 1996, Order No. 888 

extended the open access transmission requirements to all jurisdictional public 

utilities. In FY 2007, Order No. 890 strengthened the requirements of Order No. 

888 through increased transparency to address and remedy opportunities for 

undue discrimination. Over time, the natural gas and electric industries 

transformed from companies using their monopoly-owned transportation and 

transmission facilities to supply all the needs of their own wholesale customers, to 

companies providing competing suppliers and wholesale customers with 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 electric energy sales at marketbased prices and to offer market choices for customers. 

The Commission has also promoted development of regional transmission 

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

independent transmission companies (ITCs). Operating as independent providers 

of electric transmission service, these organizations are not affiliated with energy 

market participants and thus have no incentive to discriminate in the provision of 

transmission service. They operate the electric transmission grid in a certain state 

or region, thereby eliminating rate pancaking and providing for regional planning. 

All RTOs and ISOs also now run energy markets. 

“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 2007 Performance and Accountability Report 

10 

The Commission’s policies have resulted in significant new electric generation 

capacity by independent power producers. At the same time, investment in 

electric transmission infrastructure has not kept pace, resulting in increased 

transmission congestion in some regions. This is of concern because transmission 

congestion results in higher energy prices. The Commission’s new requirements 

in Order No. 890 for coordinated, open and transparent planning should facilitate 

the planning and expansion of the transmission system and address congestion 

and other customer concerns. 

The Commission monitors wholesale power and natural gas markets to ensure 

that its policies mitigate market power, and toward that end, has reformed many 

of its rules in recent years. Since 2001, the Commission has modified its use of 

regulatory tools to prevent the exercise of market power by focusing on its 

electric generation market power policies. Initially through its Market Behavior 

Rules and later through the implementation of EPAct 2005, the Commission 

strengthened its reporting requirements (Order Nos. 2001 and 652) and acted to 

prohibit, among other things, market manipulation. Provisions of EPAct 2005 

broadly prohibit fraud in jurisdictional energy market transactions. The 

Commission has implemented these provisions by adopting new electric and 

natural gas market anti-manipulation rules in Order No. 670. In 2004, the 

Commission bolstered its electric generation market power test by issuing 

improved interim market power screens and in June 2007 issued Order No. 697 

adopting new rules governing when a seller can charge market-based rates. 

The Commission also continues to be vigilant regarding electric transmission 

market power. In February 2007, in Order No. 890, the Commission amended its 

regulations and the pro forma open access transmission tariff adopted in Order 

No. 888 to ensure that transmission services are provided on a basis that is just, 

reasonable and not unduly discriminatory or preferential. Although Order No. 

888 was successful in many important respects, the need to reform the pro forma

open access transmission tariff became increasingly apparent. For example, in 

1999, the Commission held, in adopting Order No. 2000, that the pro forma open 

access transmission tariff could not fully remedy undue discrimination because 

transmission providers retained both the incentive and the ability to discriminate 

against third parties, particularly in areas where the pro forma open access 

transmission tariff left the transmission provider with significant discretion. The 

Commission made a similar finding in Order No. 2003, again holding that 

opportunities for undue discrimination continue to exist in areas where the pro 

forma open access transmission tariff leaves transmission providers with 

substantial discretion. 

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

protect the consumer. Because of the dramatic changes that have occurred in the 

electric and natural gas industries over the past 25 years, the Commission needed 

these new regulatory tools to discharge its historical duties to protect consumers 

against unjust and unreasonable rates and undue discrimination and preference. 

In particular, EPAct 2005 expanded the Commission’s authority to review 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

11 

mergers and electric generation facility acquisitions and granted the Commission 

authority to impose significant civil penalties. The Commission will judiciously 

exercise this new civil penalty authority to prevent the exercise of market power. 

The Commission began to exercise this new authority in January 2007 when it 

entered into settlements with five companies providing for a total of $22.5 million 

in penalties. It has continued to issue settlements involving payments of civil 

penalties. 

Finally, EPAct 2005 directed the Commission to facilitate price transparency in 

wholesale electric and gas commodity, transmission, and transportation markets 

and permitted the Commission to issue rules to ensure timely dissemination of 

price information to market participants and the public. The Commission 

conducted a technical conference in October 2006 focusing on ways to facilitate 

price transparency in markets for the sale and transportation of natural gas and 

electricity. In April 2007, the Commission issued a notice of proposed 

rulemaking to provide greater transparency in natural gas markets. The 

Commission continues to monitor industry progress on market transparency and 

stands ready to use its statutory transparency authority as necessary. 

Energy Infrastructure that Serves the Nation’s Needs 

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

infrastructure which is critical to the health of the U.S. economy. Nearly twothirds 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 confidence that they will have an 

opportunity to recover their investments, and must provide reasonable rates for 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 the market. Similarly, 

the timely review of LNG terminal projects to ensure their safe construction and 

operation is crucial to support the Nation’s need for additional gas supplies. 

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 certificate process of a major 

pipeline project, including environmental review, is now approximately nine 

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. This helps to 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

12 

open the lines of communication earlier in the project review process so that 

problems can be averted later. 

One project approved in FY 2007 is a prime example of what the Commission has 

been able to accomplish through the pre-filing process. The project consisted of 

172 miles of 42-inch-diameter pipeline across Texas and Louisiana using new 

right-of-way, and the construction of two new compressor stations. This project 

was designed to provide much needed capacity for transporting rapidly 

developing gas supplies in the Barnett Shale and Bossier Sand production areas. 

The pre-filing process was determined to be the best way to meet the aggressive 

in-service schedule requested by the company. 

The environmental analysis for this project determined that it: 

• would affect about 2,500 acres, including 130 acres of wetland; 

• would cross 110 perennial waterbodies (3 of which are listed on the 

National and state inventories due to their scenic qualities) and 136 

intermittent streams; and 

• could affect 6 federally-listed and 25 state-listed endangered or 

threatened species or their habitat. 

During the pre-filing process the company adopted 34 route variations to address 

environmental and landowner concerns. In the Environmental Impact Statement 

(EIS), the Commission staff evaluated three major route alternatives, and seven 

route variations, two of which were recommended for inclusion in the 

Commission order to reduce wetland impacts. 

Through the efforts of the Commission staff, and the cooperation of other 

agencies and the company, the environmental review was completed, and the 

Commission issued a certificate in less than eight months. The company was able 

to comply with the 38 environmental conditions included in the Commission’s 

Order, complete construction in less than seven months, and place the project into 

service in May 2007. 

Although the 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 the 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. Natural gas storage 

capacity has remained relatively static for many years while demand has 

increased. Between 1998 and 2003, gas storage capacity expanded only 1.4 

percent while demand rose 24 percent. The volatility of natural gas prices rose 

sharply during this period. To ensure adequate supplies during peak demand 

periods, the Commission is encouraging the development of new natural gas 

storage capacity. In June 2006, the Commission, responding to EPAct 2005, 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

13 

issued a final rule reforming the Commission’s pricing policies for natural gas 

storage. The rule provides further incentive for the development of new natural 

gas storage capacity to ensure access to storage services at just and reasonable 

rates while at the same time ensuring that adequate storage capacity will be 

available to meet anticipated market demand. 

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

infrastructure. In setting rates for both wholesale power sales and transmission in 

interstate commerce, the Commission ensures opportunity for cost recovery and 

additional investment in generation and transmission facilities. Transmission 

capacity per megawatt of peak demand declined during much of the past three 

decades, prompting the Commission to consider pricing policies to encourage the 

construction of new transmission facilities. After the Commission initiated a 

proceeding on these policies, Congress amended the FPA, through EPAct 2005, 

to require the Commission to establish incentive-based rate treatments for 

transmission within one year of enactment of the new statute. In July 2006, 

pursuant to this new directive, the Commission issued Order No. 679 to increase 

investment in transmission infrastructure, promote reliability, and lower costs for 

consumers by reducing transmission congestion. The final rule allows 

companies, among other things, to seek: 

• incentive rates of return on equity for new investment in transmission 

facilities; 

• full recovery of prudently incurred transmission-related construction 

work in progress costs in the rate base; and 

• full recovery of prudently incurred pre-commercial operations costs. 

The Commission has also adopted a number of reforms in Order No. 890 to 

improve the development of transmission infrastructure. For example, the 

Commission amended its pro forma open access transmission tariff to require 

coordinated, open, and transparent transmission planning on both a sub-regional 

and regional level. Order No. 890 adopted a congestion study principle to ensure 

that the transmission planning process encompasses both reliability and economic 

considerations. As a result, customers may request studies that evaluate potential 

upgrades or other investments that could reduce congestion or integrate new 

resources (e.g., wind developers) and loads on an aggregated or regional basis, 

without assigning cost responsibility for those investments or otherwise 

determining whether they should be implemented. 

In addition, EPAct 2005 amended the FPA to grant the Commission, for the first 

time, authority to site electric transmission facilities under certain conditions. 

While this new authority is more limited than the Commission’s natural gas 

pipeline siting authority, it should help lower the regulatory barriers to necessary 

investment in the transmission grid. In November 2006, in Order No. 689, the 

Commission adopted rules to implement this new authority in accordance with the 

specific criteria established in EPAct 2005. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

14 

In addition to its role in developing a strong energy infrastructure, the 

Commission now has the responsibility of assuring the reliability of the bulk 

power system through oversight of the ERO and enforcement of the reliability 

standards. This new regulatory authority is important to the Nation’s energy 

infrastructure, and therefore, its economy and security. 

The EPAct 2005 reliability provisions require Commission participation in 

several areas, including: 

• oversight of the ERO, ensuring compliance of the nearly 1,500 entities 

subject to the mandatory and enforceable reliability standards and 

investigation of major incidents on the bulk power system; 

• development of as many as 50 new or modified reliability standards 

each year; 

• development of reliability standards and oversight of the new and 

critically important areas of cyber and physical security; and 

• reports and assessments of the adequacy and reliability of the bulkpower system. 

The Commission has moved quickly to implement the reliability provisions of 

EPAct 2005. By April 2007, the Commission had put into place the essential 

elements, namely: 

• creation of a new Division of Reliability and reorganization of the 

Office of Markets, Tariffs and Rates into the Office of Energy Markets 

and Reliability to organize technical staff efforts; 

• establishment of the Office of Enforcement to organize oversight of all 

compliance work, including adherence to reliability standards; 

• certification of an ERO; 

• approval of agreements governing the delegation of the ERO’s 

enforcement responsibilities to eight regional entities; and 

• approval of 83 mandatory and enforceable reliability standards, 

effective in June 2007. 

While these accomplishments are significant, the Commission’s work with 

respect to reliability has just begun and will become significantly more complex. 

With mandatory reliability standards in place, the Commission began overseeing 

and ensuring the enforcement of these standards. In addition, the Commission 

will engage in the ERO’s processes to develop new reliability standards. The 

Commission anticipates significant increases in the volume and complexity of 

work in FYs 2008 and 2009 that must be done in order to achieve the goals of 

EPAct 2005, particularly with respect to ERO oversight, cyber security, ongoing 

reliability standards development and enforcement. 

Another ongoing critical issue for all consumers is the assurance that there exist 

plans and procedures to address disruptions to energy services that may be caused 

by extreme weather, terrorism or other national disaster. In August 2006, the 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

15 

Commission revised its regulations to better monitor and assess the physical state 

of the interstate natural gas pipeline system and gas storage infrastructure when 

damages cause service disruptions. The final rule requires jurisdictional natural 

gas companies to report to the Commission damage to their facilities and report 

service disruptions that occur when a natural disaster or other cause results in a 

reduction in pipeline throughput or storage deliverability. The Commission also 

remains committed to giving priority to processing any filings made for the 

recovery of extraordinary expenditures to safeguard the reliability and security of 

the Nation’s energy transportation systems and energy supply infrastructure. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

16 

Program Performance Overview 

The performance measurement data and other achievements included below 

constitute a few of the Commission’s key achievements during FY 2007. The 

performance measures and targets were selected from the Commission’s FY 2008 

Performance Budget Request. A complete list of the Commission’s performance 

measurement data for fiscal years 2004 through 2007 is included in the 

Performance Report section of this report. 

Performance Measurement Data for Energy Infrastructure

Goal: Promote the Development of a Strong Energy Infrastructure. 

Performance Measurement Performance Target Result 

Percentage of proposed reliability 

standards reviewed 100% 

Target Met. Docket No. RM06-16-

000; Final Rule, Order No. 693, 

"Mandatory Reliability Standards 

for the Bulk-Power System," 

issued March 16, 2007, in which 

the Commission approved 83 of 

107 proposed Reliability 

Standards, and directed significant 

improvements to 56 of those 

standards. The Commission also 

required submission of further 

information in order to evaluate the 

adequacy of the remaining 24 

standards. 

The initial 83 standards became 

mandatory and enforceable on 

June 18, 2007. 

In addition, the Commission 

approved 8 regional standards in 

Docket No. RM07-11-000; "Order 

Approving Regional Reliability 

Standards for the Western 

Interconnection and Directing 

Modifications," issued June 8, 

2007. 

In Order No. 693 the Commission, for the first time, approved mandatory and 

enforceable reliability standards for the United States and, although many of the 

reliability standards need significant improvement, this action resulted in the U.S. 

being better prepared to meet future reliability challenges. These mandatory 

reliability standards apply to all users, owners and operators of the bulk power 

system designated by NERC through its compliance registry procedures. Both 

monetary and non-monetary penalties may be imposed for violations of the 

standards. 

While the approved reliability standards were immediately enforceable, the 

Commission directed the Commission-certified ERO and the Regional Entities to 

focus their resources on the most serious violations during an initial period. The 

ERO and Regional Entities were directed to exercise enforcement discretion with 

regard to all applicable users, owners and operators of the bulk power system, to 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

17 

allow the ERO, Regional Entities and others to ensure that the compliance 

monitoring and enforcement processes work as intended and all entities have time 

to implement the new processes. 

Performance Measurement Performance Target Result 

Percentage of qualifying LNG 

plants inspected during ongoing 

construction activity 

100% of plants inspected every 8 

weeks 

Target Met. 100% of qualifying 

LNG plants (6 of 6) where 

construction was occurring were 

inspected at least every 8 weeks. 

LNG plant construction activity during FY 2007 continued at four new LNG 

import terminals in Texas and Louisiana: Freeport LNG, Cheniere Sabine Pass 

Phases I and II, Sempra Cameron LNG, and ExxonMobil Golden Pass. In 

addition, two existing import terminals commenced construction of major 

expansion projects: the Dominion Cove Point Expansion Project and the 

Trunkline Infrastructure Enhancement Project. A team of two Commission LNG 

engineers were assigned to each project to ensure that all of the qualifying 

projects were inspected at least once every eight weeks and to verify that facilities 

under construction complied with engineering and safety conditions set forth in 

the Commission order. Each team also inspected environmental mitigation 

measures at each site and reviewed the final design of process and safety 

equipment to verify compliance with the authorized design. 

Performance Measurement Performance Target Result 

Percentage inspected annually: 

3⁄4 LNG import terminals 

3⁄4 LNG peak-shaving facilities 

3⁄4 100% 

3⁄4 50% 

Targets Met. 

3⁄4 All 5 of the operating LNG 

import terminals were inspected. 

3⁄4 6 of the 12 peak-shaving 

facilities were inspected. 

During FY 2007, Commission LNG engineers conducted annual operational 

inspections at all five of the LNG import terminals: Dominion Cove Point LNG in 

Cove Point, MD, Southern LNG at Elba Island, GA; EcoEléctrica L.P. in 

Penuelas, Puerto Rico, Trunkline LNG at Lake Charles, LA, and Distrigas in 

Everett, MA. Biennial operational inspections were conducted at six of the 

twelve jurisdictional LNG peak-shaving facilities. A team of Commission LNG 

engineers conducted field inspections on the condition of plant process 

equipment, storage tanks and safety systems at each facility. In addition, the 

operational and maintenance history of the facility since the previous inspection 

was reviewed with plant management. Of the eleven total inspections, seven 

resulted in post-inspection letters with recommendations. Example 

recommendations included increasing gas detection, adding fire extinguishers, or 

repairing corrosion. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

18 

Performance Measurement Performance Target Result 

Percentage of high- and 

significant-hazard-potential dams 

inspected annually 

100% 

Target Met. 100% of all high and 

significant hazard-potential dams 

were inspected annually. 

The Commission is responsible for conducting operation inspections of almost 

1,000 high and significant hazard potential dams each year. These inspections are 

conducted by engineers located in the Commission’s Division of Dam Safety and 

Inspections five regional offices: New York, Atlanta, Chicago, Portland (OR), 

and San Francisco. 

Each operation inspection serves to verify that the hydropower project is 

operating safely, has an effective dam safety surveillance monitoring program, 

and an appropriate security program. Any safety problems or concerns identified 

during the inspection may lead to engineering investigations, evaluations, or 

corrective actions being required by the Commission, such as remedial 

modifications, enhanced monitoring of the performance of the structures, or 

improved security measures. Inspections also ensure that projects get the 

necessary maintenance to provide the long-term structural integrity of the project 

and help ensure that project owners comply with their license terms and 

conditions. Furthermore, these inspections ensure the continued operation of 

hydropower projects, which enables them to continue to produce a wide variety of 

multi-purpose benefits. 

Other Accomplishments

Memorandum of Understanding with the Department of Defense

In FY 2006, the Commission set a target of completing a memorandum of 

understanding (MOU) with the Secretary of Defense on the coordination of LNG 

facilities affecting active military installations. The Commission was not able to 

meet this goal due to personnel shifts within the Department of Defense (DOD). 

The Commission was able to sign this MOU in August 2007 and is currently 

awaiting signature by DOD. 

Long Term Transmission Rights 

In FY 2007, the Commission issued orders on long term transmission rights plans 

for the PJM Interconnection (PJM), Midwest Independent Transmission System 

Operator (Midwest ISO), and California Independent System Operator (CAISO) 

regions, consistent with Commission requirements and EPAct 2005. The plans 

provide increased certainty about the congestion cost risks of long term service in 

organized electricity markets and help load-serving entities and other market 

participants support new investments and other long-term power supply 

arrangements. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

19 

Pricing Policies

In November 2006, the Commission issued its first order authorizing marketbased rates for natural gas storage consistent with its FY 2006 final rule 

encouraging gas storage development. The November 2006 order determined that 

the applicant had met the requirements of one of the additional approaches natural 

gas storage developers may now use to justify market-based rates under the final 

rule. 

The Commission’s Order No. 679, which offers incentives for potential investors 

to build needed electric transmission facilities, was clarified on rehearing in 

December 2006 and again in April 2007. Order No. 679 seeks to ensure 

investment in the Nation’s aging transmission infrastructure, promote electric 

power reliability, and lower costs for consumers by reducing transmission 

congestion. The final rule identifies specific incentives the Commission will 

consider based on a case-by-case analysis of individual transmission proposals. 

In FY 2007, the Commission conditionally approved transmission rate incentives 

for Duquesne Light Company to allow it to recover costs connected with a 

proposed $184 million transmission expansion project in western Pennsylvania. 

The Commission also approved incentive rate treatment for a static volt-amperereactive (VAR) compensator to be installed at the existing Black Oak Substation 

as part of the Trans-Allegheny Interstate Line Project. 

Performance Measurement Data for Competitive Markets

Goal: Support Competitive Markets. 

Performance Measurement Performance Target Result 

Revise open access transmission 

tariff Issue final rule by June 30, 2007 

Target Met. Docket Nos. RM05-

17-000 and RM05-25-000; Final 

Rule, Order 890, "Preventing 

Undue Discrimination and 

Preference in Transmission 

Service," issued February 16, 

2007. 

In Order No. 890, the Commission reforms its ten year old open-access 

transmission regulatory framework to ensure transmission service is provided on 

a nondiscriminatory and just and reasonable basis, as well as provide for more 

effective regulation and transparency in the operation of the transmission grid. 

The final rule was designed to (1) strengthen the pro forma open-access 

transmission tariff to ensure that it achieves its original purpose of remedying 

undue discrimination, (2) provide greater specificity to reduce opportunities for 

undue discrimination and facilitate the Commission’s enforcement, and (3) 

increase transparency in the rules applicable to planning and use of the 

transmission system. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

20 

The Commission’s reforms included in the final rule will: 

• Increase non-discriminatory access to the grid by eliminating the wide 

discretion that transmission providers have in calculating available 

transfer capability (ATC). 

• Increase the ability of customers to access new generating resources 

by requiring an open, transparent and coordinated transmission 

planning process. 

• Increase efficient utilization of transmission by eliminating artificial 

barriers to use of the grid. 

• Facilitate the use of and access to clean energy resources, such as wind 

power. 

• Strengthen compliance and enforcement efforts. 

In addition to the increased transparency included in the ATC and planning 

reforms, the final rule required that transmission providers post on their openaccess same-time information system (OASIS) all business rules, practices and 

standards related to transmission services provided under the pro forma open 

access transmission tariff. 

The final rule applies to all public utility transmission providers, including 

regional transmission organizations and independent system operators. 

Performance Measurement Performance Target Result 

Develop generation market power 

screens for electric market based 

rates 

Issue final rule by June 30, 2007 

Target Met. Docket No. RM04-7-

000; Final Rule, Order 697, 

"Market-Based Rates for 

Wholesale Sales Of Electric 

Energy, Capacity And Ancillary 

Services By Public Utilities," 

issued June 21, 2007. 

The Commission issued Order No. 697 as part of a series of fundamental reforms 

to its market-based rate program that will strengthen competitive markets and 

protect consumers by reinforcing regulations for just and reasonable wholesale 

electric power sales. The rule realigns the Commission’s previous market power 

analysis for determining whether a wholesale seller of electric energy, capacity or 

ancillary services qualifies for market-based rate authority into a two-part analysis 

that looks at horizontal (generation) market power and vertical (transmission and 

other barriers to market entry) market power. The reforms are intended to protect 

consumers from an electric power seller’s exercise of market power. For sellers 

that do not demonstrate a lack of market power, the Commission will determine 

appropriate mitigation on a case-by-case basis. 

In its new rule, the Commission: 

• Collapses the four-prong analysis for determining whether a wholesale 

seller of electric energy, capacity or ancillary services qualifies for 

market-based rate authority into a two-part test covering horizontal 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

21 

(generation) and vertical (transmission and other barriers to market 

entry) market power. 

• Eliminates what is known as the section 35.27 exemption for all 

generation built after July 9, 1996, alleviating the Commission’s 

concern that retaining the exemption could allow a seller to gain a 

dominant position in the market without being subject to any 

generation market power analysis. All sellers seeking market-based 

rate authority, or filing updated market power analyses, on or after the 

effective date of the rule must provide a horizontal market power 

analysis for the generation they own or control, including generation 

built after July 1996. 

• Allows a seller to use the entire RTO/ISO geographic footprint as the 

default relevant geographic market if the RTO/ISO has sufficient 

market structure and a single energy market. However, if the 

Commission determines there is a submarket within an RTO/ISO, the 

submarket becomes the default relevant geographic market. 

• Will determine appropriate mitigation on a case-specific basis for 

sellers that do not demonstrate a lack of market power, including 

whether a “must offer” requirement is necessary to mitigate market 

power. 

• Allows mitigated sellers to make market-based rate sales “to the 

border” if that seller commits that the power will leave home and not 

ricochet through an affiliate. The rule imposes a record retention 

requirement on mitigated sellers making such sales and required tariff 

language to allow for such sales. 

Other Accomplishments

Demand Response

The Commission promotes effective demand response principally as a means to 

reduce electric price volatility and ensure just and reasonable rates for electricity 

and to enhance reliability. Further, more effective demand response and 

improved energy efficiency is consistent with sound climate change policy 

because it will reduce peak and average demand levels and offset the need for 

generation capacity. To that end, the Commission has adopted a number of 

reforms to facilitate the use of demand resources in a number of recent orders and 

rulemakings. Essentially, these orders allow demand response to compete with 

new generation to meet future demand needs. More effective demand response 

can offset the need for some generation additions. 

In September 2007 the Commission issued its annual report, “Assessment of 

Demand Response and Advanced Metering 2007,” required under the Energy 

Policy Act of 2005 to chart progress in the number of demand response programs, 

the number of states introducing opportunities for demand response, and the key 

role that demand response is playing in organized wholesale power markets. The 

report notes major demand response developments in wholesale markets, 

including the use of demand resources in forward capacity markets and ancillary 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

22 

services markets, and the development of new reliability-based demand response 

programs. 

Based on a review of various demand response activities in the last year, 

Commission staff has identified the following demand response trends: 

• Increased participation in demand response programs; 

• Increased ability of demand resources to participate in RTO/ISO 

markets; 

• More attention to the development of a smart grid that can facilitate 

demand response; 

• More interest in multi-state and state-federal demand response 

working groups; 

• More reliance on demand response in strategic plans and state plans; 

and 

• Increased activity by third parties to aggregate retail demand response. 

Seams

Seams refer to the differences in market rules and designs, operating and 

scheduling protocols, and other control-area practices that inhibit or preclude the 

ability to execute transactions that cross regional boundaries and thus create 

inefficiencies. Significant differences in power products and pricing and market 

rules between markets can reduce competition between suppliers across the 

regions. Thus, resolving seams differences could lower the cost of transacting 

power sales, permit dispatch of lower cost power and, ultimately, lower costs to 

customers. 

In FY 2007, the Commission facilitated discussions between industry and states 

and took other actions to address and resolve the seams issues that occur at 

boundaries between organized markets. Specifically: 

• In November 2006, the Commission accepted for filing a proposed 

Seams Operating Agreement between the Midwest ISO and Manitoba 

Hydro; 

• In December 2006, the Commission held a technical conference to 

examine concerns about seams issues from the CAISO Market 

Redesign and Technology Upgrade (MRTU) order. While the MRTU 

does not introduce seams into Western electricity markets, since 

certain seams issues already exist between organized and bilateral 

markets in the West, the Commission determined that a technical 

conference would be appropriate to address these concerns; and 

• In March 2007, the Commission held a technical conference focused 

on seams issues in the Eastern Interconnection. The goal of the 

conference was to concentrate on efforts to identify the market seams 

in the Eastern Interconnection that create the greatest barriers to trade 

and cost shifts, and develop proposals to address those seams. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

23 

Performance Measurement Data for Enforcement

Goal: Prevent Market Manipulation. 

Performance Measurement Performance Target Result 

Percentage of enforcement 

investigations completed 75% within one year 

Target met. 94.8% of 

investigations were closed within a 

year of being initiated. 

In ten of the investigations concluded in FY 2007, the Commission approved a 

total of $32.5 million in civil penalties. These cases are the first civil penalties 

paid under the Commission’s enhanced civil penalty authority from EPAct 2005. 

These cases provided for penalties ranging from $500,000 to $10 million. Seven 

cases involved the electric industry and violations of open access transmission 

tariffs, Market Behavior Rules, business standards for OASIS transactions, and 

codes of conduct. Three cases involved the natural gas industry and violations of 

capacity release requirements and failure to comply with Commission orders. 

Performance Measurement Performance Target Result 

Percentage of operational audit 

recommendations issued and 

implemented 

90% 

Target met. 100% of operational 

audit recommendations issued 

were implemented within 6 

months.

In FY 2007, the Commission completed 71 audits of energy companies, including 

three audits that were referred to the Commission’s Division of Investigations for 

further consideration. The audited companies included public utilities, natural gas 

pipeline and storage companies, and oil pipelines (jurisdictional companies). The 

Commission auditors were successful in overseeing jurisdictional companies’ 

implementation of 100 percent of our recommendations to correct the areas of 

noncompliance discovered during the audit engagements. 

The audits focused on compliance with post-EPAct 2005 financial securities 

orders, open access transmission tariffs, interconnection rules, gas tariffs, 

wholesale fuel adjustment clause tariffs, standards of conduct and code of conduct 

compliance, cash management programs, electronic quarterly reporting, OASIS 

and gas websites, Uniform System of Accounts, market-based rate authority, and 

other blanket authorization and filing requirements of the Commission. 

The Commission auditors monitored a public utility’s successful completion of a 

new construction project costing $25 million to alleviate congestion on the 

transmission system. Specifically, the public utility increased transmission 

capacity to alleviate congestion on the Iowa-Illinois border and in Central Iowa. 

This increased transmission capacity benefited many entities in the Midwest, 

including a number of municipal electricity providers. Moreover, two 

Commission audits resulted in a public utility (1) paying $1 million in refunds for 

fuel costs improperly recovered from wholesale energy customers in fuel 

adjustment clause billings and (2) paying $125,000 in refunds for engaging in 

affiliated transactions without Commission authorization. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

24 

Performance Measurement Performance Target Result 

Evaluate and improve the 

usefulness of EQR data 

3⁄4 Issue a data dictionary for all 

undefined fields with restricted 

entries 

3⁄4 Review the current EQR data 

structure and develop written 

recommendations for 

improvements 

Targets met. Issued Final Order in 

Docket No. RM01-8-006 on 

September 24, 2007 which defined 

all EQR fields and improved EQR 

data structure.

The Order Adopting Electric Quarterly Report (EQR) Data Dictionary (Order No. 

2001-G) compiles in one document the definitions of certain terms and values 

used in filing EQR data and issues formal definitions for fields previously 

undefined. The order takes into consideration the comments filed in response to 

the notice seeking comments issued in April 2007. The Data Dictionary includes 

many revisions and refinements to codify staff guidance provided over the years 

and to clarify EQR filing requirements. 

Performance Measurement Performance Target Result 

Timeliness of actions on problems 

or discrepancies identified in 

reviews of organized markets 

Within 6 months of completed 

report

Target met. Addressed all seven 

identified issues within six months 

of identification. Issues included: 

prices over $400 in West, lack of 

transparency for intrastate 

pipelines, lack of transparency for 

natural gas sales and purchases, 

need to clarify role of MMUs in 

RTOs, PJM/MISO transmission 

issues, CenterPoint data reporting, 

and Rockies Gas Prices. 

Commission staff identified questionable trading behavior during the last thirty 

minute settlement period for natural gas futures. They provided expert analysis 

that supported the Commission’s actions against Amaranth Advisors for alleged 

market manipulation in connection with the NYMEX trading patterns. 

Other Accomplishments

Investigations

The Commission also issued two orders requiring companies to show cause why 

substantial civil penalties should not be assessed for market manipulation. These 

orders to show cause are the result of lengthy investigations into natural gas 

trading activities. In one case, the Commission has proposed civil penalties 

totaling $232 million and disgorgement of $62.5 million in unjust profits for 

violations of the anti-manipulation rule adopted pursuant to EPAct 2005. 

In the other case, the Commission has proposed civil penalties totaling $97.5 

million and disgorgement of $70.5 million in unjust profits for violations of 

Market Behavior Rule 21 and the Commission’s regulations. These cases are 

pending before the Commission. 

 

1. Market Behavior Rule 2 states: Actions or transactions that are without a legitimate business purpose and that are intended to or foreseeably 

could manipulate market prices, market conditions, or market rules for electric energy or electricity products are prohibited. Actions or 

transactions undertaken by Seller that are explicitly contemplated in Commission-approved rules and regulations of an applicable power market 

(such as virtual supply or load bidding) or taken at the direction of an ISO or RTO are not in violation of this Market Behavior Rule. Note: This 

rule was rescinded after FERC adopted the Anti-Manipulation Rule pursuant to EPAct 2005. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

25 

Financial Regulation

During FY 2007, the Commission drafted several major orders and undertook 

initiatives to ensure that the Commission and the public had access to information 

needed for oversight activities. These activities improved the quality of 

information reported to the Commission and provided regulatory certainty to 

companies filing data with the Commission. 

These major initiatives included: 

• PUHCA II Rulemaking (RM06-11-000), which implemented new 

accounting and reporting requirements for centralized service 

companies. 

• Accounting guidance on how jurisdictional entities should implement 

FAS 158 “Defined Postretirement Benefit Plans” (AI07-1-000) and 

FIN 48 “Uncertain Tax Positions” (AI07-2-000). 

• Order to Show Cause for Compliance with Financial Forms Filing 

Requirements (IN07-7-000), requiring 14 companies to explain why 

they did not file various financial forms. 

• Notice of Inquiry on Adequacy of Financial Forms (RM07-9-000), 

seeking to assess whether the financial forms collect relevant financial 

information critical to the Commission’s jurisdictional activities, and 

Notice of Proposed Rulemaking on Revisions to Forms, Statements, 

and Reporting Requirements for Natural Gas Pipelines (RM07-9-000), 

proposing to amend the FERC Forms 2, 2-A and 3-Q to reflect current 

market and cost information relevant to interstate natural gas pipelines 

and their customers. 

The Commission also successfully cleared a longstanding backlog in AC filings 

(also known as Requests for Approval by Chief Accountant). 

Market Oversight

The Commission also undertook a comprehensive effort to improve 

understanding of energy markets among other regulators and the public. These 

efforts included an extensive Market Oversight website available to the public, 

monthly conference calls with interested state officials, an innovative program to 

partner with state regulators on particular research projects (the Research in 

Market Oversight program), and publication of the State of the Markets Report. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

26 

Performance Measurement Data for Supporting Initiatives

Performance Measurement Performance Target Result 

Customers are satisfied with the 

use of eGovernment initiatives to 

interact with FERC 

90% 

Target Met. The customer 

satisfaction level for FERC eGov 

Services exceeds 96% based on 

data collected from the external 

users surveys.

For several years, the Commission has been expanding the services and 

information it provides through its website, www.ferc.gov, to improve 

stakeholder involvement and to make information available to a broader audience 

more quickly. Customer surveys help the Commission determine how well it is 

performing and learn customers’ needs. 

In the FY 2007 survey on eGov Services, the Commission received feedback 

from 450 respondents, 96 percent of whom were satisfied with the overall 

services. Comments included, “tremendously valuable suite of services” and 

“[o]verall, an invaluable resource provided by the Commission.” In general, the 

comments favorably compared the Commission’s eGov Services to other 

government sites. 

The Commission also received many constructive suggestions for further 

improvements. These included simplifying the filing process, speeding access to 

materials, making the systems more user-friendly, and providing as much online 

as possible. Through ongoing initiatives (such as the proposal in RM07-16 to 

expand greatly the materials that can be filed electronically through eFiling), the 

Commission continues its efforts to address these comments and enhance its 

services provided. 

Performance Measurement Performance Target Result 

Percentage of transactional ADR 

processes agreed to by parties 

concluded 

75% within 120 days total 

(convening and process) 

Target Met. Dispute Resolution 

Services completed 34 

transactional processes or cases, 

both environmental and nonenvironmental in which parties 

agreed to pursue an ADR process. 

Of these, 31 were completed 

within 120 days after being 

referred to the DRS (91%).

Alternative Dispute Resolution (ADR) processes have proven effective in 

resolving many transactional and environmental energy conflicts. In FY 2007, 

the Commission completed 91 percent of the transactional processes or cases in 

which parties agreed to pursue ADR in 120 days or less. The prompt settlement 

of conflict facilitates developing a strong energy infrastructure and supporting 

competitive markets, two of the Commission strategic goals. The Commission’s 

support of ADR as a successful tool demonstrates its commitment to 

organizational excellence and the effective use of resources to achieve strategic 

priorities. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

27 

Performance Measurement Performance Target Result 

Enhance communication with 

National and International groups 

Provide email notification of 

significant Commission actions to 

Congress within 1 to 2 business 

days of the underlining action 

along with briefing offers where 

appropriate2 

In FY 2007, email notifications to 

members of Congress were sent 

out on 340 significant Commission 

actions within 1 to 2 business days 

of the underlining action. Briefing 

offers were made on appropriate 

items.

It is important and valuable to explain Commission actions to various audience 

groups. In recent years, the Commission has expanded communication with 

members of Congress through targeted outreach, which includes detailed 

explanations of Commission activities to effected members. When necessary, the 

Commission also extends briefing offers to members of Congress. These briefing 

opportunities further facilitate an increased understanding of the dynamic energy 

environment underlying Commission activities on enforcement, reliability, LNG, 

pipeline, hydroelectric, and market monitoring issues. In FY 2007, the 

Commission’s outreach program continued to progress as various members of 

Congress were notified of 340 significant Commission actions. These actions 

involved critical issues within a members’ district and State. The outreach 

program has enhanced the relationship between the Commission and Congress, 

which is an underlying element to the Commission achieving its regulatory 

mission. 

Other Accomplishments

The Commission received an unqualified (“clean”) audit opinion on its FY 2007 

annual financial statements with no material deficiencies. An “unqualified 

opinion” is the highest level of assurance that an audit firm can give on an 

organization’s financial statements. The accomplishment is noteworthy because 

it is the fourteenth consecutive year the Commission has met this financial 

standard, despite fluctuating OMB, U.S. Department of Treasury, and DOE 

reporting requirements and the changes to information technology that are driven 

by those requirements. Unlike most federal agencies, the Commission bills out its 

full costs to the industries and returns receipts back to the Treasury. This unique 

interface raises the need for maintaining sustained superior financial performance 

so the Commission’s accounting can be relied on by the regulated energy 

industries. 

 

2 This is one target out of five associated with this performance measure. This particular target was selected to highlight the increased 

communication and interaction between the Commission and Congress. The complete performance measure and set of targets can be found in the 

Performance Report section of this Performance and Accountability Report. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

28 

Financial Performance Overview 

As of September 30, 2007, the financial condition of the Commission was sound 

with sufficient funds to meet program needs and adequate controls 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 2007 new budget 

authority was $221.9 million. This represents an increase in new budget authority 

of approximately $1.5 million over FY 2006. Additional funds available to 

obligate in FY 2007 were $5.7 million from prior-year unobligated appropriations 

and $.7 million of prior-year obligations that were subsequently de-obligated in 

the current year and submitted for re-allotment. The sum of all funds available to 

obligate in FY 2007 was $228.3 million. Additionally, the Commission receives 

an appropriation from Congress to pay states the fees it collected for the 

occupancy and use of public lands. The payments to states appropriation in FY 

2007 was $3.1 million. 

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 2007. 

Costs by Function. The Commission incurred costs of $240.1 million in FY 

2007, which was an increase of $5.8 million over FY 2006. Approximately 72 

percent of costs were used for salaries and benefits. The remaining 28 percent 

was used to obtain technical assistance for the Commission's principal regulatory 

programs, to cover operating expenses, staff travel, and reimbursable work. 

Salaries and benefits increased by $11.4 million over 2006 while the net affect on 

the other cost categories was a decrease of $5.6 million. 

Costs by Function (millions) 

Costs FY 2007 FY 2006 

Salaries and Benefits $174.0 $162.6 

Travel/Transportation 2.8 3.0 

Rent/Comm/Utilities 22.1 22.1 

Contract Support 30.8 37.2 

Printing/Supplies/Other 10.4 9.4 

Total Costs $240.1 $234.3 

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

2007 financial statements. This was the fourteenth consecutive year the 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

29 

Commission has received an unqualified opinion. For FY 2007, 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 and footnotes 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 $61.0 million as of September 30, 

2007. This is a decrease of $37.1 million from September 30, 2006. The assets 

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

Summary table. 

Assets Summary (millions) 

Assets FY 2007 FY 2006 

Fund Balance with Treasury $48.4 $62.2 

Accounts Receivable, net 4.6 26.3 

Property and Equipment, 

net 8.0 9.6 

Total Assets $61.0 $98.1 

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

$48.4 million as of September 30, 2007, a decrease of $13.8 million from the 

balance as of September 30, 2006. This balance represents appropriated funds, 

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

disposition is determined. The decrease from FY 2006 to FY 2007 is primarily 

due to the transfer out of resources that were collected under protest and held in 

suspense as of September 30, 2006. 

The Accounts Receivable, net has a balance of $4.6 million as of September 30, 

2007. This balance represents the outstanding amounts due from either annual 

charges, civil penalties or other penalties issued by the Commission to entities 

under its regulation. The $21.7 million decrease from FY 2006 to FY 2007 is the 

result of fewer billing adjustments and improved collections throughout FY 2007. 

The net book value of Property and Equipment net was $8.0 million as of 

September 30, 2007, a decrease of $1.6 from FY 2006. The balance is comprised 

of the net value of the Commission’s equipment, furniture, leasehold 

improvements, and computer hardware and software. The $1.6 million difference 

is primarily due to the depreciation of Commission assets in FY 2007. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

30 

The Commission's liabilities were $54.1 million as of September 30, 2007. The 

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

Liabilities Summary table. 

Liabilities Summary (millions) 

Liabilities FY 2007 FY 2006 

Accounts Payable $13.1 $13.5 

Federal Employee Benefits 6.4 5.8 

Other Liabilities 34.7 65.4 

Total Liabilities $54.1 $84.7 

The decrease in total liabilities of $30.6 million is largely due to the release of 

collections held in protest and suspense, as of September 30, 2007 upon 

resolution of appeals and other factors in FY 2007. 

The difference between total assets and total liabilities is net position. The 

Commission’s net position was approximately $6.9 million as of September 30, 

2007, and is discussed in the Analysis of Statement of Changes in Net Position 

further below. 

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 

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

that can be linked to the costs of program performance under the Government 

Performance and Results Act of 1993 (GPRA). Net costs by strategic goal are 

shown in the Net Cost of Operations table. 

Net Cost of Operations (dollars) 

Operation FY 2007 FY 2006 

Energy Infrastructure $0 $(22,541) 

Competitive Markets 0 (4,264) 

Enforcement 0 (3,656) 

Net Cost of Operations $0 $(30,461) 

The Commission's net cost of operations for FY 2007 was $0 as compared to FY 

2006 net cost of operations of ($30,461). The Commission is a full cost recovery 

agency and recovers all of its costs through the allocated annual charges to the 

entities it regulates. In FY 2007 for financial reporting purposes, the Commission 

accrued its reimbursable revenue to match total reimbursable costs to report a net 

cost of $0 on its financial statements. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

31 

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 overall decrease in Net Position of $6.6 million is the result of increased 

expended appropriations for FY 2007 compared to FY 2006. 

Net Position Summary (millions) 

Position FY 2007 FY 2006 

Unexpended Appropriations $4.5 $9.5 

Cumulative Results of 

Operations 2.4 4.0 

Total Net Position $6.9 $13.5 

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 represents the relationship 

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

outlays. For FY 2007, the Commission had budgetary resources available of 

$231.5 million, the majority of which was derived from new spending authority. 

This represents a decrease of $0.9 million over FY 2006 budgetary resources 

available of $232.4 million. The unobligated budget authority available at 

September 30, 2007 was $3.4 million, which is a decrease of $2.3 million from 

the FY 2006 amount of $5.7 million. 

The FY 2007 status of budgetary resources includes obligations incurred of $228.0 

million, or 98.5 percent of funds available. Similarly, FY 2006 obligations incurred 

were $226.6 million, 97.5 percent of funds available. Total net outlays for FY 2007 

were $77.3 million, which represents a $26.1 million increase from FY 2006 net 

outlays of $51.2 million. The increase between years is primarily the result of 

greater collections in FY 2007 of Commission distributed offsetting receipts. 

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 billed and collected by the Commission on behalf of another federal 

agency will not be reported twice as revenue on the consolidated government’s 

Statement of Net Cost. In FY 2007, the Commission reported $69.9 million in 

custodial revenue compared to $45.8 million in FY 2006. The majority of the 

increase over FY 2006 is due to an increase in civil penalty revenue reported in 

the current year compared to prior year. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

32 

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; 

3⁄4 Debt Collection Improvement Act of 1996; and 

3⁄4 OMB Circular A-123, Appendix A 

Integrity Act Statement 

 During fiscal year 2007, the Commission responded to the challenge of a changing energy industry 

as it became more competitive. Our strategic plan contains three primary Commission goals which 

reflect the Commission’s vision of “Abundant, reliable energy in a fair competitive market.” 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 the development of a strong 

energy infrastructure; (2) Support competitive markets; (3) Prevent market manipulation. 

 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 2007 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 Commission’s management is responsible for establishing and maintaining effective internal 

control and financial management systems that meet the objectives of the Federal Managers’ Financial 

Integrity Act (FMFIA). In accordance with OMB Circular A-123, Management’s Responsibility for 

Internal controls; we evaluated the effectiveness and efficiency of our internal controls over operations 

and our compliance with applicable laws and regulations as of September 30, 2007. Based on the 

results of this evaluation, the Commission can provide reasonable assurance that its internal controls are 

operating effectively and that no material weaknesses were found in the design or operation of our 

internal controls. 

 In addition, the Commission assessed the effectiveness of internal controls over financial reporting, 

which includes the safeguarding of assets and our compliance with applicable laws and regulations in 

accordance with the requirements of OMB Circular A-123, Appendix A. The results of this assessment 

found no material weaknesses in the design or operation of our controls over financial reporting. The 

Commission can provide reasonable assurance that its internal controls over financial reporting as of 

September 30, 2007, are operating effectively. 

Joseph T. Kelliher 

Chairman 

Federal Energy Regulatory Commission 

September 2007
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

33 

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

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

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

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

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

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

areas as well as accounting and financial management. The 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 that 

management control deficiencies be integrated into office action plans. The action 

plan process has provisions for periodic updates and 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 2007 Integrity Act Results 

The Commission evaluated its management control systems for the fiscal year 

ending September 30, 2007. 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. 

FY 2007 Revised OMB A-123 Results 

The Commission evaluated its internal controls over financial reporting for the 

fiscal year ending September 30, 2007. The scope of the evaluation covered all 

financial processes and the systems that were in place as of June 30, 2007. The 

evaluation provided reasonable assurance that the Commission’s management 

controls achieved their intended objectives. As a result, management concluded 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

34 

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. 

FY 2007 Improvement Act 

As of September 30, 2007, 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. As of September 30, 2007, the Commission made 

97% of its payments, that were subject to the Prompt Payment Act, on-time. The 

Commission incurred $506 in interest penalties in FY 2007, which was a decrease 

compared to the FY 2006 amount of $1,026. The agency made 99% of its vendor 

payments electronically in FY 2007. 

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. As of September 30, 

2007, delinquent debt was $8.1 million, which was approximately three percent of 

its current annual billings. Included in this amount is a single delinquent debt of 

approximately $5.8 million which is currently under appeal at the Commission. 

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. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

35 

Improper Payments Information Act (IPIA) Reporting 

The Commission has performed a review of its payments through September 30, 

2007 and it has processed 99% of its payments without error. The Commission 

found only 22 erroneous payments out of 6,514 total payments. 

Possible Future Effects of Existing Events and Conditions 

As the result of a September 2007 hydropower annual charges appeal, the 

Commission included a $0.1 million liability in the financial statements as 

revenue collected under protest. If the licensee ultimately prevails in their claim 

against the Commission, the Commission would be liable for the amount of the 

judgment 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 2007 Performance and Accountability Report 

36 

This page intentionally left blank. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

37 

Financial 

Section 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

38 

This page intentionally left blank. 


KPMG LLP 

2001 M Street, NW 

Washington, DC 20036 

Independent Auditors’ Report 

The Federal Energy Regulatory Commission and the 

Inspector General, United States Department of Energy: 

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

Commission) as of September 30, 2007 and 2006, and the related statements of net cost, changes in net 

position, custodial activity, and budgetary resources (hereinafter referred to as “financial statements”) 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 fiscal year 2007 audit, we also considered the Commission’s 

internal controls over financial reporting and performance measures 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, 2007 and 2006, are presented fairly, in all material 

respects, in conformity with U.S. generally accepted accounting principles. 

Our report emphasizes that the Commission changed its method of reporting the reconciliation of net cost 

of operations to budget in fiscal year 2007. 

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

the internal control that might be material weaknesses as defined in the internal control over financial 

reporting section of this report. However, we noted no matters involving the internal control and its 

operation that we considered to be material weaknesses as defined in this report. 

We noted no deficiencies involving the design of the internal control over the existence and completeness 

assertions related to key performance measures. 

 

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 under Government Auditing 

Standards, issued by the Comptroller General of the United States, and Office of Management and Budget 

(OMB) Bulletin No. 07-04, 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 controls over financial reporting and performance measures; our tests of the 

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

management’s and our responsibilities. 

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

a member of KPMG International, a Swiss cooperative. 
OPINION ON THE FINANCIAL STATEMENTS 

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

September 30, 2007 and 2006, and the related statements of net cost, changes in net position, custodial 

activity, and budgetary resources for the yearsthen ended. 

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

financial position of the Commission as of September 30, 2007 and 2006, and its net costs, changes in net 

position, custodial activity and budgetary resources for the years then ended, in conformity with U.S. 

generally accepted accounting principles. 

As discussed in Note 19 to the financial statements, the Commission changed its method of reporting the 

reconciliation of net cost of operations to budget in fiscal year 2007. 

The information in the Management Discussion and Analysis is not a required part of the financial 

statements, but is supplementary information required by U.S. generally accepted accounting principles 

and OMB Circular No. A-136, Financial Reporting Requirements. We have applied certain limited 

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

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

express no opinion on it. 

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

whole. The information in the Performance Report section, and the Appendices are not required as part of 

the financial statements. This information has not been subjected to auditing procedures and, accordingly, 

we express no opinion on it. 

INTERNAL CONTROL OVER FINANCIAL REPORTING 

Our consideration of the internal control over financial reporting was for the limited purpose described in 

the Responsibilities section of this report and would not necessarily identify all deficiencies in the internal 

control over financial reporting that might be significant deficiencies or material weaknesses. 

A control deficiency exists when the design or operation of a control does not allow management or 

employees, in the normal course of performing their assigned functions, to prevent or detect misstatements 

on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, 

that adversely affects the Commission’s ability to initiate, authorize, record, process, or report financial 

data reliably in accordance with U.S. generally accepted accounting principles such that there is more than 

a remote likelihood that a misstatement of the Commission’s financial statements that is more than 

inconsequential will not be prevented or detected by the Commission’s internal control over financial 

reporting. A material weakness is a significant deficiency, or combination of significant deficiencies, that 

results in more than a remote likelihood that a material misstatement of the financial statements will not be 

prevented or detected by the Commission’s internal control. 

In our fiscal year 2007 audit, we did not identify any deficiencies in internal control over financial 

reporting that we consider to be material weaknesses as defined above. 

We noted certain additional matters that we have reported to the management of the Commission in a 

separate letter dated November 6, 2007. 
INTERNAL CONTROL OVER PERFORMANCE MEASURES 

Our tests of internal control over performance measures, as described in the Responsibilities section of this 

report, disclosed no deficiencies involving the design of the internal control over the existence and 

completeness assertions related to key performance measures. 

COMPLIANCE AND OTHER MATTERS 

The results of our tests of compliance 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. 07-04. 

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

systems did not substantially comply with the three requirements discussed in the Responsibilities section 

of this report.

* * * * 

RESPONSIBILITIES 

Management’s Responsibilities. The United States Code Title 31 Sections 3515 and 9106 require 

agencies to report annually to Congress on their financial status and any other information needed to fairly 

present their financial position and results of operations. To meet these reporting requirements, the 

Commission prepares and submits financial statements in accordance with OMB Circular No. A-136.

Management is responsible for the financial statements, including: 

 

• Preparing the financial statements in conformity with U.S. generally accepted accounting principles; 

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

• Establishing and maintaining effective internal control; and, 

• Complying with laws, regulations, and contracts applicable to the Commission, 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. 

Auditors’ Responsibilities. Our responsibility is to express an opinion on the fiscal year 2007 and 2006 

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, issued by the Comptroller General of the United 

States; and OMB Bulletin No. 07-04. Those standards and OMB Bulletin No. 07-04 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 2007 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 as a basis for designing 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. 07-04. 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 express an opinion on the effectiveness of the 

Commission’s internal control over financial reporting. Accordingly, we do not express an opinion on the 

effectiveness of the Commission’s internal control over financial reporting. 

As required by OMB Bulletin No. 07-04 in our fiscal year 2007 audit, with respect to internal control 

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

Discussion and Analysis and Performance sections, we obtained an understanding of the design of internal 

controls relating to the existence and completeness assertions and determined whether these internal 

controls had been placed in operation. We limited our testing to those controls necessary to report 

deficiencies in the design of internal control over key performance measures in accordance with OMB 

Bulletin 07-04. However, our procedures were not designed to provide an opinion 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 2007 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 the financial statement amounts, and certain provisions of other 

laws and regulations specified in OMB Bulletin No. 07-04, 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. 07-04 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. 

______________________________
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 U.S. Government Accountability Office, 

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

specified parties. 

November 6, 2007 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

46 

2007 2006

Assets (note 3):

Intragovernmental:

Fund balances with Treasury (note 4) $ 48,361,676 $ 62,235,809 

Accounts receivable (note 5) 3,116,978 22,640 

Total intragovernmental 48,384,316 65,352,787 

Accounts receivable, net (note 5) 23,201,271 4,647,677 

Property and equipment, net (note 6) 9,584,790 7,987,011 

Other assets (note 7) 5,994 - 

Total assets $ 61,019,004 $ 98,144,842 

Liabilities: 

Intragovernmental:

Accounts payable $ 3,434,843 $ 2,651,245 

Other (note 8):

Accrued payroll and benefits 996,000 990,179 

Resources transferable to Treasury and other

Federal entities 4,618,517 21,314,038 

Workers' compensation payable (note 10) 493,190 758,944 

Miscellaneous receipts transferable to Treasury 1,765 5,098 

Total intragovernmental $ 9,813,402 $ 25,450,417 

Accounts payable 9,664,254 10,828,696 

Other (note 8):

Accrued payroll and benefits 5,363,070 4,855,118 

Revenue collected under protest (note 12) 4,660,347 97,776 

Resources transferable to other entities from 

disgorged funds 16,472,603 20,435,812 

Refunds and other amounts due 1,730,332 7,411,636 

Accrued leave (note 10) 11,011,332 10,973,250 

Capital lease liability 29,000 - 

Total liabilities $ 54,114,687 $ 84,682,358 

Commitments and contingencies (note 12)

Net Position:

Unexpended appropriations $ 4,493,446 $ 9,463,468 

Cumulative results of operations 2,410,871 3,999,016 

Total net position 6,904,317 13,462,484 

Total liabilities and net position $ 61,019,004 $ 98,144,842 

The accompanying notes are an integral part of these statements.

FEDERAL ENERGY REGULATORY COMMISSION

Balance Sheets

September 30, 2007 and 2006

(in dollars)
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

47 

Program Costs: 2007 2006

 Regulation:

 Energy Infrastructure:

 Gross costs (note 15) $ 183,580,477 $ 174,498,313 

 Less: earned revenue (note 15) 174,520,854 183,580,477 

 Net program costs $ - $ (22,541)

 Competitive Markets:

 Gross costs (note 15) $ 28,451,474 $ 32,725,356 

 Less: earned revenue (note 15) 32,729,620 28,451,474 

 Net program costs $ - $ (4,264)

 Enforcement:

 Gross costs (note 15) $ 28,018,671 $ 27,075,620 

 Less: earned revenue (note 15) 27,079,276 28,018,671 

 Net program costs $ - $ (3,656)

 Total:

 Gross costs (note 15) $ 240,050,622 $ 234,299,289

 Less: earned revenue (note 15) 234,329,750 240,050,622

 Net cost of operations $ - $ (30,461)

The accompanying notes are an integral part of these statements.

FEDERAL ENERGY REGULATORY COMMISSION

Statements of Net Cost

For the Years Ended September 30, 2007 and 2006

(in dollars)
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

48 

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Changes in Net Position

For the Years Ended September 30, 2007 and 2006

(in dollars)

2007 2006

Cumulative Results of Operations:

Beginning balance $ 3,999,016 $ 5,745,921

Budgetary financing sources:

Appropriations used 224,565,776 226,871,540

Other Financing Sources (Non-Exchange):

Transfers – out to Treasury without reimbursement (239,839,793) (236,767,551)

Imputed financing from costs absorbed by others (note 11) 10,424,409 11,380,108

Total Financing Sources (1,588,145) (1,777,366)

Net Cost of Operations - 30,461

Net Change (1,588,145) (1,746,905) 

Cumulative Results of Operations $ 2,410,871 $ 3,999,016

Unexpended Appropriations:

Beginning Balance $ 9,463,468 $ 13,629,244

Budgetary Financing Sources:

Appropriations received 220,400,000 221,901,518

Appropriations used (226,871,540) (224,565,776)

 Total Budgetary Financing Sources (4,970,022) (4,165,776)

Total Unexpended Appropriations $ 4,493,446 $ 9,463,468

Net Position $ 6,904,317 $ 13,462,484

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

FY 2007 Performance and Accountability Report 

49 

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Budgetary Resources

For the Years Ended September 30, 2007 and 2006

(in dollars)

2007 2006

Budgetary Resources:

Unobligated balance, beginning of period $ 5,748,932 $ 8,961,795 

Recoveries of prior year unpaid obligations 676,291 55,181 

Budgetary authority

Appropriation 3,094,043 3,023,934 

Collected 221,917,880 220,444,346 

Change in unfilled customer orders

Without advance from Federal sources 40,979 (91,949)

Subtotal 225,052,902 223,376,331 

Total budgetary resources $ 231,478,125 $ 232,393,307 

Status of Budgetary Resources:

Obligations incurred: (note 16)

Direct $ 228,015,257 $ 226,609,667 

Reimbursable 33,178 34,708 

Subtotal 228,048,435 226,644,375 

Unobligated balances:

Apportioned 3,429,690 5,748,932 

Total status of budgetary resources $ 231,478,125 $ 232,393,307 

Change in Obligated Balance:

Obligated balance, net

Unpaid obligations, brought forward, October 1 $ 23,174,182 $ 20,208,438 

Less: Uncollected customer payments from

 Federal sources, brought forward, October 1 (46,303) (138,252)

Total unpaid obligated balance, net 20,070,186 23,127,879 

Obligations incurred, net 228,048,435 226,644,375 

Less: Gross outlays (229,918,138) (223,623,450)

Less: Recoveries of prior year unpaid

 obligations, actual (676,291) (55,181)

Change in uncollected customer payments

 from Federal sources 91,949 (40,979) 

Obligations balance, net, end of period

Unpaid obligations 20,628,189 23,174,182 

Less: Uncollected customer payments from

 from Federal sources (87,283) (46,303)

Total, unpaid obligated balance, net,

 end of period $ 20,540,906 $ 23,127,879 

(Continued)
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

50 

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Budgetary Resources (Continued)

For the Years Ended September 30, 2007 and 2006

(in dollars)

Net Outlays:

Net Outlays:

Gross outlays $ 229,918,138 $ 223,623,450 

Less: Offsetting collections (221,917,880) (220,444,346) 

Less: Distributed offsetting receipts (85,255,615) (54,362,118) 

Net outlays $ (77,255,357) $ (51,183,014) 

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

FY 2007 Performance and Accountability Report 

51 

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Custodial Activity

For the Years Ended September 30, 2007 and 2006

(in dollars)

2007 2006

Sources of Cash Collections:

Cash collections – annual charges $ 82,035,815 $ 41,526,299 

Accrual adjustment (12,179,467) 4,284,088 

Net Custodial Revenue (note 13) 69,856,348 45,810,387 

Disposition of Collections:

Transferred to Others (by Recipient):

United States Army – Corps of Engineers (13,153,812) (7,609,937)

Department of Interior (6,355,362) (8,774,079) 

United States Treasury (59,477,033) (27,121,021)

Various states (3,094,042) (3,023,934)

Increase/(Decrease) in Amounts to be Transferred 14,642,618 (1,700,133)

Net Custodial Activities $ - $ - 

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

FY 2007 Performance and Accountability Report 

52 

FEDERAL ENERGY REGULATORY COMMISSION

Notes to Financial Statements 

September 30, 2007 and 2006 

(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 the 

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 Energy Policy Act of 2005 (EPAct 2005) granted the Commission new or additional authority in 

two important areas: (1) the authority to permit the construction or modification of transmission 

facilities in national interest electric transmission corridors designated by the Secretary of Energy, if 

certain conditions are met; and (2) oversight of the Electric Reliability Organization (ERO) that will 

develop and enforce mandatory reliability standards for the Nation’s bulk power system, subject to 

Commission approval. 

The Commission’s activities are separated into the following three segments: 

Energy Infrastructure 

One of the Commission’s main objectives is to stimulate infrastructure development needed to 

sustain energy markets by addressing regulatory and other challenges and providing cost 

recovery clarity. Another main objective is to maintain a reliable and safe infrastructure. In this 

respect, Commission authority centers on the interstate electric transmission grid and LNG and 

hydropower facilities. By focusing on infrastructure, this segment covers many of the 

Commission’s important responsibilities including, pipeline certificates, hydropower licenses and 

preliminary permits, LNG siting and inspections, compliance activities, environmental and other 

licensing conditions, dam safety inspections and most rate determinations. 

Competitive Markets 

Another Commission goal is to support competitive energy markets. This requires the 

Commission to issue rules that encourage fair and competitive markets and to facilitate best 

practices throughout the industries. In this segment, the Commission must also work to prevent 

the unrestricted accumulation and/or exercise of market power. The Commission is able to work 

towards this by using its recently granted merger and acquisition review authority as well as 

traditional rate determination authority. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

53 

Enforcement 

The Commission also needs to ensure that competitive energy markets benefit the Nation over 

the long run. The Commission must provide vigilant oversight over the marketplace to offer the 

public and market participants assurance that any structural or operational energy market 

problems will be identified and remedied quickly. Enhanced penalty authority has 

complemented the Commission’s policy of firm but fair enforcement. In this segment, the 

Commission conducts investigations promptly and imposes penalties where appropriate. To 

balance the Commission’s enforcement role, the regulated entities are encouraged to be proactive 

and self-police and self-report violations. The Commission works closely with regulated entities 

to ensure that rules are understood and their internal compliance programs are effective. 

Cost Recovery 

As described below, the Commission recovers 100% of its annual appropriation from the United States 

(U.S.) Treasury (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 years’ 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. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

54 

Filing Fees 

Filing fees are calculated annually. Regulated entities pay the current fee when filing with the 

Commission for a specific service. The fees are based on the average time spent to perform the 

particular type of service and the average cost per employee, including salary, benefits, and indirect 

costs. Fee structure and procedures are codified in 18 C.F.R. Part 381. 

The Independent Offices Appropriations Act of 1952 (IOAA) authorizes agencies to prescribe 

regulations establishing charges for services, benefits, or items of value provided by an agency. In 

establishing a fee under the IOAA, the Commission must: 

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, 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 Number 

(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 U.S. Army 

Corps of Engineers, the Treasury and the U.S. 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 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

55 

appropriated funds are not restricted to use in a specific fiscal year. All revenue from annual 

charges and filing fees is remitted to the Treasury when received. 

(c) Basis of Accounting 

The Commission’s financial statements are prepared using the accrual method of accounting. The 

accrual method of accounting requires recognition of the financial effects of transactions, events, 

and circumstances in the period(s) when those transactions, events, and circumstances occur, 

regardless of when cash is received or paid. The Commission also uses budgetary accounting to 

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, 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 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

56 

purchases with a cost greater than $50,000, and commercially purchased or internally developed 

software with a cost greater than $100,000. 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. 

(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) 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. 

(k) 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. 

(l) 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. 

(m) 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 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

57 

since inception, including (1) the amount in the Special Receipts fund balance with Treasury, 

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

(n) 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. 

(o) Use of Estimates 

The preparation of financial statements in conformity with U.S. generally accepted accounting 

principles 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. Also affected are the reported amounts of revenues and expenses during 

the reporting period. Actual results could differ from these estimates. 

(3) Non-Entity Assets 

Non-entity assets at September 30, 2007 and 2006 consisted of: 

2007 2006

Intragovernmental:

 Accounts receivable $ - $ 3,082,821 

 Fund balances with Treasury:

 Revenue collected under protest 97,776 4,660,347 

 Disgorged funds 16,455,511 15,418,720 

 Miscellaneous receipts held in suspense 609,775 6,055,247 

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

 Other 5,098 1,765 

Total intragovernmental $ 24,391,079 $ 36,441,819 

Accounts receivable, net 639,612 14,233,07 6

 Total non-entity assets $ 25,030,691 $ 50,674,895 

Total entity assets 35,988,313 47,469,947 

 Total assets $ 61,019,00 $ 98,144,84 4 2
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

58 

(4) Fund Balance with Treasury

Fund Balance with Treasury at September 30, 2007 and 2006 consisted of: 

2007 2006

Fund Balances:

 Appropriated funds $ 23,970,597 $ 28,876,812 

 Revenue collected under protest 97,776 4,660,347 

 Disgorged funds 16,455,511 15,418,719 

 Miscellaneous receipts held in suspense 609,775 6,055,247 

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

 Other 5,098 1,765 

 Total $ 48,361,676 $ 62,235,809 

Status of Fund Balance with Treasury

 Unobligated balance:

 Available $ 3,429,690 $ 5,748,933 

 Unavailable 24,303,797 33,358,997 

Obligated balance not yet disbursed 20,628,189 23,127,879 

 Total $ 48,361,676 $ 62,235,809 

 (5) Accounts Receivable, net 

Entity and nonentity accounts receivable at September 30, 2007 and 2006 consisted of: 

2007

Annual Charges Other Total

Entity

Uncollected billings $ 8,131,010 $ 58,343 $ 8,189,353 

Uncollected intragovernmental billings - 22,640 22,640 

Allowance for doubtful accounts (6,681) (4,174,607) (4,181,288) 

 Total entity accounts receivable, net 3,956,403 74,302 4,030,705 

Non-entity

Uncollected billings 6,892,979 32,545,858 39,438,837 

Allowance for doubtful accounts (6,270,459) (32,528,766) (38,799,225) 

Total non-entity accounts receivable, net 17,092 622,520 639,612 

 Total accounts receivable, net $ 4,578,923 $ 91,394 $ 4,670,317 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

59 

2006

Annual Charges Other Total

Entity

Uncollected billings $ 13,147,842 $ 29,246 $ 13,177,088 

Uncollected intragovernmental billings - 34,157 34,157 

Allowance for doubtful accounts (4,202,930) (5,963) (4,208,893) 

 Total entity accounts receivable, net 8,944,912 57,440 9,002,352 

Non-entity

Uncollected billings 6,631,616 42,695,898 49,327,514 

Uncollected intragovernmental billings 3,082,821 - 3,082,821 

Allowance for doubtful accounts (2,565,595) (32,528,843) (35,094,438) 

Total non-entity accounts receivable, net 7,148,842 10,167,055 17,315,897 

 Total accounts receivable, net $ 16,093,754 $ 10,224,495 $ 26,318,249 

 (6) Property and Equipment, net 

Property and equipment and related accumulated depreciation at September 30, 2007 and 2006 

consisted of: 

2007

Acquisition Accumulated

Amount Depreciation Net

Equipment $ 4,826,522 $ 4,554,602 $ 271,920

Furniture 9,070,773 9,070,773 - 

Leasehold improvements 9,491,415 5,655,540 3,835,875 

Automated data processing software 18,422,855 14,562,972 3,859,883 

Capital assets 29,000 9,667 19,333 

 Total Property and Equipment, net $ 41,840,565 $ 33,853,554 $ 7,987,011

2006

Acquisition Accumulated

Amount Depreciation Net

Equipment $ 4,760,722 $ 4,202,613 $ 558,109

Furniture 9,070,773 9,070,773 - 

Leasehold improvements 9,491,415 5,180,970 4,310,445

Automated data processing software 17,491,138 12,803,902 4,687,236

Capital assets 29,000 - 29,000

 Total Property and Equipment, net $ 40,843,048 $ 31,258,258 $ 9,584,790

 (7) Other Assets 

Other assets at September 30, 2006 consisted of $5,994 in advances to others. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

60 

(8) Other Liabilities 

Other liabilities at September 30, 2007 and 2006 consisted of: 

2007

Non-Current Current Total

Intragovernmental

 Accrued payroll and benefits $ - $ 996,000 $ 996,000 

 Resources transferable to Treasury and other Federal

 entities - 4,618,517 4,618,517 

 Workers' compensation payable 594,890 164,054 758,944 

 Miscellaneous receipts transferable to Treasury - 5,098 5,098 

 Total intragovernmental liabilities 594,890 5,783,669 6,378,559 

Accrued payroll and benefits - 5,363,070 5,363,070 

Revenue collected under protest (note 12) - 97,776 97,776 

Resources transferable to other entities from disgorged funds 16,472,603 - 16,472,603 

Refunds and other amounts due - 1,730,332 1,730,332 

Accrued leave - 10,973,250 10,973,250 

 Total other liablities $ 17,067,493 $ 23,948,097 $ 41,015,590 

2006

Non-Current Current Total

Intergovernmental

 Accrued payroll and benefits $ - $ 990,179 $ 990,179 

 Resources transferable to Treasury and other Federal

 entities - 21,314,038 21,314,038 

 Workers' compensation payable 221,515 271,675 493,190 

 Miscellaneous receipts transferable to Treasury - 1,765 1,765 

 Total intragovernmental liabilities 221,515 22,577,657 22,799,172 

Accrued payroll and benefits - 4,855,118 4,855,118 

Revenue collected under protest (note 12) - 4,660,347 4,660,347 

Resources transferable to other entities from disgorged funds 20,435,812 - 20,435,812 

Refunds and other amounts due - 7,411,636 7,411,636 

Accrued Leave - 11,011,332 11,011,332 

Capital Lease Liability - 29,000 29,000 

 Total other liablities $ 20,657,327 $ 50,545,090 $ 71,202,417 

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

forwarded to Treasury upon receipt. 

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

protesting entities once the protest is resolved. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

61 

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

disbursed to specific entities in the future. 

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

overpayments of prior billings. 

 (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. Expenses incurred for building leases 

amounted to $19.9 million and $20.5 million for fiscal years ended September 30, 2007 and 2006, 

respectively. 

Real Property Operating Leases

Fiscal Year (FY) GSA Non-GSA Total

FY 2008 $ 10,917,230 $ 98,521 $ 11,015,751 

FY 2009 10,917,230 97,709 11,014,939 

FY 2010 10,917,230 73,280 10,990,510 

FY 2011 10,917,230 23,074 10,940,304 

FY 2012 10,917,230 12,573 10,929,803 

Beyond FY 2012 32,751,690 - 32,751,690 

 Total future minimum lease payments $ 87,337,840 $ 305,157 $ 87,642,997 

 (10) Liabilities Not Covered by Budgetary Resources 

Liabilities not covered by budgetary resources at September 30, 2007 and 2006 consisted of: 

2007 2006

Intragovernmental

 Workers' compensation payable $ 758,944 $ 493,190 

Total intragovernmental 758,944 493,190 

Accrued leave 10,973,250 11,011,332 

 Total liabilities not covered by budgetary resources $ 11,732,194 $ 11,504,522 

 (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 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

62 

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 2007 and 2006 was approximately $12.7 million and $11.3 million, respectively as of 

September 30th. During fiscal years 2007 and 2006 as of September 30th, an additional $11.4 million 

and $10.4 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. 

(12) Contingencies 

As the result of a September 2007 hydropower annual charges appeal, the Commission included a $0.1 

million liability in the financial statements as revenue collected under protest. If the licensee ultimately 

prevails in their claim against the Commission, the Commission would be liable for the amount of the 

judgment 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. 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. 

 

With regard to prior period appeals, the Commission resolved annual charge disputes totaling $4.7 

million that were reported as contingent liabilities on September 30, 2006. The disputes were lodged 

by certain regulated entities challenging the dollar amount of the annual charges assessed by the 

Commission on prior fiscal year bills. Primarily, these disputes were based on clarifications that 

needed to be provided on prior year other agency costs assessments. During FY 2007, the Commission 

effectively addressed the issues brought forth by these regulated entities through various proceedings 

and issuances. Final Commission action in each instance was not challenged under the rehearing 

provisions stated in the Commission’s regulations. By rule, these matters were administratively closed. 

(13) Custodial Activity 

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

agencies. These agencies include the U.S. Army Corps of Engineers, the Department of Interior’s 

Bureau of Reclamation, and the Treasury. Accrual accounting is used to account for the Commission’s 

custodial activities. The receivables are maintained by the Commission, and the collections are 

processed to each Federal agency on a monthly basis. In addition to the annual charges, penalty and 

administrative costs are assessed on past-due bills and remitted to the Treasury when received. For 

fiscal years 2007 and 2006, these custodial collections totaled approximately $82.0 million and $41.5 

million, respectively as of September 30th. For fiscal years 2007 and 2006, net custodial revenue 

totaled approximately $69.9 million and $45.8 million, respectively as of September 30th. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

63 

(14) Earmarked Funds 

In accordance with the Federal Accounting Standards Advisory Board’s Statement on Federal 

Financial Accounting Standards (SFFAS) No. 27, the Commission is required to report separately 

on the Balance Sheets and Statements of Changes in Net Position, the nonexchange revenue, other 

financing sources, net cost of operations and net position attributable to earmarked funds. In 

addition, the Commission must disclose the earmarked fund for which it has program management 

responsibility. The Commission’s Collections Due to States fund meets the criteria for earmarked 

funds. The balances as of September 30, 2007 and 2006 were $0 and $0 respectively. 

Fund 89X5105 and 895105 pertains to the Use of Government lands. "Reasonable annual charges 

for recompensing the United States for the use, occupancy, and enjoyment of its lands or its other 

property will be fixed by the Commission." 18 CFR CH 1, part 11.2(a) 

 

The Commission disposes of the charges arising from licenses in accordance with USC, Title 16, 

CH 12, Part I, Sec 810 “All other charges arising from licenses hereunder, except charges fixed by 

the Commission for the purpose of reimbursing the United States for the costs of administration of 

this subchapter, shall be paid into the Treasury of the United States and credited to Miscellaneous 

Receipts...37.5 per centum of the charges arising from licenses hereunder for the occupancy and use 

of national forests and public lands from development within the boundaries of any State shall be 

paid by the Secretary of the Treasury to such state” 

 

The Commission bills out of the receipt account 895105, requests a warrant for the amount of the 

collections, which is used to transfer the collections into the expenditure account, 89X5105. The actual 

payments to the states are made from account 89X5105. 

Since the earmarked funds managed by the Commission are custodial in nature, there are no equity 

balances to report on the financial statements as of September 30, 2007 and 2006. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

64 

(15) 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 of services 

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

a non-Federal entity.

Intragovernmental costs and exchange revenue at September 30, 2007 and 2006 consisted of:

2007 2006

Energy Infrastructure:

 Intragovernmental costs $ 39,345,874 $ 36,730,749 

 Public costs 144,234,603 137,767,564 

Total Energy Infrastructure costs 183,580,477 174,498,313 

 

 Intragovernmental earned revenue 48,289 58,092 

 Public earned revenue 183,532,188 174,462,762 

Total Energy Infrastructure earned revenue 183,580,477 174,520,854 

Competitive Markets

 Intragovernmental costs 6,097,860 7,445,422 

 Public costs 22,353,614 25,279,934 

Total Competitive Markets costs 28,451,474 32,725,356 

 

 Intragovernmental earned revenue 7,484 11,775 

 Public earned revenue 28,443,990 32,717,845 

Total Competitive Markets earned revenue 28,451,474 32,729,620 

Enforcement

 Intragovernmental costs 6,005,100 5,459,976 

 Public costs 22,013,571 21,615,644 

Total Enforcement costs 28,018,671 27,075,620 

 

 Intragovernmental earned revenue 7,370 8,635 

 Public earned revenue 28,011,301 27,070,641 

Total Enforcement earned revenue $ 28,018,671 $ 27,079,276 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

65 

(16) Apportionment Categories of Obligations Incurred 

Apportionment categories of obligations incurred as of September 30, 2007 and 2006 consisted of: 

2007 2006

Category A:

 Direct $ 228,015,257 $ 226,609,667 

 Reimbursable 33,178 34,708 

Total obligations incurred $ 228,048,435 $ 226,644,375 

Category A apportionments distribute budgetary resources by fiscal quarters. 

(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, 2007. 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, 2007 is not presented, because the submission of the FY 2009 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 2008. 

(18) Undelivered Orders at the End of the Period 

Undelivered orders are obligations made by the Commission for services and purchases that have 

not been received and accepted as of the balance sheet date. The amount of Commission budgetary 

resources reported as undelivered orders as of September 30, 2007 and 2006 was $1.2 million and 

$3.8 million, respectively. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

66 

 (19) Reconciliation of Net Cost of Operations to Budget 

SFFAS No. 7 requires a reconciliation of proprietary and budgetary information in a way that helps users relate the 

two. In previous years, this reconciliation was accomplished by presenting the Statement of Financing as a basic

Financial Statement. Beginning in fiscal year 2007, OMB Circular No. A-136, "Financial Reporting Requirements,"

requires that this reconciliation be presented as a note on a comparative basis rather than as a basic financial statement. 

Accordingly, the Commission presents the fiscal year 2007 reconciliation and comparative fiscal year 2006

reconciliation as follows:

2007 2006

Resources used to finance activities:

Budgetary resources obligated:

 Obligations incurred $ 228,048,435 $ 226,644,375 

 Less: spending authority from offsetting collections (222,635,150) (220,407,578) 

 Obligations, net of offsetting collections 5,413,285 6,236,797 

 Less: offsetting receipts (85,255,615) (54,362,118) 

Net obligations (79,842,330) (48,125,321) 

Other resources:

 Transfers-out, net of appropriations received (17,938,275) (16,367,551) 

 Imputed financing from costs absorbed by others (note 11) 11,380,108 10,424,409 

Net other resources used to finance activities (6,558,167) (5,943,142) 

Total resources used to finance activities $ (86,400,497) $ (54,068,463) 

Resources used to finance items not part of the net cost of operations:

 Change in budgetary resources obligated for

 goods/services/benefits ordered but not yet provided $ 2,624,898 $ 903,687 

 Resources that fund expenses recognized in prior periods (38,082) (46,364) 

 Budgetary offsetting receipts that do not affect the net

 cost of operations 85,255,615 54,362,118 

 Resources that finance the acquisition of assets (997,517) (3,244,509) 

 Payments to States (note 14) (3,094,042) (3,023,934) 

Total resources used to finance items not part of the net cost of operations 83,750,872 48,950,998 

Total resources used to finance the net cost of operations $ (2,649,625) $ (5,117,465) 

Components of the net cost of operations that will not require or generate

 resources in the current period:

 Components requiring or generating resources in the future periods:

 Increase in unfunded liabilities $ 265,753 $ 730,411 

 Increase in exchange revenue receivable from the public - 1,356,389 

Total components of net cost of operations that will require or

 generate resources $ 265,753 $ 2,086,800 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

67 

Components not requiring or generating resources:

 Depreciation and amortization $ 2,595,296 $ 2,991,773 

 Other (211,424) 8,431 

Total components of net cost of operations that will not require or

 generate resources $ 2,383,872 $ 3,000,204 

Total net cost of operations that do not require or generate resources in

 the current period 2,649,625 5,087,004 

Net Cost of Operations $ - $ (30,461) 

 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

68 

This page intentionally left blank. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

69 

Performance 

Report 

(Unaudited) 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

70 

This page intentionally left blank. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

71 

Introduction 

In accordance with Government Performance and Results Act of 1993, the 

Commission developed its Strategic and Business Plans, as well as its 

performance measures, to ensure it is fulfilling its mission. When comparing the 

planned and actual performance according to the guidelines set forth in Section 

230 of OMB Circular A-11, the Commission: 

• determined that its performance results are complete and reliable based on the 

fact that results are listed for every performance measure and target, that 

decision-makers use the information contained in the results “on an ongoing 

basis in the normal course of their duties,” and that the information contained 

in the results are derived via internal tracking mechanisms; and 

• 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. 

In addition to the FY 2007 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 2004 

through 2007. 

The Performance Measures for fiscal years 2004 through 2006 are aligned with 

the Commission’s former Strategic Plan. The Performance Measures for fiscal 

year 2007 are aligned with the Commission’s updated Strategic Plan which was 

submitted to Congress on September 29, 2006. The updated Strategic Plan can 

also be found in Appendix B. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

72 

Performance Measurement Data for Energy Infrastructure

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. 

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. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

73 

FY 2004 

Performance Measurement Performance Target Result 

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 2007 Performance and Accountability Report 

74 

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 2007 Performance and Accountability Report 

75 

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 2007 Performance and Accountability Report 

76 

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 2007 Performance and Accountability Report 

77 

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. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

78 

FY 2006 

Performance Measurement Performance Target Result 

Develop strategic plan and timeline for 

transmission line siting group By August 31, 2006 

Target Met. The strategic plan and 

timeline were in place by August 31, 

2006. Steps have been taken to 

establish a transmission line siting group 

including: the issuance of a Notice of 

Proposed Rulemaking to establish the 

necessary rules and regulations to 

process applications filed with the 

Commission and posting openings to fill 

these essential positions. 

Issue final rules on mandatory pre-filing 

process for LNG terminal proposals 

Within 60 days of enactment of EPAct 

2005 

Target Met. The Commission issued 

regulations on the mandatory pre-filing 

process for LNG terminal proposals 

within 60 days of the enactment of EPAct 

2005. The Pre-Filing Rule was issued on 

October 7, 2005 in Docket No. RM 05-31-

000, Order 665; the effective date of the 

rule was November 17, 2005. 

Complete MOU with Secretary of 

Defense on coordination of LNG facilities 

affecting active military installations 

By March 31, 2006 

Target Not Met. Both DoD contacts 

retired or were transferred during 

negotiations. A new DoD contact was 

assigned in July 2006 and negotiations 

are underway again. This did not impact 

operations. 

Issue reports to Congress on Alaska 

Natural Gas Pipeline 

Reports issued in February 2006 and 

August 2006 

Target Met. Reports issued February 1 

and July 10, 2006. 

Establish rules for transmission 

infrastructure incentives Issue rules by August 8, 2006 

Target Met. Docket No. RM06-4-000; 

Final Rule, Order No. 679, “Promoting 

Transmission Investment through Pricing 

Reform,” issued July 20, 2006. 

Identify requirements for establishing a 

communications system with 

transmission owners and RTOs on status 

of transmission lines 

Issue report to Congress by February 4, 

2006 

Target Met. Report entitled “Steps to 

Establish a Transmission Monitoring 

System for Transmission Owners and 

Operators within the Eastern and 

Western Interconnections,” submitted to 

Congress on February 2, 2006. 

Establish process to review ERO 

proposed initial reliability standards By March 31, 2006 

Target Met. Developed a rulemaking 

process and timeline for addressing the 

initial reliability standards; the process 

and timeline were approved by the 

Commission in March 2006. 

Issue report to Congress on operator 

training By December 31, 2005 

Target Not Met. Although a 

comprehensive study of the current state 

of control room operator training across 

the bulk power system of the United 

States was completed in early December, 

the report has not yet been sent to 

Congress. The Commission is currently 

involved in a comprehensive rulemaking 

related to ERO reliability standards which 

will include standards related to operator 

training. This did not negatively impact 

operations. 

Percentage of qualifying, major, onshorepipeline projects inspected during 

ongoing construction activity 

100% of projects inspected at least once 

every four weeks 100% 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

79 

FY 2006 

Performance Measurement Performance Target Result 

Percentage of pipeline certificate cases 

with no precedential issues completed 

3⁄4 90% of unprotested cases within 159 

days of filing 

3⁄4 90% of protested cases within 304 

days of filing 

3⁄4 94% 

3⁄4 100% 

Percentage of pipeline certificate cases 

of first impression or containing larger 

policy implications completed 

90% within one year of filing 100% 

Percentage of pipeline certificate cases 

requiring a major environmental 

assessment or environmental impact 

statement completed 

90% within 18 months of filing 100% 

Percentage of qualifying LNG plants 

inspected during ongoing construction 

activity 

100% of plants inspected at least once 

every eight weeks 100% 

Percentage of LNG import terminals 

inspected 100% inspected annually 100% 

Percentage of LNG peak-shaving 

terminals inspected 50% inspected annually 50% 

Percentage of ILP pre-filing notices for 

NOI/PAD and initial scoping document 

issued 

85% within 60 days of NOI/PAD filing 100% 

Percentage of ILP pre-filing scoping 

meetings and site visits completed 85% within 90 days of NOI/PAD filing 100% 

Percentage of ILP pre-filing study plan 

determinations completed 85% within 315 days of NOI/PAD filing 100% 

Percentage of final NEPA documents 

issued for ALP/TLP cases with settlement 

agreements 

85% within 12 months 94% 

Percentage of final NEPA documents 

issued for ALP/TLP cases without 

settlement agreements 

85% within 24 months 94% 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

80 

FY 2006 

Performance Measurement Performance Target Result 

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 

Target Met. 100% compliance with Order 

No. 2006, “Standardization of Small 

Generator Interconnection Agreements 

and Procedures,” issued May 12, 2005, 

was established through language 

contained in paragraph 544 of the Final 

Rule, as follows: “On the effective date 

of this Final Rule...the OATTs [open 

access transmission tariffs] of all nonindependent Transmission Providers are 

deemed revised to include the Final Rule 

SGIP [Standard Generator 

Interconnection Procedures] and SGIA 

[Standard Generator Interconnection 

Agreement].” In accordance with other 

language in the same paragraph, no 

further amendment to include the SGIP 

and SGIA in a Transmission Provider’s 

OATT is required until compliance is due 

in the Commission’s pending rulemaking 

on Electronic Tariff Filings. 

Compliance with Order No. 2003 (large 

generator rule) was completed and 

reported on during FY 2005 (see previous 

results). 

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 

Target Met. 100% of the more than 

3,350 statutory cases were completed by 

the statutory action date. 

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 

3⁄4 There were no Track I cases 

3⁄4 90% of Track II cases in 47 weeks 

3⁄4 94% of Track III cases in 63 weeks 

Percentage of rate cases set for hearing 

that achieve partial or complete 

consensual agreement 

75% 78% 

Percentage of Commission Opinions 

issued once Briefs Opposing Exceptions 

to Initial Decisions are filed 

90% within 12 months 

Target met. 100% (10 of 10) Initial 

Decisions processed within 12 months of 

Briefs Opposing Exceptions. 

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 

Target Met. 96% of the 120 merit orders 

to resolve cost recovery proposals for 

new infrastructure were issued by 

statutory or requested date as applicable. 

In the case of gas pipeline certificate 

applications, contributed rate inserts to 

allow timely completion. 

Timeliness of issuing environmental 

licensing requirements 

Licensing responsibility letters sent within 

45 business days of license issuance 

date 

Target Met. All licensing responsibility 

letters were issued within 45 days of 

license issuances. 

Percentage of NEPA documents 

completed for projects utilizing the prefiling processes 

85% within 8 months of determining a 

pipeline or LNG facility application 

complete 

100% 

Participation in NERC / industry reliability 

readiness reviews 

3⁄4 100% of the Reliability Coordinators 

3⁄4 Large entities which represent 80% of 

the load served by all entities reviewed by 

NERC 

Target Met. FERC participated in 100% 

of NERC’s Reliability Coordinator reviews 

(5 of 5), and participated in 22 readiness 

reviews of large entities which represent 

94.5% (125,503 MW) of the load served 

by all entities reviewed by NERC 

(132,796 MW). 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

81 

FY 2006 

Performance Measurement Performance Target Result 

Issue final rule on Electric Reliability 

Organization (ERO) certification and 

mandatory reliability standards 

enforcement 

Rule issued by February 4, 2006 

Target Met. Docket No. RM05-30-000; 

Final Rule, Order No. 672, “Rules 

Concerning Certification of the Electric 

Reliability Organization; and Procedures 

for the Establishment, Approval, and 

Enforcement of Electric Reliability 

Standards,” issued February 3, 2006. 

Percentage of new RTOs or ISOs 

performing reliability functions included in 

Orders No. 2000 or No. 888, respectively 

100% No new RTOs or ISOs were established 

during the performance period. 

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 

Target Met. 100% of the 394 merit 

orders to resolve cost recovery proposals 

for reliability were issued by statutory or 

requested date, as applicable. 

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 

Target Met. 100% of the 20 relevant 

filings (i.e., oil pipelines) were completed 

by the statutory action date. 

Percentage of high- and significanthazard-potential dams inspected annually 100% 100% 

Percentage of high- and significanthazard-potential dams that either meet all 

current structural safety standards or are 

undergoing investigation or remediation 

100% 100% 

Percentage of qualifying dams that either 

comply with EAP requirements or are 

conducting follow-up action(s) on 

outstanding item(s) 

100% 100% 

Number of instances of unauthorized 

access to Critical Energy Infrastructure 

Information (CEII) 

No instances Target met. No instances. 

Number of complaints from CEII 

requesters on inability to participate in a 

proceeding due to failure to obtain CEII in 

a timely manner 

None Target met. None. 

FY 2007 

Strategy 

Performance Measurement Performance Target Data Source 

 

Resolve Regulatory and Other Challenges to Needed Development 

Issue Alaska Gas Pipeline Reports to 

Congress 

Issue Reports in February and August 

2007 

Target Met. Reports were issued on 

January 31 and August 15, 2007. 

Percentage of pipeline certificate cases 

with no precedential issues completed 

3⁄4 90% of unprotested cases within 159 

days of filing 

3⁄4 90% of protested cases within 304 

days of filing 

Targets Met. 

3⁄4 98% of unprotested cases were 

completed within 159 days of filing. 

3⁄4 100% of protested cases were 

completed within 304 days of filing. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

82 

FY 2007 

Strategy 

Performance Measurement Performance Target Data Source 

 

Percentage of pipeline certificate cases of 

first impression or containing larger policy 

implications completed 

90% within 365 days of filing 

Target Met. 100% of cases of first 

impression or larger policy implications 

were completed within 365 days of filing. 

Percentage of pipeline certificate cases 

requiring a major environmental 

assessment or environmental impact 

statement completed 

90% within 480 days of filing 

Target Met. 94% of cases requiring a 

major environmental assessment or 

environmental impact statement were 

completed within 480 days of filing. 

Percentage of qualifying LNG plants 

inspected during ongoing construction 

activity 

100% of plants inspected every 8 weeks 

Target Met. 100% of qualifying LNG 

plants (6 of 6) where construction was 

occurring were inspected at least every 8 

weeks. 

Percentage of ILP pre-filing study plan 

determinations completed 

85% within 150 days of applicant’s filing 

of the proposed study plan 

Target Met. 90% (9 out 10) ILP pre-filing 

study plan determinations were 

completed within 150 days of applicant’s 

filing of the proposed study plan. 

Percentage of infrastructure studies 

completed 

3⁄4 100% for regional and issue-based 

infrastructure conferences 

3⁄4 100% for Commission- and 

Congressional-directed studies 

Targets Met. 

3⁄4 100% of infrastructure studies 

completed for regional and issue-based 

conference. 

3⁄4 100% of infrastructure studies 

completed for Commission- and 

Congressional-directed studies. 

Percentage of NEPA documents 

completed for projects utilizing the prefiling processes 

85% within 8 months of determining a 

pipeline or LNG facility application 

complete 

Target Met. Of the 18 projects that 

utilized the pre-filing process, 100% had 

final NEPA documents within 8 months of 

filing a complete application. 

Timeliness of filings processed containing 

amendments to non-independent electric 

transmission provider OATTs 

Within 60 days of filing date or applicants’ 

requested date, whichever is later 

Target Met. All 126 amendments to nonRTO/ISO OATTs completed within 60-

day statutory timeframe. 

 

Encourage Investment and Effect Timely Cost Recovery 

Timeliness of applications processed for 

incentive rates under section 205 of the 

FPA 

Processed by the statutory deadline for 

rate filings or the applicants’ requested 

date, whichever is later 

Target Met. 100% of the 11 statutory 

incentive rates cases were processed 

within statutory timeframes. 

Process cost recovery cases within 

reasonable timeframes (including 

prudently-incurred expenses to safeguard 

and enhance the reliability, security and 

safety of the energy infrastructure) 

3⁄4 100% of statutory cases addressed by 

Commission order within statutory 

deadlines 

3⁄4 95% of certificate cases within 12 

months or applicants’ requested date, 

whichever is later 

3⁄4 90% of cases set for hearing within 12 

months of briefs opposing exceptions 

Targets Met. 

3⁄4 100% of all 3,164 statutory items, 

including cost recovery cases, were 

completed within statutory due dates. 

3⁄4 In certificate work, 97%, or 60 of 62 

cases requiring rate inserts, were 

completed timely. Even in the cases that 

were unavoidably delayed—one due to 

Coast Guard involvement in approving 

LNG facility, and the other subject to 

environmental issues because the 

company did not use the NEPA pre-filing 

process—the rate analyses were 

provided to the lead Office within the 

required time period. 

 

3⁄4 100% issued within 12 months. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

83 

FY 2007 

Strategy 

Performance Measurement Performance Target Data Source 

 

Establish price volatility baseline By September 30, 2007 

Not Applicable. The Commission 

proposed to establish a price volatility 

baseline. The first step in this process 

was to determine what information was 

available and reasonable to collect. In 

FY 2007, staff reviewed available price 

data and concluded that a price volatility 

baseline was not feasible. Because of 

the lack of available data, this 

performance measure has been 

discontinued. 

Program performance was not negatively 

impacted as a result of not establishing a 

price volatility baseline. 

Establish out-of-merit dispatch baseline By September 30, 2007 

Not Applicable. The Commission 

proposed to establish an out-of-merit 

dispatch baseline. The first step in this 

process was to determine what 

information was available and reasonable 

to collect. In FY 2007, staff contacted 

transmission operators and found that 

their data is inconsistent across 

transmission systems and does not allow 

for meaningful analyses to establish this 

baseline. Because of the lack of 

consistent data, this performance 

measure has been discontinued. 

Program performance was not negatively 

impacted as a result of not establishing 

an out-of-merit dispatch baseline. 

 

Assure Reliability of Interstate Transmission Grid 

Percentage of proposed reliability 

standards reviewed 100% 

Target Met. Docket No. RM06-16-000; 

Final Rule, Order No. 693, "Mandatory 

Reliability Standards for the Bulk-Power 

System," issued March 16, 2007, in 

which the Commission approved 83 of 

107 proposed Reliability Standards, and 

directed significant improvements to 56 of 

those standards. The Commission also 

required submission of further information 

in order to evaluate the adequacy of the 

remaining 24 standards. 

The initial 83 standards became 

mandatory and enforceable on June 18, 

2007. 

In addition, the Commission approved 8 

regional standards in Docket No. RM07-

11-000; "Order Approving Regional 

Reliability Standards for the Western 

Interconnection and Directing 

Modifications," issued June 8, 2007. 

Develop procedures to review the 

performance of the ERO Complete by March 31, 2007 

Target Met. Procedures were outlined in 

Docket No. RM05-30-000; Final Rule, 

Order No. 672, "Rules Concerning 

Certification of the Electric Reliability 

Organization; and Procedures for the 

Establishment, Approval, and 

Enforcement of Electric Reliability 

Standards," issued February 3, 2006. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

84 

FY 2007 

Strategy 

Performance Measurement Performance Target Data Source 

 

Percentage of NERC / industry reliability 

readiness reviews of Reliability 

Coordinators in which FERC participates 

100% Target Met. FERC participated in all 4 of 

NERC's Reliability Coordinator reviews. 

Percentage of load served, included in 

NERC / industry reliability readiness 

reviews, in which FERC participates 

50% 

Target Met. FERC participated in 22 

readiness reviews of large entities which 

represent just over 80% (332,244 MW) of 

the load served by all entities reviewed by 

NERC (414,101 MW). 

Percentage of ERO penalty action rulings 

reviewed to prevent inappropriate rulings 

from going into effect by default 

100% 

No activity, as the standards only 

became mandatory on June 18, 2007, 

and no ERO proposed penalties were 

filed in FY 2007. 

 

Protect Safety at LNG and Hydropower Facilities 

Percentage of high- and significanthazard-potential dams inspected annually 100% 

Target Met. 100% of all high and 

significant hazard-potential dams were 

inspected annually. 

Percentage of high- and significanthazard-potential dams that either meet all 

current structural safety standards or are 

undergoing investigation or remediation 

100% 

Target Met. 100% of all high- and 

significant-hazard potential dams meet 

current structural standards or are 

undergoing investigation or remediation. 

Percentage inspected annually: 

3⁄4 LNG import terminals 

3⁄4 LNG peak-shaving facilities 

3⁄4 100% 

3⁄4 50% 

Targets Met. 

3⁄4 All 5 of the operating LNG import 

terminals were inspected. 

3⁄46 of the 12 peak-shaving facilities were 

inspected. 

Percentage of LNG facilities that meet all 

current safety standards or are subject of 

a compliance letter 

100% 

Target Met. 100% of LNG facilities met 

all current safety standards or were 

subject to a compliance letter. 

Percentage of EIS documents that contain 

sections addressing safety for Hydropower 

Projects, LNG Facilities, Gas Pipeline 

Projects and Storage Facilities 

100% 

Target Met. 100% of EIS documents 

contain sections relating to safety for 

Hydropower Projects, LNG Facilities, Gas 

Pipeline Projects and Storage Facilities. 

Control access to Critical Energy 

Infrastructure Information 

No instances of improper access or 

improper denial affecting national security 

or Commission proceedings 

Target met. No instances. 

Percentage of qualifying dams that either 

comply with EAP requirements or are 

conducting follow-up action(s) on 

outstanding item(s) 

100% 

Target Met. 100% of qualifying dams 

comply with EAP requirements or are 

conducting follow-up action(s) on 

outstanding item(s). 

Percentage of LNG facility authorizations 

that incorporate consultation with all 

appropriate agencies on security related 

matters 

100% 

Target Met. 100% of LNG facility 

authorizations incorporate consultation 

with all appropriate agencies on security 

related matters. 

 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

85 

FY 2007 

Strategy 

Performance Measurement Performance Target Data Source 

 

Incorporate Environmental Considerations into Commission Decisions 

Percentage of final NEPA documents 

issued for ALP/TLP cases: 

3⁄4 with settlement agreements 

3⁄4 without settlement agreements 

3⁄4 85% within 12 months 

3⁄4 85% within 24 months 

Targets Met. 

3⁄4 100% of final NEPA documents (5 of 5) 

were issued within 12 months for 

ALP/TLP cases with settlement 

agreements. 

3⁄4 100% of final NEPA documents (16 of 

16) were issued within 24 months for 

ALP/TLP cases without settlement 

agreements. 

Timeliness of issuing environmental 

licensing requirements 

Licensing responsibility letters sent within 

45 business days of license issuance 

date 

Target Met. All licensing responsibility 

letters were sent out within 45 business 

days of license issuance date. 

Percentage of qualifying, major, onshorepipeline projects inspected during ongoing 

construction activity 

100% of projects inspected at least once 

every four weeks 

Target Met. Of the 30 pipeline projects 

under active construction in FY 2007, 

100% were inspected at least once every 

four weeks. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

86 

Performance Measurement Results for Competitive Markets

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 2007 Performance and Accountability Report 

87 

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 2007 Performance and Accountability Report 

88 

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 2007 Performance and Accountability Report 

89 

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 2007 Performance and Accountability Report 

90 

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 

Review and propose revisions to OASIS 

standards By June 30, 2006 

Target Met. Docket No. RM05-5-000; 

Final Rule, Order No. 676, “Standards for 

Business Practices and Communication 

Protocols for Public Utilities,” issued April 

25, 2006. 

Assess demand response Issue annual report by August 8, 2006 

Target Met. Staff report, “Assessment of 

Demand Response & Advanced 

Metering” (Docket No. AD-06-2-000) was 

delivered to Congress on August 4, 2006. 

Issue final rule to implement PUHCA 

provisions of EPAct 2005 By January 31, 2006 Target Met. Final rule was issued on December 8, 2005. 

Issue rules governing market 

manipulation in electricity and gas 

markets 

By September 30, 2006 

Target Met. The final rule (Order 670) 

was issued January 19, 2006 and an 

order denying rehearing was issued 

March 22, 2006 in Docket Nos. RM06-3, 

et al., Final Rule Prohibiting Energy 

Market Manipulation. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

91 

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, independent regional 

transmission providers 

3⁄4 coordination between RTOs or 

between RTOs and neighboring nonmember utilities 

Target Met. Some examples: 

3⁄4 In order to create a more seamless 

administration between the tariffs of the 

Midwest ISO’s energy markets and the 

non-market operations of Mid-Continent 

Area Power Pool’s (MAPP) members that 

do not belong to the Midwest ISO, the 

Commission approved MAPP’s proposal 

to conform its Available Transfer 

Capability (ATC) calculation 

methodologies to provisions of the 

Seams Operating Agreement between 

MAPP and the Midwest ISO. 

3⁄4 The Commission approved proposed 

revisions to the SPP/Midwest ISO Joint 

Operating Agreement (JOA) and to the 

Congestion Management Process (CMP) 

which is incorporated in the JOA to align 

them more closely with the JOA and CMP 

of the Midwest ISO/PJM. 

3⁄4 Action was taken on Midwest ISO and 

PJM and their respective transmission 

owners’ proposed revisions to the JOA 

for allocating to customers in each RTO 

the cost of new transmission facilities that 

are built in one RTO but provide benefits 

to customers in the other RTO (the socalled cross-border facilities). 

Increased presence at RTOs, to improve 

relationships with and knowledge of 

existing RTOs 

Creation and staffing of an office at any 

new RTO within 6 months of 

commencement of operations (including 

establishment of virtual office processes) 

No new RTOs were established during 

the performance period. All existing 

RTOs have either staff on location or a 

virtual office process in effect. 

Percentage of filings to establish RTOs, 

ISOs, or Independent Transmission 

Companies (ITCs) processed 

100% completed within 6 months of filing 

or before applicants’ proposed effective 

date (whichever is later) 

No filings were received to establish new 

RTOs, ISOs, or ITCs during the 

performance period.

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 appropriate 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 

Target Met. With the exception of 

Southwest Power Pool (SPP), all 

RTOs/ISOs (PJM, ISO-NE, NY-ISO, 

Midwest ISO, and CAISO) have been 

operational over 3 years and all have 

implemented cost-effective market design 

elements. 

SPP has been operating as an RTO 

since November 1, 2004, and has 

received authorization during FY 2006 to 

commence a real-time energy imbalance 

market, as well as having received 

approvals for its market monitoring and 

mitigation plans. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

92 

FY 2006 

Performance Measurement Performance Target Data Source 

Demonstrable improvements in regional 

competitive market transparency and 

independence 

In each region of the country, there will 

be: 

3⁄4 RTO adoption of additional marketoriented features, programs or rules 

3⁄4 improvement of open access tariff to 

reduce entry barriers or eliminate undue 

discrimination 

3⁄4 increase in the degree of transmission 

independence (ownership or control) from 

generation in regions primarily without 

RTOs 

Target Met. During FY 2006, the 

Commission acted on a number of 

proceedings related to improving 

competitive market transparency and 

independence. 

Some actions by the Commission will 

have nationwide impact. In May 2006, 

the Commission issued a notice of 

proposed rulemaking (NOPR) proposing 

amendments to its regulations and the 

pro forma OATT to ensure that 

transmission services are provided on a 

basis that is just, reasonable and not 

unduly discriminatory or preferential. The 

NOPR aims to strengthen the OATT and 

address deficiencies that have become 

apparent since its adoption 10 years ago, 

particularly in the areas of available 

transfer capability calculation and 

transmission planning. 

In addition, the Commission approved 

four proposals by vertically integrated 

utilities (Duke, MidAmerican, Entergy, 

and Louisville Gas & Electric) to contract 

with an independent entity to serve as the 

independent coordinator of transmission 

(ICT). The ICT performs oversight over 

these utilities’ transmission systems, 

including authority to administer utilities’ 

OATT. 

Other actions taken on proceedings 

related to establishing new or revised 

market rules, rule changes in RTOs, and 

increased transmission independence 

were region-specific. For example: 

East

In the New England area, the 

Commission issued an order accepting a 

proposal filed by ISO-NE and NEPOOL 

which included, most significantly, the 

addition of a locational component to the 

existing Forward Reserve Market and the 

coordination and optimization of pricing of 

energy and reserves in real time to be 

effective October 1, 2006, or later date. 

In addition, the Commission approved a 

contested settlement that provided an 

alternative to the Locational Installed 

Capacity mechanism called the Forward 

Capacity Market (FCM). The 

Commission found that the FCM, in 

conjunction with an interim mechanism, 

will provide the revenues needed by 

generators to preserve reliability in New 

England. The Commission also found 

that the forward looking nature of the 

FCM will provide appropriate price 

signals to investors when new 

infrastructure resources are necessary 

with sufficient lead time to allow that 

infrastructure to be put in place before 

reliability is sacrificed. 

(Continue on next page) 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

93 

FY 2006 

Performance Measurement Performance Target Data Source 

(continued from previous page) 

Demonstrable improvements in regional 

competitive market transparency and 

independence 

(continued from previous page) 

In each region of the country, there will 

be: 

3⁄4 RTO adoption of additional marketoriented features, programs or rules 

3⁄4 improvement of open access tariff to 

reduce entry barriers or eliminate undue 

discrimination 

3⁄4 increase in the degree of transmission 

independence (ownership or control) from 

generation in regions primarily without 

RTOs 

(Continued from previous page) 

With respect to the PJM area, the 

Commission issued an initial order on 

PJM’s proposed reliability pricing model 

(RPM) designed to replace its existing 

capacity obligation rules. The 

Commission found the existing capacity 

rules to be unjust and unreasonable to 

ensure energy resources to meet 

reliability responsibilities, and established 

further procedures to resolve the 

remaining issues. At the same time, the 

Commission encouraged the parties to 

continue to seek a negotiated resolution, 

and offered the Commission’s settlement 

judge procedures to facilitate these 

discussions. 

Central

For the Midwest ISO region, the 

Commission approved the continuation of 

mitigation in Broad Constrained Areas; 

action on proposed revisions to real-time 

revenues sufficiency guarantee (RSG) 

payments; approval of revised rules 

defining less-than-seasonal financial 

transmission right (FTR) entitlements for 

network resources; approval of 

contractual arrangements related to the 

market monitor and balancing authorities; 

as well as offering guidance on Midwest 

ISO’s future plans to implement ancillary 

service markets and an energy-only 

market. 

For the SPP region, the Commission 

provided guidance and approvals related 

to SPP’s proposal to establish a real-time 

energy imbalance market. 

Regarding revisions to the OATT, the 

Commission approved various revisions 

to the Midwest ISO’s creditworthiness 

provisions, reactive power requirements, 

as well as changes to the Midwest ISO 

pro forma interconnection agreement 

which reflect improvements or regional 

variations needed based upon its 

operational experience, including new 

pricing provisions. 

West

In September 2006, the Commission 

conditionally approved the CAISO Market 

Redesign and Technology Upgrade 

(MRTU) market reforms and 

enhancements, such as a financially 

binding day-ahead market and more 

effective congestion management 

system. Elements of MRTU are intended 

to fix market design flaws, enhance 

reliability, better protect wholesale 

customers from price volatility and 

gaming, incorporate price-responsive 

demand in the markets, and encourage 

construction of new resources. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

94 

FY 2006 

Performance Measurement Performance Target Data Source 

Percentage of section 203 applications 

processed 

98% completed within 90 days of the 

comments filing date 

Target Met. 100% of the 145 section 203 

corporate filings were processed by 

target completion dates in FY 2006. 

Issue final rule on RTO and ISO 

accounting to improve oversight of RTO 

and ISO costs 

By January 31, 2006 

Target met. A final order on RTO 

accounting and financial reporting was 

issued on December 16, 2005 in Docket 

RM04-12-000, Order No. 668. 

Percentage of market-based rate filings 

processed 

100% of new filings within 60 days of 

filing date 

Target Met. 100% of the 534 marketbased rate filings were completed by the 

targeted deadline in FY 2006. 

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 

3⁄4 There were no Track I cases 

3⁄4 87% of Track II cases in 47 weeks 

3⁄4 There were no Track III cases 

Percentage of competitive energy 

markets and market institution cases set 

for hearing that achieve partial or 

complete consensual agreement 

75% 100% 

Percentage of applications filed by RTOs 

and ISOs to revise market rules to not 

inhibit demand response processed 

100% within statutory deadlines

Target Met. The Commission processed 

all 5 filings involving demand response 

enhancements within the statutory 

deadlines: 

3⁄4 PJM submitted agreements to enhance 

demand response in the PJM region in a 

number of ways, including allowing 

demand resources to participate in PJM’s 

ancillary services market by bidding into 

the PJM reserve markets. 

3⁄4 ISO-NE’s Ancillary Services Market 

(ASM) Phase II will include measures 

allowing the owners of demand resources 

to bid their resources directly into the 

energy and reserve markets on an equal 

footing with generating resources. This 

change will establish the supporting 

market infrastructure that is needed to 

develop fully the potential for demand 

participation in the wholesale markets. 

3⁄4 NYISO’s filing eliminated the sunset 

dates for NYISO’s Day-Ahead Demand 

Response Program and its Emergency 

Demand Response Program. 

3⁄4 ISO-NE’s proposal to establish a 

demand response reserve pilot program 

to test whether certain resources can 

reliably provide 30-minute and 10-minute 

Operating Reserve services. 

3⁄4 CAISO’s MRTU tariff provides loads 

with demand response capability the 

opportunity to participate in the CAISO 

day-ahead, real-time, and ancillary 

services markets under comparable 

terms as supply. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

95 

FY 2006 

Performance Measurement Performance Target Data Source 

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 

Target Met. Held technical conference 

on demand response in January 2006, 

where state representatives, including 

several state commissioners from all 

regions of the U.S., participated on 

panels. Met with NARUC officials in 

January 2006 to discuss Commission 

demand response report and seek their 

assistance in the FERC demand 

response and advanced metering survey. 

 Met in April 2006 with Midwestern state 

officials, primarily Illinois Commissioners, 

on the development of a regional demand 

response initiative. Discussed demand 

response report with state officials and 

Commissioners at various events 

including the NARUC Winter Meeting in 

February 2006 and an EPRI Summer 

Seminar on Energy Efficiency and EndUse Technologies in August 2006. 

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 

Target Met. During FY 2006, the 

Commission issued a final rule adopting 

the Wholesale Electric Quadrant’s 

controversial first set of business practice 

and communication standards within 12 

months of receiving NAESB’s complete 

proposal. Docket No. RM05-5-000; Final 

Rule, Order No. 676, “Standards for 

Business Practices and Communication 

Protocols for Public Utilities,” was issued 

April 25, 2006. 

Percentage of initial orders completed on 

third-party complaints 

3⁄4 80% within 60 days 

3⁄4 95% within 180 days 

3⁄4 60-day target not met. 49% (28 of 57 

{1 projected}) issued within 60 days. This 

was an internal deadline, not statutorily 

based, and did not have a negative 

impact on operations. 

3⁄4 180-day target met. 95% (49 {1 

projected} of 51 {1 projected}) issued 

within 180 days. 

Percentage of initial orders completed on 

fast track third-party complaints 90% within prescribed time frame Target Met. One filing was received and completed on time. 

FY 2007 

Strategy 

Performance Measurement Performance Target Data Source 

 

Employ Best Practices In Market Rules 

Timeliness of review of proposed market 

rules 

By the statutory due date or the 

applicants’ requested date, whichever is 

later 

Target Met. All 358 filings from PJM, 

ISO-NE, NYISO, NEPOOL, SPP, 

Midwest ISO, and California ISO were 

acted on by statutory due dates. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

96 

FY 2007 

Strategy 

Performance Measurement Performance Target Data Source 

 

Percentage of proposed NAESB 

business practice standards rulemakings 

completed 

3⁄4 100% of unopposed rulemakings within 

9 months 

3⁄4 100% of all rulemakings within 12 

months 

Targets Met. The Commission issued 

two NAESB business practice standards 

rulemakings during the fiscal year, both 

completed within 9 months of issuance of 

the notice of proposed rulemaking, as 

follows: 

Docket No. RM05-5-003; NOPR issued 

February 20, 2007; Final Rule, Order No. 

676-B, "Standards for Business Practices 

and Communication Protocols for Public 

Utilities," issued April 19, 2007; and 

Docket Nos. RM96-1-027 and RM05-5-

001; NOPR issued October 25, 2006; 

Final Rule, Order 698, "Standards for 

Business Practices for Interstate Natural 

Gas Pipelines; Standards for Business 

Practices for Public Utilities," issued June 

25, 2007. 

Timeliness of applications processed on 

requests to encourage demand response 

in organized markets 

Within 60 days of filing date or applicants’ 

requested date, whichever is later 

Target Met. All 15 filings were acted on 

within 60-day statutory due dates. 

 

Reduce Barriers to Trade Between Markets and Among Regions 

Timeliness of review of filings to reduce 

or eliminate seams between organized 

markets 

By the statutory due date or the 

applicants’ requested date, whichever is 

later 

Target Met. All 10 filings dealing with 

seams issues were completed by 

statutory due dates. In addition, two 

major orders were issued related to the 

California ISO's Market Redesign 

Technology Update (MRTU) addressing 

seams issues between CAISO and 

neighboring systems in the Western 

Interconnect. A technical conference 

was held on December 15, 2006, in 

Phoenix, Arizona, to address these 

western seams issues; and on March 29, 

2007, a second conference was held in 

Washington, DC, to address eastern 

seams issues. 

Assure Proposed Mergers and Acquisition Are in the Public Interest 

Percentage of merger authorizations 

upheld by the courts 90% 

Target met. 100% of merger 

authorizations have been upheld by the 

courts. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

97 

FY 2007 

Strategy 

Performance Measurement Performance Target Data Source 

 

Percentage of merged applicants 

reporting on compliance with merger 

conditions imposed by the Commission 

100% 

Target Met. 100% of the 9 merger 

applicants reported on compliance, if or 

as applicable, with the four types of 

conditions—summary, notice of 

consummation, proposed accounting 

entries, and additional conditions—

imposed by the Commission. 

It should be noted that most of the 

“additional” conditions only require 

compliance in the event that the merger 

applicants subsequently take some 

specific action. For example, in 5 of the 9 

mergers, the Commission imposed a 

“hold-harmless” condition, requiring that if 

the applicants seek to recover mergerrelated costs through jurisdictional rates, 

they must show offsetting merger-related 

cost savings. As of yet, none of the 

applicants have sought to recover any 

merger-related costs, so they haven’t 

needed to make a compliance filing. 

Timeliness of processing applications for 

the disposition, consolidation, or 

acquisition under section 203 of the FPA, 

of jurisdictional facilities (including 

transactions involving certain transfers of 

generation facilities and public utility 

holding company transactions, and 

issues of cross subsidization or 

encumbrances of utility assets) 

3⁄4 Within 180 days for non-major mergers 

3⁄4 Within 360 days for major mergers 

Targets Met. 

3⁄4 100% of the 100 non-major 

dispositions were completed within 180 

days. 

3⁄4 100% of the 9 major merger cases 

were completed within 360 days. 

 

Address Market Power in Jurisdictional Wholesale Markets 

Revise open access transmission tariff Issue final rule by June 30, 2007 

Target Met. Docket Nos. RM05-17-000 

and RM05-25-000; Final Rule, Order 890, 

"Preventing Undue Discrimination and 

Preference in Transmission Service," 

issued February 16, 2007. 

Timeliness of processing initial marketbased rate filings 

Within 60 days of filing date or by 

applicant’s requested date, whichever is 

later 

Target Met. 100% of the 167 initial 

market-based rate applications were 

completed by the established target date. 

Develop generation market power 

screens for electric market based rates Issue final rule by June 30, 2007 

Target Met. Docket No. RM04-7-000; 

Final Rule, Order 697, "Market-Based 

Rates for Wholesale Sales Of Electric 

Energy, Capacity And Ancillary Services 

By Public Utilities," issued June 21, 2007. 

Act timely on complaints 

80% within 60 days or, for fast-track 

cases only, within the designated 

timeframe 

Target not met; 78%. The performance 

goal was set at an approximate target 

level, and the deviation from that level is 

slight. There was no effect on overall 

program or activity performance. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

98 

Performance Measurement Results for Enforcement

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. 

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. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

99 

FY 2004 

Performance Measurement Performance Target Result 

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. 

Percentage of processes that achieve 

consensual agreements 

Maintain at or increase levels achieved in 

 FY 2001 

OALJ/OAL: Of the 113 cases closed in 

FY 2004, 29 cases were terminated by 

initial decision, leaving 84 cases where 

ADR was used. Of those 84 cases, 

settlement was achieved in 90% (76) of 

the cases. This was greater than the 

80% rate achieved in FY 2001. 

DRS: Of the 24 cases3 that were 

completed in FY 2004, 86% (21) of the 

cases achieved settlement. This was 

slightly less than the 90% rate achieved 

in FY 2001. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

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. 

 

3. This includes 9 cases that began prior to FY 2004 but were completed in FY 2004, but does not include simple inquiries about ADR (8), cases 

in which persons eventually said they were not interested in trying ADR or ADR was determined to be inappropriate (10), or ongoing cases (12). 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

100 

FY 2004 

Performance Measurement Performance Target Result 

Percentage of customers satisfied with 

ADR processes 85% 

86% of the cases (21 out of 24) that were 

completed in FY 2004 achieved 

settlement. 

Percentage of cases in time frames 

3⁄4 ADR processes completed 

3⁄4 litigated cases reaching initial decision 

3⁄4 20% of ADR cases within 60 days 

3⁄4 30% of ADR cases within 100 days 

3⁄4 75% of ADR cases within 150 days 

3⁄4 100% of ADR cases within 200 days 

3⁄4 95% of simple litigated cases within 

206 days 

3⁄4 95% of complex litigated cases within 

329 days 

3⁄4 95% of exceptionally complex cases 

within 441 days 

3⁄4 95% of regular complaints within 60 

days 

ADR Cases4

 – OALJ/OAL: 76 cases 

were successfully completed through the 

use of ADR: 

3⁄4 4 of the 76 cases (5%) were completed 

in < 60 days; 

3⁄4 13 of the 76 cases (17%) were 

completed in < 100 days; 

3⁄4 20 of the 76 cases (26%) were 

completed in < 150 days; 

3⁄4 36 of the 76 cases (47%) were 

completed in < 200 days; and 

3⁄4 40 cases (53%) were completed in > 

200 days. 

ADR 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% 

 4 As the results show, the performance targets for ADR cases are unrealistic. These cases are very complex, multi-party, multi-issue 

cases that involve lengthy, often heated, negotiations over hotly contested issues and/or millions of dollars. Given the Commission’s success rate, 

we do not feel that the deviation from the target level had an adverse affect on the overall performance of this program. Future targets for this 

performance measure will be reviewed and/or revised. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

101 

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). 

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 2007 Performance and Accountability Report 

102 

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 

Reduce duplicative information requests 

through coordination with CFTC 50% reduction by September 30, 2006 

Target met. Investigations coordinated 

with CFTC on all known cases of joint 

interest and there were no known 

duplicative information requests. 

Timeliness of verification of EQR 

submissions Within 10 business days of submission Target met. Verified within 10 business days. 

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 

Target met. Contacted 100% of 

companies in the EQR database that had 

filed incomplete submissions within 10 

business days of filing deadline. 

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 

Target Met. Conducted follow-up reviews 

of EQR filers that make up at least 80% 

of reported revenue for the third quarter 

of 2005 for market manipulation or 

exercise of market power within 60 days 

of final submission. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

103 

FY 2006 

Performance Measurement Performance Target Data Source 

Timeliness of reporting to Commission on 

important market events 

Analysis complete within 60 days of 

event 

Target Met. Provided the Commission 

with seven presentations at open 

Commission meetings, 26 Weekly Market 

Reviews beginning in April 2006 

reviewing weekly market developments 

and performance, and seven end-of-day 

summaries on market conditions during 

heat waves in the summer of 2006. 

Percentage of Hotline calls resolved 60% within 2 weeks of initial contact 

Target Met. Since October 1, 2005, 80% 

of hotline calls were resolved within two 

weeks of initial contact. 

Percentage of non-environmental, nontribal ADR processes (agreed to by 

parties) concluded 

75% within 120 days (convening and 

process) 

Target Met. The DRS completed 25 

cases in FY 2006 that were nonenvironmental and non-tribal, and in 

which the parties agreed to pursue an 

ADR process. Of these, 22 were 

completed within 120 days after being 

referred the DRS (88%) 

Number of ADR requests and referrals to 

the Dispute Resolution Service 

Minimum number of requests and 

referrals equal to FY 2004 

Target Met. The DRS addressed 70 new 

requests or ongoing cases from a 

previous year, involving gas, electric, 

hydroelectric, oil, and pipeline matters. 

This represents a 29.6% increase over 

FY 2004 

Favorable Dispute Resolution Service 

customer satisfaction 80% customer satisfaction rate 

Target Met. For training given by DRS, 

customer satisfaction rate was 89%. For 

casework concluded in FY 2006, all 

participants who completed evaluations 

gave the DRS staff favorable comments, 

for a satisfaction rate of 100%. 

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 

There were no Track I, II, or III cases 

Percentage of market manipulation cases 

set for hearing that achieve partial or 

complete consensual agreement 

75% 100% 

Timeliness of reporting to the 

Commission on operational audits 

85% reported to the Commission within 

120 days of Commencement Letter 

Target Met. Since the beginning of the 

rating year, 100% of operational audits 

were reported to the Commission within 

120 days of Commencement Letters. 

Percentage of operational audit 

recommendations issued and 

implemented 

85%

Target Met. 100% of operational audit 

recommendations have been issued and 

implemented. 

Timeliness of reporting to the 

Commission on financial audits 

85% reported to the Commission within 

120 days of Commencement Letter 

Target Met. Since the beginning of the 

rating year, 100% of financial audits were 

reported to the Commission within 120 

days of Commencement Letters. 

Percentage of financial audit 

recommendations issued and 

implemented 

85%

Target Met. 100% of financial audit 

recommendations have been issued and 

implemented. 

Timeliness of reporting to the 

Commission on Standards of Conduct 

compliance audits 

85% reported to the Commission within 

120 days of Commencement Letter 

No Standards of Conduct compliance 

audits were initiated during FY 2006. 

Percentage of Enforcement 

investigations completed 75% within one year 

Target Met. From October 1, 2005 to the 

present, 88% of cases were closed within 

one year (84% within 9 months and 60% 

within 6 months). 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

104 

FY 2007 

Strategy 

Performance Measurement Performance Target Data Source 

 

Identify and Remedy Problems with Structure and Operations In Energy Markets 

Timeliness of verification of EQR 

submissions Within 10 business days of submission Target met. 100% verification within 10 business days.

Evaluate and improve the usefulness of 

EQR data 

3⁄4 Issue a data dictionary for all undefined 

fields with restricted entries 

3⁄4 Review the current EQR data structure 

and develop written recommendations for 

improvements 

Targets met. Issued Final Order in 

Docket No. RM01-8-006 on September 

24, 2007 which defined all EQR fields 

and improved EQR data structure.

Number of RTO and ISO MMU 

performance metrics Increase over FY 2006 

Target met. One new RTO and ISO 

MMU performance metric was developed 

in FY2007 (increasing the number of 

performance metrics from 11 in FY 2006 

to 12 in FY 2007). 

Timeliness of initiating or deciding action 

on MMU referrals 80% acted on within 30 days Target met. 100% acted on within 30 days. 

Percentage of organized markets 

reviewed and market structure and 

operations problems or deficiencies 

identified 

100% reviewed and reports completed 

identifying market problems or 

deficiencies, if any, and recommended 

solutions 

Target met. 100% of organized markets 

reviewed in daily oversight meetings, 

including all RTO/ISO markets, NYMEX, 

ICE and other relevant markets. Results 

of continuing review communicated to 

Commissioners via Weekly Reports and 

to the public via the Market Oversight 

website and the State of the Markets 

Report. Seven major structure and 

operations problems were identified. 

Timeliness of actions on problems or 

discrepancies identified in reviews of 

organized markets 

With 6 months of completed report

Target met. Addressed all seven 

identified issues within six months of 

identification. Issues included: prices 

over $400 in West, lack of transparency 

for intrastate pipelines, lack of 

transparency for natural gas sales and 

purchases, need to clarify role of MMUs 

in RTOs, PJM/MISO transmission issues, 

CenterPoint data reporting, and Rockies 

Gas Prices. 

Publish annual assessment of 

infrastructure and market conditions for 

each region 

Complete by June 30, 2007 

Target met. The State of the Markets 

Report was completed in February 2007 

and detailed market and infrastructure 

issues for the country as a whole. In 

addition the Seasonal Assessment was 

published for electric power on May 17, 

2007, specifically addressing summer 

2007 and the new Market Oversight 

website provides updates and detailed 

information for each region on a monthly 

basis. 

 

Establish Clear and Fair Processes 

Improve Forensic Audits and 

Investigations information technology 

tools 

Implement capability to search e-mails 

and voice recordings by June 30, 2007 

Target met. The capability to search 

voice recordings was implemented 

beginning in September 2006 and the 

capability to search e-mails was 

implemented beginning in August 2006. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

105 

FY 2007 

Strategy 

Performance Measurement Performance Target Data Source 

Improve Forensic Audits and 

Investigations capabilities 

90% of enforcement and compliance staff 

participate in forensics training and 

interviewing skills by June 30, 2007 

Target met. 95% of enforcement and 

compliance staff received training on 

forensic interviewing and auditing. 

Classes were held in August 2005 and 

May 2006.

Timeliness of reporting to the 

Commission on operational audits 

100% reported to the Commission within 

120 days of Commencement Letter 

Target met. 100% of operational audits 

(24 out of 24 from 10/1/06 – 9/30/07) 

were reported to the Commission within 

120 days of the Commencement Letter.

Percentage of operational audit 

recommendations issued and 

implemented 

90% 

Target met. 100% of operational audit 

recommendations issued were 

implemented within 6 months.

Timeliness of reporting to the 

Commission on financial audits 

100% reported to the Commission within 

120 days of Commencement Letter 

Target met. 100% of financial audits (43 

out of 43 from 10/1/06 – 9/30/07) were 

reported to the Commission within 120 

days of the Commencement Letter.

Percentage of financial audit 

recommendations issued and 

implemented 

90% 

Target met. 100% of financial audit 

recommendations issued were 

implemented within 6 months.

 

Conduct Investigations Promptly and Impose Penalties Where Appropriate 

Percentage of enforcement investigations 

completed 75% within one year of initiation Target met. 94.8% of investigations were closed within a year of being initiated. 

Percentage of Hotline calls resolved 70% within 2 weeks of initial contact Target met. 75% of Hotline calls were 

resolved within 2 weeks of initial contact.

 

Encourage Self-Policing and –Reporting of Violations 

Percentage of regulated entities audited 

to ensure internal compliance programs 

and processes are in place 

85% of regulated entities included in 

annual audit plan 

Target met. 95% of regulated entities 

included in the annual audit plan were 

audited (74 out of 78). 

Timeliness of responses to regulated 

entities seeking guidance and clarification 

on compliance issues 

Within 60 days 

Target met. Responded to 100% of 

regulated entities seeking guidance and 

clarification on compliance issues within 

60 days. 

Timeliness of completing 

recommendations on compliance issues 

raised by regulated entities 

Within 180 days, where Commission 

action is required 

Target met. 100% of recommendations 

to the Commission (where Commission 

action was required) were completed 

within 180 days of completing an 

investigation originated by a self report. 

Timeliness of reporting on compliance 

issues raised by regulated entities Reports completed monthly 

Target met. The Pending Case Report is 

issued at the end of each month and 

reports on compliance issues (i.e., self 

reports) raised by regulated entities. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

106 

Performance Measurement Results for Supporting Initiatives

FY 2004 

Performance Measurement Performance Target Result 

Number of new hires from recruitment 

program 

Attract new talent through targeted 

recruitment, with 50% at entry levels 66% of all hires were at entry-levels 

New staff from summer intern program Hire 30% of participants into permanent 

positions 

25% of summer interns were hired into 

permanent positions 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Increase diversity of staff in high grades Continue increasing diversity in GS-14, 

GS-15 and SES positions 

The net increase of 21 staff into high 

grade positions included 3 minorities 

(14%) and 7 women (33%). 

Improved executive performance 

3⁄4 Implement 360 degree assessment of 

senior staff 

3⁄4 Expand training in leadership and 

management skills 

3⁄4 Completed 360 degree assessments & 

feedback; 

3⁄4 Implemented and completed FERCwide training for all new supervisors; 

3⁄4 Developed a Leadership & 

Management Development Program; and 

3⁄4 Initiated an Executive coaching pilot 

program. 

Mentoring program Implement FERC-wide mentoring 

program for all employees 

Although still being developed, the 

program’s scheduled completion date is 

November 2004. 

This performance target was set for an 

approximate date, and the deviation from 

that date is slight. This difference had no 

effect on overall program performance. 

Average IT costs per FTE Below industry average for Federal 

agencies Performance target achieved 

Percentage of transactions accepted 

electronically 

95% of transactions accepted 

electronically 

The Commission received 75.7% of 

qualified documents (25,343 out of 

33,469) electronically. Qualified 

documents represent 57% of the total 

documents (33,469 out of 59,114) 

submitted to the Commission in FY 2004. 

Although we did not meet the target level, 

the deviation had no effect on overall 

program performance. Besides 

submitting transactions electronically, 

parties have the option to submit 

transactions via digital media (i.e. CD). 

In addition, the percentage represents an 

increase over the FY 2003 result of 53%. 

Improved Internet Website 99% availability Performance target achieved 

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. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

107 

FY 2004 

Performance Measurement Performance Target Result 

Improved reliability and availability of 

FERRIS 

Increase customer satisfaction 25% over 

FY 2003 87.5% customer satisfaction rate 

Network availability 99% Performance target achieved 

Desktop reliability Increase reliability by 5% per year Performance target achieved 

Standard office automation platform and 

PC rate of refresh 33% Performance target achieved 

Timeliness of virus file updates on 

servers and workstations 

Updates within 24 hours from release by 

vendors 

92% of updates were completed within 24 

hours of release. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Implementation of Federal Information 

Security Management Act (FISMA) for 

small agencies 

95% 

Overall, the Commission had a 93% 

performance rating according to the 

FISMA OMB metric. According to the 

Putman scorecard, the Commission had 

an 84% performance rating and moved 

from an F to a solid B. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Develop Communications Plan 

Increase number of proactive interactions 

with the Press, Elected Officials, and 

Industry by 25% 

Increased the number of Press releases 

by 16%, the number of briefings with 

Elected Officials (i.e. Senate and House 

of Representatives) by 1%, but 

decreased the number of Industry 

interactions by 38%. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Redesign Internet Website Make internet site more useful and userfriendly 

Implemented new features (i.e. Public 

Event Calendar and Energy Projects 

Database) that are extremely popular 

with users. 

Engage Stakeholders Provide 50 presentations to government 

or other groups of stakeholders 

The Commission made a total of 94 

presentations – in a variety of forums – to 

numerous stakeholders throughout FY 

2004. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

108 

FY 2004 

Performance Measurement Performance Target Result 

Report Market Conditions 

Publish regular summer and winter 

Seasonal Market Assessments, and 

other reports as conditions warrant 

3⁄4 The Winter Energy Market 

Assessment, published in November 

2003, reported on the upcoming winter 

heating season. 

3⁄4 The State of the Markets Report, 

published in January 2004, analyzed the 

state of the energy markets for an 18-

month span. 

3⁄4 The Summer Energy Market 

Assessment, published in June 2004, 

reported on the upcoming summer 

cooling season. 

3⁄4 The Commission also published, in 

May 2004, the results of an investigation 

into the January 2004 New England gas 

price spike. 

Discussions with State regulatory bodies 

on Commission policies and actions

Formal, effective interactions between 

FERC and state officials on policy issues

The Commission held 23 different 

meetings with State regulators. 

Expand discussions with Canada and 

Mexico

Formal interaction with Canadian and 

Mexican regulators on policy issues

The Commission held or participated in 

10 different meetings with Canadian 

and/or Mexican officials on issues related 

to infrastructure, reliability, and other 

policy initiatives. 

Foster communication with States and 

Governors on infrastructure

Hold infrastructure conferences in each 

region

The Commission held one infrastructure 

conference in the Northeast. 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

109 

FY 2004 

Performance Measurement Performance Target Result 

Timeliness of annual charges collections Collect 98% of outstanding receivables 

within 45 days of billing 

97% of annual charge collections were 

made within 45 days of billing. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Invoices paid by electronic funds transfer 98% Over 99% of invoices were paid by 

electronic funds transfer. 

Percentage of payments accomplished 

without error 98% Over 99% of payments were accomplished without error. 

Accuracy and completeness of annual 

financial statements Unqualified opinion Performance target achieved 

Percentage of contracts performancebased 100% Performance target achieved 

Percentage of contracts advertised online 100% 

76% of contracts were advertised on-line. 

The deviation from the performance 

target is not significant and had no effect 

on overall program performance. The 

contracts that were not advertised on-line 

were sole source contracts for highly 

technical and specialized personnel 

primarily in the reliability and dam safety 

program areas. 

FY 2005 

Performance Measurement Performance Target 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. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

110 

FY 2005 

Performance Measurement Performance Target Result 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

111 

FY 2005 

Performance Measurement Performance Target Result 

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. 

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%. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

112 

FY 2005 

Performance Measurement Performance Target Result 

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). 

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. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

113 

FY 2005 

Performance Measurement Performance Target Result 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

114 

FY 2006 

Performance Measurement Performance Target Data Source 

Percentage of summer interns hired into 

permanent positions 30% 

Target Not Met. 14.3% of summer 

interns eligible to be rehired accepted 

offers of permanent employment. 

Conversions of summer interns have 

steadily declined since its high in 2003 

with 33%. As EPAct of 2005 

requirements have evolved, the need for 

skill sets not represented in the summer 

intern population has dictated hiring from 

other sources. This measure is omitted 

in 2007 and reduced in 2008 to 20%. 

Implement entry-level Professional 

Development Program Complete by September 30, 2006 

Target Met. FERC Entry-Level Retention 

Program distributed to Program Offices in 

September 2006. 

Percentage of minorities among seniorlevel positions (GS-14, GS-15, SL, and 

SES positions) 

Increase over FY 2005 

Target Met. Percentage of minorities 

among senior-level positions increased 

by 1% over FY 2005. 

Implement Commission-wide Business 

Requirements guidelines Complete by September 30, 2006 

Target Met. Commission-wide Business 

Requirements Guidelines distributed to 

the Training Council in September 2006 

Reliability of IT infrastructure 99% network availability rate Target Met. 

FISMA compliance according to the 

Putnam scorecard Grade of “A” 

Target Met. FERC received a grade of 

an "A" based on the Putnam scorecard 

for its most recent FISMA report which 

ended September 30, 2006.

Integrate the Business Plan, CPIC 

process, and IT architecture into the 

Commission’s Enterprise Architecture 

Complete by September 30, 2006 

Target Met. DCIO's current CPIC 

process requires all requests to map to 

the FERC Business Plan. Pursuant to 

the CPIC process Information 

Technology (IT) projects are approved or 

denied based on a number of criteria one 

being whether or not it supports the 

Commission's mission. Approved IT 

projects generate a Control Board action 

producing document. The data from the 

approved CCN is used to update the IT 

architecture which is entered into the 

Commission's Enterprise Architecture 

through the use of the Metis tool. 

Percentage of approved IT initiatives with 

supporting documentation per the 

Commission's CPIC process 

100% 

Target Met. The CPIC Investment 

Review Board approved 21 projects of 

which all 21 went through the CPIC 

review process. Therefore, 100% of the 

approved IT projects went through the 

CPIC approval process. 

Establish earned value management 

schedule and cost performance indices 

for all major projects 

Complete by September 30, 2006 

Target Met. As implemented in FERC 

Capability Maturity Model Integration 

level 2 (CMMI-2) policies and 

procedures, EVM is used to measure 

progress on major projects and major 

phases of multi-phased projects. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

115 

FY 2006 

Performance Measurement Performance Target Data Source 

Develop and implement automated 

Business plan Complete by September 30, 2006 

Target Not Met. Though Software 

development for Phase 2 of the Activity 

and Tracking Management System 

(ATMS) has been completed, the target 

was not met because extensive testing of 

Phase 2 due to integration with other 

eGovernment systems will push 

deployment to February 2007. Though 

Phase 2 will support business plan 

reporting that is integrated with the HR 

time reporting system (MAPS), that 

reporting will depend on requisite 

information (e.g. proper use of time 

reporting codes, MAPS data, etc.) input 

by FERC's program and other offices. 

And since full automation will require 

Commission-wide deployment (Phases 3 

and 4) and additional reporting 

requirements definition and software 

development, the target will not be fully 

met until ATMS Phase 4. Since manual 

processes for business planning will 

remain in place until they are replaced by 

an automated Business plan, there is no 

impact on operations or program 

performance. 

Percentage of qualified-procurements 

that are performance-based 100% 

Target Met. Of the 676 actions awarded 

during the period, a total of 78 actions 

were identified as performance-based. 

All 78 of these actions were awarded 

under performance-based contracts. 

Percentage of qualified-procurements 

that are advertised on-line 100% 

Target Met. Of the 676 actions awarded 

during the period, a total of 4 actions 

qualified for on-line advertisement, and 

all 4 actions were advertised on-line with 

Federal Business Opportunities 

(fedbizops.) 

Percentage of total procurement dollars 

awarded to small, women-owned, and 

minority businesses 

5% increase over FY 2005 

Target Met. In FY 2005, the Commission 

awarded 22% of its total procurement 

dollars to small, women-owned and 

minority businesses. In FY 2006, the 

Commission awarded 34% of its total 

procurement dollars to these entities 

which constitutes a 12% increase over 

the FY 2005 performance level. 

Percentage of invoices paid via electronic 

funds transfer 99% 

Target Met. During FY 2006, the 

Commission paid 99% of its invoices via 

EFT. 

Percentage of payments in compliance 

with Prompt Payment Act deadlines 100% 

Target Not Met. During FY 2006, the 

Commission processed 94% of its 

payments in compliance with Prompt 

Payment Act deadlines. The primary 

cause was the Commission's acceptance 

of invoices during the FY 2006 

Continuing Resolution (October - 

December) which could not be paid. 

Since January, the Commission has 

processed 98% of its payments in 

compliance with Prompt Payment Act 

deadlines. 

Percentage of payments made without 

error 100% 

Target Not Met. During FY 2006, the 

Commission made 99% of its payments 

without error. The failure to meet this 

target did not have an adverse affect on 

overall program performance. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

116 

FY 2006 

Performance Measurement Performance Target Data Source 

Timeliness of collecting accounts 

receivable 90% of invoices collected by due dates 

Target Met. During FY 2006, the 

Commission collected 94% of its invoice 

balances by the stated due date. 

Complete and accurate annual financial 

statements 

Unqualified opinion on audited financial 

statements Target Met 

Percentage of filings capable of being 

received electronically 95% 

Target Not Met. 42% of all document 

types are currently capable of being 

received electronically. Meeting the 

target has been delayed because of two 

primary factors: 

1) The Commission has been 

responsive to industry feedback 

regarding the most efficient way for 

tariff filings to be filed electronically and 

has extended the prototyping and 

discussion of proposed solutions; and 

2) The Commission has delayed to 

improve infrastructure (supporting 

database, storage, server, and disaster 

recovery infrastructure). 

To mitigate the effects of the delay the 

Commission encourages the filing of noneFiling-capable documents on digital 

media (CD, DVD); routinely accepts noneFiling-capable documents electronically 

on an exception basis when requested by 

filers; and performs OCR and full-text 

indexing on documents submitted on 

paper. In addition, the Commission is 

actively planning and gathering 

requirements for an eFiling system 

release that will meet the target. Given 

the mitigation efforts, there have been no 

negative impacts on program 

performance or operations. 

Percentage of Commission orders 

approved during open meetings issued 99% within 5 business days 

Target Met. 321 agenda items were 

approved in open meeting during the 

rating period. All but 2 were issued within 

5 business days. 

Percentage of Commission orders 

approved by notational vote issued 

99% within 1 business day of adoption 

date 

Target Not Met. 933 agenda items were 

approved through the notational process. 

 40 items were issued after one day of 

adoption date; these were all issued on 

the following business day. Percentage 

is 96%. This is a remarkable 

accomplishment considering the 

significant increase in notational items 

during this appraisal period and the target 

did not change from last appraisal period. 

This did not have a negative impact on 

operations. 

Percentage of legally required notices 

issued 

95% within 3 business days of being 

posted on eLibrary 

Target Not Met. This measure includes 

notices for electric rate filings prepared 

by the Secretary; notices for other 

industries are prepared by program 

offices. Number of electric rate notices 

during the appraisal period is 2,667. Of 

these, 632, or 76%, were issued three 

days after filing was posted on eLibrary. 

This target was not met due to staff 

shortages. However, no Commission 

proceeding or action was negatively 

affected. 

Percentage of press releases on 

important agency actions issued 95% within 1 hour of order being issued 

Target Met. In FY 2006, 90 out of 92 or 

97.8% of press releases were issued 

within 1 hour of action being taken. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

117 

FY 2006 

Performance Measurement Performance Target Data Source 

Percentage of responses to public 

inquiries 

3⁄4 60% within 3 business days 

3⁄4 100% within 5 business days 

Target Met. In FY 2006, OEA responded 

to approximately 2,800 public inquiries. 

Over 90% of these inquiries were 

responded to within 1 business day of 

receipt. All public inquiries were 

responded to within 5 business days. 

Percentage of agency actions and timesensitive content posted on the FERC 

Internet Website 

95% within 1 hour of order being issued 

Target Met. In FY 2006, 3,159 of 3,201 

or 98.7% of important agency actions 

were posted on the Commission’s 

internet website within 1 hour of 

issuance. 

Timeliness of notices to NEB (Canada) 

and CRE (Mexico) of FERC activities 

pursuant to Memorandum of 

Understanding 

Within 1 business day 

Target Met. The NEB and CRE are 

routinely notified of significant 

Commission activities that impact their 

respective countries through emails with 

summaries and links to these orders 

within one business day of the order 

being issued.

Timeliness of regional hearings or 

conferences email notifications sent to 

State officials and Governors 

Within 1 business day No regional hearings/conferences took 

place during the review period. 

Submit FY 2005 Annual Report to 

Congress Complete by June 30, 2006 

Target Not Met. FY 2005 Annual Report 

has not been sent to Congress. The 

target was not met due to a significant 

change in the format of the Annual 

Report to improve the overall product by 

making it more targeted to the audience 

groups. The decision to re-format the 

Annual Report to track the agency’s 

Strategic Plan resulted in a significantly 

more time-consuming review process 

and an extended period for obtaining the 

content for the Annual Report. There 

were no negative impacts on operations. 

 The process for the FY 2006 Annual 

Report has already been initiated and the 

expectation is that the target will be met. 

Submit FY 2005 international exchange 

and training activity data to U.S. 

Department of State 

Complete by April 1, 2006 

Target Met. FY 2005 international 

exchange and training activity data was 

sent to the U.S. Department of State in 

March 2006. 

Submit FY 2005 FOIA Annual Report to 

Department of Justice Complete by February 1, 2006 

Target Met. FY 2005 FOIA Annual 

Report to the Department of Justice was 

submitted on January 27, 2006. 

Submit FY 2005 Information Quality 

Agency Annual Report to OMB Complete by January 1, 2006 

Target Met. FY 2005 Information Quality 

Agency Annual Report was submitted to 

OMB prior to January 1, 2006. 

FY 2007 

Performance Measurement Performance Target Data Source 

Develop and implement a competencybased requirements framework Complete by January 31, 2007 

Target Met. Framework developed in 

January, 2007. Implementation ongoing 

with mainstream occupations. 

Percentage of women and/or minorities 

among all positions Increase over FY 2006 

Target Met. FY 2007 percentage for 

women was 52.9%. Increased 

percentage over FY06 by 8% (FY 2006 - 

44.5%). 

FY 2007 percentage for minority women 

was 20.6%. Increased percentage over 

FY06 by 1.1% (FY 2006 – 19.5%). 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

118 

FY 2007 

Performance Measurement Performance Target Data Source 

Improve retention ratio of entry-level new 

hires Increase FY 2006 ratio by 10% 

Target Met. Retention ration for FY 2007 

hires was 100% (FY 2006 percentage 

was 95%). 

Implement workforce planning tools Complete by September 30, 2007 

Target Met. Implemented Hiring Gap 

Spreadsheet and Personnel Status 

Report. Continue to prepare and publish 

the Human Capital Plan. 

Timeliness of submitting Fair Act 

Inventory to OMB per Circular A-76 

requirements 

Complete by June 30, 2007 Target Met. FY 2007 FAIR Act was 

submitted to OMB 6/30/07. 

Customers are satisfied with the use of 

eGovernment initiatives to interact with 

FERC 

90% 

Target Met. The customer satisfaction 

level for FERC eGov Services exceeds 

96% based on data collected from the 

external users surveys. 

Federal FTE time is mapped through 

systems to workload and strategic goals 

and objectives 

Fully implemented by September 30, 

2007 

Target Not met. With the deployment of 

ATMS Phase 2 in February FY07 the 

following offices are fully able to map 

workload to strategic goals and 

objectives using an enterprise-wide 

system: OAL, OED, OGC, and OEMR 

(now OEMR and OER). For the following 

offices, some divisions are able to map 

workload to strategic goals and 

objectives using an enterprise-wide 

system while other divisions can map 

workload to strategic goals and 

objectives but must continue to use 

legacy, departmental, and/or cuff 

systems: OEA, OALJ, OE, OEP. 

Mapping of workload in terms of FTE 

time requires both a revision of budget 

reporting codes and development of a 

report that correlates information in the 

enterprise-wide workload tracking system 

with information in the FERC HR system. 

 The complete implementation of all 

ATMS phases will take longer than 

planned due to contract staffing 

reductions from funding shortages under 

a yearlong FY 2007 continuing resolution 

and because the effort was 

underestimated. A detailed plan for 

ATMS Phase 3 is currently under review 

and the target may not be fully met in FY 

2008. 

Align Commission costs to strategic 

objectives Complete by September 2007 

Target Met. The FY2009 Budget 

Request has been structured to map both 

FTEs and the Commissions costs to 

strategic objectives and was completed 

on September 10, 2007. 

Percentage of vendor payments made by 

established due dates 99% 

Target Not Met. During FY07, the 

Commission processed 97.1% (1897 out 

of 1953) of payments in compliance with 

Prompt Payment Act deadlines. 37 of the 

56 late payments did not result in interest 

begin paid to the vendor. The failure to 

meet this target did not have an adverse 

affect on overall program performance. 

Percentage of payments made without 

error 100% 

Target Not Met. During FY 2007, the 

Commission made 99.7% of its payments 

without error. The failure to meet this 

target did not have an adverse affect on 

overall program performance. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

119 

FY 2007 

Performance Measurement Performance Target Data Source 

Timeliness of collecting accounts 

receivable that offset the Commission’s 

appropriation 

95% collected by due dates 

Target met. During FY 2007, the 

Commission collected 99.5% of its 

offsetting accounts receivable by their 

stated due date. 

Financial statements that present fairly, in 

all material aspects, the Commission’s 

financial position 

Unqualified audit opinion on FY 2006 

financial statements 

Target Met. Unqualified opinion received 

November, 2006 

Percentage of transactional case 

assessments or convening sessions 

concluded 

75% within 20 days 

Target Met. DRS completed 100% (41 

out of 41) transactional case 

assessments or convening sessions 

within 20 days after being referred to the 

DRS. 

Percentage of transactional ADR 

processes agreed to by parties 

concluded 

75% within 120 days total (convening and 

process) 

Target Met. Dispute Resolution Services 

completed 34 transactional processes or 

cases, both environmental and nonenvironmental in which parties agreed to 

pursue an ADR process. Of these, 31 

were completed within 120 days after 

being referred to the DRS (91%). 

Number of ADR requests and referrals to 

the Dispute Resolution Service 

Increase number over FY 2004 (base 

year) 

Target Met. DRS addressed a total of 79 

new requests or ongoing cases from a 

previous fiscal year involving gas, 

electric, hydropower, and pipelines. This 

represents a 46.3 % increase over 

FY2004, in which there were 54 new 

requests or ongoing cases. 

Favorable Dispute Resolution Service 

customer satisfaction for casework and 

outreach 

80% customer satisfaction rate 

Target Met. The DRS requests customer 

feedback through evaluations of 

casework processes, and training 

sessions. For casework concluded in 

FY2007, all participants who completed 

evaluations gave the DRS staff favorable 

comments, for a satisfaction rate of 

100%. 

In training sessions during FY2007, 

participant ranking for Course Content 

averaged 90%, Course Materials 

averaged 88%, and Instructor 

Effectiveness averaged 94%. 

Number of outreach events (e.g., 

trainings, workshops, and presentations) 

to promote the use of dispute resolution 

skills 

Increase number over FY 2004 (base 

year) 

Target Met. There were 65 active 

outreach projects in FY2007. This 

represents a 1.6 % increase over 2004 in 

which there were 64 projects. Note: The 

projects were both internal and external 

to FERC. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

120 

FY 2007 

Performance Measurement Performance Target Data Source 

Ensure timely and effective 

communication to all stakeholders 

3⁄4 Issue 95% of press releases for 

important agency actions on the 

same day as the underlining action 

3⁄4 Post 95% of important agency 

actions on the same day as the 

underlining action 

3⁄4 Provide an initial and complete 

response to 70% of inquiries at the 

time of the receipt of the request 

3⁄4 Develop webpages within the 

assigned timeframe to enhance and 

support the Commission’s initiatives 

and goals 

Targets Met. 

3⁄4 In FY 2007, 80 out of 80 or 100% of 

press releases were issued within 1 

hour of action being taken. 

3⁄4 In FY 2007, 3816 of 3820 or 99% of 

important agency actions were 

posted on the Commission’s internet 

website within 1 hour of issuance 

3⁄4 In FY 2007, the office provided an 

initial and complete response to 

2272 of 2791 or 81% of public 

inquiries at the time of receipt. 

3⁄4 In FY 2007, the Commission 

developed the following webpages 

in the assigned timeframe: Market 

Oversight, Electric Competition, 

OATT Reform, Blanket Certificates, 

Transmission Investment, Pipeline, 

Hydrokinetic Energy, MOU, Policy 

Statement, Hydro licensing, Annual 

Charges, Career, Media form, and 

FOIA form. 

Enhance communication with National 

and International groups 

3⁄4 Respond to 50% of Official 

Congressional correspondence 

within 10 business days 

3⁄4 Provide email notification of 

significant Commission actions to 

Congress within 1 to 2 business 

days of the underlining action along 

with briefing offers where 

appropriate 

3⁄4 Provide timely and effective 

briefings to members of Congress 

3⁄4 Provide email notification of 

significant Commission actions to 

effected State regulatory agencies 

within 1 to 2 business days of the 

underlining action 

3⁄4 Accommodate visitation requests 

from delegations from various 

countries and organizations 

Targets Met. 

3⁄4 130 out of 205 pieces of official 

Congressional correspondence, or 

63%, were responded to within 10 

business days. 

3⁄4 In FY 2007, email notifications to 

members of Congress were sent out 

on 340 significant Commission 

actions within 1 to 2 business days 

of the underlining action. Briefing 

offers were made on appropriate 

items. 

3⁄4 In FY 2007, the Commission 

provided 38 briefings to members of 

Congress. 

3⁄4 In FY 2007, 178 email notifications 

to State regulatory agencies were 

sent out on significant Commission 

actions within 1 to 2 business days 

of the underlining action. 

3⁄4 In FY 2007, OEA hosted 71 visits 

from 75 countries and organizations. 

Percentage of cases set for hearing that 

achieve partial or complete consensual 

agreement 

75% 

Target Met. 88% of cases set for hearing 

achieved partial or complete consensual 

agreement. 

Percentage of 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 

Targets Met. 

3⁄4 There were no Track I cases. 

3⁄4 80% of Track II cases in 47 weeks. 

3⁄4 88% of Track III cases in 63 weeks. 

Issue well-reasoned initial decisions, 

based on facts, law, and Commission 

policies which are upheld in whole or in 

part 

80% of initial decisions upheld in whole 

or in part 

Target Met. 91% of initial decisions were 

upheld in whole or in part. 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

121 

Appendix A 

Organizational Chart 
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

122 

This page intentionally left blank.
Federal Energy Regulatory Commission 

FY 2007 Performance and Accountability Report 

123 

Chairman

Commissioner Commissioner Commissioner Commissioner

Office of

Administrative Law

Judges

Office of General

Counsel

Energy Markets

Energy Projects

Solicitor

General and

Administrative Law

Office of the

Executive Director

Human Resources

Division

Logistics

Management

Division

Secretary of the

Commission

Payroll,

Applications and

Integration Division

Deputy Chief

Information Officer

Deputy Chief

Financial Officer

Office of Energy

Markets and

Reliability

Division of Tariffs

and Market

Development West

Division of Tariffs

and Market

Development East

Division of Tariffs

and Market

Development

Central

Division of Policy

Analysis and

Rulemaking

Division of

Reliability

Division of

Administration,

Budget, and

Strategic Planning

Office of

Enforcement

Division of

Investigations

Division of Audits

Division of

Financial

Regulation

Division of Energy

Market Oversight

Office of

Administrative

Litigation

Division of

Technical Division

Administrative and

Litigation Support

Legal Division

Office of External

Affairs

Public Affairs

Division

Congressional and

Intergovernmental

Press Services

Affairs Division

Division

Office of Energy

Projects

Division of Pipeline

Certificates

Division of GasEnvironment and

Engineering

Division of

Hydropower

Licensing

Division of Dam

Division of

Safety and

Inspection

Hydropower

Administration and

Compliance

Regional Offices

Atlanta

Chicago

New York

Portland

San Francisco

Financial

Services

Division

Financial Policy

Division

Internal Audits

Division

Budget Division

Procurement

Division

IT Operations &

Information

Management

Systems

Engineering

Division

Security &

Systems

Assurance

Division

IT Policy &

Regulatory

Compliance

Dispute

Resolution

Service

9/30/2007

Infrastructure Policy

Group

Management &

Operations
 Federal Energy Regulatory Commission 

 FY 2007 Performance and Accountability Report 

124 

This page intentionally left blank.
 Federal Energy Regulatory Commission 

 FY 2007 Performance and Accountability Report 

125 

Appendix B 

Strategic Plan 
 Federal Energy Regulatory Commission 

 FY 2007 Performance and Accountability Report 

126 

This page intentionally left blank.
 Federal Energy Regulatory Commission 

 FY 2007 Performance and Accountability Report 

127 
 Federal Energy Regulatory Commission 

 FY 2007 Performance and Accountability Report 

128 
 Federal Energy Regulatory Commission 

 FY 2007 Performance and Accountability Report 

129 

Appendix C 

Statutory Authority 
 Federal Energy Regulatory Commission 

 FY 2007 Performance and Accountability Report 

130 

This page intentionally left blank.
 Federal Energy Regulatory Commission 

 FY 2007 Performance and Accountability Report 

131 

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, Electric, Hydropower Statutes 

• Federal Power Act

• Energy Policy Act of 2005

• Energy Policy Act of 1992

• Power Plant & Industrial Fuel Use Act

• Department of Energy Organization Act

• Electric Consumers Protection Act (ECPA)

• Electronic Freedom of Information Act of 1996

• Public Utility Holding Company Act of 1935 (PUHCA)

• Public Utility Regulatory Policies Act of 1978 (PURPA)

• Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)

• Information Technology Management Reform Act of 1996 (ITMRA/Clinger-Cohen Act)

Natural Gas Statutes 

• Natural Gas Act 

• Natural Gas Policy Act of 1978 

• Alaska Natural Gas Pipeline Act of 2004 

• Alaska Natural Gas Transportation Act of 1976 

• Outer Continental Shelf Lands Act of 1978 (OCSLA) 

• Natural Gas Wellhead Decontrol Act of 1989 (NGWDA) 

Oil Statutes 

• Interstate Commerce Act 

• Oil Pipeline Regulatory Reform 

Environmental and Other Statutes 

• Clean Air Act 

• Clean Water Act 

• Rivers and Harbors Act 

• Endangered Species Act 

• Wild and Scenic Rivers Act 

• Coastal Zone Management Act 

• National Historic Preservation Act 

• Fish and Wildlife Coordination Act 

• National Environmental Policy Act (NEPA) 
 Federal Energy Regulatory Commission 

 FY 2007 Performance and Accountability Report 

132 

This page intentionally left blank.
 Federal Energy Regulatory Commission 

 FY 2007 Performance and Accountability Report 

133 

Appendix D 

Acronym Glossary 
 Federal Energy Regulatory Commission 

 FY 2007 Performance and Accountability Report 

134 

This page intentionally left blank.
 Federal Energy Regulatory Commission 

 FY 2007 Performance and Accountability Report 

135 

Acronym Full Description 

ADR Alternative Dispute Resolution 

ATC available transfer capability 

CAISO California Independent System Operator 

DOE U.S. Department of Energy 

DOD U.S. Department of Defense 

DRS Dispute Resolution Service 

EIS Environmental Impact Statement 

EPAct 2005 Energy Policy Act of 2005 

EQR Electric Quarterly Report 

ERO Electric Reliability Organization 

FPA Federal Power Act 

FPC Federal Power Commission 

FTE full-time equivalent 

ISO independent transmission system operator 

ITC independent transmission company 

LNG liquefied natural gas 

Midwest ISO Midwest Independent Transmission System Operator 

MOU memorandum of understanding 

NEPA National Environmental Policy Act of 1969 

NERC5 North American Electric Reliability Council or 

North American Electric Reliability Corporation 

NGA Natural Gas Act 

OASIS Open Access Same-Time Information System 

OMB Office of Management and Budget 

PJM PJM Interconnection 

RTO regional transmission organization 

 

5 The North American Electric Reliability Corporation is the certified ERO. However, the entity is still in transition from the North American Electric Reliability 

Council to the North American Electric Reliability Corporation. Therefore, thus far, the Council has been filing documents with the Commission on behalf of the 

Corporation 
 Federal Energy Regulatory Commission 

 FY 2007 Performance and Accountability Report 

136 

This page intentionally left blank.