FY 2006 

PERFORMANCE AND 

ACCOUNTABILITY REPORT

FEDERAL ENERGY REGULATORY COMMISSION 

NOVEMBER 2006

Joseph T. Kelliher 

Chairman 


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CONTENTS

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

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

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

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

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

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

Business Plan .........................................................................................9 

Guarding the Consumer .........................................................................9 

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

Program Performance Overview..........................................................14 

Financial Performance Overview ........................................................26 

Controls, Systems, and Legal Compliance ..........................................31 

Improper Payments Information Act Reporting ..................................34 

Possible Future Effects of Existing Events and Conditions ................34 

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

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

Chief Financial Officers’ Letter...........................................................39 

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

Balance Sheets .....................................................................................45 

Statements of Net Cost.........................................................................46 

Statements of Changes in Net Position................................................47 

Statements of Budgetary Resources ....................................................48 

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

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

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

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

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

Performance Measurement Data for Energy Infrastructure: 

FY 2003 – FY 2007 .............................................................................72 

Performance Measurement Data for Competitive Markets: 

FY 2003 – FY 2007 .............................................................................86 

Performance Measurement Data for Market Oversight: 

FY 2003 – FY 2007 .............................................................................99 

Performance Measurement Data for Management Initiatives: 

FY 2003 – FY 2007 ...........................................................................110 

Appendix A: Organizational Chart......................................................127 

Appendix B: Strategic Plan...................................................................131

Appendix C: Statutory Authority ........................................................135

Appendix D: Acronym Glossary ..........................................................139
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Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

1 

Management’s 

Discussion 

and Analysis 

(Unaudited) 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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Introduction 

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

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

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

FERC’s) FY 2006 audited annual financial statements and program performance 

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

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

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

report section includes performance measurement data for fiscal years 2003 

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, both during FY 2006 and beyond. 

Overview of the Commission 

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

of Energy (DOE) whose function is to oversee 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. 

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

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

Mission

Regulate and oversee energy industries in the 

economic, environmental, and safety interests of the 

American public. 

Vision

Reliable, affordable energy through reliance on 

competition and effective regulation. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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

energy and transmission service in interstate commerce by public utilities. The 

Commission must ensure that those rates, terms and conditions are just, 

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 certain corporate transactions involving public 

utilities and public utility holding companies. Under FPA sections 203, 205 and 

206, the Commission primarily regulates investor-owned utilities. Governmentowned 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 is 

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. On July 20, 2006 the Commission conditionally 

certified the North American Electric Reliability Council (NERC) as the ERO. 

All owners, users and operators of the bulk power system will be subject to 

mandatory reliability standards approved by the Commission. 

The Commission’s role 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 

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 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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other such 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 1,261 full time equivalents (FTEs) carried out the Commission’s 

mission in FY 2006 using a budget of $220.4 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 August 2006, 

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 protecting 

customers through understanding markets and their regulation, timely identifying 

and remedying market problems, assuring compliance with rules and regulations, 

and detecting and crafting penalties to address market manipulation. 
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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 

reliable, affordable energy through a reliance on competition and effective 

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

this, the Commission has three main goals: 

• Adequate infrastructure. Promote development of a robust energy 

infrastructure consistent with statutory mandates and due process. 

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

effective competition and establishing clear market rules. 

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

but fair enforcement of Commission rules. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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

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

Infrastructure.

This goal encourages investment in the infrastructure needed to sustain energy 

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

cost certainty, protecting the energy infrastructure, and welcoming innovative 

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

this goal covers many of the Commission’s important traditional responsibilities 

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

compliance activities, environmental and other licensing conditions, dam safety 

inspections and most rate determinations. 

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

Reliance on Effective Competition.

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

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

establishing clear market rules in wholesale electric markets, promoting 

transparency in electric and gas markets, and reforming market policies where 

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

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

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

on Effective Regulation.

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

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

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

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

and reasonable rates. This goal also includes more traditional work, such as some 

aspects of litigation, dispute resolution, complaints, mergers and auditing. 

The Commission’s Strategic Plan also includes several management initiatives 

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

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

and training; building effective, customer-friendly information technology 

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

strengthening strategic management processes. Finally, the management 

initiatives also include the Commission’s communication, outreach and 

collaboration efforts. 

On September 29, 2006, the Commission submitted to Congress its updated 

Strategic Plan which will guide the Commission through fiscal year 2011. During 

this update process, the Commission reassessed its vision, mission, and strategic 

goals. The Commission identified strategies and realigned resources to 

accomplish the mission of regulating and overseeing energy industries in the 

economic, environmental, and safety interests of the American public. In the 

updated Strategic Plan, the Commission has three strategic goals: 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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• Energy Infrastructure: Promote the development of a strong energy infrastructure. 

• Competitive Markets: Support competitive markets. 

• Enforcement: Prevent market manipulation. 

The Commission’s updated Strategic Plan describes these 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, protecting the energy infrastructure, and ensuring the security of 

the interstate transmission grid. By focusing on infrastructure, this goal covers 

many of the Commission’s important traditional responsibilities such as, pipeline 

certificates, hydropower licenses and preliminary permits, compliance activities, 

environmental and other licensing conditions, dam safety inspections and most 

rate determinations. 

2. Competitive Markets. Goal: 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 

litigation, alternative dispute resolution services, communication, outreach and 

other collaboration efforts. 

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

organizational excellence, due process and transparency, regulatory certainty, 

stakeholder involvement, and timeliness. Whether the Commission is adjudicating 
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FY 2006 Performance and Accountability Report 

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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 resource 

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

internal accountability by enabling management to link individual office 

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

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

helping to identify which activities help the Commission achieve particular goals 

and objectives. During FY 2006, the Commission reported estimated and actual 

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

Offices’ ability to organize and allocate resources. 

Guarding the Consumer 

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

under the FPA and NGA, laws that were written in the 1930s. Although these 

1930-era laws recently underwent important reforms in EPAct 2005, and although 

the Commission’s electric regulatory responsibilities also include the Public 

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

Public Utility Holding Company Act of 2005 (PUHCA 2005), the FPA and NGA 

remain the Commission’s core statutory responsibilities. The central charge of 

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

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

transmission customers from unjust and unreasonable rates and from undue 

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

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

from unjust and unreasonable rates and from undue discrimination and 

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 or natural gas markets. While the 

Commission has encouraged competitive wholesale markets, 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. 

“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 2006 Performance and Accountability Report 

10 

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 assure just and reasonable 

rates. The Commission first pursued this goal in the 1980’s 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 ultimately affirmed this policy change. 

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

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

utilities that are authorized to make market-based sales, for example, continue to 

be subject to Commission regulation. 

The Commission also promoted effective competition in wholesale power and 

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

transportation and electric transmission. Open access in gas markets was 

completed in 1992 with the adoption of Order No. 636. The Commission began 

to impose electric open access requirements in market-based rate cases and 

mergers in the 1980’s. In 1996, Order No. 888 extended the open access 

requirements to all jurisdictional public utilities. 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 

electricity sales at market-based prices and to offer market choices for customers. 

The Commission also promoted development of regional transmission 

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

RTOs and ISOs are not affiliated with energy market participants and thus have 

no incentive to discriminate in the provision of transmission service. They 

operate the transmission grid in a certain state or region, thereby eliminating rate 

pancaking and providing for regional planning. Most RTOs and ISOs also now 

run energy markets. In some respects, they operate more like (and some say even 

resemble) securities and commodities exchanges like the New York Stock 

Exchange or the Chicago Board of Trade than a traditional public utility. The 

Commission has begun taking steps to lower RTO costs by encouraging greater 

cost accountability by RTOs and ISOs. 

The Commission’s policies have resulted in significant entry and construction of 

new generation capacity by independent power producers. At the same time, 

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

transmission congestion in some regions. This raises a significant concern for the 

“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 2006 Performance and Accountability Report 

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Commission because transmission congestion acts like an import quota, resulting 

in higher energy prices. 

The Commission monitors the 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 generation market power policies. In 

particular, the Commission strengthened its reporting requirements (Orders Nos. 

2001 and 652) and acted to prohibit and sanction market manipulation through its 

Market Behavior Rules. Provisions of EPAct 2005 broadly prohibit fraud in 

energy market transactions. The Commission has implemented these provisions 

by adopting new electric and gas market anti-manipulation rules in Order No. 

670. In 2004, the Commission bolstered its generation market power test by 

issuing interim market power screens and in May 2006 issued a notice of 

proposed rulemaking proposing to adopt the existing market power screens in 

principle with several enhancements. 

The Commission also has remained vigilant regarding transmission market 

power. It issued a proposed rulemaking in May 2006 to reform its electric 

transmission open access policies to eliminate the remaining potential to engage 

in undue discrimination and preference in transmission service. 

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

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

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

new regulatory tools to discharge its 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 mergers 

and generation facility acquisitions and granted the Commission authority to 

impose significant civil penalties. The Commission will judiciously exercise this 

new authority to prevent the exercise of market power. 

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

wholesale commodity and transmission and transportation markets by permitting 

the Commission to issue rules to assure timely dissemination of price information 

to market participants and the public. 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 

A strong energy infrastructure is critical to the health of the nation, as evidenced 

by the immediate impact of Hurricanes Katrina and Rita. The damage to offshore 

oil and gas production facilities and the disruption to natural gas, oil and 
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FY 2006 Performance and Accountability Report 

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petroleum product pipelines caused a surge in energy prices, leading to increased 

public fears about the adequacy of the Nation’s energy supply. 

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

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

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

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

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

to transportation infrastructure projects, must give investors confidence that they 

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

certainty to oil and natural gas customers as well. 

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

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

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

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

pipelines, enabling companies to bring those supplies to 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 about nine months. Prefiling 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 

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

problems can be averted later. 

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

Southeastern United States consisting of 209 miles of pipeline crossing southern 

Georgia and northern Florida ranging in diameter from 12 to 36 inches and three 

new compressor stations. The companies voluntarily used the Commission prefiling process. Though it was not one of the Commission’s largest projects, the 

environmental analysis for this project determined that it: 

• would affect about 2,713 acres, including 680 acres of wetland; 

• would cross 56 perennial streams and rivers (6 of which would be major 

crossings more than 100 feet wide) and 52 intermittent streams; and 

• could occur in the vicinity of 20 federally-listed or proposed endangered or 

threatened species and 19 state-listed endangered or threatened species. 

In the environmental impact statement (EIS), Commission staff evaluated two 

major route alternatives, several route variations, a no-action alternative, and a 

postponed-action alternative. The companies subsequently adopted one of the 

route variations recommended in the draft EIS, resulting in a significant reduction 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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in land use impacts and forest clearing. The environmental review was completed 

and the Commission took final action on the proposal within 12 months. 

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

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

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

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

project. 

The Commission also regulates natural gas storage projects. 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. In order to reduce volatility in natural gas prices, the 

Commission is encouraging the development of new natural gas storage capacity. 

In June 2006, the Commission, responding to EPAct 2005, issued final rules 

reforming the Commission’s pricing policies for natural gas storage. The rules 

will provide 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 intends its pricing policy will encourage 

investment in generation and transmission facilities. Transmission capacity per 

megawatt (MW) 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 late 2005, 

pursuant to this new directive, the Commission proposed rules to promote greater 

capital investment in new transmission capacity. In July 2006, the Commission 

issued a final rule 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 in rate base; and 

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

The Commission also proposed a number of reforms to improve the development 

of transmission infrastructure in its May 2006 transmission open access proposed 

rulemaking. For example, the Commission proposed to amend its pro forma open 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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access transmission tariff to require coordinated, open, and transparent 

transmission planning on both a sub-regional and regional level. It also proposed 

to require transmission providers to prepare annual studies identifying significant 

and recurring congestion and possible remedies for the elimination of the 

congestion. 

In addition, EPAct 2005 amended the FPA to grant the Commission new 

authority to promote an energy infrastructure that serves the Nation’s needs. The 

new law granted 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 gas pipeline siting authority, it should help lower 

the regulatory barriers to investment in the transmission grid. In June 2006, the 

Commission proposed rules to implement this new authority in accordance with 

the specific criteria established in EPAct 2005. 

Program Performance Overview 

The performance measurement data samples and other achievements included 

below constitute a few of the Commission’s key achievements during FY 2006. 

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

2007 Performance Budget Request. A complete list of the Commission’s 

performance measurement data for fiscal years 2003 through 2007 is included in 

the Performance Report section of this report. 

Performance Measurement Data for Energy Infrastructure

Goal: Promote Development of a Robust Energy Infrastructure. 

Performance Measurement Performance Target Result 

Issue final rules on mandatory prefiling 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. 

EPAct 2005 directed the Commission, within 60 days of enactment, to issue 

regulations requiring the pre-filing process to commence at least six months prior 

to the filing of an LNG project application. The Commission considers this 

requirement to be a validation of its success in the use of the pre-filing process 

since 2001 on a voluntary basis. With the issuance of Order No. 665, the 

Commission established pre-filing regulations based on the knowledge gained 

from the use of the process since 2001. This rule also encourages prospective 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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applicants to cooperate with state and local government officials to address safety 

and security considerations. 

Performance Measurement Performance Target Result 

Percentage of NEPA documents 

completed for projects utilizing the 

pre-filing processes 

85% within 8 months of 

determining a pipeline or LNG 

facility application complete 

100% 

In FY 2006, the Commission completed NEPA documents for eleven pipeline and 

LNG projects that were filed after using the pre-filing process. Most notably, the 

Commission issued the Environmental Assessment for Transco’s Leidy to Long 

Island Project less than four months after the applications were filed. In addition, 

the EIS for the Centerpoint Carthage to Perryville Project was issued less than six 

months after filing. Completing these NEPA documents well ahead of schedule 

allows the Commission to act timely on subsequent issues related to the projects. 

 

Performance Measurement Performance Target Result 

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. 

Order No. 679 was written to bolster investment in the nation’s aging 

transmission infrastructure and to promote electric power reliability and lower 

costs for consumers, by reducing transmission congestion. Greater grid 

investment will also make it more difficult to engage in undue discrimination and 

preference in transmission service. 

This Order identifies specific incentives the Commission would allow based on a 

case-by-case analysis of individual transmission proposals. Key provisions of the 

rule include: 

• incentive rates of return on equity for new investment by public 

utilities (both traditional utilities and stand-alone transmission 

companies, or transcos); 

• full recovery of prudently incurred construction work in progress; 

• full recovery of prudently incurred pre-operations costs; 

• full recovery of prudently incurred costs of abandoned facilities; 

• use of hypothetical capital structures; 

• accumulated deferred income taxes for transcos; 

• adjustments to book value for Transco sales/purchase; 

• accelerated depreciation; 

• deferred cost recovery for utilities with retail rate freezes; and 

• a higher rate of return on equity for utilities that join and/or continue 

to be members of transmission organizations such as, but not limited 

to, RTOs and ISOs. 

The rule does not grant utilities all of the listed incentives, but rather allows 

utilities on a case-by-case basis to select and justify the package of incentives 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

16 

needed to support new investment. Additionally, the rule provides expedited 

procedures for the approval of incentives to provide utilities greater regulatory 

certainty and facilitate the financing of projects. 

Performance Measurement Performance Target Result 

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). 

NERC established its reliability readiness review program in response to the 

August 2003 blackout that affected about 50 million people in the U.S. and 

Canada. Review teams typically include representatives from FERC and industry 

volunteers with considerable expertise from other interconnections, other regions, 

and neighboring operating entities. Each team is led by a NERC staff member 

and a regional co-leader. 

The reliability readiness review program independently reviews the operations of 

balancing authorities, transmission operators, and reliability coordinators in North 

America, and determines their readiness to maintain safe and reliable operations. 

Reviews identify areas of excellence in operations and areas in need of 

improvement. Additionally, the reviews are designed to ensure that operators of 

the bulk electric system have the tools, processes, and procedures in place to 

operate reliably, and help balancing authorities, transmission operators, and 

reliability coordinators recognize and assess their reliability responsibilities and 

evaluate how their operations support those responsibilities. 

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. 

Pursuant to EPAct 2005, the Commission issued Order No. 672 to delineate the 

process for certification of a single independent ERO, development of reliability 

standards, enforcement of those standards, delegation of authority to Regional 

Entities, ERO funding, and other matters necessary to implement the statute. The 

final rule established: 

• criteria that an entity must satisfy to qualify to be the ERO; 

• procedures under which the ERO may propose new or modified 

reliability standards for Commission review; 

• a process for timely resolution of any conflict between a reliability 

standard and a Commission-approved tariff or order; 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

17 

• the process for resolution of an inconsistency between a state action 

and a reliability standard; 

• regulations pertaining to the funding of the ERO; 

• procedures governing an enforcement action by the ERO, regional 

entity or the Commission; 

• criteria under which the ERO may enter into an agreement to delegate 

authority to a regional entity for the purpose of proposing reliability 

standards to the ERO and enforcing reliability standards; 

• regulations governing the issuance of periodic reliability reports by the 

ERO that assess the reliability and adequacy of the bulk power system 

in North America; and 

• procedures for the establishment of regional advisory bodies that may 

provide advice to the Commission, the ERO or a regional entity on 

matters of governance, applicable reliability standards, the 

reasonableness of proposed fees within a region, and any other 

responsibilities requested by the Commission. 

In July 2006, the Commission took a critical step in establishing a strong 

foundation for assuring reliability of the transmission network by certifying 

NERC as the Nation’s ERO. In addition, the Commission accepted, with some 

modifications and clarifications, their proposed governance structure, funding, 

reliability standards development process, enforcement program and pro forma 

Regional Entity delegation agreement. 

As the ERO, NERC will be responsible for developing and enforcing mandatory 

electric reliability standards under the Commission’s oversight. The standards 

will apply to all users, owners and operators of the bulk power system. The ERO 

and Regional Entities must monitor compliance with the reliability standards. 

They may direct violators to comply with the standards, and impose penalties for 

violations, subject to review by, and appeal to, the Commission. While the ERO 

is responsible for compliance and enforcement under Commission oversight, the 

statute provides that the Commission can investigate compliance and impose 

penalties independently of the ERO. 

Other Accomplishments

EPAct 2005 specified a significant number of actions to be taken by the 

Commission with quite challenging deadlines, all of which the Commission met 

or exceeded. While many of these actions are addressed in the performance 

results, the following are also noteworthy. 

During FY 2006 Commission staff completed a preliminary assessment of 102 

reliability standards filed by NERC, the first step in an open and inclusive process 

to establish technically sound and legally enforceable Reliability Standards that 

meet statutory criteria. The Commission is currently soliciting industry comment 

on the potential deficiencies in the current standards and the appropriate process 

and timeline for addressing them. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

18 

Order No. 681, issued July 20, 2006, amended the regulations to require 

transmission organizations that are public utilities with organized electricity 

markets to make available long-term firm transmission rights that satisfy certain 

guidelines adopted by the Commission in this rule. These guidelines will increase 

long-term transmission price certainty in the organized electricity markets and 

allow for new investments and other long-term power supply arrangements. 

Along with the repeal of the Public Utility Holding Company Act of 1935 

(PUHCA 1935), EPAct 2005 expanded the Commission’s corporate review 

authority to include authority over certain holding company mergers and 

acquisitions, as well as certain public utility acquisitions of generating facilities. 

It also imposed statutory deadlines for acting on mergers and other jurisdictional 

corporate transactions. The Commission implemented these new provisions of 

EPAct 2005 by providing blanket authorizations for certain transactions while 

ensuring that captive utility customers are protected. The Commission acted 

quickly, so that new rules would be in effect before the effective dates of the new 

corporate review authority and PUHCA 2005, and the repeal of PUHCA 1935, all 

of which became effective on February 8, 2006. 

After hurricanes Katrina and Rita, the Commission promoted various avenues for 

operators to quickly initiate recovery projects. The Commission adopted rules 

which: 

• provided incentives to facilitate the development of new natural gas 

storage capacity; 

• ensured access to storage services at just and reasonable rates, while at 

the same time ensuring that adequate storage capacity would be 

available to meet anticipated market demand; 

• extended blanket certificate authority to interstate natural gas facilities 

previously ineligible for such consideration; and 

• raised project cost limits under the blanket certificate program. 

The Commission revised some reporting requirements to better monitor and 

assess the physical state of the interstate natural gas pipeline grid and gas storage 

infrastructure when service is disrupted due to damage caused by a hurricane, 

other natural disasters or acts of terrorism. 

Performance Measurement Data for Competitive Markets

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

Performance Measurement Performance Target Result 

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 

non-member utilities 

Target met. The Commission 

approved several proposals to 

advance competitive energy 

markets. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

19 

The Commission approved Mid-Continent Area Power Pool’s (MAPP) proposal 

to conform its Available Transfer Capability calculation methodologies to 

provisions of the Seams Operating Agreement between MAPP and the Midwest 

ISO in order to create a more seamless administration between the tariffs of the 

Midwest ISO’s energy markets and the non-market operations of MAPP’s 

members that do not belong to the Midwest ISO. 

The Commission also approved proposed revisions to the Southwest Power Pool 

(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 RTO (PJM). Action 

was also 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 so-called cross-border facilities). 

Performance Measurement Performance Target Result 

Demonstrable improvements in 

regional competitive market 

transparency and independence 

In each region of the country, 

there will be: 

3⁄4 RTO adoption of additional 

market-oriented 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 taken by the Commission to improve market transparency and 

independence will have nationwide impact. In May 2006, the Commission issued 

a notice of proposed rulemaking proposing amendments to its regulations and the 

pro forma open access transmission tariff to ensure that transmission services are 

provided on a basis that is just, reasonable and not unduly discriminatory or 

preferential. The proposed rulemaking aims to strengthen the tariff 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’ open access transmission 

tariff. 

Other actions taken on proceedings related to establishing new or revised market 

rules, rule changes in RTOs/ISOs, and increased transmission independence were 

region-specific. For example: 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

20 

• In the New England area, the Commission issued an order accepting a 

proposal filed by ISO-New England (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. 

• With respect to the PJM area, the Commission issued an initial order 

on PJM’s proposed reliability pricing model 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. 

• 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 

payments; approval of revised rules defining less-than-seasonal 

financial transmission right 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 open access transmission tariff, 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 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

21 

which reflect improvements or regional variations needed based upon 

its operational experience, including new pricing provisions. 

• In September 2006, the Commission conditionally approved the 

California Independent System Operator (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 priceresponsive demand in the markets, and encourage construction of new 

resources. 

Performance Measurement Performance Target Result 

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. 

Demand response can play a key role in both wholesale and retail markets. In 

wholesale markets, it can introduce needed price responsiveness when wholesale 

prices spike and can help reduce the ability to exercise market power. In retail 

markets, demand response can assist load serving entities hedge their positions 

and meet their load obligations at the least cost. The Commission addressed 

demand response in several filings during FY 2006. 

• 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. 

• ISO-NE’s Ancillary Services Market 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. 

• New York ISO’s (NYISO) filing eliminated the sunset dates for 

NYISO’s Day-Ahead Demand Response Program and its Emergency 

Demand Response Program. 

• 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. 

• CAISO’s MRTU tariff provides loads with demand response 

capability the opportunity to participate in the CAISO day-ahead, real-
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

22 

time, and ancillary services markets under comparable terms as 

supply. 

Performance Measurement Performance Target Result 

Issue final rule to implement 

PUHCA provisions of EPAct 2005 By January 31, 2006 Target Met. Final rule was issued on December 8, 2005. 

The Commission issued Order No. 667 in December 2005 which finalized the 

Commission’s rules to implement the repeal of PUHCA 1935 and enactment of 

PUHCA 2005, as it relates to federal access to books and records. Order No. 667 

emphasizes that the Commission’s primary means of overseeing jurisdictional 

companies that are members of holding companies continues to be the FPA and 

the NGA. These statutes enable the Commission to detect and disallow from 

jurisdictional rates any imprudently incurred, unjust or unreasonable or unduly 

discriminatory or preferential costs from affiliate transactions between companies 

in the same holding company system. 

Performance Measurement Performance Target Result 

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. 

The Commission adopted regulations on January 26, 2006 prohibiting the use of 

any manipulative devices or contrivances in wholesale energy markets. This new 

authority was granted to the Commission in the EPAct 2005. 

Performance Measurement Data for Market Oversight

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

Performance Measurement Performance Target Result 

Percentage of operational audit 

recommendations issued and 

implemented 

85% 

Target Met. 100% of operational 

audit recommendations have been 

issued and implemented. 

The Commission completed 61 operational audits in FY 2006. The Commission 

worked with high-level corporate officials to develop stringent compliance plans 

involving a commitment from jurisdictional entities to invest millions of dollars 

to: ensure compliance with Commission regulations, orders and policies through 

processes and procedural changes; establish or enhance compliance programs 

with adequate staffing; self-police and self-report violations to the Commission; 

and implement structural changes to address prohibited access to transmission and 

market information. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

23 

For example, the MidAmerican Energy Corporation audit resulted in a $23 

million investment in transmission system upgrades to increase transmission 

capacity in congested areas. This audit also provided information to the 

Commission as it developed revisions to the open access transmission tariff. 

Also, in the Louisville Gas & Electric audit, the company’s senior management 

agreed to invest millions of dollars in improving federal compliance, including 

structurally separating the company’s wholesale merchant operations from its 

unregulated operations. 

Performance Measurement Performance Target Result 

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). 

In less than ten months, the Commission completed an investigation of violations 

related to the breach of the upper Taum Sauk reservoir in Missouri. The breach 

released 1.3 billion gallons of water, injured nine persons, and did significant 

damage to the environs. At the end of FY 2006, the Commission was poised to 

approve a settlement in which AmerenUE, operator of the project, would pay a 

significant civil penalty plus an additional amount to fund improvements to the 

area over and above the cost of remediation of the environmental and property 

damage. 

Other Accomplishments

In FY 2006, the Commission held 34 transparency outreach meetings with groups 

from the entire value chains for natural gas and electricity and with information 

providers. The wide range of responses and understanding of market interactions, 

how prices are formed and what information is available prompted staff to hold a 

workshop on September 26, 2006. At the workshop, staff covered the major 

venues where energy market interactions take place (New York Mercantile 

Exchange, RTO/ISO’s, IntercontinentalExchange, Inc, Voice Brokers and Index 

Forming) and the kind of information that is available from each venue. The 

workshop helped facilitate a common understanding of the market and the 

language that will be used at a technical conference in FY 2007. 

Following the grant by EPAct 2005 of significant new civil penalty authority 

under the Federal Power Act Part II and the Natural Gas Act, the Commission 

issued the Policy Statement on Enforcement in October 2005. The Policy 

Statement articulated the Commission’s intent to have “firm but fair” enforcement 

of its statutes, orders, rules, and regulations, and emphasized the importance of 

internal compliance, self-reporting of violations, and cooperation. 

The former Office of Market Oversight and Investigations implemented a major 

reorganization to become the Office of Enforcement. Although the Office of 

Enforcement’s mission remained the same, the new structure has four main 

focuses: investigations, audits, financial regulation, and market oversight. This 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

24 

new structure provides increased operational efficiency and more accurately 

reflects the functions of each division. 

Performance Measurement Data for Management Initiatives

Performance Measurement Performance Target Result 

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.

Federal Information Security Management Act of 2002 (FISMA), Chapter 35 of 

title 44, United States Code amended, provides the framework and mechanisms 

for implementing information security controls supporting federal operations and 

assets. In its simplest form, agencies provide proof that all major systems have 

been Certified and Accredited (C&A), these systems have contingency plans and 

controls that have been tested, everyone in the agency has had security awareness 

training with specialized training for the selected staff, and the agency has 

security policies and standards. The Inspector General (IG) evaluates key cyber 

security program areas and provides its results separately. 

The Commission had a positive response to the FISMA questionnaire reporting 

complete compliance in the survey. The IG concurred with the Commission’s 

position in the IG’s questionnaire reporting complete compliance and further 

stating that the assessment of the C&A process was “Excellent” (the highest 

score). The Putman score card rates these general categories on a completion 

scale of 0 to 100 percent. The Commission achieved 100 percent this year as it 

did last year. FERC’s improvement came from the IG who reported only a 

“Good” last year in the C&A process, the only category receiving less that the 

highest grade. The IG raised that evaluation to “Excellent” this year. All other 

IG rates where record at the highest mark. 

Performance Measurement Performance Target Result 

Complete and accurate annual 

financial statements 

Unqualified opinion on audited 

financial statements Target Met.

The Commission received an unqualified (“clean”) audit opinion on its FY 2006 

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 thirteenth consecutive year the Commission has met this financial standard, 

despite fluctuating OMB, Treasury, and DOE reporting requirements and the 

changes to information technology that are driven by those requirements. Unlike 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

25 

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 that the Commission’s 

accounting can be relied on by the energy industries we regulate. 

Other Accomplishments

The Commission successfully implemented OMB Circular A-123, Appendix: A: 

Management’s Responsibility for Internal Controls over Financial Reporting. 

The Commission put into action a vigorous plan to assess, document, and test the 

adequacy of the controls affecting financial reporting and the systems that support 

it. The scope and pursuit of this implementation was substantial and it raised the 

awareness of internal controls for the employees involved in financial operations. 

 To implement A-123, the Commission: 

• evaluated the entity level control environment; 

• identified the business processes that impact the financial statement 

line items; 

• documented the business process and sub-processes; 

• identified the control activities and the key controls in each business 

process; 

• assessed the design and effectiveness of the controls to determine 

whether they would prevent or detect errors or misstatements in the 

selected financial statement line items; 

• tested the key control activities for a material account or a significant 

risk; and 

• established corrective action plans for the internal controls identified 

as not effective. 

After reviewing the financial systems and evidence gathered during the 

implementation process, the Commission determined that there is reasonable 

assurance that the internal controls over financial reporting and the supporting the 

information technology systems are operating effectively. No material 

weaknesses were found in the design or operation of the internal controls. 

In another management initiative, the Commission increased its hiring rate this 

year by 54 percent to accommodate increased staffing levels required for new 

requirements associated with the electric reliability program and other programs 

associated with EPAct 2005. To achieve this, the Commission made full use of 

available hiring incentives. Also, the Commission was one of less than 

approximately 30 agencies to obtain provisional certification of the Senior 

Executive Service pay for performance system which was critical in the retention 

and recruitment of senior executives to the agency. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

26 

Financial Performance Overview 

As of September 30, 2006, the financial condition of the Commission was sound 

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

in place to ensure Commission obligations did not exceed budget authority. The 

Commission prepared its financial statements in accordance with the accounting 

standards codified in the Statements of Federal Financial Accounting Standards 

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

Sources of Funds. The Commission receives an appropriation from Congress 

that is available until expended. The Commission’s FY 2006 new budget 

authority was $220.4 million. This represents an increase in new budget authority 

of approximately $10.4 million over FY 2005. Additional funds available to 

obligate in FY 2006 were $9.0 million from prior-year appropriations. The sum 

of all funds available to obligate in FY 2006 was $229.4 million. The 

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

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

payments to states in FY 2006 was $3.0 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 2006.

Costs by Function. The Commission incurred costs of $234.3 million in FY 

2006, which was an increase of $11.4 million over FY 2005. Approximately 

69 percent of costs were used for salaries and benefits and the remaining 31 

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

regulatory programs, to cover operating expenses, (e.g., building rentals, 

transportation, printing, security services, supplies, office automation, and 

training), staff travel, and reimbursable work. The increase in FY 2006 costs 

were mainly due to higher salaries as a result of higher pay increases and higher 

benefits, increased rent, increased contract support, and increased materials and 

supplies. The unobligated budget authority available at the end of FY 2006 was 

$5.7 million, which is a decrease of $3.3 million over the FY 2005 amount of $9.0 

million. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

27 

Costs by Function (millions) 

Costs FY 2006 FY 2005 

Salaries and Benefits $162.6 $158.9 

Travel/Transportation 3.0 3.5 

Rent/Comm/ Utilities 22.1 20.0 

Contract Support 37.2 34.0 

Printing/Supplies/Other 9.4 6.4 

Reimbursable Work .02 .05 

Total Costs $234.3 $222.9 

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

2006 financial statements. This was the thirteenth consecutive year the 

Commission has received an unqualified opinion. For FY 2006, 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 related 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 $98.1 million as of September 30, 

2006. This is a decrease of $42.6 million from September 30, 2005. The assets 

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

Summary table. 

Asset Summary (millions) 

Asset FY 2006 FY 2005 

Fund Balance with Treasury $62.2 $111.3 

Accounts Receivables, Net 26.3 20.0 

Property, Plant, & Equipment, 

Net 9.6 9.3 

Due from Regulated Entities 0.0 0.1 

Total Assets $98.1 $140.7 

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

$62.2 million as of September 30, 2006, a decrease of $49.1 million from the 

September 30, 2005 balance. This balance represents appropriated funds, 

collected license fees, and other funds maintained at the Treasury until final 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

28 

disposition is determined. The majority of the decrease from FY 2005 to FY 

2006 is due to a payment out of the disgorged fund account, in the amount $36.0 

million. Disgorged funds are the result of a settlement with a number of regulated 

western electric utility companies having conducted inappropriate trading 

practices in violation of California tariffs. In addition, the Commission resolved 

appeals dealing with prior year other agency costs which amounted to the 

disposition of approximately $42.3 million. 

Accounts Receivable, Net, as of September 30, 2006, were $65.6 million net of an 

offsetting allowance for doubtful accounts of $39.3 million. As a result of 

increased billings in FY 2006, the Commission has a larger balance of uncollected 

outstanding receivables in FY 2006 as compared to FY 2005, which accounts for 

the increase. 

The net book value of Property and Equipment, Net, was $9.6 million. The 

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

computer hardware and software. The increase in FY 2006 as compared to FY 

2005 is due to the recording of several internally developed software items in FY 

2006. 

The Commission's liabilities were $84.6 million as of September 30, 2006. The 

Liabilities Summary table shows a decrease in total liabilities of $36.7 million 

from the September 30, 2005 balance of $121.3 million. The majority of the 

decrease is due to the payment of $36.0 million from disgorged funds account and 

the disposition of approximately $44.7 million in prior year appeals.

Liabilities Summary (millions) 

Liabilities FY 2006 FY 2005 

Accounts Payable $13.5 $9.4 

Other Liabilities 71.1 111.9 

Total Liabilities $84.6 $121.3 

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

approximately $13.5 million as of September 30, 2006. 

 

Net Position Summary (millions) 

Position FY 2006 FY 2005 

Unexpended Appropriations $9.5 $13.7 

Cumulative Results of 

Operations 4.0 5.7 

Total Net Position $13.5 $19.4 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

29 

Analysis of the Statement of Net Cost 

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

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

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

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

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

of programs. The Commission's net cost of operations for FY 2006 was ($.03) 

million. This net surplus is a result of the reduction of FY 2006 reimbursable 

costs due to the over accrual of FY 2005 costs. As a result, current year 

reimbursable billings were greater than costs. Net costs by strategic goal are 

shown in the Net Cost of Operations table. 

Net Cost Of Operations (millions) 

Operation FY 2006 FY 2005 

Energy 

Infrastructure ($.022) $.009 

Competitive Markets (.005) .003 

Market Oversight (.003) .002 

Analysis of Statement of Changes in Net Position 

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

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

components: Cumulative Results of Operations and Unexpended Appropriations. 

The decrease in Net Position of $5.9 million from FY 2005 to FY 2006 represents 

the net change in Cumulative Results of Operations and Unexpended 

Appropriations. The majority of the decrease is a result of the Commission 

expending more of its appropriation in FY 2006 than in FY 2005. 

Analysis of the Statement of Budgetary Resources 

The Statement of Budgetary Resources shows the sources of budgetary resources 

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

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

outlays. For FY 2006, the Commission had budgetary resources available of 

$232.4 million, the majority of which was derived from new spending authority. 

This represents an increase of $13.1 million over FY 2005 budgetary resources 

available of $219.3 million.

The status of budgetary resources includes obligations incurred of $226.7 million, 

or 98 percent of funds available. Similarly, FY 2005 obligations incurred were 

$210.3 million, 96 percent of funds available. Total net inflows for FY 2006 were 

$51.2 million, which represents a $42.0 million increase from FY 2005 net 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

30 

inflows of $9.2 million. The increase was primarily due to settlement of the 

appeals related to prior year other agency costs. 

Analysis of the Statement of Financing 

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

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

information in the Statement of Budgetary Resources by reporting the differences 

and reconciling the two statements. This reconciliation ensures that the 

proprietary and budgetary accounts in the financial management system are in 

balance. The Statement of Financing reconciles budgetary obligations incurred of 

$226.7 million to the net cost of operations of ($.03) million by adding nonbudgetary resources, and deducting costs not requiring resources and financing 

sources yet to be provided. 

Analysis of the Statement of Custodial Activity 

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

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

that revenue of another agency is not reported on the Commission’s Statement of 

Net Cost so the revenue will not be reported twice. In FY 2006, the Commission 

reported $45.8 million in custodial activity compared to $45.4 million in FY 

2005. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

31 

Controls, Systems, and Legal Compliance 

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

• Federal Managers' Financial Integrity Act of 1982; 

• Federal Financial Management Improvement Act of 1996; 

• Prompt Payment Act; 

• Debt Collection Improvement Act of 1996; and 

• Revised Appendix A of OMB Circular A-123, Management’s Responsibility 

for Internal Control. 

Integrity Act Statement 

During Fiscal Year 2006, the Commission responded to the challenge of a 

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

three primary Commission goals which reflect the Commission’s vision of “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 robust energy 

infrastructure; (2) prevent exercise of market power by reliance on effective competition 

and; (3) prevent exercise of market power by reliance on effective regulation. 

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

integrate our budget, business plan, performance measures, and management controls to 

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

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

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

of management and resolved within the Commission at the appropriate level. The 

auditors' FY 2006 report on the Commission's internal control structure disclosed no 

material weaknesses 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. I have completed an assessment of the 

effectiveness of internal controls over the effectiveness and efficiency of operations and 

compliance with applicable laws and regulations in accordance with OMB Circular A123, Management’s Responsibility for Internal Control, for the Federal Energy 

Regulatory Commission in effect as of the fiscal year ending September 30, 2006. 

Based on the results of this evaluation, the Commission can provide reasonable 

assurance that its internal control over the effectiveness and efficiency of operations and 

compliance with applicable laws and regulations was operating effectively, our financial 

systems conform with government-wide standards and no material weaknesses were 

found in the design or operation of the internal controls. 

 In addition, the Commission conducted its assessment of the effectiveness of 

internal control over financial reporting, which includes safeguarding of assets and 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

32 

compliance with applicable laws and regulations, in accordance with the requirements of 

Appendix A of the OMB Circular A-123. Based on the results of this evaluation, the 

Commission can provide reasonable assurance that its internal control over financial 

reporting as of June 30, 2006 was operating effectively and no material weaknesses were 

found in the design or operation of the internal control over financial reporting.

Joseph T. Kelliher 

Chairman 

Federal Energy Regulatory Commission 

September 2006

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: 

• Management knowledge gained from the daily operation of agency programs 

and reviews; 

• Management reviews; 

• Annual performance plans; and, 

• Inspector General and Government Accountability Office reports. 

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

things, that management control deficiencies be integrated into office action 

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

attention from senior managers. The management control information in these 

plans, combined with the individual assurance statements discussed previously, 

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

controls on an ongoing basis. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

33 

FY 2006 Integrity Act Results 

The Commission evaluated its management control systems for the fiscal year 

ending September 30, 2006. 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 2006 Revised Appendix A of OMB Circular A-123, Management’s 

Responsibility for Internal Control 

The Commission conducted its assessment of the effectiveness of internal control 

over financial reporting, which includes safeguarding of assets and compliance 

with applicable laws and regulations, in accordance with the requirements of 

Appendix A of the OMB Circular A-123. Based on the results of this evaluation, 

the Commission can provide reasonable assurance that its internal control over 

financial reporting as of June 30, 2006 was operating effectively and no material 

weaknesses were found in the design or operation of the internal control over 

financial reporting. 

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 2006 Improvement Act Results 

As of September 30, 2006, 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, 2006, the Commission made 

94% of its payments that were subject to the Prompt Payment Act on-time. The 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

34 

Commission incurred $1,026 in interest penalties in FY 2006, which was an 

increase over the FY 2005 amount of $390. The agency made 99% of its vendor 

payments electronically in FY 2006. 

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, 

2006, delinquent debt was $9.0 million, which was approximately three percent of 

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

approximately $6.6 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. 

Improper Payments Information Act (IPIA) Reporting 

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

2006 and it has processed 99% of its payments without error. The Commission 

found only 11 erroneous payments out of 6,909 total payments. 

Possible Future Effects of Existing Events and Conditions 

Certain hydroelectric licensees previously filed appeals on two basic grounds. 

First, some licensees contested that the Commission used flawed methodology to 

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

administering Part I of the FPA) component of the licensees’ annual charges. 

Second, some licensees disputed the dollar amount of the annual charges assessed 

by the Commission. The appeals dealing with prior year other agency costs were 

resolved as of FY 2006. However, as a result of the June 2006 notice on OFA 

costs and the subsequent FY 2006 bills, additional current appeals were filed. 

The combined liability of these annual charges appeals total approximately $4.7 

million as of September 30, 2006; this amount is included in the financial 

statements as revenue collected under protest. If the licensees ultimately prevail 

in their claims against the Commission, then the Commission might be obligated 

to grant legal or equitable relief to appellants. If the Commission loses any of 

these cases, it would be liable for the amount(s) of the judgment(s) rendered 

against it. However, the majority of the contingent liability is funded, while the 

remaining portion is considered immaterial and therefore poses no adverse or 

material future effect on the Commission’s financial position. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

35 

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. 
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FY 2006 Performance and Accountability Report 

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Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

37 

Financial 

Section 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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FY 2006 Performance and Accountability Report 

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KPMG LLP 

2001 M Street, NW 

Washington, DC 20036 

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

a member of KPMG International, a Swiss cooperative. 

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, 2006 and 2005, and the related statements of net cost, changes in net 

position, budgetary resources, financing, and custodial activity (herein after 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 (FY) 2006 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, 2006 and 2005, are presented fairly, in all material 

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

Our consideration of internal controls over financial reporting and performance measures would not 

necessarily disclose all matters in the internal control over financial reporting that might be material 

weaknesses as defined in the Internal Control Over Financial Reporting and the Internal Controls Over 

Performance Measures sections 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. 

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

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

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

Budget (OMB) Bulletin No. 06-03, 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. 

Opinion on the Financial Statements 

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

September 30, 2006 and 2005, and the related statements of net cost, changes in net position, budgetary 

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

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

financial position of the Commission as of September 30, 2006 and 2005, and its net costs, changes in net 
position, budgetary resources, reconciliation of net costs to budgetary obligations, and custodial activities,

for the years then ended, in conformity with U.S. generally accepted accounting principles. 

The information in the Management’s 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 a 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 internal control over financial reporting would not necessarily disclose all matters in 

the internal control over financial reporting that might be material weaknesses under standards issued by 

the American Institute of Certified Public Accountants. Material weaknesses are reportable conditions in 

which the design or operation of one or more of the internal control components does not reduce to a 

relatively low level the risk that misstatements caused by error or fraud in amounts that would be material 

in relation to the financial statements being audited, may occur and not be detected within a timely period 

by employees in the normal course of performing their assigned functions. Because of inherent limitations 

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

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

material weaknesses as defined above. 

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

letter dated November 7, 2006. 

Internal Controls Over Performance Measures 

Under OMB Bulletin No. 06-03, the definition of material weaknesses is extended to other controls as 

follows. Material weaknesses are reportable conditions in which the design or operation of one or more of 

the internal control components does not reduce to a relatively low level the risk that misstatements caused 

by error or fraud, in amounts that would be material in relation to a performance measure or aggregation of 

related performance measures, may occur and not be detected within a timely period by employees in the 

normal course of performing their assigned functions. Because of inherent limitations in internal control, 

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

Our consideration of the design and operation of the internal controls over the existence and completeness 

assertions related to key performance measures would not necessarily disclose all matters involving the 

internal control and its operation related to the design and operation of the internal control over the 

existence and completeness assertions related to key performance measures that might be reportable 

conditions. 

In our FY 2006 audit, we noted no matters involving the design and operation of the internal control over 

the existence and completeness assertions related to key performance measures that we considered to be 

material weaknesses as defined above. 
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. 06-03. 

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

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

of this report. 

Responsibilities 

Management’s Responsibilities 

Management is responsible for the financial statements, including: 

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

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

• Establishing and maintaining internal controls; 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 FY 2006 and FY 2005 financial statements of the 

Commission based on our audits. We conducted our audits in accordance with auditing standards generally 

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

Government Auditing Standards, and OMB Bulletin No. 06-03. Those standards and OMB Bulletin No. 

06-03 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 FY 2006 audit, we considered the Commission’s internal control over 

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

whether internal controls had been placed in operation, assessing control risk, and performing tests of 
controls in order to determine our auditing procedures for the purpose of expressing our opinion on the 

financial statements. We limited our internal control testing to those controls necessary to achieve the 

objectives described in Government Auditing Standards and OMB Bulletin No. 06-03. We did not test all 

internal controls relevant to operating objectives as broadly defined by the Federal Managers’ Financial 

Integrity Act of 1982. The objective of our audit was not to provide an opinion on the Commission’s 

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

As required by OMB Bulletin No. 06-03, in our FY 2006 audit, with respect to internal control related to 

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

and Analysis and Performance Report sections, we obtained an understanding of the design of 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 test and report 

on the internal control over key performance measures in accordance with OMB Bulletin No. 06-03. 

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 FY 2006 financial statements 

are free of material misstatement, we performed tests of the Commission’s compliance with certain 

provisions of laws, regulations, and contracts, noncompliance with which could have a direct and material 

effect on the determination of financial statement amounts, and certain provisions of other laws and 

regulations specified in OMB Bulletin No. 06-03, 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. 06-03 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. 

Restricted Use

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

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

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

specified parties. 

November 7, 2006 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

45 

2006 2005

Assets (note 3):

Intragovernmental assets:

Fund balances with Treasury (note 4) $ 62,235,809 $ 111,328,121 

Accounts receivable (note 5) 3,116,978 2,635,221 

Total intragovernmental assets 65,352,787 113,963,342 

Accounts receivable, net (note 5) 23,201,271 17,281,896 

Property and equipment, net (note 7) 9,584,790 9,343,478 

Other assets (note 6) 5,994 119,154 

Total assets $ 98,144,842 $ 140,707,870 

Liabilities:

Intragovernmental:

Accounts payable $ 2,651,245 $ 2,492,461 

Other (note 8):

Accrued payroll benefits 990,179 912,400 

Resources transferable to Treasury and other

Federal entities 21,314,038 14,898,128 

Miscellaneous receipts transferable to Treasury 1,765 8,102 

Workers' compensation payable (note 10) 493,190 539,555 

Total intragovernmental liabilities 25,450,417 18,850,646 

Accounts payable 10,828,696 6,916,645 

Other (note 8):

Accrued payroll and benefits 4,855,118 5,084,000 

Revenue collected under protest (note 12) 4,660,347 44,423,159 

Resources transferable to other entities from 

disgorged funds 20,435,812 34,147,570 

Refunds and other amounts due 7,411,636 1,629,764 

Accrued leave (note 10) 11,011,332 10,280,921 

Capital lease liability - 29,000 

Total liabilities $ 84,682,358 $ 121,332,705 

Commitments and contingencies (note 12)

Net position:

Unexpended appropriations - earmarked funds $ - $ - 

Unexpended appropriations - other funds 9,463,468 13,629,244 

Cumulative results of operations - earmarked funds - - 

Cumulative results of operations - other funds 3,999,016 5,745,921 

Total net position $ 13,462,484 $ 19,375,165 

Total liabilities and net position $ 98,144,841 $ 140,707,870 

The accompanying notes are an integral part of these statements

FEDERAL ENERGY REGULATORY COMMISSION

Balance Sheets

September 30, 2006 and 2005
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

46 

Program Costs: 2006 2005

 Regulation:

 Energy Infrastructure (note 15):

 Gross costs $ 174,498,313 $ 146,869,168 

 Less: Earned Revenue 174,520,854 146,859,935 

 Net Program Costs $ (22,541) $ 9,233 

 Competetive Markets (note 15):

 Gross costs $ 32,725,356 $ 44,041,530 

 Less: Earned Revenue 32,729,620 44,038,732 

 Net Program Costs $ (4,264) $ 2,798 

 Market Oversight (note 15):

 Gross costs $ 27,075,620 $ 32,012,348 

 Less: Earned Revenue 27,079,276 32,010,389 

 Net Program Costs $ (3,656) $ 1,959 

 Total (note 15):

 Gross costs $ 234,299,289 $ 222,923,046 

 Less: Earned Revenue 234,329,750 222,909,056 

Net Program Costs $ (30,461) $ 13,990 

The accompanying notes are an integral part of these statements

FEDERAL ENERGY REGULATORY COMMISSION

Statements of Net Cost

For the Years Ended September 30, 2006 and 2005
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

47 

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Changes in Net Position

For the Years Ended September 30, 2006 and 2005

2006 2005

Cumulative Results of Operations:

Beginning balances $ 5,745,921 $ 4,496,053

 Adjustments:

(a) Changes in accounting principles (+/-) - - 

(b) Correction of errors (+/-) - - 

 Beginning balances, as adjusted 5,745,921 4,496,053

Budgetary financing sources:

Appropriations received - - 

Appropriations used 224,565,776 213,852,949

Unexpended appropriation – adjustment - - 

Other financing sources:

Transfers – out to Treasury without reimbursement (236,767,551) (223,758,624)

Imputed financing from costs absorbed by others (note 11) 10,424,409 11,169,533

Total financing sources (1,777,366) 1,263,858

Net cost of operations 30,461 (13,990)

Net Change (1,746,905) 1,249,868

Cumulative Results of Operations $ 3,999,016 $ 5,745,921

Unexpended Appropriations:

Beginning balances $ 13,629,244 $ 17,482,193 Adjustments:

(a) Changes in accounting principles (+/-) - - 

(b) Correction of errors (+/-) - - Beginning balances, as adjusted 13,629,244 17,482,193

Budgetary financing sources:

Appropriations received 220,400,000 210,000,000

Appropriations used (224,565,776) (213,852,949)

Other Adjustments - - 

 Total budgetary financing sources (4,165,776) (3,852,949)

Total Unexpended Appropriations $ 9,463,468 $ 13,629,244

Net Position $ 13,462,484 $ 19,375,165

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

FY 2006 Performance and Accountability Report 

48 

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Budgetary Resources

For the Years Ended September 30, 2006 and 2005

2006 2005

Budgetary Resources:

1. Unobligated balance, beginning of period $ 8,961,795 $ 6,248,461 

2. Recoveries of prior year unpaid obligations 55,181 - 

3. Budgetary authority

3A. Appropriation 3,023,934 2,968,924 

3B. Borrowing Authority - - 

3C. Contract authority - - 

3D.

3D1. Earned

3D1a . Collected 220,444,346 210,025,317 

3D1b . Change in receivables from Federal sources - - 

3D2. Change in unfilled customer orders

3D2a . Advance received - - 

3D2b . Without advance from Federal Sources (91,949) 38,112 

3D3. Anticpated for rest of year, without advances - - 

3D4. Previously unavailable - - 

3D5. Expenditure transfers from trust funds - - 

3E. Subtotal 223,376,331 213,032,353 

4. Nonexpenditure transfers, net, anticipated and actual - - 

5. Temporarily not available pursuat to Public law - - 

6. Permanently not available - - 

7. Total Budgetary Resources $ 232,393,307 $ 219,280,814

Status of Budgetary Resources:

8. Obligations incurred

8A. Direct $ 226,609,667 $ 210,292,373 

8B. Reimbursable 34,708 26,646 

8C. Subtotal (note 16) 226,644,375 210,319,019 

9. Unobligated balances available and apportioned

9A. Apportioned 5,748,932 8,960,483 

9B. Exempt from apportionment - - 

9C. Subtotal 5,748,932 8,960,483 

10. Unobligated balance not available - 1,312 

Total status of budgetary resources $ 232,393,307 $ 219,280,814 

Spending authority from offsetting collections
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

49 

Change in Obligated Balance:

12. Obligated balance, net

12A. Unpaid obligations, brought forward, October 1 $ 20,208,438 $ 25,261,839

12B. Less: Uncollected customer payments from

 Federal sources, brought forward, October 1 (138,252) (100,140) 

12C. Total unpaid obligated balance, net 20,070,186 25,161,699 

13. Obligations incurred, net 226,644,375 210,319,019 

14. Less: Gross outlays (223,623,450) (215,372,420) 

15. Obligated balance transferred, net

15A. Actual transfers, unpaid obligations (+/-) - - 

15B. Actual transfers,uncollected customer payments - - 

 from Federal sources (+/-)

15C. Total Unpaid obligated balance transferred, net - - 

16. Less: Recoveries of prior year unpaid

 obligations, actual (55,181) - 

17. Change in uncollected customer payments

 from Federal sources 91,949 (38,112) 

18. Obligations balance, net, end of period

18A. Unpaid obligations 23,174,182 20,208,438 

18B. Less: Uncollected customer payments from

 from Federal sources (46,303) (138,252) 

18C. Total, unpaid obligated balance, net,

 end of period $ 23,127,879 $ 20,070,186 

Net Outlays:

19. Net Outlays:

19A. Gross outlays $ 223,623,450 $ 215,372,420 

19B. Less: Offsetting collections (220,444,346) (210,025,317) 

19C. Less: Distributed Offsetting Collections (54,362,118) (14,595,982) 

19D. Net Outlays $ (51,183,014) $ (9,248,879) 

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

FY 2006 Performance and Accountability Report 

50 

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Financing

For the Years Ended September 30, 2006 and 2005

2006 2005

Resources used to finance activities:

Budgetary resources obligated:

Obligations incurred $ 226,644,375 $ 210,319,019 

Less: spending authority from offsetting collections and recoveries (220,407,578) (210,063,429) 

Obligations, net of offsetting collections 6,236,797 255,590 

Less: offsetting receipts (54,362,118) (14,595,982) 

Net obligations (48,125,321) (14,340,392) 

Other resources:

Transfers-out, net of appropriations received (16,367,551) (13,758,625) 

Imputed financing from costs absorbed by others (note 11) 10,424,409 11,169,533 

Net other resources used to finance activities (5,943,142) (2,589,092) 

Total resources used to finance activities (54,068,463) (16,929,484) 

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 903,687 6,533,364 

Resources that fund expenses recognized in prior periods (46,364) 198,506 

Budgetary offsetting receipts that do not affect the net

cost of operations 54,362,118 14,595,982 

Resources that finance the acquisition of assets (3,244,509) (3,697,908) 

Payments to States (3,023,934) (2,968,924) 

 Total resources used to finance items not part of the net cost of operations 48,950,998 14,661,021 

 Total resources used to finance the net cost of operations (5,117,465) (2,268,463) 

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 (note 19) 730,411 - 

Refund due to regulated entities 1,356,389 - 

Total components of net cost of operations that will require or 2,086,800 - 

 generate resources

Components not requiring or generating resources:

Depreciation and amortization 2,991,774 2,627,684 

Other (345,231) 8,431 

Total components of net cost of operations that will not require or

 generate resources 3,000,205 2,282,453 

Total net cost of operations that do not require or generate resources in

 the current period 5,087,005 2,282,453 

Net cost of operations $ (30,461) $ 13,990 

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

FY 2006 Performance and Accountability Report 

51 

 FEDERAL ENERGY REGULATORY COMMISSION

Statements of Custodial Activity

For the Years Ended September 30, 2006 and 2005

2006 2005

Sources of collections (note 13):

Cash Collections - annual charges $ 44,609,120 $ 53,436,050 

Accrual adjustment 1,201,267 (8,076,985) 

Total custodial revenue 45,810,387 45,359,065 

Disposition of collections:

Transferred to others:

United States Army – Corps of Engineers (7,609,937) (4,926,352) 

Department of Interior (6,355,362) (4,685,479) 

United States Treasury (33,304,005) (27,121,021) 

Various states (3,023,934) (2,968,979) 

Decrease (increase) in amounts to be transferred (1,700,133) 525,750 

Net custodial activities $ - $ - 

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

FY 2006 Performance and Accountability Report 

52 

FEDERAL ENERGY REGULATORY COMMISSION

Notes to Financial Statements 

For the Years Ended September 30, 2006 and 2005 

(1) Description of Reporting Entity 

The Federal Energy Regulatory Commission (the Commission) is an independent Federal agency that 

oversees key operating functions of the United States’ natural gas and oil pipeline transportation, 

electric utility and hydroelectric power industries. 

The Commission was created through the Department of Energy’s (DOE) Organization Act on 

October 1, 1977. The Commission’s predecessor, the Federal Power Commission (FPC), established in 

1920, was abolished, and the Commission inherited a significant portion of FPC’s energy agenda. 

The Commission administers laws and regulations involving key energy issues. These include 

transportation and sale of natural gas and oil in interstate commerce; regulation of electric utility 

wholesale rates and transactions; licensing and inspection of private, municipal, and state hydroelectric 

projects; and oversight of related environmental matters. 

The Commission’s main legal authority is derived from the Federal Power Act of 1935 (FPA), the 

Natural Gas Act of 1938, the Natural Gas Policy Act of 1978, and the Public Utility Regulatory 

Policies Act of 1978. 

The 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 

The Commission’s overall objective is to encourage investment in the infrastructure needed to 

sustain energy markets by removing roadblocks, providing cost recovery clarity and welcoming 

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

segment covers many of the Commission’s important traditional activities, for example, pipeline 

certificates, hydropower licenses and preliminary permits, compliance activities, environmental 

and other licensing conditions, dam safety inspections and most rate determinations. 

Competitive Markets 

Another Commission objective is to complete the transition to competitive energy markets as 

quickly and comprehensively as possible. This requires the growth of certain new institutions, 

particularly clearly defined and independent regional transmission organizations (RTOs), to 

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

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

standardize reliability and business practice standards, promote the use of demand-side 

participation in energy markets, and establish regional transmission planning. Along with some 

traditional work in the area of rate determinations, this segment includes work on initiatives 

begun in the last couple of years such as RTOs and new policies for natural gas. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

53 

Market Oversight 

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

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

that the Commission will identify and remedy energy market problems to maintain just and 

reasonable rates. At the systemic level, the Commission needs to recognize problems when or 

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

individual behavior in markets much more effectively than in the past. Work in this segment 

includes activities related to litigation, dispute resolution, complaints, mergers, and auditing. 

Cost Recovery 

As described below, the Commission recovers 100% of its annual appropriation from the U.S. Treasury 

(the Treasury) through annual charges and filing fees authorized by the Omnibus Budget Reconciliation 

Act of 1986 and other laws. 

Annual Charges 

The Commission recovers most of its administrative program costs through allocated annual charges to 

the entities it regulates, regardless of the number or type of services rendered to any particular entity 

during the year. The annual charge assessed in a fiscal year is based on an estimate of costs to be 

incurred during that year. Final program costs are determined from year-end accounting reports and 

time distribution reports by office and program. The difference in assessments that results from 

estimated versus final program costs is an adjustment to the following fiscal year’s assessments. The 

authority and related implementation methods for the annual changes are summarized as follows: 

Hydropower 

Authority – Section 10(e) of FPA makes the general provision that licensees under Part I of FPA 

shall pay reasonable annual charges to compensate the federal government for the costs of 

administering Part I. 

Implementation – The methods for assessing annual charges to hydropower licensees are codified 

at 18 Code of Federal Regulations (C.F.R.) Part 11. Costs are prorated based on capacity 

(municipal projects), on capacity and generation (nonmunicipal projects), or on a flat rate per 

horsepower under 1,000 (minor projects). 

Gas, Electric, and Oil 

Authority – Section 3401 of the Omnibus Budget Reconciliation Act of 1986 provides that the 

Commission shall “assess and collect fees and annual charges in any fiscal year in amounts equal 

to all of the costs incurred by the Commission in that fiscal year.” It further provides that “fees or 

annual charges assessed shall be computed on the basis of methods that the Commission 

determines, by rule, to be fair and equitable.” 

Implementation – The methods for assessing annual charges to gas and oil pipelines and to 

electric utilities and power marketing administrations are codified at 18 C.F.R. 

Parts 382.201-203. Costs are prorated to gas pipelines based on volume transported and sold, to 

electric utilities and power marketing administrations based on energy sold, and to oil pipelines 

based on operating revenues. 
Federal Energy Regulatory Commission 

FY 2006 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: 

• Identify the service for which the fee is to be assessed; 

• Explain why that particular service benefits an identifiable recipient more than it benefits the 

general public; 

• Base the fee on as small a category of service as possible; and 

• Demonstrate what direct and indirect costs are incurred by the Commission in rendering the 

service. 

Section 3401 of the Omnibus Budget Reconciliation Act of 1986 also provides for fees and annual 

charges “computed on the basis of methods that the Commission determines, by rule, to be fair and 

equitable.” 

(2) Summary of Significant Accounting Policies 

(a) Basis of Presentation 

The accompanying financial statements have been prepared to report the financial position of the 

Commission and its net costs, changes in net position, budgetary resources, reconciliation of net 

costs to budgetary obligations, and custodial activity in accordance with accounting principles 

generally accepted in the United States of America applicable to federal government entities. 

These financial statements have also been prepared in accordance with the form and content for 

financial statements specified by Office of Management and Budget (OMB) Circular No. A-136, 

Financial Reporting Requirements.

The financial statements include all activity related to the Commission’s portion of appropriation 

(89X0212), including the budget authority allotted by DOE to other DOE agencies. In addition, 

the Commission receives small allotments from DOE appropriation (89X5105). Both of the 

Commission’s appropriations relate to budget functional classification code 276, Energy 

Information Policy and Regulation. 

Entity assets disclosed in notes 3 and 5 include those assets that the Commission has the 

authority to use in its operations. 

Non-entity assets disclosed in notes 3 and 5 include those assets that result from the 

Commission’s custodial billing activities for other federal agencies, including the United States 

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

Department of Interior. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

55 

(b) Budgets and Budgetary Accounting 

Congress annually adopts a budget appropriation that provides the Commission with authority to 

use funds from the Treasury to meet its operating and capital expenditure requirements. The 

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

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

(c) Basis of Accounting 

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

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

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

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

facilitate compliance with legal constraints and to monitor its budget authority at the various 

stages of execution, including allotment, obligation, and eventual outlay. 

(d) Revenue and Financing Sources 

As described above, the Commission receives funds for its operating and capital expenditures 

through an appropriation allotment from DOE. For financial statement purposes, the 

appropriation allotment is recognized as a financing source when operating expenses (primarily 

salaries and benefits), other than depreciation, are incurred and when capital assets are purchased. 

The Commission recognizes revenue for hydropower, gas, oil, and electric annual charges when 

earned. Annual charges are based on estimated current year program costs and adjustments from 

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

accurately reflect the amount to be billed or credited to regulated entities based on the difference 

between the charges and the actual program costs for the year. The Commission adjusts the 

subsequent year’s charge for such amount. Revenue is recognized for filing fees when received. 

The Commission recognizes an imputed financing source for the estimated annual pension and 

life and health insurance costs in excess of contributions made by the Commission during the 

year. These costs will ultimately be funded by the Office of Personnel Management. 

Reimbursable work agreement revenue is recognized when the related services are rendered. 

Transfers-out represent receipts collected and remitted to the Treasury during the year and net 

accounts receivable that, once collected, will be returned to the Treasury, less any amounts due to 

regulated entities for the excess of estimated and billed costs over actual costs incurred. 

(e) Fund Balance with Treasury 

The Commission does not maintain cash in commercial bank accounts. Cash receipts and 

disbursements are processed by the Treasury. The balance of funds with the Treasury represents 

appropriated funds that are available to pay current liabilities and finance authorized purchase 

commitments relative to goods or services that have not been received and monies held in 

suspense until final disposition is determined. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

56 

(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 and equipment purchases with a cost greater than $25,000 and a total useful 

life exceeding two years. The Commission capitalizes commercially purchased or internally 

developed software with a cost greater than $100,000 and a total useful life exceeding two years. 

Depreciation and amortization 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. No amortization is calculated 

on internally developed software prior to system acceptance. 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) Collections Due to States 

The Commission disburses 50% of the fees it collects from licensees for the occupancy and use 

of public lands to affected states in the year following collection. These collections are initially 

deposited into the Treasury’s miscellaneous receipts fund. In accordance with the Federal 

Accounting Standards Advisory Board’s Statement of Federal Financial Accounting Standards 

No. 27, the Commission is required to report separately on the Balance Sheet and Statement 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. 

(k) Accrued Leave 

Annual leave is accrued as a liability as it is earned. The accrual is reduced as leave is taken. 

Each year, the balance in the accrued annual leave account is adjusted to reflect current year pay 

rates. To the extent that the current or prior year appropriations are not available to fund annual 

leave earned but not taken, funding will be obtained from future appropriations. Sick leave and 

other types of nonvested leave are charged to expense as the leave is used. 

(l) Workers’ Compensation Payable 

The Federal Employees Compensation Act (FECA) provides income and medical cost protection 

to cover federal civilian employees injured on the job, employees who have incurred a workrelated occupational disease and beneficiaries of employees whose death is attributable to a jobrelated injury or occupational disease. Claims incurred for benefits for the Commission’s 

employees under FECA are administered by the United States Department of Labor (DOL) and 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

57 

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

from DOL that are unpaid at year-end. An actuarial estimate of unbilled claims is recorded by 

DOE at the departmental level and was not separately calculated for the Commission. 

(m) Disgorged Funds 

The Commission seeks to detect abuses of market power or statutory or rule violations by 

investigating observed market anomalies, complaints, and referrals from regional transmission 

organizations and/or independent system operators, and by conducting both targeted and random 

audits. Once the Commission identifies violations, it applies remedies to mitigate the effects of 

market power, requires disgorgement of unjust profits where appropriate, and imposes civil 

penalties or other sanctions when available under existing laws. The Commission records 

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

(n) Net Position Accounts 

Net position account balances consist of the following components: 

Unexpended appropriations – Represents amounts of spending authority that are unobligated 

and available to the Commission, or obligated but not expended. 

Cumulative results of operations – Represents the Commission’s net results of operations 

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

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

less accumulated depreciation, and (3) the amount of appropriated funding that will be 

needed in future periods to liquidate liabilities incurred through the current fiscal year. 

Funding for these items is generally received in the year that amounts become due and 

payable. 

(o) Tax Status 

The Commission, as a Federal agency, is not subject to Federal, state, or local income taxes, and 

accordingly, no provision for income tax is recorded. 

(p) Use of Estimates 

The preparation of financial statements in conformity with accounting principles generally 

accepted in the United States of America requires management to make estimates and 

assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 

assets and liabilities at the date of the financial statements, and the reported amounts of revenues 

and expenses during the reporting period. Actual results could differ from these estimates. 

(q) Distributed Offsetting Receipts 

Based on new Treasury guidance in FY 2006 requiring miscellaneous receipts to be reported as 

distributed offsetting receipts on the Statement of Budgetary Resources, the Commission 

reported receipts related to civil penalties, penalty, interest, administrative charges, lands, dams 

and other agency costs on both the statements of Custodial Activity and Budgetary Resources. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

58 

(r) Changes in Presentation 

Certain FY 2005 amounts have been reclassified to conform to the FY 2006 presentation 

requirements prescribed by OMB Circular No. A-136. 

(3) Non-Entity Assets 

Non-entity assets at September 30, 2006 and 2005 consisted of: 

(4) Fund Balance with Treasury 

Fund balances with Treasury at September 30, 2006 and 2005 consisted of: 

2006 2005

Fund Balances:

 Appropriated funds $ 28,876,812 $ 29,031,982 

 Revenue collected under protest 4,660,347 44,423,159 

 Disgorged funds 15,418,720 29,130,478 

 Miscellaneous receipts held in suspense 6,055,247 1,511,426 

 Special Receipts fund 7,222,919 7,222,919 

 Other 1,765 8,157 

 Total $ 62,235,809 $ 111,328,121 

Status of Fund Balance with Treasury

 Unobligated Balance:

 Available $ 5,748,933 $ 8,961,795 

 Unavailable 33,358,997 82,296,139 

 Obligated Balance not yet disbursed 23,127,879 20,070,187 

 Total $ 62,235,809 $ 111,328,121 

2006 2005

Intragovernmental:

 Accounts receivable $ 3,082,821 $ 2,590,005 

 Fund balances with Treasury:

 Collections due to states - 55 

 Revenue collected under protest 4,660,347 44,423,159 

 Disgorged funds 15,418,720 29,130,478 

 Miscellaneous receipts held in suspense 6,055,247 1,511,426 

 Special Receipts fund 7,222,919 7,222,919 

 Other 1,765 8,102 

Total Intragovernmental 36,441,819 84,886,144 

Accounts receivable, net 14,233,076 13,610,269 

 Total non-entity Assets 50,674,895 98,496,413 

Total entity assets 47,469,947 42,211,457 

 Total assets $ 98,144,842 $ 140,707,870 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

59 

(5) Accounts Receivable, net 

Entity and nonentity accounts receivable at September 30, 2006 and 2005 consisted of: 

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 

Nonentity

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 

2005

Annual Charges Other Total

Entity

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

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

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

 Total entity accounts receivable, net 3,661,479 55,364 3,716,843 

Nonentity

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

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

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

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

 Total accounts receivable, net $ 14,474,960 $ 5,442,157 $ 19,917,117 

(6) Other Assets 

Other assets at September 30, 2006 and 2005 consisted of: 

2006 2005

Due from regulated entities $ - $ 94,687 

Advances to others 5,994 24,467 

 Total other assets $ 5,994 $ 119,154 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

60 

(7) Property and Equipment, Net 

Property and equipment and related accumulated depreciation at September 30, 2006 and 2005 

consisted of: 

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 

ADP software 16,346,302 12,803,902 3,542,400 

Internal software developed 1,144,836 - 1,144,836 

Capital assets 29,000 - 29,000 

 Total Property and Equipment, Net $ 40,843,048 $ 31,258,258 $ 9,584,790

2005

Acquisition Accumulated

Amount depreciation Net

Equipment $ 5,346,314 $ 4,222,437 $ 1,123,877

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

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

ADP software 14,589,357 11,293,174 3,296,183

 Total Property and Equipment, Net $ 38,497,859 $ 29,154,381 $ 9,343,478

The $29,000 capital asset refers to a lease of a vehicle acquired by the Commission in FY 2006. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

61 

 (8) Other Liabilities 

Other liabilities at September 30, 2006 and 2005 consisted of: 

2006

Non-Current Current Total

Intragovernmental

 Accrued payroll and benefits $ - $ 990,179 $ 990,179 

 Resources transferable to Treasury and other Federal - 21,314,038 21,314,038 

 entities

 Miscellaneous receipts transferable to Treasury - 1,765 1,765 

 Workers' compensation payable 221,515 271,675 493,190 

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 - 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 

2005

Non-Current Current Total

Intergovernmental

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

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

 entities

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

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

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

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

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

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

Refunds and other amounts due - 1,629,764 1,629,764 

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

 Total other liablities $ 78,842,404 $ 33,081,195 $ 111,923,599 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

62 

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

forwarded to Treasury upon receipt. 

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

protesting entities once the protest is resolved. 

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

overpayments of prior billings. 

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

disbursed to specific entities in the future. 

 (9) Building Lease 

The General Services Administration (GSA) enters into lease agreements for government buildings and 

maintains those lease agreements. The Commission pays GSA a standard level users charge for the 

annual rental of building space, of which Commission Headquarters is in Washington, DC and several 

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

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

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

notice to vacate. Expenses incurred for building leases amounted to $20.5 million and $19.7 million 

for fiscal years ended September 30, 2006 and 2005, respectively. 

Real Property Operating Leases

Fiscal Year GSA Non-GSA Total

FY 2007 $ 21,184,268 $ - $ 21,184,268 

FY 2008 21,730,930 - 21,730,930 

FY 2009 22,297,296 - 22,297,296 

FY 2010 23,096,344 - 23,096,344 

FY 2011 23,630,143 - 23,630,143 

Beyond FY 2011 106,514,752 - 106,514,752 

Total future minimum lease payments $ 218,453,733 $ - $ 218,453,733 

 (10) Liabilities Not Covered by Budgetary Resources 

Liabilities not covered by budgetary resources at September 30, 2006 and 2005 consisted of: 

2006 2005

Intragovernmental

 Worker's compensation payable $ 493,190 $ 539,555

Total intragovernmental 493,190 539,555 

 Accrued leave 11,011,332 10,280,921 

Total liabilities not covered by budgetary resources $ 11,504,522 $ 10,820,476 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

63 

(11) Pension Expense

Commission employees participate in either the Civil Service Retirement System (CSRS) or the Federal 

Employees’ Retirement System (FERS). Employees participating in CSRS contribute 7% of their basic 

pay to the plan, and the Commission makes a matching contribution. For employees participating in 

the FERS program, the Commission makes a contribution of 10.7% of basic pay. 

On January 1, 1987, FERS went into effect pursuant to Public Law 99-335. Most employees hired after 

December 31, 1983, are automatically covered by FERS and Social Security. Employees hired prior to 

January 1, 1984, could elect either to join FERS and Social Security or remain in CSRS. FERS offers a 

savings plan in which the Commission automatically contributes 1% of employees’ basic pay and 

matches any employee contribution up to an additional 4% of basic pay. For most employees hired 

since December 31, 1983, the Commission also contributes the employer’s matching share for Social 

Security. 

The actuarial present value of accumulated benefits, assets available for benefits, and unfunded pension 

liability of CSRS and FERS is not allocated to individual departments and agencies and is, therefore, 

not disclosed by the Commission. Total pension expense paid by the Commission for both plans for 

fiscal years 2006 and 2005 was approximately $11.3 million and $14.3 million, respectively as of 

September 30. During fiscal years 2006 and 2005 as of September 30, an additional $10.4 million and 

$11.2 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 

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

that the Commission used flawed methodology to calculate the “other agency costs” (costs incurred 

by other federal agencies in administering Part I of the FPA) component of the licensees’ annual 

charges. Second, some licensees disputed the dollar amount of the annual charges assessed by the 

Commission. The combined amount of these appeals as of September 30, 2005 was $44.4 million 

and is included in the financial statements as revenue collected under protest. The appeals dealing 

with prior year other agency costs were resolved as of FY 2006. 

As a result of the June 2006 notice on OFA costs and the subsequent FY 2006 bills, additional 

current appeals were filed. The liability of these annual charges appeals total approximately $4.7 

million as of September 30, 2006 and is included in the financial statements as revenue collected 

under protest. Additionally, there is a prior year annual charge assessment currently being disputed 

that is not funded by the amounts held in protest with a reasonably possible chance of success 

against the Commission. The monetary amount of the dispute is approximately $330,000. If the 

licensees ultimately prevail in their claims against the Commission, then the Commission might be 

obligated to grant legal or equitable relief to appellants. If the Commission loses any of these 

cases, it would be liable for the amount(s) of the judgment(s) rendered against it. However, the 

majority of the contingent liability is funded. 

In addition, the Commission has two Freedom of Information Act cases pending in the United States 

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

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

Commission has two Equal Employment Opportunity (EEO) Commission cases pending where the 

claimant’s likelihood of success is reasonably possible. One claimant is seeking $300,000 in monetary 

relief plus attorney fees, while the amount of monetary relief from the other claimant is unknown. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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(13) Custodial Activity 

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

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

Reclamation, and Treasury. The accrual basis of accounting is used to account for custodial activity. 

The receivables are maintained by the Commission, and the collections are processed directly to each 

Federal agency on a monthly basis. In addition to the annual charges billed yearly, penalty and 

administrative costs are assessed on past-due bills and remitted to the Treasury when received. For 

fiscal years 2006 and 2005, these custodial transactions totaled approximately $45.8 million and $45.4 

million, respectively as of September 30. 

(14) Earmarked Funds 

 

In accordance with the Federal Accounting Standards Advisory Board’s Statement of Federal 

Financial Accounting Standards 27, the Commission is required to report separately on the Balance 

Sheet and Statement 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. 

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, 2006. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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(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 and seller 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 as of September 30, 2006 and 2005 consisted of:

Regulation 2006 2005

Energy Infrastructure:

 Intragovernmental Costs $ 36,730,749 $ 39,199,121 

 Public Costs 137,767,564 107,670,047 

Total Energy Infrastructure Costs 174,498,313 146,869,168 

 

 Intragovernmental Earned Revenue 58,092 34,257 

 Public Earned Revenue 174,462,762 146,825,678 

Total Energy Infrastructure Earned Revenue 174,520,854 146,859,935 

Competitive Markets

 Intragovernmental Costs 7,445,422 11,757,356 

 Public Costs 25,279,934 32,284,174 

Total Competitive Markets Costs 32,725,356 44,041,530 

 

 Intragovernmental Earned Revenue 11,775 10,275 

 Public Earned Revenue 32,717,845 44,028,457 

Total Competitive Markets Earned Revenue 32,729,620 44,038,732 

Market Oversight

 Intragovernmental Costs 5,459,976 8,544,314 

 Public Costs 21,615,644 23,468,034 

Total Market Oversight Costs 27,075,620 32,012,348 

 

 Intragovernmental Earned Revenue 8,635 7,467 

 Public Earned Revenue 27,070,641 32,002,922 

Total Market Oversight Earned Revenue $ 27,079,276 $ 32,010,389 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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(16) Apportionment Categories of Obligations Incurred 

Apportionment categories of obligations incurred as of September 30, 2006 and 2005 consisted of: 

2006 2005

Category A:

 Direct $ 226,609,667 $ 210,292,373 

 Reimbursable 34,708 26,646 

Total obligations incurred $ 226,644,375 $ 210,319,019 

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, 2005. 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, 2006 is not presented, because the submission of the FY 2008 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 2007. 

(18) Undelivered Orders at the End of the Period 

The amount of budgetary resources obligated by the Commission for undelivered orders as of 

September 30, 2006 was $ 3,825,937. The amount of budgetary resources obligated by the 

Commission for undelivered orders as of September 30, 2005 was $ 4,802,932. 

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

Components Requiring or Generating Resources in Future Periods

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

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

not covered by budgetary resources. These liabilities totaling $11.5 million and $10.8 million on 

September 30, 2006 and 2005, respectively, are discussed in Note 10, Liabilities Not Covered by 

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

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

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

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

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

changes in liabilities not covered by budgetary resources are comprised of the following: 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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Fiscal years ended September 30, 2006 and 2005:

2006 2005

Components of net cost of operations requiring or generating

 resources in future periods:

 Increase in Accrued Annual Leave Liability $ 730,411 $ - 

 Increase in Refund due to regulated entities 1,356,389 - 

Total components of net cost of operations requiring or 

 generating resources in future periods $ 2,086,800 $- 
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Performance 

Report 

(Unaudited) 
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Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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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 No. A-11, the Commission: 

• determined that its performance results are complete and reliable based on the 

fact that results are listed for every performance measure and target, that 

decision-makers use the information contained in the results “on an ongoing 

basis in the normal course of their duties,” and that the information contained 

in the results are derived via internal tracking mechanisms. 

• identified no “significant or material” performance shortfalls based on the fact 

that none of the Commission’s unmet performance measures or targets had an 

adverse effect on overall program performance. 

In addition to the FY 2006 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 2003 

through 2007. 

The Performance Measures for fiscal years 2003 through 2006 are aligned with 

the Commission’s former Strategic Plan. The FY 2007 Performance Measures 

are aligned with the Commission’s updated Strategic Plan which was submitted to 

Congress on September 29, 2006. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

72 

Performance Measurement Data for Energy Infrastructure

FY 2003 

Performance Measurement Performance Target Result 

Percentage of natural gas pipelines with 

approved Order No. 637 compliance 

filings 

100% of pipelines subject to Order No. 

637 

By the end of FY 2003, the Commission 

issued orders approving and establishing 

effective dates for 92 out of a total 94 

(98%) pending Order No. 637 compliance 

filings. The two pipeline filings that were 

not completed were Northern Natural Gas 

Pipeline Company, Docket No. RP00-

404, and El Paso Natural Gas Co., 

Docket No. RP00-336. The Northern 

Natural Order is scheduled for the 

October 22, 2003 Commission agenda. 

Action on the Order No. 637 compliance 

issues in El Paso are delayed pending 

resolution of pre-existing capacity 

allocation issues. Those allocation 

issues need to be resolved before the 

Commission can move forward on the 

Order No. 637 compliance issues. 

Statutory cases by workload category All cases competed by statutory action 

date 

Of the nearly 3,000 statutory items whose 

due date fell in FY 2003, 99.7% were 

completed by the statutory action date. 

Merger and qualifying facilities (QF) 

workload (regulatory cases) 

80% of cases completed by regulatory 

deadline 

Approximately 325 QF filings were 

received in FY 2003. Of these 325, 9 

filings were applications for Commission 

QF certification or re-certification. The 

Commission completed 100% of the 

applications for certification or recertification within 90 days specified in 

the Commission’s regulations (18 C.F.R. 

§ 202.207(b) (3) (2003)). Orders were 

issued in response to all 9 applications, 3 

of which were issued pursuant to 

delegated authority and 6 of which were 

Commission issued orders. No merger 

applications were received in FY 2003. 

Number of cases requiring additional 

remedial action 

Less than 20% of all cases processed in 

FY 2003 require additional remedial 

action 

The Commission received no merger 

applications in FY 2003; therefore, we 

have no results to report for this 

performance measure. 

Implement generic policy on Large 

Generator Interconnections and Small 

Generator Interconnections 

Issue final rules on both policies in FY 

2003 

The Large Generator Interconnection 

final rule was issued on July 24, 2003, 

and became effective on October 20, 

2003. The Small Generator Notice of 

Proposed Rulemaking was also issued 

on July 24, 2003. The final rule will be 

issued in FY 2004. 

Percentage of pipeline certificate cases 

completed in specified time frames 

85% of cases completed within the 

following time frames: 

3⁄4 unprotested cases that involve no 

precedential issues, 159 days 

3⁄4 protested cases that involve no 

precedential issues, 304 days 

3⁄4 cases of first impression or containing 

larger policy implications, 365 days 

3⁄4 cases requiring a major environmental 

assessment or environmental impact 

statement, 480 days 

3⁄4 148 days for Category 1 

3⁄4 193 days for Category 2 

3⁄4 272 days for Category 3 

3⁄4 469 days for Category 4 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

73 

FY 2003 

Performance Measurement Performance Target Result 

Timely processing of filings seeking 

recovery of security and safety expenses 

in jurisdictional rates 

Process filings: 

3⁄4 within 30 days for gas and oil rate 

filings 

3⁄4 within 60 days for electric filings 

The following filings were acted on in FY 

2003: 

RP02-129-000, Southern LNG

Filed: December 21, 2001 

Order Issued: January 31, 2002 

(Suspension order setting case for 

hearing) 

Case settled: Letter order issued 

October 10, 2002, accepting a settlement 

and closing out the case. 

Target: While this case was not acted on 

within 30 days, action did meet our 

statutory guidelines as we acted prior to 

the proposed effective date of February 

1, 2002. The suspension order was 

dated January 31, 2002; the case was 

settled in early FY 2003. 

IS03-457, Plantation Pipe Line Co.

Filed: July 31, 2003 

Order Issued: August 29, 2003 

Target: Met 

IS03-475, West Shore Pipe Line Co.

Filed: August 12, 2003 

Order Issued: September 30, 2003 

Target: While this case was not acted on 

within the 30-day target, it met our 

statutory guidelines as we acted prior to 

the proposed effective date of October 1, 

2003. 

Percentage of filings addressing the 

development of increased hydropower 

capacity 

25% of all relicense cases using ALP 

29% of licenses issued based on the 

collaborative process resulted in an 

increase in capacity. 

Increase non-federal hydropower 

capacity 

Complete license amendments proposing 

increased capacity/generation in less 

than 12 months 

5 amendments authorizing an increase in 

capacity were processed in less than 8 

months. 

Percentage of hydropower licenses 

approved within specified time frames 

75% of licenses approved within the 

following time frames: 

3⁄4 ALP median case, less than 16 months 

3⁄4 Traditional median case, less than 43 

months 

3⁄4 100% of the ALP, or collaboratively 

prepared license applications, were 

completed within 15 months when 

external factors (i.e., water quality 

certificate, Coastal Zone Management 

reviews) did not delay processing. Of the 

pending cases in which collaboratively 

prepared amendments to license 

applications were filed and were not 

delayed by external factors, 80% were 

completed within 16 months after receipt 

of the settlement. 

3⁄4 For traditionally prepared license 

applications for which no external factors 

contributed to the delay, 77% of the 

cases were processed in less than 43 

months. 

Inspect each major onshore pipeline 

project at least once every four weeks 

during ongoing construction activity 

100% of qualifying projects inspected per 

established schedule 

All 7 major onshore pipeline projects 

were inspected at least once every 4 

weeks during ongoing construction 

activity. 

Increase the percentage of hydropower 

licenses issued using ALP 2% increase over FY 2002 13% increase over FY 2002 

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

FY 2006 Performance and Accountability Report 

74 

FY 2003 

Performance Measurement Performance Target Result 

Percentage of high- and significanthazard-potential dams meeting all current 

structural safety standards 

Percentage of high- and significanthazard-potential dams meeting all current 

structural safety standards remains 

uniformly high 

95% of high- and significant-hazardpotential dams met all current structural 

safety standards 

Percentage of high- and significanthazard-potential dams in compliance with 

EAP requirements 

100% of qualifying dams in compliance 

with EAP requirements 

100% of qualifying dams were in 

compliance with EAP requirements 

Conduct 5 site visits 

Conducted 5 site visits and evaluated the 

effectiveness of the targeted 

environmental mitigation measures. 

Hold 2 regional meetings with 

stakeholders 

Held 3 regional outreach meetings with 

stakeholders, i.e., 2 shoreline 

management outreach meetings in 

Wisconsin and South Carolina, and a 

water quality mitigation effectiveness 

outreach meeting in New York. 

Evaluate and improve the effectiveness 

of required environmental enhancement 

and mitigation measures in hydropower 

licenses 

Disseminate 2 environmental 

effectiveness reports 

Disseminated 2 environmental 

effectiveness reports: “Mitigation 

Effectiveness Studies at the Federal 

Energy Regulatory Commission: Final 

Water Quality Report”; and “Mitigation 

Effectiveness Studies at the Federal 

Energy Regulatory Commission: Draft 

Fish Passage Report”. 

Update and add new chapters to the 

Engineering Guidelines, as appropriate 

Issue new or revised Engineering 

Guidelines chapters, as appropriate 

Developed and issued a new Engineering 

Guidelines chapter on the Dam Safety 

Performance Monitoring Program. 

FY 2004 

Performance Measurement Performance Target Result 

Inspect each major onshore pipeline 

project at least once every four weeks 

during ongoing construction activity 

100% of qualifying projects inspected per 

established schedule 

All three major onshore projects were 

inspected at least once every four weeks. 

Percentage of relicense filings based 

upon ALP’s 25% of all relicense cases using ALP 45% of the relicense applications filed during FY2004 used ALP. 

Complete implementation process of 

Large Generator Interconnection Policies 

By year end, process 90% of all 

compliance tariff filings submitted by July 

31 

89% of the 87 compliance tariff filings 

were completed by the end of FY 2004. 

The remainder involve cases where 

additional time was needed to evaluate 

protests and unique compliance issues, 

and will be completed by the end of first 

quarter of FY 2005. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Percentage of final NEPA documents, 

required for hydropower license 

applications filed after FY 2002, 

completed within specified time frames 

75% of final NEPA documents prepared 

for licenses approved within the following 

time frames: 

3⁄4 ALP case, less than 16 months 

3⁄4 TLP case, less than 24 months 

3⁄4 83% of final NEPA documents were 

issued within 16 months of the date ALP 

license applications were deemed 

complete. 

3⁄4 100% of final NEPA documents were 

issued within 24 months of the date TLP 

license applications were deemed 

complete. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

75 

FY 2004 

Performance Measurement Performance Target Result 

Percent of final NEPA documents based 

upon comprehensive settlement 

agreements completed within specified 

time frames 

75% of final NEPA documents prepared 

for final comprehensive license 

settlement agreements are completed 

within 12 months 

100% of final NEPA documents were 

issued within 12 months of the date final 

settlement agreements were filed with the 

Commission. 

Percentage of pipeline certificate cases 

completed in specified time frames 

85% of cases completed within the 

following time frames: 

3⁄4 unprotested cases that involve no 

precedential issues, 159 days 

3⁄4 protested cases that involve no 

precedential issues, 304 days 

3⁄4 cases of first impression or containing 

larger policy implications, 365 days 

3⁄4 cases requiring a major environmental 

assessment or environmental impact 

statement, 480 days 

85% of the cases were completed in: 

3⁄4 111 days for unprotested cases that 

involve no precedential issues; 

3⁄4 190 days for protested cases that 

involve no precedential issues; 

3⁄4 217 days for cases of first impression 

or containing larger policy implications; 

3⁄4 448 days for cases requiring a major 

environmental assessment or 

environmental impact statement. 

Implement generic policy on Small 

Generator Interconnection Issue final rule 

Although the Commission expected to 

issue a final rule by the end of FY 2004, 

we delayed development and issuance in 

response to ongoing stakeholder activity 

to reach a consensus on important 

technical and legal issues. The 

extension for stakeholders to submit 

additional comments will ensure broad 

industry consensus on the final rule. 

This, in turn, will speed the ability to 

implement the requirements of the final 

rule we now plan to issue in FY 2005. 

These procedures and agreements, when 

issued, will provide certainty about the 

costs market participants will bear and 

the terms and conditions that will affect 

interconnection to the electric 

transmission system thereby hastening 

the interconnection process. 

Statutory cases by workload category All cases competed by statutory action 

date 

Over 99.6% of the 2,900 statutory cases 

were completed by the required date. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Process qualifying facilities workload 

(regulatory cases) 

100% of cases processed by regulatory 

deadline 

100% of QF certification or re-certification 

applications were completed within the 

regulatory 90-day time frame prescribed 

in 18 CFR § 292.207(b)(3)(i). 

Evaluate and improve the effectiveness 

of required environmental enhancement 

and mitigation measures in hydropower 

licenses 

3⁄4 Conduct 5 site visits 

3⁄4 Hold 2 outreach meetings with 

stakeholders 

3⁄4 Disseminate 2 environmental 

effectiveness reports 

3⁄4 100% completed 

3⁄4 100% completed 

3⁄4 Disseminated two reports 

Update and add new chapters to the 

Engineering Guidelines, as appropriate 

Issue new or revised Engineering 

Guidelines chapters, as appropriate 

Although no updates or new chapters 

were added, the Commission developed 

substantial portions of two new chapters 

that will be issued in FY 2005: 

 3⁄4 Seismicity; and 

 3⁄4 Penstock and Water Conveyance 

Facilities. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

76 

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 2006 Performance and Accountability Report 

77 

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 2006 Performance and Accountability Report 

78 

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 2006 Performance and Accountability Report 

79 

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 2006 Performance and Accountability Report 

80 

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 2006 Performance and Accountability Report 

81 

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 2006 Performance and Accountability Report 

82 

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 2006 Performance and Accountability Report 

83 

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 

Office of Energy Projects / 

Office of the General Counsel 

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 

Office of Energy Projects / 

Office of the General Counsel 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

84 

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 Office of Energy Projects / 

Office of the General Counsel 

Percentage of pipeline certificate cases 

requiring a major environmental 

assessment or environmental impact 

statement completed 

90% within 480 days of filing Office of Energy Projects / 

Office of the General Counsel 

Percentage of qualifying LNG plants 

inspected during ongoing construction 

activity 

100% of plants inspected every 8 weeks Office of Energy Projects 

Percentage of ILP pre-filing study plan 

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

Percentage of infrastructure studies 

completed 

3⁄4 100% for regional and issue-based 

infrastructure conferences 

3⁄4 100% for Commission- and 

Congressional-directed studies 

Office of Energy Projects 

Percentage of NEPA documents 

completed for projects utilizing the prefiling processes 

85% within 8 months of determining a 

pipeline or LNG facility application 

complete 

Office of Energy Projects / 

Office of the General Counsel 

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 

Office of Energy Markets and Reliability / 

Office of the General Counsel 

 

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 

Office of Energy Markets and Reliability / 

Office of the General Counsel 

Process cost recovery cases within 

reasonable timeframes 

3⁄4 100% of statutory cases within 

statutory deadlines 

3⁄4 90% of cases set for hearing within 12 

months of briefs opposing exceptions 

Office of Energy Markets and Reliability / 

Office of the General Counsel 

Percentage of complete proposals 

allowing recovery of 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 

Office of Energy Markets and Reliability / 

Office of Energy Projects / 

Office of the General Counsel 

 

Assure Reliability of Interstate Transmission Grid 

Percentage of proposed reliability 

standards reviewed 100% Office of Energy Markets and Reliability / Office of the General Counsel 

Develop procedures to review the 

performance of the ERO Complete by March 31, 2007 Office of Energy Markets and Reliability 

Percentage of NERC / industry reliability 

readiness reviews of Reliability 

Coordinators in which FERC participates 

100% Office of Energy Markets and Reliability 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

85 

FY 2007 

Strategy 

Performance Measurement Performance Target Data Source 

Percentage of load served, included in 

NERC / industry reliability readiness 

reviews, in which FERC participates 

50% Office of Energy Markets and Reliability 

Percentage of ERO penalty action rulings 

reviewed to prevent inappropriate rulings 

from going into effect by default 

100% Office of Energy Markets and Reliability / 

Office of the General Counsel 

 

Protect Safety at LNG and Hydropower Facilities 

Percentage of high- and significanthazard-potential dams inspected annually 100% Office of Energy Projects 

Percentage of high- and significanthazard-potential dams that either meet all 

current structural safety standards or are 

undergoing investigation or remediation 

100% Office of Energy Projects 

Percentage inspected annually: 

3⁄4 LNG import terminals 

3⁄4 LNG peak-shaving facilities 

3⁄4 100% 

3⁄4 50% Office of Energy Projects 

Percentage of LNG facilities that meet all 

current safety standards or are subject of 

a compliance letter 

100% Office of Energy Projects 

Percentage of EIS documents that contain 

sections addressing safety for Hydropower 

Projects, LNG Facilities, Gas Pipeline 

Projects and Storage Facilities 

100% Office of Energy Projects 

Control access to Critical Energy 

Infrastructure Information 

No instances of improper access or 

improper denial affecting national security 

or Commission proceedings 

Office of the General Counsel 

Percentage of qualifying dams that either 

comply with EAP requirements or are 

conducting follow-up action(s) on 

outstanding item(s) 

100% Office of Energy Projects 

Percentage of LNG facility authorizations 

that incorporate consultation with all 

appropriate agencies on security related 

matters 

100% Office of Energy Projects 

 

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 

Office of Energy Projects / 

Office of the General Counsel 

Timeliness of issuing environmental 

licensing requirements 

Licensing responsibility letters sent within 

45 business days of license issuance 

date 

Office of Energy Projects / 

Office of the General Counsel 

Percentage of qualifying, major, onshorepipeline projects inspected during ongoing 

construction activity 

100% of projects inspected at least once 

every four weeks Office of Energy Projects 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

86 

Performance Measurement Results for Competitive Markets

FY 2003 

Performance Measurement Performance Target Result 

Percentage of country covered by 

approved RTOs or ISOs (percentage of 

electricity load) 

70% of electricity load in regions where 

we have jurisdiction 

59% of load in jurisdictional areas under 

an RTO/ISO. 

Creation of OMOI OMOI established 

Enhanced regulatory support for market 

institutions Creation of market performance 

indicators 

Market performance indicators created 

with an ongoing process to add or delete 

metrics as appropriate. 

Timely processing of proposed 

rulemakings adopting consensus 

industry-wide business practice and 

reliability standards (North American 

Energy Standards Board (NAESB) and 

North American Electric Reliability 

Council (NERC)) 

Benchmarks to be established in FY 

2003 

Target is established for FY 2004 as 

follows: Non-controversial rulemakings 

completed within 9 months/controversial 

rulemakings completed within 12 months 

of external party action. 

3⁄4 During October 2002, NAESB filed 

natural gas industry standards with the 

Commission. The Commission codified 

the standards, on which all segments of 

the natural gas industry had reached 

consensus, in its Regulations in a Final 

Rule issued in March 2003, five months 

after submission. 

3⁄4 In June 2003, NAESB filed 

creditworthiness standards on which all 

segments of the natural gas industry 

participants were able to reach 

consensus; NAESB also reported 

additional proposed creditworthiness 

standards on which consensus was not 

reached. Action is pending on the 

creditworthiness standards. 

Timely processing of RTO filings Benchmarks to be established in FY 

2003 

Upon review, we have concluded that it is 

impractical to put to put into effect an 

average processing time for filings as 

dissimilar in scope, complexity, and 

number of issues needing resolution as 

are RTO filings. For example, it took 26 

months to grant RTO status to PJM 

(Pennsylvania-New Jersey-Maryland); 11 

months for Midwest ISO. 

A sampling of other RTO filings or 

petitions for declaratory orders also 

revealed significant variances in 

processing times, as shown below: 

3⁄4 SeTrans – Filed on 6/27/02; 

Commission issued initial order on 

10/9/02 (less than 4 months). (SeTrans 

has not yet formally requested authority 

to form, or to operate an RTO.) 

3⁄4 RTO West – filed on 10/16/00; first 

order was issued on 4/26/01 (over 6 

months); order on Stage 2 issued on 

9/18/02 (23 months). 

3⁄4 WestConnect – filed on 10/16/01; order 

issued on 10/10/02 (12 months) (Neither 

RTO West nor WestConnect has filed a 

Section 205 requesting RTO status). 

3⁄4 Cal ISO – filed on 6/1/01; no order has 

been issued in this proceeding. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

87 

FY 2003 

Performance Measurement Performance Target Result 

RTO/ISO wholesale market design 

includes demand-response features 

Measure increasing percentage of 

operating RTOs and ISOs with demand 

response programs 

During FY 2003, four ISOs/RTOs (Cal 

ISO, NYISO, PJM, and ISO New 

England) operated demand response 

programs, and one RTO which does not 

yet run any energy market (Midwest ISO) 

did not. Since these four RTOs/ISOs 

operated demand response programs in 

FY 2002, there was no increase in the 

percentage of operating RTOs and ISOs 

during FY 2003. Nevertheless, 

throughout the year, FERC has 

encouraged and approved improvements 

in both the number and design of 

demand response in PJM, NYISO and 

ISO-NE. For example, FERC supported 

the New England Demand Response 

Initiative, a broad stakeholder process in 

New England, to provide a detailed 

assessment of ISO demand response 

programs and to develop recommended 

improvements. 

Establish RTOs/ISOs with sufficient 

market monitoring and mitigation 

measures in place 

Fewer complaints about rates in RTOs 

filed with the Commission 

3⁄4 In FY 2002, 19 complaints were filed 

against ISO/RTOs (ISO-NE 10, NYISO 5, 

and CAISO 4). 

3⁄4 In FY 2003, 6 complaints were filed 

against ISO/RTOs (ISO-NE/NEPOOL 3, 

NYISO 1, CAISO 1, and PJM 1). 

While complaints are fewer when 

comparing FY 2002 and 2003, we do not 

expect this to be the case in the future; 

rather, we anticipate more complaints as 

numbers of participants increase, and as 

RTOs mature beyond current stages. 

We will review this performance target for 

appropriateness. Focusing on the 

number of complaints about rates in 

RTOs does not highlight the fact that 

market monitoring units exist in all 

RTOs/ISOs and that they work together 

with the Commission to evaluate market 

performance and identify problems with 

proposed and existing market rules, 

market operations, and individual 

participant behavior. 

Adopt market design standards for 

wholesale electric markets Issue final Standard Market Design rule 

In April 2003, the Commission issued a 

White Paper in the Standard Market 

Design proceeding that emphasized its 

strong commitment to customer-based, 

competitive wholesale power markets, 

while underscoring an increasingly 

flexible approach to regional needs and 

outlining step-by-step elaborations of its 

key market design proposal. The 

Commission intends to focus on the 

formation of RTOs and on ensuring that 

all independent transmission 

organizations have sound wholesale 

market rules. The final rule will allow 

implementation schedules to vary 

depending on local needs and will allow 

for regional differences. During the 

remainder of FY 2003, the Commission 

continued its dialogue on market design 

by holding a number of regional 

conferences to exchange ideas with 

stakeholders. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

88 

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 2006 Performance and Accountability Report 

89 

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 2006 Performance and Accountability Report 

90 

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 2006 Performance and Accountability Report 

91 

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 2006 Performance and Accountability Report 

92 

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 2006 Performance and Accountability Report 

93 

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 2006 Performance and Accountability Report 

94 

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 2006 Performance and Accountability Report 

95 

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 2006 Performance and Accountability Report 

96 

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 2006 Performance and Accountability Report 

97 

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 

Issue rules or orders requiring open 

access by non-public utilities By June 30, 2007 Office of Energy Markets and Reliability / Office of the General Counsel 

Issue rules or orders requiring RTO and 

ISO cost accountability By June 30, 2007 Office of Energy Markets and Reliability / Office of the General Counsel 

Timeliness of review of RTO and ISO 

proposed market rules 

By the statutory due date or the 

applicants’ requested date, whichever is 

later 

Office of Energy Markets and Reliability / 

Office of the General Counsel 

Percentage of proposed NAESB 

business practice standards rulemakings 

completed 

3⁄4 100% of non-controversial rulemakings 

within 9 months 

3⁄4 100% of controversial rulemakings 

within 12 months 

Office of Energy Markets and Reliability / 

Office of the General Counsel 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

98 

FY 2007 

Strategy 

Performance Measurement Performance Target Data Source 

Timeliness of applications processed on 

requests by RTOs and ISOs to 

encourage demand response in 

organized markets 

100% within 60 days of filing date or 

applicants’ requested date, whichever is 

later 

Office of Energy Markets and Reliability / 

Office of the General Counsel 

 

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 

Office of Energy Markets and Reliability / 

Office of the General Counsel 

 

Assure Proposed Mergers and Acquisition Are in the Public Interest 

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) 

100% within 180 days Office of Energy Markets and Reliability / 

Office of the General Counsel 

Timeliness of processing section 203 

applications that raise issues of cross 

subsidization or encumbrances of utility 

assets 

100% within 180 days Office of Energy Markets and Reliability / 

Office of the General Counsel 

 

Address Market Power in Jurisdictional Wholesale Markets 

Revise Open Access Transmission Tariff Issue final rule by June 30, 2007 Office of Energy Markets and Reliability / 

Office of the General Counsel 

Percentage of market-based rate filings 

processed 

100% of new filings within 60 days of 

filing date or by the applicant’s requested 

date, whichever is later 

Office of Energy Markets and Reliability / 

Office of the General Counsel 

Finalize generation market power 

screens for electric market based rates Issue final rule by June 30, 2007 Office of Energy Markets and Reliability / Office of the General Counsel 

Act timely on complaints 

80% within 60 days or, for fast-track 

cases only, within the designated 

timeframe 

Office of the General Counsel / 

Office of Energy Markets and Reliability 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

99 

Performance Measurement Results for Market Oversight

FY 2003 

Performance Measurement Performance Target Result 

Establish the Office of Market Oversight 

and Investigations Complete 

Publish regular summer and winter 

Seasonal Market Assessments 

Reported winter 2002-2003 and summer 

2003 assessments in formal 

presentations to the Commission and 

published on Commission’s website. 

Enhance institutional capability for 

overseeing energy markets 

Develop metrics/indicators of gas and 

electric market performance measures 

Developed 5 standard metrics for electric 

markets that agreed with market 

monitoring units. 

Top to bottom review of all existing 

information systems to monitor markets Complete entire review The complete review has been delayed until FY 2004. 

Development or acquisition of usable 

electronic baselines and databases to 

support market oversight objectives 

Complete development of all baselines 

and databases by end of FY 2003 Complete 

Timeliness of audits Complete 90% of audits on time Target achieved 

Training on market issues for 40% of 

OMOI and 20% of OMTR, OGC, and 

other staff 

OMOI: 50% of OMOI staff received 

training explicitly related to markets. 

OMTR: Target met through a combination 

of formal and informal training 

opportunities available to or required of 

OMTR staff. Examples of informal 

training: attendance at events sponsored 

by OMOI such as presentations by guest 

speakers with market expertise and 

courses on the operations of ISOs in New 

York and New England; market 

development discussions at selected 

Commission meetings which are aired 

live as well as videotaped for later 

viewing; access to material relevant to 

Commission conferences posted on the 

web site; speakers brought in by group 

managers to discuss various topics—

including market-related issues—at their 

group meetings; and hands-on training 

conducted in our divisions. 

Hiring of staff with market expertise Hiring target achieved 

Development of market expertise 

Issuance of market assessment products 

and data analysis demonstrating market 

understanding 

Produced comprehensive market 

surveillance report for each closed 

Commission meeting (every two to three 

weeks); seasonal assessments; and daily 

market reports for Commission staff. 

Also analyzed key issues in detail, for 

example, natural gas spike and energy 

price index reaction. 

Establishment of protocols between the 

Commission and independent market 

monitoring units of RTOs 

All approved RTOs Target achieved 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

100 

FY 2003 

Performance Measurement Performance Target Result 

Timeliness of corporate application 

orders 

Less than 20% of merger applications will 

require examination or the imposition of 

mitigation measures beyond the initial 

review period, with such percentage 

targeted to decrease as further policy 

guidance is issued in cases requiring 

more time to address market power 

Since the Commission received no 

merger requests in FY 2003, it has no 

results to report for this performance 

measure. 

Timeliness of Hotline calls resolutions Resolve 80% within 1 week of initial 

contact 

74% of Hotline calls were closed by the 

end of the two-week period in which they 

were received during FY 2003. 

Timeliness of formal complaints 

resolutions 

Complete 80% within target time frames 

for various paths for resolution of 

complaints as specified by the 

Commission 

OALJ/OAL: Issued six initial decisions on 

complaints set for hearing. 84% were 

completed within expected targets (4 out 

of 6). OALJ also handled 17 additional 

complaints; 12 settled; 5 were either 

returned to the Commission for further 

action or set for hearing before a judge 

(no targets were set for those cases while 

in settlement mode). 

Percentage of customers satisfied with 

ADR processes 85% 

DRS: 14 of 20 cases (70%) that were 

completed in FY 2003 achieved 

settlement. 

Number of requests and referrals for ADR 

services 

Maintain at or increase levels achieved in 

 FY 2001 

DRS: 38 requests or active cases were 

initiated in FY 2003. This number 

includes simple inquiries about ADR, 

cases in which persons eventually 

indicated that they were not interested in 

using ADR, cases referred to 

Enforcement Hotline, and cases that are 

ongoing into FY 2004. Note: There were 

51 requests in FY 2002, and 38 requests 

in FY 2003. While this represents a 

decrease in cases, the DRS efforts 

devoted to outreach projects have 

increased dramatically by comparison. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

101 

FY 2003 

Performance Measurement Performance Target Result 

Percentage of cases in time frames 

3⁄4 ADR processes completed 

3⁄4 litigated cases reaching initial decision 

3⁄4 20% of ADR cases within 60 days 

3⁄4 30% of ADR cases within 100 days 

3⁄4 75% of ADR cases within 150 days 

3⁄4 100% of ADR cases within 200 days 

3⁄4 95% of simple litigated cases within 

206 days (29.5 weeks) 

3⁄4 95% of complex litigated cases within 

329 days (47 weeks) 

3⁄4 95% of exceptionally complex cases, 

441 (63 weeks) 

3⁄4 95% of regular complaints, 60 days 

ADR Cases – OALJ/OAL: 76 cases were 

successfully completed through the use 

of ADR: 

3⁄4 2 cases completed in < 60 days (2.6%) 

3⁄4 10 cases completed in < 100 days 

(13%) 

3⁄4 15 cases completed in <150 days 

(20%) 

3⁄4 14 cases completed in < 200 days 

(18%) 

3⁄4 35 cases completed in >200 days 

ADR Cases – DRS: 20 cases completed 

through the use of ADR: 

3⁄4 8 cases completed in < 60 days (40%) 

3⁄4 2 cases completed in < 100 days 

(10%) 

3⁄4 5 cases completed in < 150 days 

(25%) 

3⁄4 3 cases completed in < 200 days 

(15%) 

3⁄4 2 cases completed in > 200 days 

(10%) 

Litigated Cases – OALJ/OAL:

3⁄4 Track I Cases: Standard processing 

time = 29.5 weeks. FY 2003 Average 

processing time = 24.3 weeks 

3⁄4 Track II Cases: Standard processing 

time = 47 weeks. FY 2003 Average 

processing time = 38.4 weeks 

3⁄4 Track III Cases: Standard processing 

time = 63 weeks. FY 2003 Average 

processing time = 46.2 weeks 

Regular Complaints – OGC: 97% 

Percentage of processes that achieve 

consensual agreements 

Maintain at or increase levels achieved in 

 FY 2001 

OALJ/OAL: 112 cases were closed in 

OALJ. Out of the 112 cases, 16 cases 

were terminated by initial decision, 

leaving 94 cases where ADR was used. 

Of the 94 cases, settlement was 

achieved in 76 cases (81% success). 

Settlement was not successful in 18 of 

the 94 cases. 

DRS: 14 of 20 cases (70%) that were 

completed in FY 2003 achieved 

settlement. Note: This includes 7 cases 

that were begun prior to FY 2003 but 

completed in FY 2003. It does not 

include simple inquires about ADR (1), 

cases in which persons eventually said 

they were not interested in trying ADR or 

ADR was determined to be inappropriate 

(11), cases referred to Enforcement 

Hotline (3), or cases that were ongoing 

into FY 2004 (14). 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

102 

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 2006 Performance and Accountability Report 

103 

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 cases1

 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. 

 

1 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 2006 Performance and Accountability Report 

104 

FY 2004 

Performance Measurement Performance Target Result 

Number of requests and referrals for ADR 

services 

Maintain at or increase levels achieved in 

 FY 2001 

There were 54 requests or active cases 

in FY 2004, 2 more than in FY 2001. 

This number includes simple inquiries 

about ADR, cases in which persons 

eventually indicated that they were not 

interested in using ADR or ADR was 

deemed inappropriate, and cases that 

are ongoing into FY 2005. 

Percentage of customers satisfied with 

ADR processes 85% 

86% of the cases (21 out of 24) that were 

completed in FY 2004 achieved 

settlement. 

Percentage of 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 Cases2

 – 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% 

 

2 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 2006 Performance and Accountability Report 

105 

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 2006 Performance and Accountability Report 

106 

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 2006 Performance and Accountability Report 

107 

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 2006 Performance and Accountability Report 

108 

FY 2007 

Strategy 

Performance Measurement Performance Target Data Source 

 

Identify and Remedy Problems with Structure and Operations In Energy Markets 

Timeliness of review of filings to 

recognize regional state committees 

100% addressed by Commission order 

within 180 days or by the applicants’ 

requested date, whichever is later 

Office of Energy Markets and Reliability / 

Office of the General Counsel 

Timeliness of verification of EQR 

submissions Within 10 business days of submission Office of Enforcement

Review EQR submissions for 

completeness and contact companies 

that make up at least 80% of reported 

revenue for incomplete submissions 

Within 10 business days of submission Office of Enforcement

Conduct follow-up reviews of companies 

that make up at least 80% of reported 

revenue on exercise of market power or 

market manipulation 

Within 60 days of final submission Office of Enforcement

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 

Office of Enforcement

Number of RTO and ISO MMU 

performance metrics Increase over FY 2006 Office of Enforcement 

Timeliness of initiating or deciding action 

on MMU referrals 80% acted on within 30 days 

Office of Enforcement / 

Office of Energy Markets and Reliability / 

Office of the General Counsel 

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 

Office of Enforcement 

Timeliness of actions on problems or 

discrepancies identified in reviews of 

organized markets 

With 6 months of completed report

Office of Enforcement / 

Office of Energy Markets and Reliability / 

Office of the General Counsel 

Publish annual assessment of 

infrastructure and market conditions for 

each region 

Complete by June 30, 2007 

Office of Enforcement / 

Office of Energy Markets and Reliability / 

Office of the General Counsel 

 

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 Office of Enforcement

Improve Forensic Audits and 

Investigations capabilities 

90% of enforcement and compliance staff 

participate in forensics training and 

interviewing skills by June 30, 2007 

Office of Enforcement

Timeliness of reporting to the 

Commission on operational audits 

100% reported to the Commission within 

120 days of Commencement Letter Office of Enforcement

Percentage of operational audit 

recommendations issued and 

implemented 

90% Office of Enforcement

Timeliness of reporting to the 

Commission on financial audits 

100% reported to the Commission within 

120 days of Commencement Letter Office of Enforcement
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

109 

FY 2007 

Strategy 

Performance Measurement Performance Target Data Source 

Percentage of financial audit 

recommendations issued and 

implemented 

90% Office of Enforcement

 

Conduct Investigations Promptly and Impose Penalties Where Appropriate 

Percentage of enforcement investigations 

completed 75% within one year of initiation Office of Enforcement

Percentage of Hotline calls resolved 70% within 2 weeks of initial contact Office of Enforcement

 

Conduct Investigations Promptly and Impose Penalties Where Appropriate 

Percentage of regulated entities audited 

to ensure internal compliance programs 

and processes are in place 

85% of regulated entities included in 

annual audit plan Office of Enforcement 

Timeliness of responses to regulated 

entities seeking guidance and clarification 

on compliance issues 

Within 60 days 

Office of Enforcement / 

Office of Energy Markets and Reliability / 

Office of the General Counsel 

Timeliness of completing 

recommendations on compliance issues 

raised by regulated entities 

Within 180 days, where Commission 

action is required 

Office of Enforcement / 

Office of Energy Markets and Reliability / 

Office of the General Counsel 

Timeliness of reporting on compliance 

issues raised by regulated entities Reports completed monthly 

Office of Enforcement / 

Office of Energy Markets and Reliability / 

Office of the General Counsel 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

110 

Performance Measurement Results for Management Initiatives

FY 2003 

Performance Measurement Performance Target Result 

Number of new hires from recruitment 

program 

Attract new talent through targeted 

recruitment, with 50% at entry levels 

Exceeded target level by 2%. Of the 60 

permanent hires in targeted positions in 

FY 2003, 31 were entry level recruits. 

Met the Commission’s need for new 

talent through targeted recruitment. 

New staff from summer intern program Hire 30% of participants into permanent 

positions 

Exceeded target level by 3%. Of the 33 

summer interns eligible to be hired, 11 

were hired into permanent positions. 

Increase diversity of staff in high grades Continue increasing diversity in GS-14, 

GS-15 and SES positions 

Increased the number of women and 

minorities in GS-14, GS-15 and SES 

positions by 35 (18%). Of the 35, 13 

(37%) were minorities. 

Encourage knowledge sharing Conduct informal training workshops Conducted 184 informal training 

workshops in 5 offices. 

Improved executive performance Implement 360 degree assessment of 

senior staff 

Completed 360 degree assessments for 

129 supervisors and managers, including 

senior staff. Completed targeted 

individual executive coaching sessions. 

Percentage of transactions accepted 

electronically 

95% of transactions accepted 

electronically 

57% of all documents received were 

eligible to be e-filed; 53% of the 

documents eligible to be e-filed were 

actually e-filed; 33% of all documents 

received (paper and electronic) were efiled. We expect to have 95% of 

transactions eligible to be accepted 

electronically in December 2003. 

Percentage of e-issuance versus paper 90% of Commission documents issued 

electronically 100% 

Redesigned Web site 

The redesigned web site, sponsored by 

the Office of External Affairs, was 

deployed in August, 2003. 

Improved Web site 

99% availability 

The site was 99% available in FY 2003 

based on contract performance 

evaluation server availability reporting by 

FERC IT Support Services contractor. 

Timeliness of getting public documents 

online 

99% within 24 hours of receipt or 

issuance 

3⁄4 99% of FERC issuances are available 

online within 24 hours or less. 

3⁄4 99% of electronic submissions to 

FERC are published within 24 hours of 

review by the Office of the Secretary. 

3⁄4 99% of paper submissions to FERC 

are published within 48 hours. 

Network availability 99% 

File and Printer servers (where all Office 

Automation applications and network 

drives reside) were available for use 

99.93% of the Prime Period of 

Maintenance (PPM). The PPM is defined 

as the 11 hour period from 7:00 a.m. to 

6:00 p.m. on all days the FERC is open 

for business. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

111 

FY 2003 

Performance Measurement Performance Target Result 

Standard office automation platform and 

PC rate of refresh 33% 

During this performance period, in an 

effort to reduce costs, the replace cycle 

has been changed from 3 years to 3.5 

years. During this period 335 CPUs were 

replaced that were 3.5 years or older. All 

primary FERC workstations are now 

newer than 3.5 years old. The 

performance measure should reflect the 

new 28.5% target. 

Timeliness of virus definition files updates 

on servers and workstations 

Updates within 24 hours from release by 

vendors 

The performance target has been met. 

We currently have our servers set up to 

Auto Update each morning at 1 a.m. for 

any Virus Engine Updates and at 2 a.m. 

for any DAT (virus definition file) 

Updates. They are set to update daily 

and to scan local drives ‘On Access’ and 

boot sectors and floppy drives on 

shutdown. Updates are received via the 

internal FERC ‘McAfee/NetShield’ FTP 

server which in turn is getting the updates 

straight from the secure Network 

Associates, Inc. (NAI) site. We update to 

this server and use it as an internal 

update point for security and ease of 

configuration. All workstations are 

configured to check virus update from 

FTP server hourly. 

Improved integration of work processes 

and electronic filing 

Refresh integrated filing, docket, and 

document management system 

Software releases of the FERC eFiling 

system were deployed in FY 2003 that 

increased the types of documents 

accepted electronically, improved the 

interface used by stakeholders to submit 

documents electronically, and improved 

the integration with the FERC document 

management system, eLibrary, and the 

FERC Online eRegistration system. 

A business case for the Activity 

Management Tracking System (ATMS) is 

under review by the FERC Online 

Executive Steering Committee. ATMS 

will allow FERC to align FTE time 

reporting with business planning goals 

and objectives. 

Two releases of the FERC document 

management system, eLibrary, were 

deployed that improved systems 

availability, reliability, and usability as 

documented in weekly reporting by the 

FERC IT Support Services Contractor 

and reflected in comments received 

through customer surveys. 

eSubscription, a facility that allows 

stakeholders to receive email 

notifications and document links 

whenever a document is received or 

issued in a case to which they subscribe, 

was deployed and has improved the work 

processes of external and internal 

stakeholders. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

112 

FY 2003 

Performance Measurement Performance Target Result 

IT system changes to comply with 

enterprise IT architecture and 

configuration management practices 

Implement 98% reviews 

Although an Enterprise IT Architecture 

has not been completed for FERC, 100% 

of configuration changes are reviewed 

and approved or rejected by the FERC 

DCIO Configuration Control Board. All 

change requests and approvals are 

documented in the FERC configuration 

management library. 

Monitoring of manage-to-budget (MTB) 

process 

Bi-weekly tracking of office salary levels 

and quarterly review of salary levels 

between CFO and Office Directors 

The Commission met its performance 

target of bi-weekly tracking of the MTB 

process. However, the quarterly reviews 

between the CFO and Office Directors 

did not take place. This was due to the 

open and constant communication 

between the Division of Budget and the 

individual office MTB points-of-contact. 

As a result, managers were able to make 

quicker and more informed decisions on 

the resources within their particular 

program. No issues were raised during 

these discussions that necessitated 

involvement from the CFO or Office 

Directors. 

Timeliness of annual charges collections Within 45 days of billing 

The Commission collected 74% of the 

total dollar value of current year annual 

charge billings within the 45 day billing 

period; however, by the close of the fiscal 

year, the Commission collected 96% of 

the total dollar value of current year 

billings. 

Invoices paid by electronic funds transfer 98% 

The Commission processed over 99% of 

its disbursements via electronic funds 

transfer. 

Accuracy and completeness of annual 

financial statements Unqualified opinion 

The Commission received an unqualified 

opinion on its FY 2002 financial 

statements. 

Percentage of contracts performancebased 100% 100% of all contracts were performance 

based. 

Percentage of contracts advertised online 100% 

100% of all competitive contract 

requirements advertised in the Fed Biz 

Ops. 

FY 2004 

Performance Measurement Performance Target Result 

Number of new hires from recruitment 

program 

Attract new talent through targeted 

recruitment, with 50% at entry levels 66% of all hires were at entry-levels 

New staff from summer intern program Hire 30% of participants into permanent 

positions 

25% of summer interns were hired into 

permanent positions 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Increase diversity of staff in high grades Continue increasing diversity in GS-14, 

GS-15 and SES positions 

The net increase of 21 staff into high 

grade positions included 3 minorities 

(14%) and 7 women (33%). 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

113 

FY 2004 

Performance Measurement Performance Target Result 

Improved executive performance 

3⁄4 Implement 360 degree assessment of 

senior staff 

3⁄4 Expand training in leadership and 

management skills 

3⁄4 Completed 360 degree assessments & 

feedback; 

3⁄4 Implemented and completed FERCwide training for all new supervisors; 

3⁄4 Developed a Leadership & 

Management Development Program; and 

3⁄4 Initiated an Executive coaching pilot 

program. 

Mentoring program Implement FERC-wide mentoring 

program for all employees 

Although still being developed, the 

program’s scheduled completion date is 

November 2004. 

This performance target was set for an 

approximate date, and the deviation from 

that date is slight. This difference had no 

effect on overall program performance. 

Average IT costs per FTE Below industry average for Federal 

agencies Performance target achieved 

Percentage of transactions accepted 

electronically 

95% of transactions accepted 

electronically 

The Commission received 75.7% of 

qualified documents (25,343 out of 

33,469) electronically. Qualified 

documents represent 57% of the total 

documents (33,469 out of 59,114) 

submitted to the Commission in FY 2004. 

Although we did not meet the target level, 

the deviation had no effect on overall 

program performance. Besides 

submitting transactions electronically, 

parties have the option to submit 

transactions via digital media (i.e. CD). 

In addition, the percentage represents an 

increase over the FY 2003 result of 53%. 

Improved Internet Website 99% availability Performance target achieved 

Timeliness of getting public documents 

online 

99% within 24 hours of receipt or 

issuance 

97.3% of public documents were 

available online within 24 hours of receipt 

or issuance. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Improved reliability and availability of 

FERRIS 

Increase customer satisfaction 25% over 

FY 2003 87.5% customer satisfaction rate 

Network availability 99% Performance target achieved 

Desktop reliability Increase reliability by 5% per year Performance target achieved 

Standard office automation platform and 

PC rate of refresh 33% Performance target achieved 

Timeliness of virus file updates on 

servers and workstations 

Updates within 24 hours from release by 

vendors 

92% of updates were completed within 24 

hours of release. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

114 

FY 2004 

Performance Measurement Performance Target Result 

Implementation of Federal Information 

Security Management Act (FISMA) for 

small agencies 

95% 

Overall, the Commission had a 93% 

performance rating according to the 

FISMA OMB metric. According to the 

Putman scorecard, the Commission had 

an 84% performance rating and moved 

from an F to a solid B. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Develop Communications Plan 

Increase number of proactive interactions 

with the Press, Elected Officials, and 

Industry by 25% 

Increased the number of Press releases 

by 16%, the number of briefings with 

Elected Officials (i.e. Senate and House 

of Representatives) by 1%, but 

decreased the number of Industry 

interactions by 38%. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Redesign Internet Website Make internet site more useful and userfriendly 

Implemented new features (i.e. Public 

Event Calendar and Energy Projects 

Database) that are extremely popular 

with users. 

Engage Stakeholders Provide 50 presentations to government 

or other groups of stakeholders 

The Commission made a total of 94 

presentations – in a variety of forums – to 

numerous stakeholders throughout FY 

2004. 

Report Market Conditions 

Publish regular summer and winter 

Seasonal Market Assessments, and 

other reports as conditions warrant 

3⁄4 The Winter Energy Market 

Assessment, published in November 

2003, reported on the upcoming winter 

heating season. 

3⁄4 The State of the Markets Report, 

published in January 2004, analyzed the 

state of the energy markets for an 18-

month span. 

3⁄4 The Summer Energy Market 

Assessment, published in June 2004, 

reported on the upcoming summer 

cooling season. 

3⁄4 The Commission also published, in 

May 2004, the results of an investigation 

into the January 2004 New England gas 

price spike. 

Discussions with State regulatory bodies 

on Commission policies and actions

Formal, effective interactions between 

FERC and state officials on policy issues

The Commission held 23 different 

meetings with State regulators. 

Expand discussions with Canada and 

Mexico

Formal interaction with Canadian and 

Mexican regulators on policy issues

The Commission held or participated in 

10 different meetings with Canadian 

and/or Mexican officials on issues related 

to infrastructure, reliability, and other 

policy initiatives. 

Foster communication with States and 

Governors on infrastructure

Hold infrastructure conferences in each 

region

The Commission held one infrastructure 

conference in the Northeast. 

Outreach to stakeholder groups to 

encourage use of conflict resolution 

mechanisms 

Increase number of outreach 

opportunities with stakeholders by 25% 

The 64 outreach opportunities during FY 

2004 represent an 8% increase over FY 

2003. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

115 

FY 2004 

Performance Measurement Performance Target Result 

Maintain liaison with market monitors in 

RTOs and ISOs 

Meet at least twice annually with RTO 

and ISO market monitors 

Commission staff meets regularly with 

market monitors early in the winter 

heating season (usually in December) 

and the summer cooling season (usually 

in June) and also participates in monthly 

conference calls with RTO/ISO market 

monitors. 

Monitoring of manage-to-budget process 

Bi-weekly tracking of office salary levels 

and quarterly review of salary levels 

between CFO and Office Directors 

Manage-to-budget (MTB) information was 

tracked and provided to office contacts 

on a bi-weekly basis. However, ongoing 

reviews and discussions between the 

Budget Division, individual office MTB 

contacts, and the Chief Financial Officer 

did not necessitate the need for quarterly 

reviews with Office Directors. 

Monitoring of business plan 

3⁄4 Clarity of fit between projects, 

activities, and objectives 

3⁄4 Periodic monitoring of completions and 

adjustments to plan and related 

resources 

3⁄4 In order to better align work and 

resources between the various goals and 

objectives of the Commission, several 

changes were made to the Business Plan 

in FY 2004. This increased the logical 

arrangement and clarity of projects and 

activities within the Commission’s goals 

and objectives. 

3⁄4 The Business Plan was updated twice 

during FY 2004 to adjust workload 

completions and reflect resource 

reallocations based on workload priority 

changes. 

Timeliness of annual charges collections Collect 98% of outstanding receivables 

within 45 days of billing 

97% of annual charge collections were 

made within 45 days of billing. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Invoices paid by electronic funds transfer 98% Over 99% of invoices were paid by 

electronic funds transfer. 

Percentage of payments accomplished 

without error 98% Over 99% of payments were accomplished without error. 

Accuracy and completeness of annual 

financial statements Unqualified opinion Performance target achieved 

Percentage of contracts performancebased 100% Performance target achieved 

Percentage of contracts advertised online 100% 

76% of contracts were advertised on-line. 

The deviation from the performance 

target is not significant and had no effect 

on overall program performance. The 

contracts that were not advertised on-line 

were sole source contracts for highly 

technical and specialized personnel 

primarily in the reliability and dam safety 

program areas. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

116 

FY 2005 

Performance Measurement Performance Target Result 

Number of new hires from recruitment 

program 

Attract new talent in mainstream 

occupations through targeted 

recruitment, with 50% at entry levels 

Target Met. 57% of new employees (42 

of 74) were hired into mainstream 

occupations at the entry-level. 

New staff from summer intern program Hire 30% of participants into permanent 

positions 

Target Not Met. 20% (6 0f 29) of interns 

eligible for conversion were hired into 

permanent positions. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. In light of the increase 

in the number of entry-level new hires 

during FY 2005, this difference had no 

effect on overall program performance. 

Increase diversity of staff in high grades Continue increasing diversity in GS-14, 

GS-15 and SES positions 

Target Met. Overall diversity in grades 

GS-14 and -15, SES, and equivalent 

level positions increased from 93 to 95 

during FY 2005. This figure includes 

both women and minorities. 

Improved executive/managerial 

development 

Expand training in leadership and 

management skills by implementing an 

experienced supervisors leadership 

program 

Target Met. Beginning in June 2005, the 

Commission launched a Business 

Acumen Course that was designed for 

supervisors. The curriculum, which was 

developed through a series of focus 

group meetings with SES managers, 

addresses the linkage between strategic 

plans, budgets, human capital plans, and 

operational plans in order to manage 

performance at both the organizational 

and individual levels. 

In August 2005, the first of four Business 

Acumen Courses were taught. Out of a 

target audience of 133 non-SES 

supervisors, 81 or 61% have completed 

or are enrolled to complete this course. 

Improved technical development Implement second phase of “markets 

curriculum” for experienced staff 

Target Met. From March 2005 to June 

2005, a second markets curriculum titled 

“FERC’s Role in the Energy Markets and 

Infrastructure” was implemented through 

a series of four separate modules. 

Mentoring program Implement FERC-wide mentoring 

programs 

Target Not Met. Although a draft 

mentoring program was prepared in late 

January 2005, a decision was made to 

merge the mentoring program with a 

larger training/developmental program 

that is being developed in FY 2006. 

This difference had no effect on overall 

program performance. 

Improved human capital processes 

Implement selected human resources 

flexibilities provided by new SES Pay-forPerformance legislation 

Target Met. On April 7, 2005, the 

Commission received provisional 

certification to implement SES Pay-forPerformance for calendar year 2005 by 

demonstrating that our SES performance 

appraisal system made meaningful 

distinctions in pay and performance, 

demonstrated clear alignment to strategic 

goals, and included good measures of 

performance for each executive. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

117 

FY 2005 

Performance Measurement Performance Target Result 

Improved employee morale 

Conduct baseline FERC-wide employee 

survey; identify issues and conduct 

follow-up survey; set improvement targets 

for follow-up survey in FY 2006 

Target Met. Based on the analysis of a 

baseline Commission-wide employee 

survey conducted in early FY 2005, 

specific survey issues were identified and 

addressed (through action plans) by the 

Commission and each office. In 

accordance with a FY 2006 NDAA 

requirement, a follow-up survey is 

planned that will address and include 

those issues identified in the FY 2005 

baseline survey (including improvement 

targets). 

Improved services to employees Successful implementation of payroll 

services and integration with HR services 

Target Met. In March 2005, the 

Commission successfully migrated its 

processing of payroll distributions to the 

National Finance Center. Also in March 

2005, the Commission’s Employee 

Maintenance Helpdesk was established 

to provide a central point of contact for all 

human resources and payroll related 

inquiries. 

Average IT costs per FTE Below industry average for federal 

agencies 

Target Met. The Commission’s FY 2005 

average IT cost per FTE of $12,154 is 

below the FY 2005 industry average for 

federal agencies of $14,590. 

Percentage of transactions accepted 

electronically 

95% of transactions accepted 

electronically 

Target Not Met. The Commission 

received 80.2% of qualified documents 

(27,934 out of 34,817) electronically. 

Qualified documents represented about 

56% of the total documents submitted to 

the Commission in FY 2005. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance 

since parties have the option to submit 

transactions via digital media (i.e. CD) 

rather than hard-copy form. In addition, 

the percentage represents an increase 

over the FY 2004 result of 75.7%. 

Improved Internet Website 99% availability 

Target Met. The Commission did not 

experience a major Internet outage in FY 

2005, with average uptime reported at 

100% (per contractor FY 2005 selfevaluation reports). 

Timeliness of getting public documents 

online 

99% within 24 hours of receipt or 

issuance 

Target Not Met. During FY 2005, 96.6% 

of all documents presented to the 

Commission’s eLibrary operations staff 

were published within 24 hours. Of the 

documents the Commission receives or 

issues electronically, 99.88% were 

published within 24 hours. As the volume 

of electronic filings increases, the current 

96.6% will rise. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Improved reliability and availability of 

FERRIS 

Increase customer satisfaction 25% over 

FY 2003 

Target Met. During FY 2005, customer 

feedback from the eLibrary Helpdesk 

showed that 100% of customers felt they 

received a high quality of service. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

118 

FY 2005 

Performance Measurement Performance Target Result 

Network availability 99% 

Target Met. The Commission did not 

experience a major network outage in FY 

2005, with average uptime reported at 

100% (per contractor FY 2005 selfevaluation reports). 

Desktop reliability Increase reliability by 5% per year 

Target Met. Compared to FY 2004 , the 

number of PC breakdowns (or re-images) 

during FY 2005 reduced by 9.2% from 54 

re-images to 49 re-images. 

With no means to capture positive 

reliability data (e.g. reliability increases 

from FY 2004 to FY 2005), the current 

performance measure and target do not 

appear in future performance plans. 

Standard office automation platform and 

PC rate of refresh 33% Target Met. The Commission’s FY 2005 upgrade percentage was 37%. 

Timeliness of virus file updates on 

servers and workstations 

Updates within 24 hours from release by 

vendors Target Met 

Implementation of Federal Information 

Security Management Act (FISMA) for 

small agencies 

95% 

Target Met. According to the Putnam 

scorecard, the measurement used to 

grade implementation of FISMA, the 

Commission earned a 100% (or A) rating 

for FY 2005. 

Development of initial enterprise 

architecture Complete by October 30, 2004 

Target Met. The Commission’s IT 

Enterprise Architecture was completed 

and in place by October 31, 2004. 

Develop Communications Plan 

Increase number of proactive interactions 

with the Press, Elected Officials, and 

Industry by 25% 

Target Met. In FY 2005, the total number 

of proactive interactions increased by 

27.6%. 

Redesign Internet Website Make internet site more useful and userfriendly 

Target Met. In addition to several new 

user-friendly features, the Commission 

added eleven new project- / initiativetargeted web pages during FY 2005. 

Engage Stakeholders Provide 50 presentations to government 

or other groups of stakeholders 

Target Met. The Commission provided 

over 70 presentations to government 

and/or other stakeholder groups during 

FY2005. 

Discussions with State regulatory bodies 

on Commission policies and actions

Formal, effective interactions between 

FERC and state officials on policy issues

Target Met. The Commission 

participated in 61 different meetings with 

state officials during FY 2005. 

Foster communication with States and 

Governors on infrastructure

Hold infrastructure conferences in each 

region

Target Not Met. The Commission held a 

total of seven infrastructure related 

conferences during FY 2005 in the 

Northeast, Western, Appalachian, and 

Rocky Mountain regions. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. The Commission’s 

inability to hold a conference in each 

region did not have an effect on overall 

program performance. 

Maintain liaison with market monitors in 

RTOs and ISOs 

Meet at least twice annually with RTO 

and ISO market monitors 

Target Met. The Commission met with 

RTO and ISO market monitors twice 

during FY 2005, both at Commissionhosted conferences (December 2004 and 

July 2005). 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

119 

FY 2005 

Performance Measurement Performance Target Result 

Outreach to stakeholder groups to 

encourage use of conflict resolution 

mechanisms 

Increase number of outreach 

opportunities with stakeholders by 25% 

Target Met. The 83 active projects in FY 

2005 represent a 29.7% increase over 

the 64 projects in FY 2004. 

Support further discussions with Canada 

and Mexico

Formal interaction with Canadian and 

Mexican regulators on policy issues

Target Met. The Commission held or 

participated in 20 different meetings with 

Canadian and/or Mexican officials on 

issues related to infrastructure, reliability, 

and other policy initiatives during FY 

2005. 

Monitoring of manage-to-budget process 

Bi-weekly tracking of office salary levels 

and quarterly review of salary levels 

between CFO and Office Directors 

Target Not Met. Due to the National 

Finance Center processing of payroll 

distributions migration in March 2005, biweekly tracking information was briefly 

delayed. In addition, ongoing reviews 

and discussions between the Budget 

Division, individual office contacts, and 

the Chief Financial Officer did not 

necessitate the need for quarterly reviews 

with Office Directors. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. This difference had no 

effect on overall program performance. 

Monitoring of business plan 

3⁄4 Clarity of fit between projects, 

activities, and objectives 

3⁄4 Periodic monitoring of completions and 

adjustments to plan and related 

resources 

Target Met. Both of the business plan 

updates that took place during FY 2005 

accomplished the stated targets. A final 

FY 2005 update will be completed during 

the first week in November. 

Timeliness of annual charges collections Collect 98% of outstanding receivables 

within 45 days of billing 

Target Not Met. The Commission 

received 92.7% of its annual charge 

collections within 45 days of billing. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. Since the collections 

during the 45-day period off-set the 

Commission’s FY 2005 appropriation and 

the Commission received 97.3% of its 

annual charge collections prior to the end 

of FY 2005, this difference had no effect 

on overall program performance, 

Invoices paid by electronic funds transfer 98% 

Target Met. The Commission paid 99% 

of its invoices via electronic funds 

transfer during FY 2005. 

Percentage of payments accomplished 

without error 98% 

Target Not Met. The Commission made 

97% of its payments without error during 

FY 2005. 

This performance target was set at an 

approximate level, and the deviation from 

that level is slight. Since all incorrect 

payments were recovered via internal or 

Department of Treasury collection 

actions, this difference had no effect on 

overall program performance. 

Accuracy and completeness of annual 

financial statements Unqualified opinion 

Target Met. The Commission received 

an unqualified opinion on its FY 2004 

financial statement audit. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

120 

FY 2005 

Performance Measurement Performance Target Result 

Percentage of contracts performancebased 85% 

Target Met. Of the 118 procurement 

actions that required a performancebased statement of work, 100% were 

awarded as performance-based. 

Percentage of contracts advertised online 85% 

Target Met. Of the 3 procurement 

actions eligible for advertising, 100% 

were advertised online. 

FY 2006 

Performance Measurement Performance Target Data Source 

Percentage of summer interns hired into 

permanent positions 30% 

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. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

121 

FY 2006 

Performance Measurement Performance Target Data Source 

Establish earned value management 

schedule and cost performance indices 

for all major projects 

Complete by September 30, 2006 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

122 

FY 2006 

Performance Measurement Performance Target Data Source 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

123 

FY 2006 

Performance Measurement Performance Target Data Source 

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. 

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. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

124 

FY 2007 

Performance Measurement Performance Target Data Source 

Implement an aggressive entry level 

recruiting program 

3⁄4 Recruit at least 3 students each 

from at least 4 target universities 

3⁄4 Increase new hires from recruiting 

program by 10 over FY 2007 

3⁄4 Hire 20% of interns into permanent 

positions 

Office of the Executive Director 

Implement employee development 

programs 

3⁄4 Launch leadership development 

program 

3⁄4 Develop competency based training 

for mainstream occupations 

Office of the Executive Director 

Maintain an effective performance 

management system 

3⁄4 All employees receive training 

annually 

3⁄4 Provide feedback to managers to 

ensure ratings reflect meaningful 

distinctions between performance 

3⁄4 High achievers are rewarded 

appropriately 

Office of the Executive Director 

Ensure appropriate representation of 

women and minorities at all levels within 

the organization 

Increase over FY 2007 baseline Office of the Executive Director 

Timeliness of submitting Fair Act 

Inventory to OMB per Circular A-76 

requirements 

Complete by June 30, 2007 Office of the Executive Director 

Customers are satisfied with the use of 

eGovernment initiatives to interact with 

FERC 

90% Office of the Executive Director 

Federal FTE time is mapped through 

systems to workload and strategic goals 

and objectives 

Fully implemented by September 30, 

2007 Office of the Executive Director 

Align Commission costs to strategic 

objectives Complete by September 2007 Office of the Executive Director 

Percentage of vendor payments made by 

established due dates 99% Office of Executive Director 

Percentage of payments made without 

error 100% Office of Executive Director 

Timeliness of collecting accounts 

receivable that offset the Commission’s 

appropriation 

95% collected by due dates Office of Executive Director 

Financial statements that present fairly, in 

all material aspects, the Commission’s 

financial position 

Unqualified audit opinion on FY 2006 

financial statements Office of Executive Director 

Percentage of transactional case 

assessments or convening sessions 

concluded 

75% within 20 days Dispute Resolution Service 

Percentage of transactional ADR 

processes agreed to by parties 

concluded 

75% within 120 days total (convening and 

process) Dispute Resolution Service 

Number of ADR requests and referrals to 

the Dispute Resolution Service 

Increase number over FY 2004 (base 

year) Dispute Resolution Service 
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FY 2006 Performance and Accountability Report 

125 

FY 2007 

Performance Measurement Performance Target Data Source 

Favorable Dispute Resolution Service 

customer satisfaction for casework and 

outreach 

80% customer satisfaction rate Dispute Resolution Service 

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) Dispute Resolution Service 

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 

Office of External Affairs 

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 

Office of External Affairs 

Percentage of cases set for hearing that 

achieve partial or complete consensual 

agreement 

75% Office of Administrative Litigation / 

Office of Administrative Law Judges 

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 

Office of Administrative Litigation / 

Office of Administrative Law Judges 

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 

Office of Administrative Litigation / 

Office of Administrative Law Judges 

Percentage of market manipulation cases 

set for hearing completed according to 

the established schedule 

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

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

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

Office of Administrative Law Judges / 

Office of Administrative Litigation 
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Appendix A 

Organizational Chart 
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129 

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

Resource

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

Administrative and

Litigation Support

Technical Division

Legal Division

Office of External

Affairs

Public Affairs

Division

Congressional and

Intergovernmental

Affairs Division

Press Services

Division

Office of Energy

Projects

Division of Pipeline

Certificates

Division of GasEnvironment and

Engineering

Division of

Hydropower

Licensing

Division of Dam

Safety and

Inspection

Division of

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

Division

Systems

Engineering

Division

Security &

Systems

Assurance

Division

Information

Management

Division

Dispute

Resolution

Service

10/2006

Federal Energy Regulatory Commission

Organizational Chart
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Appendix B 

Strategic Plan 
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Federal Energy Regulatory Commission 

Strategic Plan FY 2005 – FY 2008 

7/26/2005 

Vision

Reliable, affordable energy through reliance on competition and effective regulation. 

Mission

The Federal Energy Regulatory Commission regulates and oversees energy industries in the economic, 

environmental, and safety interests of the American public. 

Goals and Objectives

Goal 1: Promote Development of a Robust Energy Infrastructure. 

Objective 1.1: Expedite Development of Energy Infrastructure Projects. 

• Implement the infrastructure provisions of the Energy Policy Act of 2005. 

• Make final decisions on proposed projects in a timely manner, consistent with statutory mandates and due 

process, and continue to seek improvements in the Commission’s processing of project applications. 

• Enforce power plant interconnection rules. 

• Implement integrated licensing and pre-filing processes and interagency agreements facilitating hydropower 

licensing, pipeline and storage certification and LNG facility authorization. 

• Encourage regional electric system planning to meet reliability, security and market needs. 

Objective 1.2: Encourage Investment in Energy Infrastructure. 

• Maintain high level of regulatory certainty in Commission policies. 

• Establish pricing policies that encourage investment in electric generation and transmission, natural gas 

pipelines, LNG import facilities, gas storage, and oil pipelines. 

• Ensure that revenue levels and rate designs for regulated company services are just and reasonable and 

support long-term competitive markets. 

• Encourage balanced innovative proposals that provide incentives for appropriate infrastructure investment. 

Objective 1.3: Address Landowner and Environmental Concerns Fairly. 

• Encourage potential applicants for licenses or certificates to utilize the Commission’s collaborative prefiling process. 

• Incorporate reasonable environmental conditions into permits, licenses and certificates and regulate 

compliance with conditions. 

Objective 1.4: Protect the Reliability, Security and Safety of the Energy Infrastructure. 

• Oversee the development and enforcement of mandatory grid-reliability standards to protect the bulk power 

supply. 

• Regulate the safety of hydropower projects and LNG import facilities licensed by the Commission. 

• Serve as lead Federal agency on siting and authorization of LNG import facilities, hydropower facilities, 

and interstate natural gas pipelines and storage facilities. 

• Work with other agencies and industry to address and improve infrastructure security. 

• Allow prompt recovery of prudently-incurred expenses to safeguard and enhance the reliability, security 

and safety of the energy infrastructure. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

134 

Goal 2: Prevent Exercise of Market Power by Reliance on Effective Competition. 

Objective 2.1: Promote Effective Competition in Electric and Gas Markets. 

• Promote effective competition in wholesale power markets in regions with and without voluntary, 

organized markets. 

• Encourage the reduction or elimination of seams between organized markets. 

• Support creation of regional state committees to advise RTOs and ISOs. 

• Promote transparency of competitive electric and gas markets. 

• Ensure that mergers and jurisdictional facility sales are consistent with the public interest. 

Objective 2.2: Establish Clear Market Rules to Govern Electric Markets. 

• Reform transmission open access policy to prevent undue discrimination and preference. 

• Reform market-based ratemaking policy to prevent exercise of market power and provide regulatory 

certainty. 

• Provide regulatory certainty through clear market rules and case specific decisions. 

• Prevent undue preference and self dealing in affiliate transactions. 

• Encourage the development of business rules and practices that maximize market efficiency, ease market 

entry and reduce transactions costs, relying on NAESB, NERC and the RTO/ISOs where appropriate. 

• Promote development of policies that accommodate effective demand response programs. 

• Remove unduly discriminatory barriers to entry affecting renewable energy. 

Goal 3: Prevent Exercise of Market Power by Reliance on Effective Regulation. 

Objective 3.1: Vigilant and Effective Oversight of Market Operations. 

• Strengthen the Commission’s ability to perform market monitoring. 

• Encourage effective RTO and ISO market monitoring units, as permitted by law. 

• Identify and remedy problems with market structure and operations, and periodically review market rules 

for consistency with long-term market development. 

• Assess market and infrastructure conditions and incorporate analysis into Commission decisions. 

Objective 3.2: Firm but Fair Enforcement of Commission Rules. 

• Improve the Commission’s enforcement capabilities. 

• Implement the market power and enforcement provisions of the Energy Policy Act of 2005. 

• Investigate statutory and rule violations, imposing penalties where appropriate and promptly terminating 

investigations when no violations are identified. 

• Encourage settlements to resolve disputes in an expeditious manner. 

• Act swiftly on complaints, using administrative litigation as needed to determine factual issues. 

• Encourage self-reporting of violations by regulated entities and improve processes to allow regulated 

entities to seek clarifications of Commission rules. 

Management Initiatives Supporting all Goals and Objectives 

Human Capital 

• Implement the Human Capital Plan to meet challenges of new Commission roles and changing workforce 

demographics. 

• Use the right mix of internal workforce and contracted services from the private sector to meet the agency’s 

statutory mandates efficiently and effectively. 

Information Technology 

• Complete the implementation of e-government initiatives to expedite interactions with customers. 

• Build effective electronic workload/time-management and case-processing systems to expedite work 

processes. 

Agency Resources 

• Integrate budget, business plan, and performance measurement to improve performance and accountability. 

• Generate accurate and timely financial information to support operating, budget, and policy decisions. 

Communication 

• Reach out to groups affected by agency actions in a timely manner. 

• Build strong partnerships with all stakeholders, legislators and regulators. 
Federal Energy Regulatory Commission 

FY 2006 Performance and Accountability Report 

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Appendix C 

Statutory Authority 
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As mentioned in Management’s Discussion and Analysis, below is a listing of federal statutes 

applicable to the Commission. Links to these statutes are available on the Commission’s website 

at www.ferc.gov under Legal Resources. 

General 

Title 18 Chapter I of the Code of Federal Regulations (CFR)

Americans with Disabilities Act (ADA)

Department of Energy Organization Act 

Electric Consumers Protection Act (ECPA)

Electronic Freedom of Information Act of 1996

Energy Policy Act of 2005

Energy Policy Act of 1992

Federal Power Act

Information Technology Management Reform Act of 1996 (ITMRA/Clinger-Cohen Act)

Public Utility Holding Company Act of 1935 (PUHCA)

Public Utility Regulatory Policies Act of 1978 (PURPA)

Power Plant & Industrial Fuel Use Act

Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)

Environmental 

Clean Air Act

Clean Water Act

Coastal Zone Management Act 

Endangered Species Act

16 USC 661, Fish and Wildlife Coordination Act

National Environmental Policy Act (NEPA)

National Historic Preservation Act 

Rivers and Harbors Act 

Wild and Scenic Rivers Act

Natural Gas 

Alaska Natural Gas Pipeline Act of 2004

Alaska Natural Gas Transportation Act of 1976

Natural Gas Act of 1938

Natural Gas Policy Act of 1978

Natural Gas Wellhead Decontrol Act of 1989 (NGWDA)

Outer Continental Shelf Lands Act (OCSLA)

Oil 

Oil Pipeline Regulatory Reform

Interstate Commerce Act
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Appendix D 

Acronym Glossary 
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Acronym Full Description 

C&A Certified and Accredited 

CAISO California Independent Transmission System Operator 

CMP Congestion Management Process 

DOE U.S. Department of Energy 

DRS Dispute Resolution Service 

EIS Environmental Impact Statement 

EPAct 2005 Energy Policy Act of 2005 

ERO Electric Reliability Organization 

FCM forward capacity market 

FISMA Federal Information Security Management Act of 2002 

FPA Federal Power Act 

FPC Federal Power Commission 

FTE full-time equivalent 

ICT independent coordinator of transmission 

IG Inspector General 

ISO Independent Transmission System Operator 

ISO-NE Independent Transmission System Operator - New England, Inc 

JOA joint operating agreement 

LNG liquefied natural gas 

MAPP Mid-Continent Area Power Pool 

Midwest ISO Midwest Independent Transmission System Operator 

MRTU Market Redesign and Technology Upgrade 

MW megawatt 

NEPA National Environmental Policy Act of 1969 

NERC North American Electric Reliability Council 

NGA Natural Gas Act of 1938 

NYISO New York Independent Transmission System Operator 

OMB Office of Management and Budget 
 Federal Energy Regulatory Commission 

 FY 2006 Performance and Accountability Report 

142 

Acronym Full Description 

PJM PJM Regional Transmission Organization 

PUHCA 1935 Public Utility Holding Company Act of 1935 

PUHCA 2005 Public Utility Holding Company Act of 2005 

RTO Regional Transmission Organization 

SPP Southwest Power Pool