By Leland McMillan, NERC Supervisor
NERC provides an annual report to summarize Compliance Monitoring and Enforcement Program (CMEP) activities as well as key statistics in the prior calendar year. The report for 2024 was published on February 12, 2025 and contains interesting high-level details about what has happened as well as key initiatives for the upcoming year. The entire report is a good read, but here are a few key highlights quoted from the report:
Annual FFT and CE Programs Review
In October 2024, NERC Enforcement issued the report for the 2023 annual review of the FFT and CE programs.11 NERC and FERC staff jointly reviewed a sample of 32 out of 173 FFT instances of noncompliance and a sample of 30 out of 888 CE instances of noncompliance posted by NERC between October 2022 and September 2023. Sampling for the 2023 program year indicated that Regional Entities appropriately processed all sampled violation IDs as FFTs or CEs, all sampled noncompliance were adequately remediated, and the root cause of each noncompliance was clearly identified. Commission staff also reviewed the supporting information for these FFTs or CEs and agreed with the final risk determinations for all 62 noncompliance, which clearly identified the factors affecting the risk prior to mitigation (such as potential and actual risk) and actual harm. 12 NERC agreed with all sampled risk determinations and found the Regional Entities had detailed and thorough descriptions of noncompliance. Based on these findings, NERC concluded that Regional Entities have continued to improve consistency in processing and understanding of the risk associated with individual noncompliance across the ERO Enterprise. NERC and FERC staff initiated the 2024 Annual FFT and CE Programs review in Q4 2024. NERC issued data requests to the Regional Entities for sampled IDs from the fiscal year 2024 and the Regional Entities provided evidence documents in response. NERC staff will conduct a thorough review of evidence documents in Q1 2025.
Functional Registration Changes by Region
In 2024, the ERO Enterprise processed 347 registration changes, 218 of them being activations and 129 deactivations. Most of this registration activity was concentrated in the Generator Owner (GO) and Generator Operator (GOP) functions, consistent with prior years.
Noncompliance Discovery Methods
The ERO Enterprise looks for high levels of self-reported noncompliance as an indicator that registered entities have good detective controls and strong cultures of compliance.
Focus on Reducing Older Inventory
ERO Enterprise’s open noncompliance inventory consists of noncompliance reported to or identified by the Regional Entities or NERC that has not yet been processed by filing with FERC (Full NOPs and SNOPs), submission to FERC (FFTs and CEs), or being dismissed. In 2024, the ERO Enterprise focused on reducing the volume of its oldest open inventory and made substantial reductions. ERO Enterprise strives to process noncompliance in a timely manner such that its open noncompliance older than two years old is kept to a minimum.
Priorities for 2025
To guide registration, certification, compliance monitoring, and enforcement, activities in 2024, NERC has identified the following priorities:
• Continued oversight of the ERO Enterprise registration, certification, compliance monitoring, and enforcement activities.
• Continued improvement of the Align and SEL tools in support of the CMEP.
• Continued focus on reducing noncompliance inventory, particularly older inventory.
• Use data to timely provide insights, trends, and recommendations to prepare for emerging risks to reliability.
• Engage with U.S. and Canadian regulators to explore opportunities for greater knowledge sharing and involvement.
• Develop a symbiotic relationship between certification, entity risk (as evaluated through IRAs and COPs), and compliance monitoring.
• Participate in ERO Enterprise monitoring activities to evaluate potential opportunities to further mature the audit process.
• Continue to engage with the CCC, and other stakeholders as appropriate, to understand, among other things, industry perceptions of the policies, practices, and effectiveness of the ORCP and CMEP.