Common use of Commission Findings Clause in Contracts

Commission Findings. 243. We find that the ERCOT bylaws and the representations made in Exhibit B of the TRE Delegation Agreement satisfy the governance requirements of FPA section 215 and the pro forma Exhibit B Governance Criteria. First, we find that TRE will be governed by a combination independent and balanced stakeholder board. The board will be sufficiently independent because it will be responsible for managing its own budget, hiring and managing its own staff and consultants, and investigating compliance with, and enforcement of, reliability standards in the ERCOT region. The Texas Commission, moreover, will conduct all hearings on complaints, allegations of violations, and non- compliance reports and will make recommendations as to the appropriate disposition of these matters.133 The chairman of the Texas Commission will also occupy a seat on the ERCOT board. As such, we find that there will be a sufficient separation of functions between TRE and the ISO function of ERCOT.134 133 ERCOT bylaws at section 7.2. 134 In our analysis of the SPP Delegation Agreement, below, we reach a different conclusion regarding the extent to which the SPP Regional Entity, as proposed, will operate independently of the SPP RTO. However, we find that the circumstances presented by the proposed TRE/ERCOT arrangement can be distinguished, particularly given the involvement of the Texas Commission in TRE’s governance. 244. We also find that the ERCOT board will be sufficiently independent because it will be comprised of directors chosen from all industry segments, with no two sectors able to control a vote. No single sector will be able to veto a measure, given ERCOT’s quorum and supermajority voting requirements. As such, XXXXX’s board composition and voting protocols are designed to ensure that TRE will be governed by an appropriate balance of stakeholder interests. 245. Finally, we clarify that the ERCOT bylaws are “rules,” under our regulations, which are subject to NERC approval and, if approved by NERC, Commission approval.135

Commission Findings. 243145. We find that accept NERC’s attachment 2 hearing procedures. In general, these hearing procedures satisfy the ERCOT bylaws and the representations made in Exhibit B requirements of the TRE Delegation Agreement satisfy ERO Certification Order by providing an appropriate forum to resolve disputes regarding the governance requirements enforcement of FPA section 215 and the pro forma Exhibit B Governance Criteriareliability standards, including appropriate appellate procedures. However, we also identify modifications to be addressed by NERC. 146. First, we find note that TRE NERC’s attachment 2 hearing procedures do not expressly address or describe certain essential components of the administrative hearing process. As AMP-Ohio, GSOC, Progress Energy, and Xcel point out, for example, attachment 2 does not expressly address the allocation of the burden of persuasion for a finding of violation. Nor does attachment 2 expressly describe the standard of proof that will apply to determinations by the hearing bodies on these matters. Accordingly, we direct NERC to address these matters. NERC’s hearing procedures, for example, must provide expressly that the compliance enforcement authority will have the burden of persuasion on the merits of an attachment 2 hearing. NERC must also expressly guarantee that the standard of proof in its adjudications will be governed the preponderance of the evidence.95 147. We also agree with AMP-Ohio, GSOC, Progress Energy, and Xcel that NERC should modify attachment 2 to address a potential disparity in the availability of discovery. Specifically, attachment 2, section 3 gives the compliance enforcement authority’s staff, compliance audit teams, and investigation teams wide-ranging tools to obtain information from registered entities pertaining to their compliance with reliability standards before deciding whether to issue a notice of alleged violation. However, attachment 2, while not precluding this right, establishes no specific authority for the 94 Attachment 2, section 9 provides, in relevant part, that “[c]opies of the written decision shall be served electronically and by certified mail on the Registered Entity and on the Compliance Enforcement Authority’s designated representative.” 95 This is the standard of proof the Commission employs for imposition of remedies and sanctions. See, e.g., Nantahala Power and Light Co., 19 FERC ¶ 61,152 at 61,276, n. 9 (1982), citing Steadman v. SEC, 450 U.S. 91 (1981). registered entity to seek discovery from the compliance enforcement authority. Accordingly, we direct NERC to modify its attachment 2 procedures to address this concern. 148. Attachment 2, section 1 provides that the hearing body may rule on all procedural and discovery matters. However, without specific, codified rules to be applied in these cases, there could be the potential for arbitrary, inconsistent rulings. Moreover, these rulings may lead to disparate procedures among the Regional Entities and thus promote a lack of uniformity. Accordingly, we direct NERC to address this concern. 149. We also note that attachment 2, section 5 provides for consultations with respect to discovery that, if unsuccessful, would be resolved by a combination independent and balanced stakeholder board. The board will determination made by the NERC compliance program officer.96 However, while this process may be sufficiently independent because successful, in some cases, it will may not be responsible for managing its own budgetadequate in others, hiring and managing its own staff and consultants, and investigating compliance with, and enforcement of, reliability standards in the ERCOT regionabsence of guidelines, i.e., specific rules on discovery. The Texas CommissionIn addition, moreoverit may not be appropriate for these matters to be considered by the NERC compliance program officer after a hearing body has convened. Rather, will conduct all hearings on complaintsat that time, allegations of violations, and non- compliance reports and will make recommendations as it would be preferable to assign this role to the appropriate disposition hearing body. Accordingly, we direct NERC to address these issues. 150. We reject Progress Energy’s and Xxxx’s arguments regarding the need for procedures addressing the participation of these matters.133 The chairman third parties in an attachment 2 hearing. We find that, generally, third parties should not be permitted to intervene. In most cases, the contributions from third parties regarding the development of the Texas Commission record would likely be minimal, given the fact that the record will also occupy a seat on have been compiled largely during the ERCOT boardinvestigative process. Second, attachment 2 hearings will generally be non-public. As such, participation by third parties could make it more difficult for the hearing to remain non-public. There are, however, exceptions to this general rule that should be recognized. For instance, more than one registered entity may receive a notice of alleged violation for the same event or transaction, and it may be necessary, under these circumstances, to examine the actions of both entities in a single hearing. Circumstances may also occur when it would be appropriate and in the public interest to hold public hearings or permit third parties to intervene. In Order No. 672, the Commission stated 96 Attachment 2, section 5 states that “[t]he hearing body shall set a date for an initial conference within thirty (30) days after the date the hearing body is convened.” Attachment 2, section 5 further provides that “[a]t the initial conference, the hearing body shall establish specific procedures for the hearing including: (i) any procedures for exchange of additional documents, (ii) any written testimony; (iii) the hearing date(s), and (iv) dates for any briefs.” that it must authorize, in advance, interventions in proceedings in which a Regional Entity or NERC determines whether to impose a penalty. We will consider such matters on a case-by-case basis. If we find permit interventions in such cases, we will address at that there will time any particular procedures relating to intervenors that would be a sufficient separation of functions between TRE appropriate. 151. We agree with GSOC that NERC’s attachment 2 hearing procedures should also provide additional details regarding the composition and the ISO function of ERCOT.134 133 ERCOT bylaws at section 7.2. 134 In our analysis duties of the SPP Delegation Agreementcompliance enforcement authority hearing body. These details would be helpful in assuring that adjudications reached by these hearing bodies will comport with basic due process and will not be subject to inconsistency. For example, belowthese procedures should address whether the entire hearing body, we reach or only a different conclusion regarding the extent to which the SPP Regional Entitysubset of it, as proposedmust vote, will operate independently of the SPP RTO. Howeverif not recused.97 Further, we find that the circumstances presented by the proposed TRE/ERCOT arrangement can be distinguished, particularly given the involvement of the Texas Commission in TRE’s governance. 244. We also find that the ERCOT board will be sufficiently independent because it will be comprised of directors chosen from all industry segments, with no two sectors able to control a vote. No single sector will be able to veto a measure, given ERCOT’s quorum and supermajority voting requirements. As such, XXXXX’s board composition and voting protocols are designed to ensure that TRE will different practices do not arise on this point, all questions in a hearing shall be governed decided by an appropriate balance a majority of stakeholder intereststhe votes cast by a quorum of the hearing body. 245. FinallyAccordingly, we clarify direct NERC to address these matters. 152. We reject GSOC’s argument that attachment 2, section 6 should be required to set forth additional requirements regarding the admissibility of evidence in an attachment 2 hearing. We note that attachment 2, section 6 essentially restates the Commission’s own rule on admissibility of evidence and for that reason is acceptable.98 153. We reject Xcel’s argument that attachment 2 should be required to adopt additional provisions, as applied by the NASD Rules of Procedures. While we have determined, above, that certain changes are necessary to meet general due process concerns, we do not agree that the ERCOT bylaws are “rules,” under our regulations, which are subject to NERC approval and, if approved by NERC, Commission approval.135NASD template is appropriate in every instance.

Commission Findings. 243145. We find that accept NERC’s attachment 2 hearing procedures. In general, these hearing procedures satisfy the ERCOT bylaws and the representations made in Exhibit B requirements of the TRE Delegation Agreement satisfy ERO Certification Order by providing an appropriate forum to resolve disputes regarding the governance requirements enforcement of FPA section 215 and the pro forma Exhibit B Governance Criteriareliability standards, including appropriate appellate procedures. However, we also identify modifications to be addressed by NERC. 146. First, we find note that TRE NERC’s attachment 2 hearing procedures do not expressly address or describe certain essential components of the administrative hearing process. As AMP-Ohio, GSOC, Progress Energy, and Xcel point out, for example, attachment 2 does not expressly address the allocation of the burden of persuasion for a finding of violation. Nor does attachment 2 expressly describe the standard of proof that will apply to determinations by the hearing bodies on these matters. Accordingly, we direct NERC to address these matters. NERC’s hearing procedures, for example, must provide expressly that the compliance enforcement authority will have the burden of persuasion on the merits of an attachment 2 hearing. NERC must also expressly guarantee that the standard of proof in its adjudications will be governed by a combination independent and balanced stakeholder boardthe preponderance of the evidence.95 147. The board will be sufficiently independent because it will be responsible for managing its own budgetWe also agree with AMP-Ohio, hiring and managing its own staff and consultantsGSOC, Progress Energy, and investigating Xcel that NERC should modify attachment 2 to address a potential disparity in the availability of discovery. Specifically, attachment 2, section 3 gives the compliance withenforcement authority’s staff, compliance audit teams, and enforcement of, investigation teams wide-ranging tools to obtain information from registered entities pertaining to their compliance with reliability standards in the ERCOT region. The Texas Commission, moreover, will conduct all hearings on complaints, allegations before deciding whether to issue a notice of violations, and non- compliance reports and will make recommendations as to the appropriate disposition of these matters.133 The chairman of the Texas Commission will also occupy a seat on the ERCOT board. As such, we find that there will be a sufficient separation of functions between TRE and the ISO function of ERCOT.134 133 ERCOT bylaws at section 7.2. 134 In our analysis of the SPP Delegation Agreement, below, we reach a different conclusion regarding the extent to which the SPP Regional Entity, as proposed, will operate independently of the SPP RTOalleged violation. However, attachment 2, while not precluding this right, establishes no specific authority for the 94 Attachment 2, section 9 provides, in relevant part, that “[c]opies of the written decision shall be served electronically and by certified mail on the Registered Entity and on the Compliance Enforcement Authority’s designated representative.” 95 This is the standard of proof the Commission employs for imposition of remedies and sanctions. See, e.g., Nantahala Power and Light Co., 19 FERC ¶ 61,152 at 61,276, n. 9 (1982), citing Steadman v. SEC, 450 U.S. 91 (1981). registered entity to seek discovery from the compliance enforcement authority. Accordingly, we find direct NERC to modify its attachment 2 procedures to address this concern. 148. Attachment 2, section 1 provides that the circumstances presented by hearing body may rule on all procedural and discovery matters. However, without specific, codified rules to be applied in these cases, there could be the proposed TRE/ERCOT arrangement can be distinguishedpotential for arbitrary, particularly given inconsistent rulings. Moreover, these rulings may lead to disparate procedures among the involvement Regional Entities and thus promote a lack of the Texas Commission in TRE’s governanceuniformity. 244. We also find that the ERCOT board will be sufficiently independent because it will be comprised of directors chosen from all industry segments, with no two sectors able to control a vote. No single sector will be able to veto a measure, given ERCOT’s quorum and supermajority voting requirements. As such, XXXXX’s board composition and voting protocols are designed to ensure that TRE will be governed by an appropriate balance of stakeholder interests. 245. FinallyAccordingly, we clarify that the ERCOT bylaws are “rules,” under our regulations, which are subject direct NERC to NERC approval and, if approved by NERC, Commission approval.135address this concern.