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On October 2, 2025, the Federal Energy Regulatory Commission (FERC) approved a settlement with the Los Angeles Department of Water and Power (LADWP) to resolve an Office of Enforcement (Enforcement) investigation of LADWP's failure to comply with the North American Electric Reliability Corporation's (NERC) Rules of Procedure (ROP) by providing false information in an audit. LADWP agreed to pay a civil penalty of $350,000 and to submit annual compliance monitoring reports for several years in resolution of the investigation.
FERC's approval of the settlement marks a rare instance of a civil penalty assessment for failure to provide accurate information to a regional entity in a NERC audit. The settlement affirms NERC's broad audit and enforcement authority and reflects the importance FERC places on accurate and complete communications with NERC and regional entities. The settlement also emphasizes that responsibility rests with the NERC-regulated entity to ensure that its employees, agents, and third-party consultants conduct themselves in compliance with all applicable ROP requirements.
The investigation stemmed from the Western Electricity Coordinating Council's (WECC) 2020 audit of LADWP. During the audit, LADWP omitted relevant material in responses to data requests issued by WECC, rendering the responses false. LADWP personnel responsible for responding to WECC's data requests, including "high-level personnel", were aware of the relevant material but nonetheless omitted it from data responses. Compounding the problem, according to the settlement agreement, LAWDP personnel claimed they were unable to locate the material responsive to the data requests, which was untrue. Further, an outside consultant LADWP hired to assist with the audit told LADWP that omitting the material could be perceived as hiding information or not being completely forthcoming with WECC – but the consultant and LADWP still finalized the data responses without including the materials. Following these inaccurate responses to WECC data requests, LADWP self-reported its conduct to WECC in June of 2023.
The Office of Enforcement investigated this incident and determined that LADWP's data responses violated provisions of NERC's ROP – which constituted a separate violation of section 39.2(d) of FERC regulations, requiring that each user, owner, and operator of the Bulk Power System provide all information necessary to its applicable regional entity to implement section 215 of the Federal Power Act. Along with the involvement of senior LADWP personnel, Enforcement emphasized the role of LADWP's audit consultants in preparing the inaccurate data responses, noting that this behavior was inconsistent with the obligation of third-party consulting firms to advise and guide NERC members to provide truthful responses during NERC audits. LADWP did not admit or deny the violations.
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