18 Cfr 41

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Federal Energy Regulatory Commission

Pt. 41

determining whether the state action
is inconsistent with a Reliability
Standard, taking into consideration
any recommendation of the Electric
Reliability Organization and the state.
(c) The Commission, after consultation with the Electric Reliability Organization and the state taking action,
may stay the effectiveness of the state
action, pending the Commission’s
issuance of a final order.

PART 40—MANDATORY RELIABILITY
STANDARDS FOR THE BULKPOWER SYSTEM

§ 39.13

§ 40.1 Applicability.
(a) This part applies to all users,
owners and operators of the BulkPower System within the United
States (other than Alaska or Hawaii),
including, but not limited to, entities
described in section 201(f) of the Federal Power Act.
(b) Each Reliability Standard made
effective by § 40.2 must identify the
subset of users, owners and operators
of the Bulk-Power System to which a
particular Reliability Standard applies.

Regional Advisory Bodies.

(a) The Commission will establish a
Regional Advisory Body on the petition of at least two-thirds of the states
within a region that have more than
one-half of their electric load served
within the region.
(b) A petition to establish a Regional
Advisory Body shall include a statement that the Regional Advisory Body
is composed of one member from each
participating state in the region, appointed by the governor of each state,
and may include representatives of
agencies, states and provinces outside
the United States.
(c) A Regional Advisory Body established by the Commission may provide
advice to the Electric Reliability Organization or a Regional Entity or the
Commission regarding:
(1) The governance of an existing or
proposed Regional Entity within the
same region;
(2) Whether a Reliability Standard
proposed to apply within the region is
just, reasonable, not unduly discriminatory or preferential, and in the public interest;
(3) Whether fees for all activities
under this part proposed to be assessed
within the region are just, reasonable,
not unduly discriminatory or preferential, and in the public interest; and
(4) Any other responsibilities requested by the Commission.
(d) The Commission may give deference to the advice of a Regional Advisory Body established by the Commission that is organized on an Interconnection-wide basis.

Sec.
40.1 Applicability.
40.2 Mandatory Reliability Standards.
40.3 Availability of Reliability Standards.
AUTHORITY: 16 U.S.C. 824o.
SOURCE: Order 693, 72 FR 16598, Apr. 4, 2007,
unless otherwise noted.

§ 40.2 Mandatory Reliability Standards.
(a) Each applicable user, owner or operator of the Bulk-Power System must
comply with Commission-approved Reliability Standards developed by the
Electric Reliability Organization.
(b) A proposed modification to a Reliability Standard proposed to become
effective pursuant to § 39.5 of this Chapter will not be effective until approved
by the Commission.
§ 40.3 Availability of Reliability Standards.
The Electric Reliability Organization
must post on its Web site the currently
effective Reliability Standards as approved and enforceable by the Commission. The effective date of the Reliability Standards must be included in
the posting.

PART 41—ACCOUNTS, RECORDS,
MEMORANDA AND DISPOSITION
OF CONTESTED AUDIT FINDINGS
AND PROPOSED REMEDIES
DISPOSITION OF CONTESTED AUDIT FINDINGS
AND PROPOSED REMEDIES
Sec.

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§ 41.1

18 CFR Ch. I (4–1–16 Edition)

41.1 Notice to audited person.
41.2 Response to notification.
41.3 Shortened procedure.
41.4 Form and style.
41.5 Verification.
41.6 Determination.
41.7 Assignment for oral hearing.
41.8 Burden of proof.
CERTIFICATION OF COMPLIANCE WITH
ACCOUNTING REGULATIONS
41.10
41.11
41.12

Examination of accounts.
Report of certification.
Qualifications of accountants.

AUTHORITY: 16 U.S.C. 791a–825r, 2601–2645; 42
U.S.C. 7101–7352.
SOURCE: Order 141, 12 FR 8500, Dec. 19, 1947,
unless otherwise noted.
CROSS REFERENCE: For rules of practice
and procedure, see part 385 of this chapter.

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DISPOSITION OF CONTESTED AUDIT
FINDINGS AND PROPOSED REMEDIES
§ 41.1 Notice to audited person.
(a) Applicability. This part applies to
all audits conducted by the Commission or its staff under authority of the
Federal Power Act except for Electric
Reliability Organization audits conducted pursuant to the authority of
part 39 of the Commission’s regulations.
(b) Notice. An audit conducted by the
Commission’s staff under authority of
the Federal Power Act may result in a
notice of deficiency or audit report or
similar document containing a finding
or findings that the audited person has
not complied with a requirement of the
Commission with respect to, but not
limited to, the following: A filed tariff
or tariffs, contracts, data, records, accounts, books, communications or papers relevant to the audit of the audited person; matters under the Standards of Conduct or the Code of Conduct;
and the activities or operations of the
audited person. The notice of deficiency, audit report or similar document may also contain one or more
proposed remedies that address findings of noncompliance. Where such
findings, with or without proposed
remedies, appear in a notice of deficiency, audit report or similar document, such document shall be provided
to the audited person, and the finding
or findings, and any proposed remedies,
shall be noted and explained. The au-

dited person shall timely indicate in a
written response any and all findings
or proposed remedies, or both, in any
combination, with which the audited
person disagrees. The audited person
shall have 15 days from the date it is
sent the notice of deficiency, audit report or similar document to provide a
written response to the audit staff indicating any and all findings or proposed
remedies, or both, in any combination,
with which the audited person disagrees, and such further time as the
audit staff may provide in writing to
the audited person at the time the document is sent to the audited person.
The audited person may move the Commission for additional time to provide
a written response to the audit staff
and such motion shall be granted for
good cause shown. Any initial order
that the Commission subsequently may
issue with respect to the notice of deficiency, audit report or similar document shall note, but not address on the
merits, the finding or findings, or the
proposed remedy or remedies, or both,
in any combination, with which the audited person disagreed. The Commission shall provide the audited person 30
days to respond to the initial Commission order concerning a notice of deficiency, audit report or similar document with respect to the finding or
findings or any proposed remedy or
remedies, or both, in any combination,
with which it disagreed.
[Order 675–A, 71 FR 29784, May 24, 2006]

§ 41.2

Response to notification.

Upon issuance of a Commission order
that notes a finding or findings, or proposed remedy or remedies, or both, in
any combination, with which the audited person has disagreed, the audited
person may: Acquiesce in the findings
and/or proposed remedies by not timely
responding to the Commission order, in
which case the Commission may issue
an order approving them or taking
other action; or challenge the finding
or findings and/or any proposed remedies, with which it disagreed by timely notifying the Commission in writing
that it requests Commission review by
means of a shortened procedure or, if
there are material facts in dispute

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Federal Energy Regulatory Commission
which require cross-examination,
trial-type hearing.

a

facts and argument as prescribed for
briefs in § 385.706 of this chapter.
[Order 141, 12 FR 8500, Dec. 19, 1947, as
amended by Order 225, 47 FR 19056, May 3,
1982]

[Order 675, 71 FR 9706, Feb. 27, 2006]

§ 41.3

§ 41.10

Shortened procedure.

If the audited person subject to a
Commission order described in § 41.1 notifies the Commission that it seeks to
challenge one or more audit findings,
or proposed remedies, or both, in any
combination, by the shortened procedure, the Commission shall thereupon
issue a notice setting a schedule for the
filing of memoranda. The person electing the use of the shortened procedure,
and any other interested entities, including the Commission staff, shall
file, within 45 days of the notice, an
initial memorandum that addresses the
relevant facts and applicable law that
support the position or positions taken
regarding the matters at issue. Reply
memoranda shall be filed within 20
days of the date by which the initial
memoranda are due to be filed. Only
participants who filed initial memoranda may file reply memoranda. Subpart T of part 385 of this chapter shall
apply to all filings. Within 20 days
after the last date that reply memoranda under the shortened procedure
may be timely filed, the audited person
who elected the shortened procedure
may file a motion with the Commission
requesting a trial-type hearing if new
issues are raised by a party. To prevail
in such a motion, the audited person
must show that a party to the shortened procedure raised one or more new
issues of material fact relevant to resolution of a matter in the shortened procedure such that fundamental fairness
requires a trial-type hearing to resolve
the new issue or issues so raised. Parties to the shortened procedure and the
Commission staff may file responses to
the motion. In ruling upon the motion,
the Commission may determine that
some or all of the issues be litigated in
a trial-type hearing.

§ 41.5

Verification.

The facts stated in the memorandum
must be sworn to by persons having
knowledge thereof, which latter fact
must affirmatively appear in the affidavit. Except under unusual circumstances, such persons should be
those who would appear as witnesses if
hearing were had to testify as to the
facts stated in the memorandum.
§ 41.6

Determination.

If no formal hearing is had the matter in issue will be determined by the
Commission on the basis of the facts
and arguments submitted.
§ 41.7

Assignment for oral hearing.

Except when there are no material
facts in dispute, when a person does
not consent to the shortened procedure, the Commission will assign the
proceeding for hearing as provided by
subpart E of part 385 of this chapter.
Notwithstanding a person’s not giving
consent to the shortened procedure,
and instead seeking assignment for
hearing as provided for by subpart E of
part 385 of this chapter, the Commission will not assign the proceeding for
a hearing when no material facts are in
dispute. The Commission may also, in
its discretion, at any stage in the proceeding, set the proceeding for hearing.
[Order 575, 60 FR 4854, Jan. 25, 1995]

§ 41.8

Burden of proof.

The burden of proof to justify every
accounting entry shall be on the person
making, authorizing, or requiring such
entry.
CERTIFICATION OF COMPLIANCE WITH
ACCOUNTING REGULATIONS

[Order 675, 71 FR 9706, Feb. 27, 2006]

§ 41.10
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§ 41.4

Form and style.

Each copy of such memorandum
must be complete in itself. All pertinent data should be set forth fully, and
each memorandum should set out the

Examination of accounts.

(a) All Major and Nonmajor public
utilities and licensees not classified as
Class C or Class D prior to January 1,
1984 shall secure, for the year 1968 and
each year thereafter until December 31,

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§ 41.11

18 CFR Ch. I (4–1–16 Edition)

1975, the services of an independent certified public accountant, or independent licensed public accountant,
certified or licensed by a regulatory
authority of a State or other political
subdivision of the United States, to
test compliance in all material respects of those schedules as are indicated in the General Instructions set
out in the Annual Report, Form No. 1,
with the Commission’s applicable Uniform System of Accounts and published
accounting releases. The Commission
expects that identification of questionable matters by the independent accountant will facilitate their early resolution and that the independent accountant will seek advisory rulings by
the Commission on such items. This
examination shall be deemed supplementary to periodic Commission examinations of compliance.
(b) Beginning January 1, 1976, and
each year thereafter, only independent
certified public accountants, or independent licensed public accountants
who were licensed on or before December 31, 1970, will be authorized to conduct annual audits and to certify to
compliance in all material respects, of
those schedules as are indicated in the
General Instructions set out in the Annual Report, Form No. 1, with the
Commission’s applicable Uniform System of Accounts, published accounting
releases and all other regulatory matters.
[Order 462, 37 FR 26005, Dec. 7, 1972, as
amended by Order 390, 49 FR 32505, Aug. 14,
1984]

independent accountant certifying approval must be filed within 150 days of
the close of the company’s fiscal year;
the letter or report must also identify
which, if any, of the examined schedules do not conform to the Commission’s requirements and shall describe
the discrepancies that exist. The Commission will not be bound by a certification of compliance made by an independent accountant pursuant to this
paragraph.
[73 FR 58736, Oct. 7, 2008]

§ 41.12

Qualifications of accountants.

The Commission will not recognize
any certified public accountant or public accountant through December 31,
1975, who is not in fact independent.
Beginning January 1, 1976, and each
year thereafter, the Commission will
recognize only independent certified
public accountants, or independent licensed public accountants who were licensed on or before December 31, 1970,
who are in fact independent. For example, an accountant will not be considered independent with respect to any
person or any of its parents or subsidiaries in whom he has, or had during the
period of report, any direct financial
interest. The Commission will determine the fact of independence by considering all the relevant circumstances
including evidence bearing on the relationships between the accountant and
that person or any affiliate thereof.

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[Order 462, 37 FR 26006, Dec. 7, 1972]

§ 41.11 Report of certification.
Each Major and Nonmajor (including
those companies classified as nonoperating under Part 101, General Instruction 1(A)(3) of this chapter) public
utility or licensee operating on a calendar year and not classified as Class C
or Class D prior to January 1, 1984 must
file with the Commission a letter or report of the independent accountant
certifying approval, together with or
within 30 days after the filing of the
Annual Report, Form No. 1, covering
the subjects and in the form prescribed
in the General Instructions of the Annual Report. For such utility or licensee operating on a non-calendar fiscal year, the letter or report of the

PART 42—LONG-TERM FIRM TRANSMISSION RIGHTS IN ORGANIZED
ELECTRICITY MARKETS
Sec.
42.1 Requirement that Transmission Organizations with Organized Electricity
Markets Offer Long-Term Firm Transmission Rights.
AUTHORITY: 16 U.S.C. 791a–825r and section
217 of the Federal Power Act, 16 U.S.C. 824q.
SOURCE: Order 681, 71 FR 43619, Aug. 1, 2006,
unless otherwise noted.

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