Taking a Utility From a Culture of Complacency to a Culture of Compliance

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Vice President, Energy & Utilities Compliance

As the Electric Reliability Organization (ERO) continues to mature and provide leadership for electric reliability, there have been many changes over the last four years. One of the most recent NERC initiatives is working with the industry on reliability excellence with a risk-based approach. Gerry Cauley, President and CEO of NERC, has continuously emphasized the “Five Key Success Factors” for building a foundation of public trust. These five key success factors include:

  1. Risked based approach, with reliability performance measurably improving
  2. Reliability-learning, self-correcting industry
  3. Culture of compliance, enforcement backstop
  4. Commitment to security/resilience of grid
  5. Positive relationships and reputation

NERC and the Regional Entities will start conducting more reviews and assessments on registered entities regarding “Risk Based Compliance Monitoring.” All Regions are moving toward evaluations of internal compliance programs based on the FERC “13 questions” provided in the 2005 orders. Some Regional Entities are already sending surveys to their entities trying to learn more about the internal compliance culture in these organizations. They will be reviewing internal processes and procedures. They will also review such things as: the number of violations discovered via audits or investigations, repeat violations, number of mitigation plans, etc.

FERC Orders

Policy Statement on Enforcement Docket No. PL06-1-000, 113 FERC ¶ 61,068 (October 20, 2005)

Revised Policy Statement on Enforcement Docket No. PL08-3-000, 123 FERC ¶ 61,156 (May 18, 2008)

Policy Statement on Compliance Docket No. PL09-1-000,125 FERC ¶ 61,058 (October 16, 2008)

Policy Statement on Penalty Guidelines Docket No. PL10-4-000, 130 FERC ¶ 61,220 (March 18, 2010)  suspended on April 15, 2010

Revised Policy Statement on Penalty Guidelines Docket No. PL10-4-000,132 FERC ¶ 61,216 (October 17, 2010)

Many businesses in a regulated industry such as financial, life sciences, and nuclear industry have lived through these changes and have continuously improved their internal compliance and regulatory programs. Many have built strong Culture of Compliance programs. I have seen and been a part of some very strong Culture of Compliance programs. Some of the key elements of these programs are senior management involvement that provides strong leadership and holding individuals accountable. This is so important when implementing the critical elements of a Culture of Compliance.

Another important part of building a better compliance culture is establishing an organization that self-identifyies and self-corrects issues. One of the most important aspects of this internal initiative is implementing a robust corrective and preventive action (CAPA) program. Every individual in an organization must be trained on the process and tools of this program; management must continuously support the employees identifying issues; and preventative steps must be assigned and completed.

Corrective and Preventive Action (CAPA) Workflow

AssurX has developed a white paper on how to build the key elements of the “Culture of Compliance” program. Download your copy here to learn more.

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