The Federal Energy Regulatory Commission and the U.S. electric grid overseer settled their dispute yesterday over the grid agency's expenditures and transparency.

A FERC audit last May faulted the North American Electric Reliability Corp. (NERC) for a lack of transparency, saying the organization "significantly deviated from its budgeted activities" without approval from FERC commissioners or its own board of trustees (Greenwire, May 7, 2012).

Among other things, the audit found NERC had spent more than $74,000 in 2010 and $109,000 in 2011 for holiday parties and failed to accurately record those expenditures.

FERC auditors said NERC is a nonprofit, and "to protect ratepayers it is imperative that NERC not incur costs that have not been explicitly approved." The report covered NERC spending from August 2006 to March 2012.

NERC criticized the audit, calling it a "relatively one-sided appraisal of the issues" that "is dismissive of NERC's positions, or the findings and recommendations of independent consultants, in often harsh tones."

But the two entities reached a settlement yesterday, in which NERC agreed to improve its process for sharing information tied to expenditures and to obtain FERC approval for unforeseen expenditures of more than $500,000. NERC also agreed to conduct a cost-benefit analysis of implementing a more detailed budgeting and accounting system by March 31, 2014.

FERC Chairman Jon Wellinghoff told reporters today that neither party got all it wanted but that enough common ground was reached to produce a settlement.

"We want to ensure we have a good relationship, and I'm glad we settled the differences and we're moving forward," he said.