Archive for the ‘NERC’ Category

Western Electricity Coordinating Council Slapped with (only?) $350,000 Civil Penalty for Alleged Violations of Reliability Standards

Photo by JustoRuiz. Some rights reserved.

As reported, summarized, and analyzed by law firm Hogan Lovells in a recent Alert, FERC earlier this month issued an Order that concluded an investigation of Pacific Northwest Security Coordinator (PNSC), the predecessor  of Western Electricity Coordinating Council (WECC).

The investigation was launched after a “disturbance” that occurred in 2008 (a short circuit on a transformer in Utah), and, together, FERC and NERC found that PNSC’s “inadequate response” to the event, combined with a failure to have certain proper procedures in place, violated nine requirements of five Reliability Standards. As a result, WECC was ordered to pay a civil penalty in the amount of $350,000.

Considering that WECC –  one of nine regional electric reliability councils under NERC authority – describes itself as “responsible for coordinating and promoting bulk electric system reliability,” you’d hope they’d have their reliability down pat.

And therefore it makes sense that Hogan Lovells is left wondering why the penalty was so low, given that Florida Power and Light Company “paid a US$25 million fine in connection with the Flagami incident.” (The Flagami incident represented the first time that a regional reliability entity was fined for violating a mandatory reliability standard.) However, the law firm also notes that the Florida Reliability Coordinating Council, in its role as Reliability Coordinator, paid only a $350,000 fine for the incident.

FERC’s Proposed Data Improvements Aim to Enhance Market Monitoring and Transparency

Late last month, FERC concurrently released two Notices of Proposed Rulemaking (NOPRs) related to electronic tag (e-Tag) data associated with transactions in wholesale power markets.

The first NOPR (Docket No. RM10-12-000) proposes changes to “facilitate price transparency in markets for the sale and transmission of electric energy in interstate commerce” by requiring market participants that are currently excluded from the Commission’s jurisdiction under section 205 of the Federal Power Act (16 USC 824d) to file Electric Quarterly Reports (EQR) with the Commission. The proposal also requires such reports to include e-Tag ID data.

The second NOPR (Docket No. RM11-12-000) would require the North American Electric Reliability Corporation (NERC) to provide FERC with access to “complete electronic tagging data used to schedule the transmission of electric power in wholesale markets.” FERC claims that this information – which would not be made publicly available – would “aid the Commission in market monitoring and preventing market manipulation, help assure just and reasonable rates, and aid in monitoring compliance with certain business practice standards.”

Law firms Van Ness Feldman and Hogan Lovells have published legal alerts summarizing the proposals here and here, respectively. Hogan Lovells predicts that the proposed changes, if passed, will “significantly enhance FERC’s market oversight and enforcement capabilities.”

Reliability Standards: Are FERC and NERC Cracking the Enforcement Whip?

Last month’s Briefing from Winston & Strawn suggests that NERC and FERC are casting an ever-widening net of enforcement over renewable energy developers and other generators subject to reliability standards.

"Young Boy with Whip" (and the next head of FERC Enforcement?)

In addition to expanding the scope of transmission-related reliability standards to cover renewable energy sources, FERC has also “confirmed that it is devoting more resources to investigating alleged violations of the reliability standards,” according to Winston & Strawn.

And how exactly does investigation and enforcement of reliability standards work? Often FERC’s enforcement team will work together with the North American Electric Reliability Corporation (NERC) – an electric reliability organization certified by FERC to develop and enforce the reliability standards – to both investigate alleged violations and conduct proactive audits relating to compliance with these standards. (The federal rules relating to investigations can be found under 18 CFR 1B.)

Under “commission approved procedures,” NERC prepares and files Notices of Penalty (NOP), which detail violations and may include settlement agreements or other resolutions and remedies. The NOPs are then filed publicly (view NERC’s database here) with FERC, who can take further action (for instance, by initiating proceedings), or decline further review (rendering any enforcement actions or penalties within the NOP effective).

Sometimes these audits or investigations (or even self-reports of violations!) are disclosed in SEC filings. You can see some choice disclosures from 2010 below. Will the number of investigations explode in 2011? Stay tuned to knowledgemosaic and The Green Mien to find out.

 

Duke Energy Ohio, Inc. | Form 10-Q | 11/5/2010

In September 2008 the FERC initiated a preliminary, non-public investigation to determine if there were any potential violations by Duke Energy Carolinas of the North American Electric Reliability Council Reliability Standards. This investigation was coordinated with an ongoing Compliance Violation Investigation conducted by SERC Reliability Corporation. On March 5, 2009, FERC presented its preliminary findings about the event to Duke Energy Carolinas and solicited Duke Energy Carolinas’ responsive views about the event and the findings. On March 27, 2009, Duke Energy Carolinas conveyed its responsive views to FERC Staff. This investigation could result in penalties being assessed.

 

PACIFICORP /OR/ | Form 10-Q | 11/5/2010

In April 2008, PacifiCorp received notice of a preliminary non-public investigation from the FERC and the NERC to determine whether an outage that occurred in PacifiCorp’s transmission system in February 2008 involved any violations of reliability standards. In November 2008, PacifiCorp received preliminary findings from the FERC staff regarding its non-public investigation into the February 2008 outage. Also in November 2008, in conjunction with the reliability standards review, the FERC assumed control of certain aspects of the WECC’s 2007 audit. PacifiCorp has engaged in discussions with FERC staff regarding findings related to the WECC audit and the non-public investigation. However, PacifiCorp cannot predict the impact of the audit or the non-public investigation on its consolidated financial results at this time.


PPL ELECTRIC UTILITIES CORP | Form 10-Q | 10/29/2010

Since 2007, PPL Electric and certain subsidiaries of PPL Energy Supply have self-reported potential violations of certain applicable reliability requirements and submitted accompanying mitigation plans. The resolution of certain of these potential violation reports is pending. In April 2010, a PPL Electric settlement with RFC resolving four self-reported potential violations became final. PPL Electric agreed to pay a settlement amount of $290,000 and, among other things, to engage in additional vegetation clearing at a cost of approximately $7 million over the next three years. The settlement amount was paid in May 2010. The resolution of certain other self-reported matters is pending. Any regional reliability entity determination concerning the resolution of violations of the Reliability Standards remains subject to the approval of the NERC and the FERC. PPL Electric and PPL Energy Supply cannot predict the outcome of these matters.

%d bloggers like this: