FERC Issues Order Approving $350,000 Fine against Florida Reliability Organization

On March 5, 2010, FERC approved a settlement order under which the Florida Reliability Coordinating Council, Inc. (“FRCC”) will pay a $350,000 civil penalty for its part in the February 26, 2008 power outage in southeastern Florida. This is the first time that a regional reliability entity has been fined for violating a mandatory reliability standard.

On February 26, 2008, millions of customers in Florida lost power caused by a fault at a substation on the Florida Power and Light Company (“FPL”) system in west Miami. It cascaded through the system, disabling 22 transmission lines and resulting in the loss of 4,300 megawatts of generation. This is the second settlement order resulting from a joint FERC and North American Reliability Corporation (“NERC”) investigation of the Florida blackout. On October 8, 2009, FERC approved a Stipulation and Consent Agreement between its Office of Enforcement (“Enforcement”), NERC, and Florida Power and Light Company (“FPL”). In that agreement, FPL agreed to pay a $25 million dollar civil penalty (see October 9, 2009 edition of the WER).

FRCC is the regional entity responsible for enforcing wholesale transmission grid reliability standards in Florida. Through its non-public investigation, FERC Enforcement alleged that FRCC violated nine reliability standards:

  • PER-004-1 (R1), IRO-002-1 (R1) and IRO-001-1 (R9): failure to staff the reliability coordinator position and independent communications systems throughout off peak hours and months with a dedicated operator. FERC stated that during the Florida Blackout, the reliability coordinator operator was in control of the FPL system and assigned FRCC restoration to a NERC-certified operator who was not involved with operations on the day of the Florida Blackout;
  • COM-002-2 (R2): failure to use three-step communication processes at all times during the restoration; and
  • IRO-003-2 (R1), IRO-003-2 (R2), IRO-005-2 (R5), IRO-005-2 (R13), and TOP-006-1 (R5): the reliability coordinator did not know of the disabled protection at the Flagami substation, where the event originated. The reliability coordinator then allowed the system to operate without this knowledge and had limited visibility of affected systems. The reliability monitor could not monitor the status of the facilities.

After the blackout, FRCC attempted to improve reliability by: (1) improving communication protocols, (2) reinforcing disabling protection procedures to staff, and (3) implementing dedicated staff of the reliability coordinator position on a year-round basis. Under the consent agreement, FRCC has committed to:

  • Ensure operators use the three-step communication process;
  • Reinforce with its members the procedures surrounding the removal of protection;
  • Staff the Reliability Coordinator position with a dedicated operator on a daily basis
  • Conduct an independent review of the Reliability Coordinator role to identify improvements
  • Maintain an FRCC employee to oversee the fulfillment of the Reliability Coordinator functions
  • Use dynamic load models for system stability analysis
  • Enhance planning assessment process to strength policies and procedures for evaluating bulk electric system performance, especially under reliability standard TPL-002-0 R1.3.10
  • Make semi-annual reports to Enforcement and NERC staff for one year after the effective date of the consent agreement

Under the consent agreement, FRCC did not admit or deny that its actions were a violation of the reliability standards. Enforcement and NERC considered FRCC’s limited role in causing the event and its responsiveness afterward to restore the system. Commission Staff found that FRCC’s actions were unintentional and not fraudulent, and considered the remedial effect of efforts after the event. The $350,000 penalty will be divided equally between the United States Treasury and NERC.

A copy of FERC’s order can be found at www.ferc.gov under Docket Number IN08-5-000.