• FERC Approves Stipulation and Consent Agreement with FRCC relating to 2008 Florida Blackout
  • March 18, 2010
  • Law Firm: Balch & Bingham LLP - Birmingham Office
  • On March 5, 2010, in Docket No. IN08-5-000, FERC issued an order approving a Stipulation and Consent Agreement (Agreement) between FERC’s Office of Enforcement, NERC, and the Florida Reliability Coordinating Council (FRCC). The Agreement is the result of an investigation of FRCC conducted by FERC and NERC into possible violations of Reliability Standards associated with the February 26, 2008, Florida Blackout. Among other things, FRCC agrees to pay a penalty of $350,000 which is to be divided between the U.S. Treasury and NERC. By way of background, in October, 2009, FPL was assessed a $25 million penalty by FERC for its violations of Reliability Standards in connection with this same event.

    The investigation of FRCC and the penalty assessment represent a first-of-its-kind occurrence in the sense that FRCC is (1) a Regional Entity (like SERC) to which NERC has delegated responsibility for enforcing Reliability Standards within Florida, and (2) a Registered Entity, which means FRCC performs bulk-power system functions and must comply with certain Reliability Standards. The two relevant functions for which FRCC is registered are the Reliability Coordinator (RC) and Planning Authority (PA) functions. FRCC performs its function as the RC through a contract with Florida Power & Light Company (FPL”) under which “FPL executes the RC function through FPL control room personnel.” As the PA, FRCC has responsibility for reviewing certain system assessments conducted within FRCC. It is from FRCC's performance as a Registered Entity that the investigation and penalty stem ¿ not from its performance as a Regional Entity.

    FERC and NERC alleged that FRCC violated the following Reliability Standards: (1) PER-004-1 (R1); (2) IRO-002-1 (R1); and (3) IRO-001-1 (R9). These violations were based on FERC Staff’s view that: “FRCC did not staff the RC position and its associated independent communications systems during off peak hours and months with a dedicated operator. In addition, the RC operator was in a position where he chose to retain control over the FPL system and assign FRCC restoration responsibilities instead to a NERC-certified operator who also had served as an FRCC RC from time to time prior to the event and was present in the control center but not directly involved in operations on the day of the event.” (Order P 13).

    FERC Staff and NERC also alleged that FRCC violated Reliability Standard COM-002-2 (R2) because FRCC “did not at all times utilize three-step communication processes during the restoration as required by the standard.” (Order P 14).

    Lastly, FERC Staff and NERC alleged that FRCC violated Reliability Standard IRO-003-2 (R1 & R2), IRO-005-2 (R5 & R13), and TOP-006-1 (R5) because “the RC operator was not aware of the disabled protection at the Flagami substation and hence the resulting system conditions and therefore permitted the operation of the system in an unknown state¿[and] during the restoration the RC had limited visibility of the systems affected by the event, and therefore could not directly monitor the status of some facilities.” (Order P 15).

    In paying the $350,000 penalty, FRCC does not admit or deny that its actions constituted violations of the standards. Under the Agreement, FRCC is required to continue certain activities including: (1) ensuring its operators utilize the three-step communication process; (2) reinforcing with its members procedures surrounding the removal of protection; (3) staffing the RC position with a dedicated operator on a 24-7-365 basis; (4) conducting an independent review of the RC function to identify and develop further improvements; and (5) maintaining a FRCC employee to oversee the fulfillment of the RC functions. (Agreement P 16).

    FRCC also agreed to undertake additional reliability enhancement measures including: (a) utilizing dynamic load modeling for system stability analysis across Florida; (b) coordinating the implementation of these load models by each Transmission Planner and Planning Authority; and (c) making adjustments to the models as needed. (Agreement P 17). FRCC will also enhance its planning assessment process “to strengthen its policies and procedures for evaluating BES performance” in meeting the requirements of TPL-002-0 (R1.3.10) with a commitment to various enhanced processes detailed in the Agreement. (Agreement P 18). FRCC also is required under the Agreement to make semi-annual reports to FERC Enforcement Staff and NERC for up to two years on its compliance with the Agreement and the Reliability Standards. (Agreement P 19).