NERC Case Notes: Reliability Standard PER-003-0 | White & Case LLP International Law Firm, Global Law Practice
NERC Case Notes: Reliability Standard PER-003-0

NERC Case Notes: Reliability Standard PER-003-0

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American Electric Power Service Corp, FERC Docket No. NP13-37-000 (May 30, 2013)

Reliability Standard: PER-003-0

Requirement: 1

Violation Risk Factor: High

Violation Severity Level: Severe

Region: TRE

Issue: TRE determined that American Electric Power Service Corp’s (AEP), as agent for AEP Texas North Co, AEP Texas Central Co, and Public Service Company of Oklahoma, manager of transmission dispatching has primarily responsibility, either directly or through communications with others, for the real-time operation of the interconnected BPS, but at the time of the February 2, 2011 winter event was not NERC-certified as required.

Finding: TRE found that the PER-003-0 violation constituted a moderate risk to BPS reliability since real-time system operators that are not NERC-certification (and thus have uncertain qualifications) can potentially initiate real-time operating actions that would adversely affect the BPS. But, the AEP employee at issue is a knowledgeable and experienced staff member that has been with AEP for 20 years. TRE also determined that the employee took the appropriate actions. The duration of the PER-003-0 violation was from May 4, 2010 through December 10, 2012. AEP neither admits nor denies the violations. In approving the settlement agreement, NERC BOTCC considered the fact that AEP had a compliance program in place when the violations occurred (which was evaluated as a mitigating factor). And while AEP had prior violations of the Reliability Standards, it was not viewed as an aggravating factor since the prior violations did not indicate that there were any broader corporate issues involved. AEP was also cooperative during the enforcement process and did not conceal the violations. The violations did not constitute a serious or substantial risk to BPS reliability.

Total Penalty: $200,000 (aggregate for 6 violations)

FERC Order: Issued June 28, 2013 (no further review)

Arlington Valley, LLC - AVBA, FERC Docket No. NP13-9 (December 31, 2012)

Reliability Standard: PER-003-0

Requirement: 1

Violation Risk Factor: High

Violation Severity Level: Severe

Region: WECC

Issue: Arlington Valley, LLC – AVBA (Arlington Valley) self-reported, as a TOP, that certain of its operating personnel were not NERC-certified as required.

Finding: WECC found that the PER-003-0 violation constituted a moderate risk to BPS reliability. In regards to the PER-003-0 violation, the required NERC training and certification helps ensure that AVBA's personnel implement the correct actions and the lack of training could lead to misoperations or delays in implementing needed real-time actions. But, the training program that AVBA had in place covered all of the operating proficiencies needed for the reliable operation of the generation system. In addition, all of AVBA's activities are coordinated with its Balancing Authority and Reliability Coordinator. The duration of the PER-003-0 R1 violation was from November 5, 2007 through March 1, 2009. AVBA stipulated to the violations. In approving the settlement agreement, the NERC BOTCC considered the fact that these violations were AVBA's first violations of the relevant Reliability Standards; the violations were not intentional and were promptly mitigated once discovered; and AVBA was cooperative during the enforcement process and did not conceal the violations. In addition, all but one of AVBA's violations did not constitute a serious or substantial risk to BPS reliability.

Penalty: $60,000 (aggregate for 43 violations)

FERC Order: Issued January 30, 2013 (no further review)

Cedar Creek Wind Energy, LLC (CCWE), Docket No. NP12-42 (August 31, 2012)

Reliability Standard: PER-003-0

Requirement: 1

Violation Risk Factor: High

Violation Severity Level: Severe

Region: WECC

Issue: Based on a compliance audit in May 2010, WECC found that CCWE was not staffed with the necessary NERC-certified personnel to fulfill its TOP function.

Finding: WECC found that the PER-003-0 violation only constituted a minimal risk to BPS reliability. CCWE only owns a 72-mile 230 kV transmission line that connects its wind generation facility to a neighboring entity, and CCWE does not serve any load. As CCWE’s facility is connected to the neighboring entity through a ring bus, any problem on the CCWE line would be isolated and not impact the continuity of the neighboring entity’s system. The neighboring entity operators also have the authorization to undertake necessary actions on the CCWE line, which would mitigate any CCWE failure. The duration of the PER-003-0 violation was from January 21, 2008 through December 27, 2011. In approving the settlement agreement, the NERC BOTCC considered the fact that these were CCWE’s first violations of the relevant Reliability Standards; CCWE was cooperative during the enforcement process (complying with all applicable compliance directives) and did not conceal the violations; the violations were not intentional; the violations did not constitute a serious or substantial risk to BPS reliability; and there were no additional aggravating or mitigating factors.

Penalty: $60,000 (aggregate for 10 violations)

FERC Order: Issued September 28, 2012 (no further review)

City of Cleveland, Dept. of Public Utilities, Division of Cleveland Public Power, FERC Docket No. NP10-21-000 (December 30, 2009)

Reliability Standard: PER-003-0

Requirement: R1

Violation Risk Factor: High

Violation Severity Level: Not provided

Region: RFC

Issue: First, Cleveland Public Power (CPP) did not provide evidence verifying that relevant personnel were certified for minimum competencies for operating a reliable bulk power system by the time required in its mitigation plan for violations occurring before the standard became enforceable. Second, CPP determined an unacceptable risk of operator fatigue due to medical leave of a NERC-certified operator, and that it did not have NERC-certified operators available for all shifts during a period of time.

Finding: Duration of the first violation was from June 18, 2007 when the standard became enforceable through July 14, 2008. Duration of second violation from February 2, 2009 through February 11, 2009. In reaching a settlement penalty, RFC considered (1) CPP self-reported the violations; (2) CPP was cooperative throughout the enforcement process; and (3) CPP committed substantial financial and personnel resources, compared to its size, in order to achieve compliance with the standard.

Penalty: $160,000 (aggregate for multiple violations)

FERC Order: Issued January 29, 2010 (no further review)

City of College Station, Docket No. NP12-27 (May 30, 2012)

Reliability Standard: PER-003-0

Requirement: R1 (1.1 and 1.2)

Violation Risk Factor: High

Violation Severity Level: Severe

Region: TRE

Issue: TRE found that not all of the City of College Station’s (COCS) operators had received their NERC-certifications by the March 2011 deadline established in COCS’ TOP Implementation Plan, which was accepted by TRE.

Finding: TRE found that the violation constituted a moderate risk to BPS reliability. But, the COCS operators had received plenty of training and had demonstrated their ability to perform their jobs. In response, COCS delegated certain TOP activities to a registered TOP, who will only have NERC-certified operators managing COCS’ transmission system, until COCS is able to have a NERC-certified operator in place during all shifts. The duration of the violation was from May 4, 2010 through September 1, 2011. TRE evaluated COCS’ compliance program as a mitigating factor.

Penalty: $25,000

FERC Order: Order issued June 29, 2012 (no further review)

Eugene Water & Electric Board (EWEB), Docket No. NP12-22-000 (March 30, 2012)

Reliability Standard: PER-003-0

Requirement: R1

Violation Risk Factor: High

Violation Severity Level: Severe

Region: WECC

Issue: EWEB registered as a TOP with NERC effective as of May 8, 2009, and subsequently, EWEB submitted self-reports addressing non-compliance with NERC Reliability Standards. EWEB is located in the Bonneville Power Administration (BPA) Control Area. Prior to May 8, BPA was registered with NERC as the area TOP, and BPA had informed EWEB that it was not required to register as a TOP with NERC; however, after review of a FERC order discussing TOP compliance, on April 6, 2009, BPA notified EWEB that it would no longer serve as its TOP. EWEB then registered as a TOP and reported itself as non-compliant with applicable NERC Reliability Standards.

Starting on May 8, 2009, the date EWEB registered as a TOP with NERC, EWEB was in violation of PER-003-0 R1 because EWEB did not have NERC-certificated staff employed in its operating positions that are responsible, either directly or through communications with others, for the related functions for the real-time operation of the interconnected BES or for positions directly responsible for NERC compliance.

Finding: The violation posed no serious or substantial risk to BPS reliability. WECC considered that EWEB was new to the TOP role because of a registration issue. Although EWEB did not staff properly trained operating personnel, risk to the BPS was mitigated because its facility is a 115 kV local network that has no critical facilities as listed on WECC’s critical facilities list. EWEB’s network is set up to take power from BPA and serves its load. Disruptions to its facility would not have a significant impact on the systems of the nearby BAs and TOPs. WECC further found that EWEB staff was sufficiently experienced and knowledgeable and had received training on system reliability during the period EWEB was establishing training processes as required by the Standard. WECC considered that even though EWEB had not coordinated its current day, next day and seasonal planning and operations with the adjacent BAs and TOP and with its RC, those activities are generally done on a long-term or annual basis, and BPA had plans in place to make sure normal interconnection operations were undisturbed while EWEB completed its documentation to be compliant with the PER-002-0 Standards. In addition, BPA conducted a technical assessment of EWEB’s electrical system in determining whether it would act as EWEB’s TOP, and the assessment results showed that BPA was not performing TOP duties in the first place, and second it did not need control of the EWEB system for BPS reliability. As the BA for EWEB, BPA was responsible for system reliability within its footprint. While EWEB was working towards TOP certification, BPA performed TOP duties such as coordinating outage plans, day-to-day routine real-time communications and notifications and any unplanned work forced by equipment failures, storms, etc. BPA assured the RC it would continue to communicate any planned and emergency outages and would work diligently with EWEB to obtain full TOP certification. At the time EWEB registered as a TOP, it was working on compliance with its other functions as Transmission Owner (TO), Transmission Provider (TP), Purchasing-Selling Entity (PSE), Load Serving Entity (LSE), Distribution Provider (DP), Generator Owner (GO) and Generator Operator (GOP).

WECC assessed no penalty due to the circumstances surrounding the non compliance. BPA unexpectedly notified EWEB that it would not be its TOP, effective immediately on April 6, 2009. EWEB then found itself immediately required to be NERC compliant. EWEB submitted its self reports in a timely manner and in addition submitted mitigation plans which were timely completed. The violations were not repeat violations and were not contested by EWEB.

Penalty: $0

FERC Order: Issued April 30, 2012 (no further review)

Mesquite Power LLC, FERC Docket No. NP12-35 (June 29, 2012)

Reliability Standard: PER-003-0

Requirement: R1 (2 violations)

Violation Risk Factor: High (both violations)

Violation Severity Level: Severe (both violations)

Region: WECC

Issue: In March 2009, Mesquite Power LLC (Mesquite), as a TOP, self-certified that its operators were not NERC-certified, as required (first violation). During an audit in July 2010, WECC found that Mesquite had four NERC-certified operators, but that Mesquite was not staffing its control center with a NERC-certified operator on approximately one night per week (second violation).

Finding: WECC found that the PER-003-0 violations only constituted a minimal risk to BPS reliability. For the first PER-003-0 violation, Mesquite’s training program covered all of the operating proficiencies that would be needed to reliably operate Mesquite’s generation system. In addition, Mesquite coordinates its activities pursuant to the direction of its BA, which coordinates the activities with the RC. In regard to the second violation, NERC-certified operators were available on-call and, when notified, could remotely log into a digital control system in order to monitor and instruct the gas turbine technician. Also, an adjacent TOP that was staffed with NERC-certified operators was available to monitor the Mesquite transmission system. The duration of the PER-003-0 violations was from November 5, 2007 through October 13, 2009 (first violation) and from October 13, 2009 through March 1, 2011 (second violation). In approving the settlement agreement, the NERC BOTCC considered the fact that these were Mesquite’s first violations of the relevant Reliability Standard; one of the violations (VAR-002-1 R3) was self-reported; Mesquite was cooperative during the enforcement process and did not conceal the violations; Mesquite did have a compliance program in place (which was evaluated as a mitigating factor); there were two violations of the same Reliability Standard (PER-003-0 R1) that demonstrated the repeat nature of the violation (which was evaluated as an aggravating factor); the violations did not constitute a serious or substantial risk to BPS reliability; and there were no additional aggravating or mitigating factors.

Penalty: $60,000 (aggregate for 26 violations)

FERC Order: Order issued July 27, 2012 (no further review)

Milford Wind Corridor Phase I, LLC, FERC Docket No. NP13-40 (June 27, 2013)

Reliability Standard: PER-003-0

Requirement: 1

Violation Risk Factor: High

Violation Severity Level: Severe

Region: WECC

Issue: Milford Wind Corridor Phase I, LLC (Milford Wind) self-certified that, as a TOP, not all of its required personnel were fully certified by NERC as mandated.

Finding: WECC found that the PER-003-0 violation only constituted a minimal risk to BPS reliability. Milford Wind’s output is not baseload generation, and if Milford Wind was unable to deliver its generation, the host BA would be able to find replacement generation without there being an adverse impact on BPS reliability. Milford Wind’s generation is non-firm and intermittent, and thus its transmission facilities are limited in use. Milford Wind’s transmission line is radial in nature and is only used to connect Milford Wind’s generation to the bulk power system. The PER-003-0 violation occurred from May 18, 2010 through September 19, 2010. Milford neither admitted nor denied the violations. In approving the settlement agreement, NERC BOTCC considered the fact that these violations were Milford Wind’s first violations of the relevant Reliability Standard and that Milford Wind had a compliance program in place. Milford Wind was also cooperative during the enforcement process and did not conceal the violations.

Total Penalty: $81,000 (aggregate for 15 violations)

FERC Order: Issued July 26, 2013 (no further review)

New Harquahala Generating Company, LLC, FERC Docket No. NP10-2-000 (October 14, 2009)

Reliability Standard: PER-003-0

Requirement: R1

Violation Risk Factor: High

Violation Severity Level: Not provided

Region: WECC

Issue: New Harquahala Generating Company, LLC (New Harquahala) self-reported that it did not have NERC-certified operating personnel as specified in PER-003-0. New Harquahala was, therefore, also unable to have an adequate training program.

Finding: WECC found that the violation did not pose a serious or substantial risk to the bulk power system since a third party was functioning as New Harquahala's Balancing Authority and this third party was fully compliant with the requirements of PER-003-0. This Registered Entity closely coordinated the operation of its radial transmission line with an interconnected entity, and the Registered Entity had a training program for generator operators (even though the training did not address Transmission Operator functions). The violation was self-reported and it was New Harquahala's first violation of this Reliability Standard. Even though the violation occurred before the Reliability Standards became mandatory, New Harquahala did not complete its mitigation plan in a timely manner, turning the violation into a post-June 18, 2007 violation. Even though the mitigation plan was completed late, no penalty was imposed.

Penalty: $0

FERC Order: Issued November 13, 2009 (no further review)

Public Utility District No. 1 of Clark County, FERC Docket No. NP12-5 (November 30, 2011)

Reliability Standard: PER-003-0

Requirement: R1

Violation Risk Factor: High

Violation Severity Level: Severe

Region: WECC

Issue: In preparation for its registration with NERC as a TOP, in April 2009 CKPD self-reported non-compliance with PER-003-0 R1. CKPD explained that its TOP, Bonneville Power Administration (BPA), informed it on April 6, 2009, that it would no longer function as CKPD’s TOP effective immediately. As a result, CKPD was required to register as a TOP and report non-compliance with the Standard. CKPD reported that the requirements of PER-003-0 were new to CKPD because of its TOP registration, and at the time of registration CKPD had not filled operating positions responsible for real-time operation of the interconnected BPS or positions responsible for NERC compliance with NERC-certified personnel.

Finding: WECC determined the violation did not pose a serious or substantial risk to the reliability of the BPS because even though CKPD operators were not NERC-certified, they were experienced and knew how to operate the CKPD system. In addition, BPA would have assisted to maintain BPS operations and CKPD’s facilities are not critical to BPS reliability. WECC recognized that at the time of its registration for the TOP function, CKPD was satisfying the requirements for its other functions as a TO, PSE, LSE, DP, GO and GOP. BPA performed tests on CKPD’s electric system during April 2009 which showed that it was not conducting TOP duties at the facility and the facility was not required to maintain system reliability. BPA also reported that CPKD employs experienced operators and also has internal maintenance procedures including a 24-hour dispatch center. WECC assessed no penalty for the violation based on the extenuating circumstances surrounding the non-compliance. In particular, BPA’s notice to CKPD that it would no longer operate as the TOP was unexpected and effective immediately. Consequently, CKPD was immediately responsible for registration and compliance with all applicable TOP standards. WECC also considered the following mitigating factors: the violations were self-reported, mitigation plans were quickly submitted and timely completed; the risk to the BPS was not serious or substantial; the violations were not repeat violations; and CKPD did not dispute the violations.

Penalty: $0 (for 33 violations)

FERC Order: Issued December 30, 2011 (no further review)

Public Utility District No. 1 of Snohomish County (SNPD), Docket No. NP12-22-000 (March 30, 2012)

Reliability Standard: PER-003-0

Requirement: R1

Violation Risk Factor: High

Violation Severity Level: Severe

Region: WECC

Issue: SNPD registered as a TOP with NERC effective as of February 6, 2009, subsequently, SNPD submitted self-reports addressing non-compliance with NERC Reliability Standards. SNPD is located in the Bonneville Power Administration (BPA) Control Area. BPA was registered with NERC as the area TOP, and BPA had informed SNPD that it was not required to register as a TOP with NERC; however, after review of a FERC order discussing TOP compliance, on December 24, 2008, BPA notified SNPD that it would no longer serve as its TOP, effective immediately. SNPD then registered as a TOP and reported itself as non-compliant with applicable NERC Reliability Standards. SNPD underwent a WECC audit in January 2012 and no compliance violations were found.

Starting on February 6, 2009, the date SNPD registered as a TOP with NERC, SNPD was in violation of R1 PER-003-0 because it did not have NERC-certificated staff employed in its operating positions that are responsible, either directly or through communications with others, for the related functions for the real-time operation of the interconnected BES or for positions directly responsible for NERC compliance.

Finding: The violation posed no serious or substantial risk to BPS reliability. WECC considered that SNPD was new to the TOP role because of a registration issue. Even though SPND did not staff adequately trained operation personnel, actual risk was mitigated by the size of SNPD and the fact that it has no critical facilities as identified by WECC. SNPD’s network is set up to take power from BPA and serves its load. SNPD was coordinating with BPA during the violation period and BPA has trained staff available to SNPD. In addition, BPA conducted a technical assessment of SPND’s electrical system in determining whether it would act as SPND’s TOP, and the assessment results showed that BPA was not performing TOP duties in the first place, and second it did not need control of the SNPD system for BPS reliability. While SNPD was working towards TOP certification, BPA performed TOP duties such as coordinating outage plans, day-to-day routine real-time communications and notifications and any unplanned work forced by equipment failures, storms, etc. BPA assured the RC it would continue to communicate any planned and emergency outages and would work diligently with SNPD to obtain full TOP certification. At the time SNPD registered as a TOP, it was working on compliance with its other functions as Transmission Owner (TO), Transmission Provider (TP), Purchasing-Selling Entity (PSE), Load Serving Entity (LSE), Distribution Provider (DP), Generator Owner (GO) and Generator Operator (GOP).

WECC assessed no penalty due to the circumstances surrounding the non compliance. BPA unexpectedly notified SNPD that it would not be its TOP, effective immediately on December 24, 2008. SNPD then found itself immediately required to be NERC compliant. SNPD submitted its self reports in a timely manner and in addition submitted mitigation plans which were timely completed. The violations were not repeat violations and were not contested by SNPD.

Penalty: $0

FERC Order: Issued April 30, 2012 (no further review)

Silicon Valley Power (SVP), Docket No. NP13-21 (January 31, 2013)

Reliability Standard: PER-003-0

Requirement: 1

Violation Risk Factor: High

Violation Severity Level: Severe

Region: WECC

Issue: SVP, as a TOP, self-reported that, at the time it registered as a TOP, only four (out of six) of its transmission operators were NERC-certified. Thus, SVP did not staff all its operating positions that have the primary responsibility for the real-time operation of the interconnected bulk electric system with NERC-certified personnel, as required.

Finding: WECC found that the PER-003-0 R1 violation constituted only a minimal risk to BPS reliability. Four of its operators were already NERC-certified and the other two operators were in the process of earning their NERC certification. In addition, SVP had documentation showing that for 88% of the time NERC-certified operators were the ones responsible for the reliable operation of the BPS. SVP also generally staffs its operations desk with experienced operators. The duration of the PER-003-0 violation was from May 27, 2011 through May 27, 2012. SVP agreed and stipulated to the violations. In approving the settlement agreement, the NERC BOTCC considered the fact that these were the SVP’s first violations of the relevant Reliability Standards and four of the violations were self-reported. URE was also cooperative during the enforcement process, did not conceal the violations and engaged in voluntary corrective action to remediate the violations. Twelve of the violations posed a minimal risk to BPS reliability, and five of the violations posed a moderate risk, while none of the violations posed a serious or substantial risk to BPS reliability.

Total Penalty: $150,000 (aggregate for 17 violations)

FERC Order: Issued March 1, 2013 (no further review)

TransAlta Centralia Generation, LLC, FERC Docket No. NP10-2-000 (October 14, 2009)

Reliability Standard: PER-003-0

Requirement: R1

Violation Risk Factor: High

Violation Severity Level: Not provided

Region: WECC

Issue: In June 2008, TransAlta Centralia Generation, LLC (TransAlta) self-reported that it did not have NERC-certified operating personnel as specified by PER-003-0. TransAlta was, therefore, also unable to have an adequate training program.

Finding: WECC found that this violation did not pose a serious or substantial risk to the bulk power system since under an April 2000 agreement between TransAlta and its Balancing Authority, there were relevant procedures in place (even though those procedures did not meet the requirements of PER-003-0). TransAlta would implement the directions of the Balancing Authority dispatchers, as generation and transmission operations were coordinated between TransAlta and its Balancing Authority. In addition, TransAlta and its Balancing Authority had well-established communications protocols and, in emergency situations, TransAlta agreed to respond to all of the Balancing Authority's instructions. The violation was self-reported and was TransAlta's first violation of this Reliability Standard. A mitigation plan has been completed.

Penalty: $0

FERC Order: Issued November 13, 2009 (no further review)