NERC Case Notes: Reliability Standard VAR-001-1 | White & Case LLP International Law Firm, Global Law Practice
NERC Case Notes: Reliability Standard VAR-001-1

NERC Case Notes: Reliability Standard VAR-001-1

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This page contains the NOP (Notice of Penalty) and ACP (Administrative Citation of Penalty) summaries. Click here to read the FFT (Find, Fix and Track) summaries.

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

Reliability Standard: VAR-001-1

Requirement: 1, 4

Violation Risk Factor: High (1), Medium (4)

Violation Severity Level: Severe (1, 4)

Region: WECC

Issue: AVBA self-certified, as a TOP, that it did not possess formal policies regarding the monitoring and control of voltage levels and Mvar flows. AVBA also self-reported that it had not provided DYN, its GOP, with a voltage schedule or directed DYN to comply with the voltage schedule in automatic voltage control mode, as required.

Finding: WECC found that the VAR-001-1 violations only constituted a minimal risk to BPS reliability. In regards to VAR-001-1 R1, the Salt River Project (SRP) is the TOP at the substation and had voltage levels in place. For VAR-001-1 R4, SRP provided DYN with the needed voltage schedule. The duration of the VAR-001-1 violations was from November 5, 2007 through April 24, 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)

Cleco Corporation, FERC Docket No. NP11-265-000 (August 31, 2011)

Reliability Standard: VAR-001-1

Requirement: R1

Violation Risk Factor: High

Violation Severity Level: Lower

Region: SPP

Issue: During a compliance audit in April 2010, SPP found that Cleco Corporation's (Cleco) policies and procedures did not sufficiently detail the actions that Cleco's operators would need to take to operate reactive resources, under what conditions the operators should implement voltage control actions and operator actions in response to abnormal voltage conditions. In addition, Cleco did not have proper instructions concerning the use of reactive reserves to respond to system low voltage or load shedding as a contingency in order to maintain system voltage.

Finding: SPP and Cleco entered into a settlement agreement to resolve multiple violations, whereby Cleco agreed to pay a penalty of $27,000 and to undertake other mitigation measures. SPP found that the VAR-001-1 violation only constituted a minimal risk to bulk power system reliability since Cleco routinely monitors, though a five-day ahead system security assessment study, and controls its system voltage. The duration of the VAR-001-1 violation was from June 18, 2007 through September 20, 2010. In approving the settlement agreement, NERC found that these were Cleco's first violations of the relevant Reliability Standards; Cleco was cooperative during the enforcement process and did not conceal the violations; Cleco had a compliance program in place (which was evaluated as a mitigating factor); and there were no additional aggravating or mitigating factors or other extenuating circumstances.

Penalty: $27,000 (aggregate for 6 violations)

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

El Paso Electric Company, FERC Docket No. NP10-25-000 (December 30, 2009)

Reliability Standard: VAR-001-1

Requirement: R3

Violation Risk Factor: Lower

Violation Severity Level: Not provided

Region: WECC

Issue: EPE permitted generators on its system to remain in service without AVR turned on and in voltage control mode to allow routine maintenance. EPE failed to establish and document criteria for exemption of generators from the AVR requirements of R4 as required by the Standard.

Finding: Alleged violation occurred from June 18, 2007 when the Standard became enforceable through April 21, 2009. In determining penalty for aggregate violations, NERC gave credit for (1) self-reporting of two violations; (2) cooperation through the audit process; (3) evidence of an effective compliance culture; and (4) these were EPE's first violations.

Penalty: $15,000 (aggregate for multiple violations)

FERC Order: Issued March 15, 2010 (no further review)

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

Reliability Standard: VAR-001-1

Requirement: R3, R6, R11

Violation Risk Factor: Lower (R3, R11); Medium (R6)

Violation Severity Level: Lower (R3, R11); Moderate (R6)

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 VAR-001-1 R3, R6 and R11. Regarding R3, EWEB did not set forth a criterion that exempts generators from compliance with respect to maintaining a list of generators in its area that are exempt from following a voltage or Reactive Power schedule as described in R4 and R6.1, in violation of VAR-001-1 R3. Regarding R6, EWEB was non compliant because EWEB was unaware of the status of all transmission Reactive Power resources, including information on voltage regulators and power system stablizers. Regarding R11, EWEB did not provide its GO the required documentation for tap changes.

Finding: The violations 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 provide its GO with documents outlining required tap changes, including the reasons and timeline for the changes, risk to the BPS was mitigated because EWEB’s BA and TOP (BPA) were responsible for voltage and reactive control while EWEB was completing documentation to be compliant with the TOP 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)

Hoosier Energy REC, Inc., FERC Docket No. NP11-190-000 (May 26, 2011)

Reliability Standard: VAR-001-1

Requirement: R1

Violation Risk Factor: High

Violation Severity Level: High

Region: ReliabilityFirst

Issue: During a compliance audit, ReliabilityFirst determined that Hoosier Energy REC, Inc. (Hoosier) failed to provide evidence of policies and procedures with three transmission operators, which impacted 12.5% of all transmission interconnections above 100 kV. Duration of violation was June 18, 2007 when the standard became mandatory and enforceable through February 26, 2010, when the violation was mitigated.

Finding: ReliabilityFirst determined that the violation posed a minimal risk to the bulk power system because while Hoosier did not have formal policies with these three transmission operators, Hoosier’s voltage and MVAR monitoring document states that it intends to work with neighboring transmission operators and Hoosier provided evidence that it routinely coordinated voltage schedules with neighboring transmission operators. The NERC BOTCC also considered that the violation constituted Hoosier’s first occurrence of violation of the standards, Hoosier self-reported the PRC-005-1 violation, and Hoosier agreed to take actions that exceed those expected to achieve and maintain baseline compliance.

Penalty: $80,000 (aggregate for 10 violations)

FERC Order: Issued June 24, 2011 (no further review)

Idaho Power Company, FERC Docket No. NP10-2-000 (October 14, 2009)

Reliability Standard: VAR-001-1

Requirement: R1, R2, R3, R4, R9

Violation Risk Factor: High (for R1, R2, R9); Lower (R3); Medium (R4)

Violation Severity Level: Not provided

Region: WECC

Issue: In December 2007, Idaho Power Company (IPC) self-reported that it was unable to provide the relevant documentation outlining its formal policies and procedures for voltage levels or VAR flow with neighboring Transmission Operators and the documentation which detailed the studies it performed to determine reactive requirements for steady state or contingent conditions as required by R1 and R2/R9, respectively. In addition, IPC self-reported that as it had not documented a list of criteria, it had not developed a list of exempt generators as required by R3. In terms of R4, IPC was unable to produce formal documentation showing the voltage schedules/policy for IPC-utility owned generation (as the non-IPC utility owned generator had their reactive schedules contained in their interconnection agreements).

Finding: WECC found that the violations did not pose a serious or substantial risk to the bulk power system since IPC had been communicating with its neighboring Balancing Authorities, Transmission Operators, and Generator Operators within its boundaries and IPC had maintained sufficient margins. In addition, the violations were primarily documentation issues. The violations were self-reported and were IPC's first violation of this Reliability Standard. A mitigation plan has been completed.

Penalty: $0

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

KCPL – Greater Missouri Operations, FERC Docket No. NP12-15 (February 29, 2012)

Reliability Standard: VAR-001-1

Requirement: R2, R9

Violation Risk Factor: High (R2, R9) Violation Severity Level: Severe (R2, R9)

Region: SPP

Issue: On June 17, 2009 at 9:54 am, KCPL – Greater Missouri Operations (“KCPL-GMO”) suffered a system outage that caused all of KCPL-GMO’s customers in the greater St. Joseph area to lose service. KCPL-GMO lost 84 MW of generating capacity and 258 MW of firm load (representing approximately 48,000 customers), with power being restored by 11:22 am that day and the relevant generator returning to service at 12:54 pm that day. KCPL-GMO’s transmission system outage was limited to the St. Joseph, Missouri area and did not impact any other transmission system. During a compliance audit related to the outage, SPP found that on the day of the transmission outage, KCPL-GMO’s system operators did not know that additional reactive resources were needed during the emergency circumstances. Therefore, the system operators did not obtain sufficient reactive resources to protect its system voltage levels under normal and contingency conditions (R2). SPP also found that since system operators did not properly conduct next-day and current-day studies on the first contingency reactive power requirements for the planned outage, the system operators did not possess adequate reactive resources online, as mandated, to support its voltage under first contingency conditions (R9).

Finding: SPP found that the violations constituted a serious or substantial risk to BPS reliability. The lack of an accurate next-day or current-day study posed a serious and substantial risk to the 161 kV BPS that served the St. Joseph load pocket. SPP determined that if KCPL-GMO had conducted current-day and next-day studies, it would have known about potential problems (and the operator may have cancelled the planned outage). In addition, KCPL-GMO did not know that it needed to acquire additional reactive resources order to maintain its voltage within +/- 10% of the nominal voltage after the loss of the Woodbine-Eastside line. The duration of the VAR-001-1 violations was from June 17, 2009 through September 18, 2009 (R2) and March 31, 2010 (R9). In approving the penalty amount, NERC BOTCC evaluated the fact that the violations resulted in a loss of load (which increased the severity of the relevant violations); these were the first violations of the relevant Reliability Standards; KCPL-GMO cooperated during the enforcement process and did not conceal the violations; and KCPL-GMO had an internal compliance program in place (which was evaluated as a mitigating factor). KCPL-GMO also implemented additional voluntary actions in order to prevent future violations.

Penalty: $400,000 (aggregate for 7 violations)

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

Lee County Electric Cooperative, Inc., FERC Docket No. NP11-266-000 (August 31, 2011)

Reliability Standard: VAR-001-1

Requirement: R1

Violation Risk Factor: High

Violation Severity Level: High

Region: FRCC

Issue: During an audit, FRCC determined that Lee County Electric Cooperative, Inc. (LCEC) failed to provide evidence demonstrating that it jointly developed formal policies and procedures for monitoring and controlling voltage levels and Mega Volt Ampere Reactive flows with its neighboring Transmission Operators.

Finding: FRCC found that the violation did not constitute a serious or substantial risk to the bulk power system because LCEC ensured that formal policies and procedures were developed, maintained and implemented within its individual area, even though it had not jointly developed such policies and procedures with neighboring Transmission Operators. Duration of violation was from June 18, 2007 through November 2, 2009.

Penalty: $30,000 (aggregate for 7 violations)

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

NERC Registered Entity, FERC Docket No. NP10-159-000 (July 30, 2010)

Reliability Standard: VAR-001-1

Requirement: R3, R4

Violation Risk Factor: Lower for R3, Medium for R4

Violation Severity Level: Not provided

Region: WECC

Issue: The Registered Entity self-reported that it did not have written criteria exempting generators from following voltage or Reactive Power schedules and did not have a written list of exempt generators. In addition, it had not provided a voltage or Reactive Power schedule to all of its Generator Operators and had not specified a voltage or Reactive Power schedule at the interconnection between the generator facility and the Transmission Owner's facilities to be maintained by each generator.

Finding: Duration of the violations was from June 18, 2007, when the Reliability Standard became enforceable, through February 1, 2008. The violations did not pose a serious risk to the reliability of the bulk power system because the Registered Entity only has a few generators connected to the system with minimal impact on the interconnected system. These were the Registered Entity's first violations of the Reliability Standard.

Penalty: $109,000 (aggregate for multiple violations)

FERC Order: Issued August 27, 2010 (no further review)

Northern States Power Company, FERC Docket No. NP09-19-000 (May 1, 2009)

Reliability Standard: VAR-001-1

Requirement: R3, R4

Violation Risk Factor: R3 – Lower; R4 - Medium

Violation Severity Level: Minimal

Region: MRO

Issue: VAR-001-1 R3 requires Transmission Operators, which includes Northern States Power, to specify criteria to be used to exempt certain generators from compliance with the requirements detailed in Requirement R4 and Requirement R6.1. Under this standard, Northern States Power is required to keep a list of generators in its area that are exempt from following a voltage or Reactive Power schedule and, for each generator on this list, to notify that Generator Owner. After an internal review, Northern States Power self-reported non-compliance with VAR-001-1 R3 – especially as it lacked exemption criteria for wind generators. VAR-001-1 R4 mandates Transmission Operators, such as Northern States Power, to specify voltage or Reactive Power schedule at the interconnection between the generator facility and the Transmission Operator's facilities which are maintained by each generator. Northern States Power self-reported non-compliance with VAR-000-1 R4 as it could not ensure that it had provided notice and specified voltage or Reactive Power schedule to each Generator Operator.

Finding: MRO decided not to assess a penalty for the violations since the violations were self-reported, these were the first violations by Northern States Power of this standard, and the violations did not place the reliability of the bulk power system at serious or substantial risk. In addition, for R3, the identified wind generators that qualified for an exemption were induction machines that are exempt from following a voltage or Reactive Power Schedule. For R.4, the additional mitigating factors were that Northern States Power provides the voltage support from transmission system reactive devices (since it operates the transmission system in the area) and the induction wind generators, which do not possess reactive supply capability, feed into a collector system where Northern States Power manages the reactive component with reactive devices. Through these mitigation measures, all wind generators received a voltage or Reactive Power schedule or notice of exemption. Furthermore, MRO found that Northern States Power has a good overall compliance culture and cooperated in addressing the problems.

Penalty: $0

FERC Order: Issued May 29, 2009 (no further review)

NorthWestern Corporation, FERC Docket No. NP10-2-000 (October 14, 2009)

Reliability Standard: VAR-001-1

Requirement: R1

Violation Risk Factor: High

Violation Severity Level: Not provided

Region: WECC

Issue: In January 2008, NorthWestern Corporation (NorthWestern) self-reported that it did not possess documented procedures with other Transmission Operators concerning the development, maintenance, and implementation of formal policies and procedures for the monitoring and controlling of voltage levels and MVAR flows within individual areas and with the areas of neighboring Transmission Owners.

Finding: WECC found that the violation did not pose a serious or substantial risk to the bulk power system since the NorthWestern System Operators were actually monitoring and controlling voltage levels and MVAR flows in the NorthWestern Balancing area. In addition, the violation was primarily a documentation issue. The violation was self-reported and was NorthWestern's first violation of this Reliability Standard. A mitigation plan has been completed.

Penalty: $0

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

Progress Energy Carolinas (PEC), Docket No. NP13-39-000 (May 30, 2013)

Reliability Standard: VAR-001-1

Requirement: 6

Violation Risk Factor: Medium

Violation Severity Level: Lower

Region: SERC

Issue: Following the company’s self-report, SERC found that PEC, as a Transmission Operator, violated VAR-001-1 R6 when it could not identify four units’ status of power system stabilizers (PSS) located at two fossil-fuel generating plants. Only 6% of PEC’s total generation was affected.

Finding: SERC found that this violation posed a minimal risk, but not a serious or substantial risk to BPS reliability. Though TOP was unaware of the status of the units at these two plants, the PSS were correctly enabled. Thus, PEC’s actions would not have changed if it knew the PPS was in existence. Further, automatic voltage regulators (AVR) do not rely on their associated PSS to function. Moreover, no instability was noted on the PEC transmission system due to the result of the PSS during this time. In determining an appropriate penalty, SERC gave credit to PEC’s internal compliance program (ICP). The ICP was widely disseminated within the organization. The ICP was overseen by the PEC and its parent company’s Electric Reliability Organization Steering Committee (ERO) which was chaired by a compliance officer that was independent of all PEC companies subject to the NERC standards and reported directly to the president/CEO. The ERO’s bimonthly meetings were attended by company officers who carried out compliance initiatives in their departments. These mitigating factors resulted in a $0 penalty assessment.

Total Penalty: $0

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

Progress Energy Florida, FERC Docket No. NP11-256-000 (August 11, 2011)

Reliability Standard: VAR-001-1

Requirement: R6.1

Violation Risk Factor: Medium

Violation Severity Level: Severe

Region: FRCC

Issue: Following a Self-Report, FRCC determined Progress Energy Florida (PEF), as TOP, did not notify the GOP of a loss of automatic voltage regulator control or provide a directive concerning reactive output on three occasions.

Finding: FRCC assessed a $40,000 penalty for this and other Reliability Standards violations. FRCC determined that the violation posed a minimal risk but did not pose a serious or substantial risk to the reliability of the bulk power system (BPS) because the violation concerned a generating plant with a nameplate rating of only 30 MW, PEF could monitor the generator reactive output through the SCADA system and direct appropriate changes, and the plan at issue is required to follow voltage schedules per procedures as communicated to the GOPs. In approving the settlement between PEF and FRCC, the NERC BOTCC considered the following factors: the PRC-005-1 violation was a second violation of that Reliability Standard, which increased the monetary penalty; PEF self-reported the violation; PEF was cooperative; PEF had a compliance program at the time of the violation, which FRCC viewed as a neutral factor; there was no evidence of an attempt or intent to conceal the violation; FRCC determined the violation did not pose a serious or substantial risk to the reliability of the BPS; there were no other aggravating or mitigating factors.

Penalty: $40,000 (aggregated for 4 violations)

FERC Order: Issued September 9, 2011 (no further review)

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

Reliability Standard: VAR-001-1

Requirement: R3, R4, R6, R7, R8

Violation Risk Factor: Lower

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 VAR-001-1 R3, R4, R6, R7 and R8. 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 VAR-001-1 were new to CKPD because of its TOP registration, and at the time of registration had the following violations. R3: CKPD failed to specify criteria that exempt generators from compliance with the requirements set forth in R4 and R6.1. R4: CKPD did not specify a voltage or Reactive Power schedule at the interconnection between its facility and the TO’s facilities to be maintained by each generator. CKPD failed to provide the voltage or Reactive Power schedule to the associated GOP and to inform the GOP to follow the schedule in automatic voltage control mode (AVR in service and controlling voltage). In addition, CKPD’s current voltage schedule was prepared by BPA, not CKPD. R6: CKPD was unaware of the status of all transmission Reactive Power resources, including the status of voltage regulators and power system stabilizers (PSS). BPA was aware of the status, but not CKPD. R7: CKPD could not operate or direct the operation of devices needed for transmission voltage and reactive flow regulation, although BPA was performing the function. R8: CKPD had not operated or directed the operation of capacitive and inductive reactive resources within its area. That includes reactive generation scheduling, transmission line and reactive resource switching, and load shedding necessary to keep system and Interconnection voltages within defined limits, although BPA was performing the functions.

Finding: WECC determined the violations did not pose a serious or substantial risk to the reliability of the BPS for the following reasons. R3: CKPD did not specify criteria for exempting generators from the requirement to maintain the voltage or reactive schedule on its system, however, CKPD only has one generator connected to its system, and that generator was not exempt. R4: CKPD did not specify a voltage or reactive power schedule for its River Road generating facility; however, BPA had established a voltage schedule that is telemetered in real-time to the single generator connected to CKPD's system. BPA also ensured the GOP knew to comply with the schedule in automatic voltage control mode. R6: Even though CKPD was not aware of the status of the AVR and PSS at its River Road generating facility, BPA had established a voltage schedule telemetered in real-time to the facility. WECC noted that the violation occurred not because system operators were not aware of the status of the PSS and AVR at the facility, but instead the issue is that the status is to be known by the current TOP, which is CKPD, not BPA. R7: CKPD was not able to independently direct the operation of the AVR and PSS at the River Road generating facility; however, BPA had established a voltage schedule that is telemetered to River Road in real-time. The voltage at River Road and the status of the AVR and PSS are telemetered back to BPA. The interconnection voltage of the River Road generating facility is at the discretion of BPA, which monitors and regulates voltage in the area. R8: CKPD was not operating or directing the operation of capacitive and inductive reactive resources within its area to maintain system and Interconnection voltages within established limits; however, BPA controls the voltages contained in its Voltage Schedules document at the interconnections with CKPD and it maintains the reactive flow at these stations by maintaining the voltage schedule to ensure system and Interconnection voltages are kept within established limits. 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)

Rochester Public Utilities, FERC Docket No. NP08-35-000 (June 5, 2008)

Reliability Standard: VAR-001-1

Requirement: R6

Violation Risk Factor: Medium

Violation Severity Level: Not provided

Region: MRO

Issue: Rochester Public Utilities was found not to be in compliance with this requirement since it was unable to provide evidence of its standing policy requiring that generators be off-line if the AVR is out of service.

Finding: MRO did not impose a penalty on Rochester Public Utilities for the violation since it found that the violation did not place the reliability of the bulk power system at serious or substantial risk and that the violation occurred during the period of transition to mandatory standards. In addition, the violation was Rochester Public Utilities first incidence of violation of the Requirement at issue and Rochester Public Utilities worked cooperatively with MRO, and Rochester Public Utilities acted immediately to mitigate the violation through an approved mitigation plan.

Penalty: $0

FERC Order: 124 FERC ¶ 61,015; http://www.nerc.com/files/NoticeOfPenaltyOrder.pdf

Salt River Project Agricultural Improvement and Power District, FERC Docket No. NP10-74-000 (March 31, 2010)

Reliability Standard: VAR-001-1

Requirement: R3, R4

Violation Risk Factor: Lower (R3); Medium (R4)

Violation Severity Level: Not provided

Region: WECC

Issue: During an audit in January 2008, WECC discovered potential violations of Reliability Standard VAR-001-1 R3 and R4 based on Salt River Project Agricultural Improvement and Power District's (SRP) inability to produce documentation that showed a process or procedure that established criteria to exempt generators from following a voltage or Reactive Power schedule and SRP’s failure to specify a voltage or Reactive Power schedule for each Generator Operator (and to provide those schedules to the Generator Operator).

Finding: WECC and SRP entered into a settlement agreement to resolve all outstanding issues related to multiple alleged violations, whereby SRP neither admitted nor denied the alleged violations but agreed to pay a penalty of $10,000 and to undertake other mitigation measures. WECC found that the alleged violations of Reliability Standard VAR-001-1 did not create a serious or substantial risk to the bulk power system since SRP's generators were maintaining nominal voltage, within an established voltage range and with no exceptions, at their interconnection points and were operating within their AVR in voltage control mode. The voltage range was monitored by the Transmission Operator, who was notified if the generators exceeded the voltage range. In assessing the penalty, WECC considered the fact that the alleged violations were SRP's first violations of the relevant Reliability Standards and that SRP was cooperative during the compliance process and did not attempt to conceal the alleged violations. SRP has successfully completed a mitigation plan for the alleged violations of Reliability Standard VAR-001-1.

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

FERC Order: Issued April 30, 2010 (no further review)

Sunflower Electric Power Corporation, Docket No. NP12-21, March 30, 2012

Reliability Standard: VAR-001-1

Requirement: 1

Violation Risk Factor: High

Violation Severity Level: Severe

Region: SPP

Issue: Sunflower Electric Power Corporation (“Sunflower”) self-certified non-compliance with R1 during its 2010 Q2 Self-Certification Assessment because its policies and procedures to monitor and control voltage levels and Mvar power flows within individual areas were deficient. Specifically, the procedures did not identify the steps or the responsible employees for monitoring and controlling the voltage levels and Mvar flows.

Finding: SPP determined that the violation posed a minimal risk, but did not pose a serious or substantial risk to the reliability of the BPS because Sunflower provided SPP with evidence that its System Operators were monitoring voltage levels and Mvar flows via its SCADA system, and therefore the violation was primarily a documentation issue. SPP found the duration of the violations was from June 18, 2007 to October 21, 2010.

Penalty: $135,000 (aggregate for 16 violations)

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

Sunflower Electric Power Corporation, Docket No. NP12-21, March 30, 2012

Reliability Standard: VAR-001-1; VAR-002-1.1b

Requirement: 1 (VAR-001-1); 1, 2, 3 (VAR-002-1.1b).

Violation Risk Factor: Medium

Violation Severity Level: VAR-001-1 R1: Lower; VAR-002-1.1b: Severe (R1), Moderate (R2), High (R3)

Region: SPP

Issue: Sunflower Electric Power Corporation (“Sunflower”) submitted a self-report to SPP on April 1, 2011 reporting violations of VAR-001-1 R6 and VAR-002-1.1b R1 -3 because following a forced outage at its Holcomb Unit, it restarted the unit in manual mode instead of automatic voltage regulator (“AVR”) mode and failed to communicate the mode to its Transmission Operator (“TOP”). The voltage regulator was incorrectly placed in manual mode while the unit was offline, and the Holcomb Control Room Operator (CRO) and TOP assumed the unit was operating in AVR mode when it came back online. Moreover, because the unit was in manual mode, the Power System Stabilizer (“PSS”) defaulted to an inactive state. Over an hour after the unit came back online, the CRO realized the voltage regulator was in manual mode and switched it to AVR mode, but failed to notify the TOP. The excitation controls remained erratic, and the Manager Coal Operations then reported to the TOP that the Holcomb Unit would be switched back to manual mode to troubleshoot the issue.

Finding: SPP determined that the violations posed a minimal risk, but did not pose a serious or substantial risk to the reliability of the BPS because the duration of time that the TOP was unaware of the status of voltage regulation and the PSS was minimal and the voltage on Sunflower’s system was closely monitored by its SCADA system. The unit only deviated from its voltage schedule by less than 0.5 V for about two minutes, and the incident did not require any emergency action by the TOP. SPP found the duration of the violations was from 9:38 am on February 19, 2011, when the Holcomb Unit was brought back online in manual mode without notifying the TOP, through 11:18 am on February 19, 2011, when Sunflower switched the mode and notified it’s TOP of the change.

Penalty: $135,000 (aggregate for 16 violations)

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

Tampa Electric Company (TEC), Docket No. NP12-44-000 (August 31, 2012)

Reliability Standard: VAR-001-1

Requirement: 6/6.1

Violation Risk Factor: Medium

Violation Severity Level: Severe

Region: FRCC

Issue: TEC, in its role as a TOP, self-reported in November 2011 that on 10 occasions involving three plant sites it had not instructed the relevant GOP to keep or change either its voltage schedule or Reactive Power schedule after being told the automatic voltage regulator (AVR) was running in manual mode.

Finding: The violation was deemed to pose moderate risk to BPS reliability because of the following. First, electric system operators would have instructed plant personnel to adjust the voltage should that have been required. Second, BPS voltage stayed inside established transmission voltage limits during the violation time period. Finally, a moderate risk was assessed because the violation involved 10 separate instances between 2009 and 2011 at three different plant sites. In determining the appropriate penalty, FRCC considered TEC's internal compliance program as a mitigating factor. TEC neither admitted to nor denied FRCC's findings.

Penalty: $15,000 (aggregate for two violations)

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

Turlock Irrigation District, FERC Docket No. NP10-18-00 (November 13, 2009)

Reliability Standard: VAR-001-1

Requirement: R3

Violation Risk Factor: Lower

Violation Severity Level: Minimal

Region: WECC

Issue: Under VAR-001-01 R3, Turlock Irrigation District (TID) (as a Transmission Operator) must specify criteria that exempts generators from compliance with the requirements specified in R4 and R6.1. Through a compliance audit, WECC discovered a potential violation of the standard since TID had not developed the criteria necessary to develop the exemption list.

Finding: This violation did not pose a serious or substantial risk to the reliability of bulk power system since TID is relatively small, and it has not exempted any generators. To correct this violation, TID implemented a mitigation plan that contained revised procedures that detailed the criteria to exempt generators from compliance with the requirements.

Penalty: $80,000 (aggregate for multiple violations)

FERC Order: Order Denying Rehearing and Providing Clarification, issued June 21, 2012, 139 FERC ¶ 61,248 (2012); http://www.ferc.gov/whats-new/comm-meet/2012/062112/E-8.pdf

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

Reliability Standard: VAR-001-1

Requirement: R1, R2, R3, R4, R6, R7, R8, R9, R10, R11, R12

Violation Risk Factor: High (R1, R2, R7, R8, R9, R10, R12); Lower (R3, R11); Medium (R4, R6)

Violation Severity Level: Not provided

Region: WECC

Issue: In May 2008, TransAlta Centralia Generation, LLC (TransAlta) self-reported that it did not possess: (R1) documented procedures with other Transmission Operators concerning the development, maintenance, and implementation of formal policies and procedures for the monitoring and controlling of voltage levels and MVAR flows within individual areas and with the areas of neighboring Transmission Owners; (R2) documentation showing the studies that were conducted to determine the reactive requirements for steady state or contingent conditions; (R3) a list of exempt generators (as TransAlta had not documented criteria for exempting generators); (R4) documented procedures delineating voltage schedule/policies for TransAlta utility owned generation; (R7) documented procedures to operate or direct the devices needed to regulate the transmission voltage and reactive flow; (R8) documented procedures to operate or direct capacitive and inductive reactive resources within its area in order to maintain system and Interconnection voltages within the establishes limits; (R9) documented procedures to maintain reactive resources in order to support its voltage under first contingency conditions; (R10) documented procedures to correct IROL or SOL violations caused by reactive resource deficiencies and to complete the violation reporting; (R11) documented procedures to provide the Generator Owner with the details on the required step-up transformer tap changes, the timeframe, and the technical justification for the change; or (R12) documented procedures to direct the corrective action (such as load reduction) in order to prevent voltage collapse when reactive resources are insufficient. In addition, TransAlta self-reported that it was unable to prove that it knew the status of all transmission Reactive Power resources (such as the status of the voltage regulators and system stabilizers), as required by R6.

Finding: WECC found that the violations did not pose a serious or substantial risk to the bulk power system since there was an Operating and Maintenance Agreement for the generation interconnection facilities in place between TransAlta and its Balancing Authority since April 2000. Under this agreement, TransAlta has been working with its Balancing Authority to ensure that there were procedures in place to address the relevant violations of VAR-001-1. In addition, the violations were primarily documentation issues. The violations were self-reported and were TransAlta's first violations of this Reliability Standard. A mitigation plan has been completed.

Penalty: $0

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

Unidentified Registered Entity, FERC Docket No. NP11-128-000 (February 23, 2011)

Reliability Standard: VAR-001-1

Requirement: R1, R2, R3

Violation Risk Factor: High (R1, R2), Lower (R3)

Violation Severity Level: Not provided

Region: WECC

Issue: URE self-reported a violation of R1 because it did not have a formal procedure for monitoring and controlling voltage levels and MVAR flows within its area and neighboring Transmission Operator areas. URE had begun negotiating with neighboring control areas to develop a common interconnection Operating Agreement, but progress had stopped before the agreement was complete.

Finding: WECC Enforcement determined URE had a violation of R2 because it could not provide evidence that it was responsible for, and was sharing, its reactive requirements interconnecting transmission circuits, and the evidence it did have demonstrating that it had required sufficient reactive resources within its area to protect voltage levels under normal and contingency circumstances, did not indicate what reactive resources were required to support voltage under contingency conditions. WECC Enforcement also determined URE had a violation of R3 because it did not provide a list of generators exempt from following voltage and VAR schedules in its area, nor did it provide a statement that there were no exempt generators. WECC Enforcement determined the violations did not pose a serious or substantial risk to the bulk power system because of URE’s small size and location. If URE lost its peak load, URE’s neighbors could absorb the loss relatively easily. In determining the penalty amount, the NERC Board of Trustees Compliance Committee considered the following factors: this was URE’s first occurrence of this type of violation; URE was cooperative; and the number and nature of the violations.

Penalty: $450,000 (aggregated for multiple violations)

FERC Order: Issued March 25, 2011 (no further review)

Unidentified Registered Entity, FERC Docket No. NP11-218-000 (June 29, 2011)

Reliability Standard: VAR-001-1

Requirement: R3, R4

Violation Risk Factor: Lower (R3), Medium (R4)

Violation Severity Level: Moderate (R3), High (R4)

Region: WECC

Issue: The Registered Entity self-reported that while it had created a list of generators in its area who are exempt from following a voltage or reactive power schedule, it had not, as a result of a clerical error, notified 40% of those exempt generators (R3). In addition, the Registered Entity did not incorporate its Danskin and Bennett Mountain busses (both of which function as an interconnection between the Registered Entity’s generation facilities and transmission facilities) in its voltage schedule list as required (R4).

Finding: WECC and the Registered Entity entered into a settlement agreement to resolve multiple violations, whereby the Registered Entity agreed to pay a penalty of $130,000 and to undertake other mitigation measures. WECC found that the VAR-001-1 violations constituted only a minimal risk to bulk power system reliability since the relevant generators were small cogenerators (with an average output of 2 MW) that were associated with the Registered Entity’s distribution system. In addition, the Registered Entity, in its Transmission Operator function, cooperated with its generation dispatchers in regulating voltage. The duration of both VAR-001-1 violations was from May 28, 2008 through April 9, 2009. In approving the settlement agreement, NERC found that there were three instances of noncompliance with Regional Reliability Standard PRC-STD-005-1 WR1 (which was evaluated as an aggravating factor); some of the violations were self-reported; the Registered Entity was cooperative during the enforcement process and did not conceal the violations; the Registered Entity had a compliance program in place (which was evaluated as a mitigating factor); the penalties for the violations of Reliability Standards EOP-001-0 R6 and EOP-005-1 R2 were aggregated since both penalties were based on a single act of noncompliance; the penalties for the violations of Reliability Standards PRC-STD-005-1 WR1 and VAR-STD-002b-1 WR1 were based on the respective Sanction Tables; and there were no additional aggravating or mitigating factors.

Penalty: $130,000 (aggregate for 27 violations)

FERC Order: Issued July 29, 2011 (no further review)

Utilities Commission of New Smyrna Beach, FERC Docket No. NP10-2-000 (October 14, 2009)

Reliability Standard: VAR-001-1

Requirement: R1

Violation Risk Factor: High

Violation Severity Level: Not provided

Region: FRCC

Issue: Utilities Commission of New Smyrna Beach (New Smyrna) failed to develop procedures for monitoring and controlling voltage levels and MVAR flows within its individual area and with the areas of neighboring Transmission Operators.

Finding: Duration of the violation was from June 18, 2007, when the standard became enforceable, through January 30, 2009. Penalty was deemed appropriate because this was New Smyrna’s first violation of this standard, and the violation did not pose a serious or substantial threat to the reliability of the bulk power system because the required assessments were being done by its Planning Authority and others.

Penalty: $0

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