NERC Case Notes: Reliability Standard FAC-008-3 | White & Case LLP International Law Firm, Global Law Practice
NERC Case Notes: Reliability Standard FAC-008-3

NERC Case Notes: Reliability Standard FAC-008-3

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American Electric Power Service Corporation (AEP), FERC Docket No. NP18-6 (January 31, 2018)

Reliability Standard: FAC-008-3

Requirement: R6

Violation Risk Factor: Medium

Violation Severity Level: Lower

Region: ReliabilityFirst

Issue: On October 21, 2016, AEP, a TO, Self-Reported a violation of FAC-008-3 R6. AEP identified the violation on March 22, 2016 during an upgrade construction project, recognizing that an inconsistency with the entity's Facility Ratings Methodology resulted in an inaccurate, higher rating for three transformer facilities. The facility ratings database did not account for two riser sections.  AEP notified PJM of the discrepancy, replaced the spans of tubing on April 14, 2016, and updated PJM databases on by May 11, 2016 in order to reflect the changes to the facilities equipment lists. Stemming from a human performance issue and a lack of verification controls to ensure proper ratings modeling, the violation spanned two years, of which two of the three transformers exceeded the reduced emergency rating 3.6 and 2.2 percent of the time, respectively; the third transformer did not exceed the rating at any point.

Finding: ReliabilityFirst found the violation constituted a moderate risk to BPS reliability and did not pose a serious or substantial risk to the BPS. Although not including the risers in the facility rating could have led to a deterioration of the equipment, the risk was mitigated due to the infrequency of the exceedance. Given that the loading on each of the three transformers varied, a potential equipment failure would not produce a substantial impact as the configuration of the station would allow electricity to flow through additional paths. The duration of the violation was from May 14, 2014 (when AEP energized the three transformers) through May 11, 2016 (when AEP corrected the facility rating following the replacement of the equipment). ReliabilityFirst considered the cooperation of AEP during the Settlement Agreement process as a mitigating factor due to the high degree of cooperation and transparency of AEP. ReliabilityFirst also considered prior noncompliance with FAC-008 R6, ultimately finding that the other violation was distinguishable from this violation and did not warrant consideration as an aggravating factor. AEP will review all applicable facilities as part of its current Mitigation Plan and implement new internal controls.

Penalty: No Penalty

FERC Order: Issued January 31, 2018 (no further review)

CCI Signal Hill LLC (CCI SH), FERC Docket No. NP15-29-000 (May 28, 2015)

Reliability Standard: FAC-008-3

Requirement: R1, R1.2

Violation Risk Factor: Medium

Violation Severity Level: Severe

Region: Texas RE

Issue: Texas RE, during a compliance audit, found that CCI SH's Facility Ratings documentation was not bifurcated up to the high side terminals of the main step up transformer. Additionally, CCI SH's Facility Ratings Methodology (FRM) used the gas turbines' firing temperature as the facility's most limiting equipment rating, which is an invalid Equipment Rating criterion.

Finding: Texas RE found that this issue, along with violations of FAC-008-1 R1, posed a moderate risk to BPS reliability because facility ratings affect system operating limits. Additionally, two of the plant's four units were Blackstart resources, and inaccurate facility ratings involving Blackstart units could delay restoration of firm load. However, during the violations period, CCI SH did not fail a Blackstart test, the plant's two other units had the ability to support the Blackstart, and CCI SH was contracted to supply only 3.4% of ERCOT's primary Blackstart capability. To mitigate the violation, CCI SH (1) created Equipment Ratings based on valid criteria, (2) created a Facility Rating based on characteristics that do not violate applicable Equipment Ratings, (3) hired a consultant to review CCI SH's internal compliance program, and (4) added an annual FRM review to its tracking and notification system.

Penalty: $50,000 (aggregate for 6 violations)

FERC Order: FERC approved the settlement on June 26th, 2015.

CCI Signal Hill LLC (CCI SH), FERC Docket No. NP15-29-000 (May 28, 2015)

Reliability Standard: FAC-008-3

Requirement: R2, 2.3

Violation Risk Factor: Medium

Violation Severity Level: Severe

Region: Texas RE

Issue: Texas RE, during a compliance audit, found that CCI SH did not have a "statement that a Facility Rating shall equal the most limiting applicable Equipment Rating of the individual equipment that comprises that Facility" in its Facility Ratings Methodology (FRM) document.

Finding: Texas RE found that this issue posed a moderate, but not a serious or substantial, risk to BPS reliability because facility ratings affect system operating limits. Additionally, two of the plant's four units were Blackstart resources, and inaccurate facility ratings involving Blackstart units could delay restoration of firm load. However, during the violations period, CCI SH did not fail a Blackstart test, the plant's two other units had the ability to support the Blackstart, and CCI SH was contracted to supply only 3.4% of ERCOT's primary Blackstart capability. To mitigate the violation, CCI SH (1) created Equipment Ratings based on valid criteria, (2) created a Facility Rating based on characteristics that do not violate applicable Equipment Ratings, (3) hired a consultant to review CCI SH's internal compliance program, and (4) added an annual FRM review to its tracking and notification system.

Penalty: $50,000 (aggregate for 6 violations)

FERC Order: FERC approved the settlement on June 26th, 2015.

CCI Signal Hill LLC (CCI SH), FERC Docket No. NP15-29-000 (May 28, 2015)

Reliability Standard: FAC-008-3

Requirement: R6

Violation Risk Factor: Medium

Violation Severity Level: Severe

Region: Texas RE

Issue: Texas RE, during a compliance audit, found CCI SH's facility ratings were inconsistent with its Facility Ratings Methodology (FRM). The FRM stated that gas turbines' firing temperature was the facility's most limiting equipment rating, but the FRM rated generators in MW and MVA. Also, CCI SH reported facility ratings to its Reliability Coordinator that were different than the ratings listed in the FRM.

Finding: Texas RE found that this issue, along with violations of FAC-009-1 R1, posed a moderate, but not a serious or substantial, risk to BPS reliability because facility ratings affect system operating limits. Additionally, two of the plant's four units were Blackstart resources, and inaccurate facility ratings involving Blackstart units could delay restoration of firm load. However, during the violations period, CCI SH did not fail a Blackstart test, the plant's two other units could have supported the Blackstart, and CCI SH was contracted to supply only 3.4% of ERCOT's primary Blackstart capability. To mitigate the violation, CCI SH (1) created Equipment Ratings based on valid criteria, (2) created a Facility Rating based on characteristics that do not violate applicable Equipment Ratings, (3) hired a consultant to review CCI SH's internal compliance program, and (4) added an annual FRM review to its tracking and notification system.

Penalty: $50,000 (aggregate for 6 violations)

FERC Order: FERC approved the settlement on June 26th, 2015.

City of Lake Worth (LWU), FERC Docket No. NP18-10 (April 30, 2018)

Reliability Standard: FAC-008-3

Requirement: R6

Violation Risk Factor: Medium

Violation Severity Level: High

Region: Florida Reliability Coordinating Council, Inc. (FRCC)

Issue: During a compliance spot check conducted by FRCC from February 27 to March 2, 2017, it was determined that LWU, as a GO and TO, was in violation of FAC-008-3 R6. FRCC identified that LWU did not establish Facility Ratings consistent with the associated Facility Ratings Methodology. The facility ratings database—comprised of the seven facilities owned by LWU, with 81 components in total—did not accurately identify the most limiting element for one of the seven facilities. LWU had not accounted for current transformers on the Hypoluxo to Main 138 kV line. FRCC found that the violation stemmed from insufficient documentation of individual component ratings; further, the physical condition of the nameplate data in the field had been adversely impacted due to age and corrosion (from exposure to the elements for many years).

Finding: FRCC found the violation constituted a minimal risk to BPS reliability and did not pose a serious or substantial risk to the BPS. By not including every component in the Facility Rating for that particular facility, LWU risked potential failure of the current transformers, misoperations, and equipment damage. The duration of the violation was from September 5, 2016 (when LWU failed to identify the transformers) through March 2, 2017 (when LWU updated all Facility Rating documents). FRCC found that the noncompliance history of LWU warranted consideration as an aggravating factor. Following the violation, LWU purchased asset management software and a third-party vendor to improve systematic tracking of NERC standards. LWU has now established a quarterly meeting schedule to discuss and review applicable deadlines and implementation measures.

Penalty: $60,000 (combined with other violations)

FERC Order: Issued April 30, 2018 (no further review)

Tampa Electric Company, FERC Docket No. NP16-20 (May 31, 2016)

Reliability Standard: FAC-008-3

Requirement: R8; R8.1

Violation Risk Factor: Medium

Violation Severity Level: Lower

Region: FRCC

Issue: Tampa Electric Company (TEC), a TO, Self-Reported a violation of FAC-008-3 R8 and R8.1.  TEC discovered that it did not maintain the bus voltage per the required schedule at Polk Power Station for a period of 7 hours and 30 minutes and that TEC’s operator failed to notify the TOP of deviations from the provided voltage schedule. 

On April 13, 2015, the Polk Power Station 230 kV bus dropped below the voltage schedule 238 kV lower limit during startup, which initiated a low bus voltage alarm that was acknowledged by the system operator.  Because none of the station’s units were online at the time, the station was exempt from maintaining the voltage schedule.  The voltage recovered to 238.1 kV, but the alarm did not reset because the voltage was still below the value necessary to reset the alarm.  The Polk Unit 4 and Polk Unit 2 combustion turbines were subsequently brought online with their AVRs set to automatic.  The station bus voltage subsequently dropped below 238 kV but the system operator did not notice because the alarm was obscured by other log entries.

Finding: FRCC found the violation posed a minimal risk to BPS reliability.  TEC’s generator voltage deficiency did not exceed 0.4 percent of the voltage schedule.  Moreover, the two generating units operated with their AVR in automatic mode during the period of the violation.  The duration of the violation was April 13, 2015 (when the Polk Power Station 230 kV bus dropped below the voltage schedule while CT 4 was online, at 11:05 a.m.) through April 13, 2015 (when the Polk Power Station 230 kV bus returned to the voltage schedule at 6:35 p.m.).  FRCC considered internal compliance program to be a mitigating factor.

Penalty: $4000

FERC Order: Issued May 31, 2016 (no further review)

Tampa Electric Company (TEC), FERC Docket No. NP15-29-000 (May 28, 2015)

Reliability Standard: FAC-008-3

Requirement: R8

Violation Risk Factor: Medium

Violation Severity Level: Lower

Region: FRCC

Issue: FRCC, during a compliance audit, found that in two instances TEC did not re-rate a facility or provide its Reliability Coordinator (RC) with proper notification through an inter-control center communications protocol.

Finding: FRCC found that this issue posed a moderate, but not a serious or substantial, risk to BPS reliability. Because the RC model had incorrect ratings data, the RC might not have operated appropriately. However, during the two instances maximum flow was 15% and 9% of the revised limits. These low percentages show the risk was not substantial. To mitigate the violation penalty, TEC (1) added a step to the process for planned switching requiring the energy system operator (ESO) to update ratings, (2) installed alarms which remind ESOs to check ratings when the possibility for de-rating arises, and (3) trained ESOs on the FAC-008-3 R8 requirement.

Penalty: $3,000 (aggregate for 2 violations)

FERC Order: FERC approved the settlement on June 26th, 2015.