On November 13, 2009 the FERC approved 564 penalties submitted in an Omnibus Notice of Penalty (“Omnibus Filing”) by the North American Electric Reliability Corporation (“NERC”).
NERC is the Commission-certified Electric Reliability Organization, and pursuant to section 215(e) of the Federal Power Act and FERC regulations, NERC must file a Notice of Penalty with FERC before a violation of a Reliability Standard takes effect. Each penalty is subject to review on a motion by FERC or by an application for review. After thirty days, if no application has been filed then the NERC penalty is affirmed by operation of law. The thirty day period for the Omnibus Filing was set to expire on November 13, 2009.
The 564 violations apply to 140 entities registered with NERC to perform reliability functions for the nationwide Bulk-Power system. Of those, 541 violations are zero dollar penalties, and the remaining 23 penalties range from $1,000 to $15,000 for eight registered entities, totaling $91,000. The Commission concluded it will not give further review to any of the monetary penalties assessed, and the Office of the Secretary issued a contemporaneous notice stating it will not seek further review on its own motion of any of the zero dollar penalties.
NERC found that the majority of the violations had a minimal to moderate impact on the Bulk-Power System, and those impacts did not pose a serious or substantial risk to the system. However, 145 penalties were considered to have a “High” Violation Risk Factor. Also, the majority of the violations were discovered prior to the July 3, 2008 FERC order that explained its expectation for the development of records in future Notices of Penalty.
Most of the violations (458) were against entities registered with the Western Electricity Coordinating Council, while the Midwest Reliability Organization submitted only six penalties. Most of the penalties were assessed for violations of rules requiring procedures for sabotage reporting. Violations of rules requiring certain registered entities to have and implement protection system maintenance and testing programs accounted for the second largest number of penalties. Other violations included failing to develop a rating methodology and applying that methodology to facilities and the failing to require coordination and communication of certain operating information.
The full decision is available at: http://www.ferc.gov/EventCalendar/Files/20091113153317-NP10-2-000.pdf with an Errata notice available at: http://www.ferc.gov/industries/electric/indus-act/reliability/11-16-09-errata.pdf.