On August 27, 2010, the Commission issued a Notice of No Further Review and Guidance Order (the “Order”) regarding one Notice of Penalty against Commonwealth Edison Company (“ComEd”).  The Commission addressed the question “whether repetitive infractions of the same or a closely-related Reliability Standard requirement are treated as an aggravating factor in penalty determinations.”

The North American Electric Reliability Organization (“NERC”) filed a Notice of Penalty against ComEd for allegedly violating reliability standard PRC-005-1 R2.1, first by failure to test relay maintenance packages and then in the second case by failure to test various batteries.  ComEd self-reported that preventive maintenance tasks were done outside of the required intervals for certain station batteries and microwave batteries, and this was their second instance of non-compliance with this particular standard.  ReliabilityFirst Corporation (“RFC”), the regional entity delegated by NERC, and ComEd filed a settlement agreement for this violation, and in approving the settlement, the NERC Board of Trustees Compliance Committee determined that the violation was ComEd’s second violation of the Reliability Standard in question but it was unrelated to the first occurrence and not an aggravating factor. 

The Commission stated in its Order that the NERC Sanction Guidelines indicate that if a violator has “repetitive infractions” the regional entity “shall consider some increase in penalty.” The Commission clarified that repetitive infractions include:

  1. multiple examples of conduct underlying violations of the same or closely-related Reliability Standard Requirement;
  2. conduct already addressed in a mitigation plan for a prior violation of the same or closely-related Reliability Standard Requirement ; or
  3. multiple violations of the same Standard and Requirement.

In this case, ComEd violated the same Reliability Standard and Requirement; therefore, NERC and RFC must consider this an aggravating factor in determining penalties.  The Commission noted that the Notice of Penalty did correctly identify prior violations, however it did not instruct the Commission on how or if these prior violations were included as an aggravating factor.  In all future Notices of Penalty (“NOPs”), the Commission will expect information about prior violations by registered entities and how these factored into penalty determinations.  In particular, FERC said all future NOPs should include whether an instant violation represents repeated conduct by the same entity, an affiliate, or department operated by the same corporation or whose reliability compliance activities are conducted by that corporation/entity.  The Commission did state, however, that NERC and regional entities have the discretion to determine whether a prior violation of the same or closely-related Reliability Standards should be considered an aggravating factor based on the specific circumstances in a case.

For a copy of the Commission’s order, click here.