On March 17, 2011, the Federal Energy Regulatory Commission (“FERC” or the “Commission”)  affirmed an original $80,000 North American Electric Reliability Corporation (“NERC”) proposed penalty against Turklock Irrigation District (“Turlock”) for an outage caused by vegetation management, specifically reviewing the Notice of Penalty (“NOP”) for FAC-003-1 R2 (see March 5, 2010 edition of the WER).  In affirming the NOP, FERC determined they do not expect to overturn reliability settlements, unless the Commission believes a remand of the NOP is in the public interest.  The Commission also emphasized their de novo review, and directed NERC to ensure an adequately developed record that supports each NOP.  Finally, FERC listed some factors that should be accounted for in future NOP reviews:

  • Load shedding arising from reliability violations should take into account the load lost, and the quantity lost will affect the harm analysis;
  • Load shedding in order to comply with another standard or contain an emergency is not itself a violation, but the underlying violation will affect the penalty assessed;
  • A registered entity’s efforts after a violation to maintain compliance maybe used in assessing a penalty, but will not be an offset or reduction of a penalty;
  • Size of an organization is determined by multiple factors, and this will not be the most important factor in reviewing a NOP;
  • Self-reporting through a violation that required reporting more quickly than the one potentially violated will require NERC and the regional entity to remove self-reporting as a mitigating factor, but cooperation thereafter can be a mitigating factor for a penalty determination;
  • System conditions surrounding load shedding must be described; and
  • Human error will not warrant reducing a penalty.

The NOP review order is available here.