On July 7, 2014, FERC approved a Stipulation and Consent Agreement between its Office of Enforcement (“Enforcement”), the North American Electric Reliability Corporation (“NERC”), and Arizona Public Service Company (“APS”) relating to the September 2011 Southwest power outage that affected approximately 2.7 million customers in Southern California, Arizona and Northern Baja Mexico.  Under the terms of the settlement, APS will pay a combined civil penalty of $3,250,000, with half being paid to the United States Treasury and half being paid to NERC.  Additionally, APS will commit to mitigation and compliance measures to address the system failures that Enforcement and NERC allege precipitated the power outage, with an additional $1,250,000 to be invested in reliability enhancements measures beyond those implicated in the power outage.  APS is to make semi-annual compliance reports Enforcement and NERC on its progress for at least one year.

The September 8, 2011 power outage was concluded to be the result of multiple factors that, when combined, led to significant voltage deviations and transmission equipment overloads, ultimately causing the loss of over 30,000 megawatts of load.  After the event, FERC and NERC launched a joint inquiry into the cause of the blackout.  In May 2012, the inquiry team published a report of its findings, titled Arizona-Southern California Outages on September 8, 2011, Causes and Recommendations (“Report”).  The Report identified  a loss of a single 500 kV transmission line to be the initial event tied to the power outage.  The loss of this line was not found to be the sole cause of the blackout, but it was considered by Enforcement and NERC to have likely triggered a series of cascading events that then culminated in the blackout event (see May 8, 2012 edition of the WER).

Based on the findings in the Report, Enforcement initiated non-public reliability investigations of several entities, including APS.   Enforcement and NERC ultimately decided that APS had violated the “Transmission Operations” group of reliability standards and further determined that these violations were “serious deficiencies undermining reliable operation of the [Bulk Power System].”  In executing the Agreement, APS stipulated to the facts included in the Report, but neither admitted or denied that its actions constituted reliability violations.  The Agreement is the first such settlement to result from Enforcement’s investigations into the incident.

A copy of FERC’s Order is available here.