On November 28, 2014, FERC approved a Stipulation and Consent Agreement (“Agreement”) between its Office of Enforcement (“Enforcement”), the North American Electric Reliability Corporation (“NERC”) and the California Independent System Operator Corporation (“CAISO”) relating to the 2011 Southwest blackout in Southern California, Arizona and Northern Baja Mexico that affected 2.7 million customers.  Under the terms of the Agreement, CAISO will pay a combined civil penalty of $6,000,000, with $2,000,000 divided equally among NERC and the U.S. Treasury, and $4,000,000 invested in reliability enhancements measures.  CAISO also agreed to commit to mitigation and compliance measures, and to submit semi-annual compliance reports to Enforcement for at least one year.

After the Southwest blackout, FERC and NERC launched a joint investigation that determined that the blackout was initially caused by the loss of a 500 kV transmission line, which triggered cascading events and ultimately led to the loss of 30,000 megawatts of load.  The joint investigation also determined that the entities responsible for maintaining the bulk electric system were not prepared to ensure reliable operation or prevent cascading outages in the event of a single failure of an electrical component.  The joint investigation’s findings were later published in a report, titled Arizona-Southern California Outages on September 8, 2011, Causes and Recommendations (“Report”).

Based on the findings of the Report, Enforcement launched non-public investigations into several entities, including CAISO.  As a result of the non-public investigations, Enforcement determined that CAISO had violated three requirements of three different reliability standards which led to the loss of 10,000 megawatts or more during the Southwest blackout.  In consenting to the Agreement, CAISO neither admitted nor denied that its actions violated reliability standards during the Southwest blackout.

A copy of FERC’s order is available here.