American Electric Power and Springdale Energy will pay ReliabilityFirst a combined $180,000 in penalties for violations of NERC’s reliability standards, according to settlements between the regional entity and the utilities approved by FERC.
NERC submitted the settlements Dec. 30, 2025, in its monthly spreadsheet notice of penalty, along with a separate nonpublic SNOP regarding violations of NERC’s Critical Infrastructure Protection standards (NP26-3). FERC indicated in a Jan. 29 filing that it would not further review the SNOPs, leaving the penalties intact.
AEP’s settlement, carrying a $150,000 penalty, concerned PROC-026-1 (Relay performance during stable power swings), which was in effect from 2018 to 2024. The standard has since been replaced by PRC-026-2, but the violation by two AEP subsidiaries, Ohio Power and Indiana Michigan Power, occurred while the earlier version was in effect, according to a self-report submitted by the utility in October 2022.
According to the settlement, PJM notified AEP in December 2020 that it had added the utility’s 765-kV Sorenson-Marysville line to its list of elements covered by PRC-026-1. Requirement R2 of the standard says a transmission owner must ensure the load-responsive protective relay settings on a transmission line meet the criteria in the standard within 12 months of being notified of the line’s inclusion.
The Sorenson substation is owned by Indiana Michigan Power, while the Marysville substation is owned by Ohio Power, and both are managed by separate engineers. While the engineer overseeing the Marysville facility reviewed the line relays within the 12-month period, the Sorenson facility’s manager did not review its relays until August 2022, about eight months after the deadline. Two of the relays were found to be out of compliance and require adjustment.
RF determined the root causes of the violation were “ineffective internal controls and workflow tools to ensure evaluations were completed in compliance with PRC-026-1,” the RE wrote in the SNOP. AEP had flagged the Sorenson relays within its tracking system, but no one was assigned to complete the evaluation and no follow-up notifications were issued to ensure completion.
RF also observed a lack of coordination between AEP’s subsidiaries, with the engineer from Indiana Michigan incorrectly assuming Ohio Power’s engineer would complete the evaluations on the Sorenson facility as well as the one in Marysville.
The RE assessed the violation as posing a moderate risk to grid reliability: greater than minimal because an extra-high voltage line was affected, the evaluation was late and the relays were eventually found to be noncompliant; but not serious or substantial because of the “limited scope of the noncompliance.” RF acknowledged that AEP performed an extent of condition review across the footprint of all its operating companies and found no other instances of noncompliance with PRC-026-1 R2.
AEP’s mitigation activities included performing the required evaluations of the Sorenson-Marysville line, along with the extent of condition review and creating a unified process for evaluating relays for PRC-026 compliance. The utility also updated its tracking system to specify the due date, estimated completion date and personnel assigned to each task.
Vendor Failed to Ensure Springdale’s Compliance
Springdale’s settlement stemmed from a violation of PRC-025-2 (Generator relay loadability). The utility notified RF in August 2022 that it was in violation of requirement R1 of the standard, which requires generator owners to apply the appropriate settings to their load-responsive protective relays “while maintaining reliable fault protection.”
RF observed that Springdale’s violation “was a continuation of a prior noncompliance” that the utility had failed to fully mitigate. Springdale reported the initial noncompliance in February 2020, telling the RE that it had failed to ensure the correct relay settings on three of its five generating units. To mitigate the issue, the utility hired a vendor to update the relay settings.
A month later, the vendor reported it had completed the updates; based on this report, Springdale reported to RF that mitigation was complete. However, when the utility retained a new vendor to review relay settings two years later, the second vendor discovered the settings were still not in compliance.
Springdale launched an investigation into the original vendor, which reported that “the technician who performed the work had properly changed” one relay’s settings but had incorrectly changed another. Six relays were affected by the oversight. The original vendor returned to fix the error in May 2022, but the second vendor reported in June that one of the units was still not compliant, affecting two relays. These were finally brought into compliance in November 2022.
RF determined that the root cause of the second noncompliance was vendor oversight, because the utility did not validate that settings changes had been implemented correctly. The RE assessed the violation as a moderate risk, observing that although the noncompliance lasted more than three years and the size of the settings changes increased the risk of an unnecessary trip, the limitation to three of five generating units “somewhat” reduced the potential magnitude of harm. The earlier violation did not constitute a reason to aggravate the penalty, RF added.
Springdale’s mitigation efforts included updating its vendor contracts to require engineering review of changes within 48 hours and vendor draft reports within 30 days after completion of work. The utility also implemented a vendor quality assurance process to ensure Springdale staff review the vendors’ work, and a requirement that the NERC compliance manager review the vendor draft report to check that it includes all necessary information to demonstrate compliance.
