FERC last week approved a settlement between SERC Reliability and Associated Electric Cooperative Inc. (AECI) for violations of NERC reliability standards. The ERO notified the commission of the settlement, which carries a penalty of $430,000, in a Notice of Penalty (NOP) on Sept. 30 (NP20-22); FERC indicated in a notice Friday it would not review the NOP, letting the agreement stand.

The commission also accepted a settlement between an unnamed entity and its compliance enforcement authority for violations of NERC’s Critical Infrastructure Protection (CIP) standards. NERC’s NOP for the CIP violations, also filed Sept. 30 (NP20-23), follows the organization’s new policy of treating CIP noncompliance information as critical energy/electric infrastructure information (CEII) in its entirety. (See FERC, NERC to End CIP Violation Disclosures.)

Up to last month, NERC selectively redacted potential CEII from its filings to the commission. (See FERC Accepts WECC Violation Settlement.) In what is likely to be standard policy in such cases going forward, all information about the settlement — including the number, date and location of violations; the entities involved; mitigation actions; and penalties assessed — were included in a separate filing that is visible in the docket’s list but not accessible by the public.

Audit Uncovers Longstanding Issues

SERC’s settlement with AECI involves violations of a number of standards by the cooperative:

• EOP-008-1 — Loss of control center functionality (two violations)
• FAC-009-1 — Establish and communicate facility ratings
• TOP-004-2 — Transmission operations
• PER-003-0 — Operating personnel credentials
• PER-005-1 — System personnel training

Per the terms of the agreement, AECI neither admitted nor denied the violations but did agree to the monetary penalty and additional mitigation and compliance activities.

The infringements of EOP-008-1 and FAC-009-1 were discovered during a compliance audit conducted from July to October 2016. However, the violations had been ongoing for several years at that point: since 2013 in the case of the EOP-008-1 violations, and 2007 for the FAC-009-01 issue.

AECI’s two infringements of EOP-008-1 concern requirements R1 — requiring reliability coordinators, balancing authorities and transmission operators (TOPs) to have a plan for meeting their obligations for reliable operation if their primary control centers are lost — and R4 — mandating BAs and TOPs have backup functionality for maintaining compliance with reliability standards during a loss of primary control center functionality. Both violations began on July 1, 2013, when the standard became enforceable.

As to the first requirement, SERC determined that the agreement between AECI and its six generation and transmission (G&T) cooperatives, which operate as regional dispatch centers (RDCs), did not require the creation of such a plan. The regional entity ruled the primary cause of the violation to be “management oversight” on the part of AECI leadership for “failing to ensure the implementation of an organizational model that reflected the [cooperatives’] role” in maintaining TOP functions.

A contributing cause was an “erroneous belief” by AECI’s management that backup plans were only required if all six G&Ts’ primary and backup control centers were lost. In reality, none of the G&Ts had a backup control center, meaning that a failure of even one primary center would put that cooperative out of action and potentially spark cascading failures. The lack of backup control centers was at the core of the R4 violation as well.

Both violations were found to pose a serious risk to the reliability of the bulk power system, as they could significantly lengthen response time in an emergency situation. AECI committed to a number of mitigating activities, primarily involving revisions to its rules for loss of RDC functions in the case of requirement R1 and requiring G&Ts to install backup facilities to fulfill requirement R4. The mitigation plans are expected to be fulfilled by the end of this year.

The FAC-009-1 violation was initially discovered at the same audit, when SERC determined that ratings for AECI’s solely and jointly owned facilities were not consistent with its stated facility ratings methodology (FRM). However, the full scope was not visible until SERC issued a request for information that required AECI to evaluate all transmission and generation facilities. At that point, the cooperative discovered that 101 of its 415 transmission facilities and eight of 25 generation facilities were incorrectly rated.

SERC assessed the violation as a moderate risk to the BPS; no harm is known to have occurred. In response to the violation, AECI rerated all transmission and generation facilities in accordance with its FRM, with all work completed by June 2019. Additional mitigation measures by the cooperative include revising its ratings application procedure, creating a new procedure for documenting asset database management processes and deploying new asset management software.

Relay Test Leads to Procedure Oversight

The remaining violations were submitted to SERC via self-report, with the TOP-004-2 infringement reported earliest of the three.

TOP-004-2 requires TOPs to “implement formal policies and procedures to provide for transmission reliability,” including switching transmission elements. AECI reported to SERC in March 2017 that one of its G&Ts had failed to follow the cooperative’s switching order procedure (SOP) following the inadvertent trip of a circuity breaker during relay testing at a substation. The operator at the G&T did not contact AECI prior to returning the breaker to service as required in the SOP.

SERC rated the violation as a moderate risk but noted that AECI had reported a similar incident of noncompliance with TOP-004-2 in 2015 (NP16-21). “The underlying cause of the prior noncompliance was similar, and the mitigation for the prior noncompliance should have prevented [this] noncompliance,” the RE said.

AECI’s mitigation plan, submitted Sept. 13, 2019, includes semiannual training for all G&T relay technicians on the SOP, along with modifying system control software to remind operators to contact AECI prior to operating BPS elements.

Training, Certification Round out Violations

AECI’s report of its PER-003-0 violation, submitted on July 24, 2019, saw the cooperative acknowledge that personnel working in the RDCs operated by its G&Ts had failed to obtain valid NERC certificates as required by the standard. SERC also attributed this shortcoming to management oversight on the part of AECI, alleging that the cooperative’s agreement with its G&Ts did not fully account for the functions they were expected to perform. As a result, AECI did not realize that the responsibilities of the affected positions required staff that were fully certified by NERC.

SERC determined that this violation posed a serious risk to the reliability of the BPS, as did the violation of PER-005-1, under which AECI reported that it did not have a systematic approach for training system operators employed by its G&Ts. The utility committed to mitigation activities for the PER-003-0 violation, including the creation of a NERC certification and training task force and a program to ensure management and implementation of the standard.

AECI’s proposed certification and training task force is a factor in planned mitigation measures for PER-005-1 as well. In addition, the entity is also developing a list of company-specific reliability tasks for all G&Ts along with programs to verify the capabilities of personnel assigned to perform those tasks. Mitigation for the PER-005-1 infringement was reported complete earlier this year, while the PER-003-0 mitigation is expected to be finished by next June.