FERC last week approved a settlement between ReliabilityFirst and ITC Holdings subsidiary Michigan Electric Transmission Company (METC) for violations of NERC reliability standards, along with a separate settlement between RF and Michigan Power (NP21-5).

The METC violation carries a $125,000 penalty, but no monetary damages were assessed for the Michigan Power infringement.

NERC submitted both settlements to FERC in a spreadsheet notice of penalty in December, which FERC indicated on Friday it would not review. In the same docket, NERC filed a separate spreadsheet NOP. The documents in that filing were not accessible, likely because it contains information on violations of NERC’s Critical Infrastructure Protection (CIP) standards, which are to be kept confidential in accordance with a policy agreed between FERC and NERC last year. (See FERC, NERC to End CIP Violation Disclosures.)

ITC Admits Facility Misratings

RF’s settlement with METC stems from a violation of FAC-008-1 (Facility Ratings Methodology). The issue was discovered by ITC Midwest (ITCM) via an internal control review in Jan. 2017, with METC filing a self-report to the regional entity on behalf of ITCM in July of that year.

During its internal review, ITCM discovered that a relay thermal limit in the Tiffin to Arnold 345-kV circuit “did not match the published equipment rating.” As a result, the facility rating had to be reduced at two locations. After finding the misrating, ITCM worked with METC and ITC’s other Michigan operating companies to conduct a root-cause analysis and an extent-of-condition review aimed at identifying “how ITCM and the Michigan groups calculated, considered and applied relay thermal limits” in ITC’s facility ratings database.

The review determined that the Michigan companies’ rating methodology did not account for relay thermal limits on transformers; only transmission lines were addressed. In addition, the methodology also did not include delta-connected current transformers, which were found to have contributed to the misrating of the relay thermal limit.

As a result, ITC committed to review all 254 substations in its footprint. The work was still underway at the time of the settlement, with completion expected by the end of 2021. As of August, the company had completed reviews of 184 substations; ratings changes have been required in about 7% of examined facilities.

Along with the ongoing review, ITC has already completed a number of additional measures, including updates to its facility ratings database and ratings methodology to account for relay thermal limits. RF considered these actions a mitigating factor in determining the penalty amount, in addition to the moderate risk posed by the violation and the fact that it was identified and reported before any harm occurred. On the other hand, the RE also noted that the company has a history of compliance issues under FAC-009-1 (Establish and Communicate Facility Ratings), which supports an increased penalty.

Because some of the affected facilities are in MRO’s footprint, the settlement amount will be divided between the two REs based on net energy for load in each region. NERC calculated MRO’s portion at $41,250.

Michigan Power Overlooks Voltage Changes

Michigan Power’s settlement arises from an infringement of VAR-002-4.1 (Generator Operation for Maintaining Network Voltage Schedules).

During a spot-check in December 2018, the utility discovered it had not maintained the reactive power schedule as required and had also failed to satisfy notification requirements since November 2017, the month the entity entered a reduced dispatch agreement (RDA) with Consumers Energy. Under the RDA the utility was required to reduce its output at the request of Consumers, which would notify it of required reductions at the beginning of each day.

Michigan Power performed the megawatt reduction according to schedule but neglected to “reduce the output of MVARs as needed to maintain the reactive power schedule.” As a result, the entity was found to have failed to maintain its voltage on 254 of the 284 occasions in question.

RF attributed the violation to “the entity’s lack of awareness of the constant output of MVARs to the grid” and a misunderstanding of the notification requirements in its contract with Consumers. However, the RE noted that Michigan Power is “inherently lower risk” because it has no record of misoperation and is not a black start resource, and that Consumers had not identified any system voltage issues caused by the violation. The utility has also committed to updating its operation requirements to ensure that MVAR is maintained during future adjustments. For these reasons, the entity elected not to apply a monetary penalty.