PacifiCorp has 30 days to convince FERC it should not have to pay a penalty of up to $42 million for alleged violations of NERC reliability standards that may have contributed to the 2012 Wood Hollow wildfire in Utah, the commission ordered Thursday.

The Order to Show Cause and Notice of Proposed Penalty (IN21-6) cites allegations by FERC’s Office of Enforcement that PacifiCorp violated FAC-009-1 (Establish and communicate facility ratings) and its successor standard FAC-008-3. Specifically, FAC-009-1 requirement R1 and FAC-008-3 requirement R6 both require transmission owners and generator owners to have ratings for their solely and jointly owned facilities that are “consistent with the associated facility ratings methodology [FRM].”

FERC staff claim that PacifiCorp — including its Utah business arm, Rocky Mountain Power — knew in 2009 when it published its FRM that “the clearances on a majority of its bulk electric system transmission lines were incorrect under [National Electric Safety Code] clearance requirements.” Because the clearance data was used to calculate facility ratings, the resulting ratings were inconsistent with the published FRM.

The clearance inaccuracies came to light following the Wood Hollow fire, which caused one death, burned more than 47,000 acres of land and destroyed more than 50 residences or cabins. Utah’s Department of Public Safety determined that the fire was caused by “inadequate clearance between two RMP transmission facilities” near the town of Fountain Green that created an arc in the gusty conditions of June 23, 2012.

FERC’s subsequent investigation found that the Fountain Green facility was just one of the clearance violations on PacifiCorp’s BES transmission lines. Clearance issues were discovered in more than 58% of the lines; 45% of the company’s BES lines had clearance violations so severe that “the transmission lines should have been rated at zero-amperes,” too low to be safely energized. This includes the line involved in the Wood Hollow fire.

PacifiCorp’s engineering department advised management as early as 2007 of the widespread clearance issues and transmission facility misratings, but FERC found that management failed to act on these concerns in a timely manner. For instance, managers delayed until 2009 a 1,200-mile lidar study to determine the extent of the problem; when the study was conducted, the issues were determined to be even worse than thought. Even after this the utility continued to provide incorrect ratings to its reliability coordinator, planning authority, transmission planner and transmission operator, FERC staff said.

“This risk level and various other culpability factors … result in a civil penalty range of $21 [million] to $42 million, and staff recommends assessing a penalty of $42 million in light of the serious nature and scope of PacifiCorp’s violations, as well as their harmful impacts, including the Wood Hollow Fire,” FERC staff said in their report.

In its order, FERC directed PacifiCorp to file, within 30 days, an answer “showing cause why it should not be found to have violated [the Federal Power Act] and … the commission’s regulations by failing to comply with … FAC-009-1 R1 [and] why its alleged violations should not warrant” being assessed the recommended penalty. Enforcement staff may file a reply to the commission within 30 days of PacifiCorp’s filing.

Chatterjee Raises Fairness Concerns

While FERC’s order passed with no dissents — Commissioner James Danly, who served as general counsel before becoming a commissioner last year, recused himself — Commissioner Neil Chatterjee urged his colleagues to consider carefully whether the penalty amount was “appropriate in light of the facts and circumstances presented.”

In a separate concurrence, Chatterjee observed that the previous highest civil penalty assessed by the commission for violations of reliability standards was a $25 million settlement with Florida Power & Light stemming from the 2008 blackout in which millions of customers in south Florida lost power for several hours.

That settlement stemmed from violations of seven groups of reliability standards that “led to the loss of 22 transmission lines, 4,300 MW of generation and 3,650 MW of … load.” By contrast, PacifiCorp is alleged to have violated a single standard, causing “minimal loss of load to customers [and] no loss of BES transmission load.”

“It is difficult to understand how the alleged violations here are substantially more serious than those that warranted the $25 million penalty [for the Florida blackout],” Chatterjee said. “Fairness also requires the commission to consider the fact that, as of August 2016, PacifiCorp had spent in excess of $127 million to conduct lidar surveys of its entire transmission system and to remediate all of the identified clearance conditions. … The commission’s penalty calculations should take into consideration such expenditures, which directly benefit PacifiCorp’s consumers.”

Chatterjee also called the arguments in favor of the penalty amount “confounding,” claiming that FERC staff cited the Wood Hollow fire to justify the $42 million penalty while also saying “the violations alone” warrant the penalty amount.

“The … fire cannot be both relevant and irrelevant. … The commission can and must be more transparent,” Chatterjee wrote.

At Thursday’s open meeting Chairman Richard Glick emphasized that the staff’s allegations were not the last word in the matter.

“Today’s order is just one step in the process. It does not represent a commission determination that PacifiCorp was in fact in violation or that they should be fined this specific amount,” Glick said. “But today’s order is an indication that the commission takes [its] responsibilities over the reliability of the bulk power system very seriously. There is a reason to believe the company is not in compliance with mandatory reliability standards. We will pursue the matter until it is resolved.”