FERC on Friday approved a $265,000 settlement between WECC and the Public Service Company of New Mexico (PNM) (NYSE:PNM) for violating NERC reliability standards, along with settlements carrying no financial penalties filed by ReliabilityFirst with Covanta Delaware and the Texas Reliability Entity with Oncor.
NERC submitted the settlements to the commission on Sept. 30, filing a spreadsheet Notice of Penalty for the agreements in RF and Texas RE (NP21-29) and a separate NOP for the PNM settlement (NP21-30). A separate, nonpublic spreadsheet NOP was filed as well, in accordance with the policy on violations of the Critical Infrastructure Protection (CIP) standards announced by FERC and NERC last year. (See FERC, NERC to End CIP Violation Disclosures.) FERC’s Friday filing indicated that the commission would not review the settlements, leaving the penalties intact.
Self-report, Audit Find Ratings Shortcomings
PNM’s settlement concerned a violation of FAC-008-3 (Facility ratings), specifically requirement R6, which mandates that a registered entity “have facility ratings for its solely and jointly owned facilities that are consistent with the associated facility ratings methodology or documentation for determining its facility ratings.”
WECC first learned of the violation through a self-report submitted by PNM on May 9, 2017, notifying the regional entity of several discrepancies. First, the utility had recorded facility ratings for six of its jointly owned facilities that were different than those of the facilities’ co-owners. PNM also acknowledged several inconsistencies within its own facility ratings spreadsheet relating to conductor MVA or amp ratings, as well as a failure to document the assumptions for calculating such ratings.
In addition, source material such as nameplate ratings or vendor documentation could not be found for multiple facilities. In all, PNM reported improper ratings for 56 transmission facilities: 15 345-kV, four 230-kV and 37 115-kV facilities.
As it happened, WECC was conducting a compliance audit at the time of PNM’s self-report. The RE subsequently discovered seven more ratings discrepancies during the remainder of the audit, bringing the total to 63.
During mitigation activities PNM found that in-line switches “were not adequately represented in its facility ratings,” meaning that the utility did not have source documentation for equipment ratings on all 72 of its 115-kV facilities, as well as four of its 230-kV facilities and 15 345-kV facilities.
WECC attributed the root cause of the violation to a “lack of management clarity” regarding the utility’s change management procedures for documenting facility ratings. The violation began on Jan. 1, 2013, when FAC-008-3 became enforceable and was still ongoing as of the date of filing; remediation and mitigation are expected to be completed by March 3, 2022.
The RE determined that the violation posed a “serious and substantial risk” to bulk power system reliability because without accurate ratings, facilities could have been operated beyond safe and reliable limits. WECC considered this in assessing the monetary penalty, with the length of the violation, PNM’s compliance history — including two prior infringements of FAC-008-3 — and the “difficulty in remediating and mitigating” the issue added as aggravating factors.
