Virginia Electric and Power Company – Power Generation Penalized of $130,000 for Violation of FAC-008-3 R6 (01/06/2023)

Cause

The cause of the violation was insufficient processes. Specifically, VEP-PG had a lack of a robust change management process, lack of internal peer reviews, and an over-reliance on documentation and not a physical walk-down of the facilities. Additionally, there was a learning curve associated with VEP-PG’s rapid integration of renewable energy assets, which required adjustments to its Facility Rating approach. As a result, while VEP-PG had a documented FRM in place at its solar facilities, new employees were not given consistent guidance on the Facility Rating process.

This violation started on September 6, 2007, when VEP-PG registered as a GO and had not rated all Facilities in accordance with its FRM, and ended on November 21, 2021, when VEP-PG accurately rated all Facilities in accordance with its FRM.

Disposition

This violation posed a moderate risk and did not pose a serious or substantial risk to the reliability of the Bulk-Power System (BPS). VEP-PG’s failure to determine Facilities Ratings in accordance with its FRM for 41 of its 102 Facilities could negatively affect reliable planning and operation of the BPS. Incorrect ratings and limits could cause system instability because planning models and System Operating Limits would not accurately reflect the true limits of the Facility and would not reliably indicate pre-contingency or post-contingency limits. However, SERC determined that the violation did not pose a serious risk to the BPS because VEP-PG did not exceeded the correct Facility Ratings and the likelihood that multiple units would trip at the same time due to a Facility Rating exceedance was unlikely. Additionally, the 41 incorrect ratings are associated with 31 generating units totaling 6,078 MVA, of which 1,319 MVA are fuel oil units with an average annual capacity factor of less than 1 percent. The largest unit with an incorrect Facility Rating was 908 MVA, however it is a fuel oil unit with an average capacity factor of only 0.81 percent. The largest unit with an incorrect Facility Rating with an average annual capacity factor of greater than 1 percent was 794.2 MVA with a 68.59 percent average annual capacity factor.

Despite unlikely potential impact to the BPS, this violation is aggravated by the length of time for which these instances of noncompliance occurred and the high percentage of Facilities affected. 

SERC reviewed VEP-PG’s internal compliance program and considered it to be a neutral factor in the penalty determination. A settlement in the amount of $130,000 was determined appropriate.

SERC considered VEP-PG’s compliance history and determined that there were no relevant instances of noncompliance.

Timely and voluntary self-identifying and self-reporting violations is vital to the reliability of the BPS as it reduces the probability of unknown risks going undetected and unmitigated for longer durations. SERC encourages detailed self-reporting of offenses, as it also reduces the time it takes for SERC to investigate and resolve enforcement actions. Self-identification of noncompliance requires mitigation to remediate the Alleged Violations and prevent recurrence, thereby eliminating the assessed risk. SERC recognizes VEP-PG’s timely reporting of the Alleged Violation. As such, SERC awarded VEP-PG penalty credit for self-reporting the Alleged Violation.

SERC also awarded mitigating credit for the level of cooperation demonstrated by VEP-PG. VEP-PG was fully cooperative during the investigation and enforcement process relating to the Alleged Violation by providing SERC with timely, detailed, and organized evidence in response to information requests. Additionally, VEP-PG voluntarily submitted all associated mitigating activities, and openly shared information including any potential weaknesses regarding its internal compliance program and applicable processes, procedures, internal controls, and systems and assets. SERC also took into consideration that VEP-PG self-initiated the complete and full walk-downs of its applicable facilities, well above the required minimum sampling. SERC highly encourages this behavior as it demonstrates VEP-PG’s level of cooperation with SERC and the overall commitment to reducing risks to the BPS.

SERC applied penalty credit for VEP-PG agreeing to settle. SERC encourages prompt resolution of enforcement actions so that VEP-PG can focus on mitigation and reducing reliability risks.