AICPA SOC Service Organizations - Certrec

Evergy, Inc. Faces $122,000 Penalty for Non-compliance with FAC-008-3 R6 Standards

Summary of NERC Penalties









Quarter 1 - February 2024

Evergy, Inc. (EVE)

NERC's Regulations

FAC-008-3 R6

Evergy, Inc. reported non-compliance with FAC-008-3 R6 after a merger. The company identified 133 Facility Rating errors across 363 facilities due to verification process deficiencies. These deficiencies included inaccurate records and methodology application which affected various facility types and led to rating discrepancies.


Evergy, Inc. (EVE) submitted a Self-Report stating that as a Generator Owner (GO) and Transmission Owner (TO) it was in potential noncompliance with FAC-008-3 R6. In 2018, Kansas City Power and Light (KCPL) and Westar merged to form Evergy (the Entity). As a result of the merger, MRO combined two Self-Reports that KCPL and Westar previously submitted separately (KCPL – MRO2019021776 and Westar – MRO2019021777) into one violation (MRO2019021777) under the Evergy name and NCR number. The Entity’s initial self-report for Westar identified discrepancies for three generating Facilities. In the Entity’s initial self-report for KCPL, it identified discrepancies through a review of Facility Rating spreadsheets for three transmission lines with terminals at six substations and three of 43 generation Facilities. To identify the full scope of the violation, the Entity performed an extensive review of its facilities and identified two scope expansion issues after the initial self-reports. These two issues were limited to the legacy Westar transmission system. As part of the Entity’s multi-year mitigation plan (2019-2021) and extent of condition analysis, it performed field walkdowns on all 363 in-scope Facilities, obtaining Individual Equipment Ratings. The Entity updated its Facility Rating calculations to ensure all equipment in the scope of its continuous improvement project was accounted for and all in-scope Facilities were rated in accordance with applicable Facility Ratings methodology. In the combined Self-Report and two additional scope expansions, the Entity identified 133 out of its 363 in-scope Facilities (36.6%) with Facility Rating errors as part of an internal compliance monitoring review, including 23.14% (or 84) 161 kV and 1.38% (or five) 345kV transmission lines. The remaining 44 Facilities with Facility Rating errors included 28 reactive devices, 10 transformers, and 6 generators. Of these 133 Facilities, the Entity identified 14.8% (or 54) Facilities that had decreases to the Facility Ratings (Summer Emergency) ranging from -1% to -57% (including 10.5% 161 kV and 1.1% 345kV transmission lines); 1.7% (or six) Facilities that had increases to the Facility Ratings (Summer Emergency) ranging from 1% to 24%, comprised of 161 kV transmission lines; and an additional 20.1% (or 73) of newly identified Facilities (previously KCPL) that were required to have ratings but were not included in the Facility Ratings calculations. For these 73 newly identified Facilities, the Entity did not have documented Facility Rating spreadsheets, though 35 Facilities were previously included in the planning models with ratings; additionally, breakers that were part of a ring bus or breaker-and-a-half bus configuration that were not adjacent to Bulk Electric System (BES) Facilities have been identified as stand-alone Facilities, but were not previously identified as such. The newly identified Facilities account for 11% of in-scope facilities. Of the total identified Facilities, 2.8% (or 10) of the Facilities are associated with interconnection points with another Transmission Owner and resulted in a rating change. Five out of the ten Facilities experienced a rating decrease, and four out of the ten Facilities experienced a rating increase. One Facility identified as part of Scope Expansion One is part of the legacy Westar Blackstart cranking paths.


The cause of the noncompliance was that the Entity had deficiencies in its Facility Rating verification process. Specifically, in the Entity’s original Self-Report, the source of record (99 drawings/one-line diagrams) was not fully inclusive of relay or conductor information (wire, bus work, etc.). In the first Scope Expansion, the Entity identified one issue where a transposition error occurred, resulting in an incorrect auxiliary CT circuit rating, and a second issue where the Entity inconsistently applied the Facility Rating methodology for auxiliary CT circuits within CT secondary circuits, resulting in four facilities where auxiliary CT circuits were not considered in the calculation spreadsheets. In the second Scope Expansion, the Entity identified a documentation issue where it incorrectly entered a CT ratio in a calculation spreadsheet.

The noncompliance started on August 28, 2015, when the Entity failed to establish Facility Ratings per its Facility Rating Methodology, and ended on October 28, 2021, when the Entity re-evaluated its switch nameplate ratings and updated its documentation.


MRO did not consider the Entity’s compliance history to be an aggravating factor because this is the first FAC-008-3 violation under the newly formed registered entity. Additionally, the prior noncompliance under related Standards for the predecessor entities occurred well before the current noncompliance and mitigation for the prior issues would not have prevented the current noncompliance. Although one of the prior cases, SPP20100418 (Westar), involved a Spreadsheet Notice of Penalty with inaccurate Facility Ratings for 122 out of 199 transmission lines, the issues did not overlap with the current case.

MRO provided mitigating credit for cooperation, self-reporting and subsequent scope expansions, settlement, and the internal compliance program (ICP). EVE’s ICP has structures in place that promote internal self-identification and analysis of potential noncompliance. The ICP has processes in place for defining the operational leadership of compliance, documenting or tracking near misses, and for the anonymous reporting of compliance concerns. The ICP empowers the individual with day-to-day supervision of NERC Compliance to go directly to the most senior leader and/or the Board and has processes to involve senior leadership throughout the noncompliance process. In addition, when a potential noncompliance occurs, the ICP directs operational staff to be involved in the investigation of noncompliance and the creation of mitigation and has a process in place to delegate ownership and tracking of mitigation to the appropriate subject matter expert(s). The Entity was transparent throughout the reporting and mitigation process. In addition, the Entity performed full field walkdown verifications of all 363 in-scope Facilities as part of its mitigation plan.

A penalty of $122,000 was assessed.

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