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NRG Energy, Inc. Receives a Penalty of $70,000 Due to the Violations of Section 6.6 of the PJM Tariff and 18 C.F.R. § 35.41(a) (2022)

Summary of NERC Penalties

REGION

WHEN?

ENTITY

COMPLIANCE AREA

VIOLATION

REASON

PENALTY AMOUNT

FERC

Quarter 3 - August 2023

NRG Energy, Inc.

FERC's regulations

Section 6.6 of the PJM Tariff and 18 C.F.R. § 35.41(a) (2022)

The enforcement action was due to violations associated with NRG's Fisk Units (combustion turbines) that were unmanned and did not have remote operational capability.

$70,000

NRG was assessed a Civil penalty of $37,342 to the United States Treasury; disgorgement of $32,658, inclusive of interest, to PJM Interconnection, LLC; and compliance monitoring for up to two years. This enforcement action was due to violations associated with NRG’s Fisk Units (combustion turbines) that were unmanned and did not have remote operational capability. FERC Enforcement determined that NRG violated Attachment K-Appendix, Section 6.6 of the PJM Tariff and 18 C.F.R. § 35.41(a) (2022). Attachment K-Appendix, Section 6.6 of the PJM Tariff provides that capacity performance resources are subject to parameter limits on cost-based offers and certain price-based offers. The PJM Tariff provides that cost-based offers are always parameter limited. Market based offers on capacity performance resources are subject to parameter limits when “the Office of the Interconnection (i) declares a Maximum Generation emergency; (ii) issues a Maximum Generation Emergency Alert, Hot Weather Alert, Cold Weather Alert, or (iii) schedules units based on the anticipation of a Maximum Generation Emergency, Maximum Generation Emergency Alert, Hot Weather Alert or Cold Weather Alert for all, or any part of, an Operating Day.”
The Fisk Units are 1970s-era combustion turbines, located in Chicago, Illinois. NRG acquired the Fisk Units from Edison Mission Energy in 2014. The Fisk Units typically operate only during peak load conditions. The Fisk Units have participated in the PJM capacity market since being acquired by NRG. NRG received capacity payments for the Fisk Units for the Delivery Years. As capacity performance resources for the Delivery Years, the Fisk Units were subject to parameter limits on their cost-based offers and price-based PLS offers. Parameter limits establish operating standards for the non-dollar denominated portion of the offers for generation capacity resources such that the submitted offer parameters are at least as flexible as the parameter limits. These include, as applicable, a minimum notification time, which is the time needed by a generation resource from inception of the PJM dispatch notification to the initiation of the start sequence for generation.

PJM determined the minimum unit notification time for combustion turbine units to be 0.1 hours. FERC Enforcement determined that NRG did not comply with the 0.1-hour notification time set forth by PJM during the Delivery Years. Although NRG sought modifications to the notification time for the delivery year beginning June 2016, that request was denied by PJM. Notwithstanding NRG’s use of Real Time Values to communicate the notification time of the Fisk Units, Enforcement determined that NRG violated Attachment K-Appendix, Sections 6.6 (a) and (b) of the PJM Tariff by operating on a three-hour notification time (instead of a 0.1-hour notification time) throughout the Delivery Years except when PJM declared a Hot Weather or Cold Weather Alert. FERC Enforcement also found that NRG’s adopted three-hour notification time was not due to any operating constraints per Attachment K-Appendix, Section 6.6 (c) of the PJM Tariff. It was instead the result of an NRG business decision not to staff the Fisk Units 24/7/365 or to install remote start capability. Such an economic decision thus does not excuse NRG’s failure to meet the PLS notification time requirements under Attachment K-Appendix, Sections 6.6 (a) and (b).

FERC Enforcement also concluded that NRG violated 18 C.F.R. § 35.41(a) (2022) because it did not comply with the PLS requirements of Attachment K-Appendix, Section 6.6 of the PJM Tariff during times when the units were unmanned. Section 35.41(a) requires that “where a Seller participates in a Commission-approved organized market, Seller must operate and schedule generating facilities, undertake maintenance, declare outages, and commit or otherwise bid supply in a manner that complies with the Commission-approved rules and regulations of the applicable market.”

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Certrec is a leading provider of regulatory compliance solutions for the energy industry with the mission of helping ensure a stable, reliable, bulk electric supply. Since 1988, Certrec’s SaaS applications and consulting expertise have helped hundreds of power-generating facilities manage their regulatory compliance and reduce their risks.

Certrec’s engineers and business teams bring a cumulative 1,500 years of working experience in regulatory areas of compliance, engineering, and operations, including nuclear, fossil, solar, wind facilities, and other Registered Entities generation and transmission.

Certrec has helped more than 120 generating facilities establish and maintain NERC Compliance Programs. We manage the entire NERC compliance program for 60+ registered entities in the US and Canada that trust us to decrease their regulatory and reputational risk. Certrec is ISO/IEC 27001:2013 certified and has successfully completed annual SOC 2 Type 2 examinations.

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