AICPA SOC Service Organizations - Certrec

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

Summary of NERC Penalties










Quarter 1



Virginia Electric and Power Company

FAC-008-3 R6

Facilities Design, Connections, and Maintenance (FAC) Standard

Moderate risk

Failure to determine Facilities Ratings in accordance with its FRM for 41 of its 102 facilities


Virginia Electric and Power Company – Power Generation (VEP-PG) notified SERC that it was noncompliant with FAC-008-3 R6. VEP-PG failed to have Facility Ratings that were consistent with its associated Facility Ratings Methodology (FRM). SERC determined that this violation started under FAC-009-1 R1 and spanned to FAC-008-5 R6. On April 2, 2020, during an extent-of-condition (EOC) assessment conducted as a result of a FAC-008-3 R6 noncompliance at an affiliated solar facility, VEP-PG discovered that it did not include its generation step-up transformer (GSU) low-side cable and GSU high-side cable in the Facility Rating calculation, which was not consistent with its FRM. To determine the full EOC, VEP-PG walked-down of all 102 of its applicable FAC-008 R6 facilities. Out of the facilities, VEP-PG identified 41 incorrect Facility Ratings. The incorrect ratings resulted in 28 Facility Rating uprates and 13 Facility Rating derates. The maximum uprate was 200 percent, and the maximum derate was 33.14 percent. The earliest incorrect Facility Rating occurred before September 6, 2007, when VEP-Trans was required to comply with the Standard. On November 23, 2021, VEP-PG updated the last incorrect rating.


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.


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.

About Certrec:
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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