Duke Energy Renewables Services, LLC (DERS) Noncompliant with FAC-008-5 R6 Resulting in a Civil Penalty of $150,000

Summary:

Duke Energy Renewables Services, LLC, (DERS) notified SERC pursuant to an existing multi-region registered entity Coordinated Oversight agreement that the individually registered Generator Owners (GOs) in Coordinated Oversight Group #15b were noncompliant with FAC-008-5 R6. Each GO registration represents one wind generating Facility. This violation spanned the individual registrations because of deficiencies in DERS’ centralized fleet-wide internal controls. In 2023, following the submission of the Self-Reports, ownership of the GOs was transferred to Deriva Energy, LLC, which is part of Brookfield Renewables Energy Partners, Ltd., with DERS remaining as the Generator Operator for the Facilities. Fifteen of the GOs did not have a Facility Rating for their respective solely owned Facility that was consistent with the associated Facility Rating methodology (FRM), as well as additional Equipment Rating errors in their internal workpapers. Further, while seven additional GOs had correctly calculated Facility Ratings, these GOs had internal workpapers containing incorrectly calculated Equipment Ratings, which was also indicative of the deficient fleet-wide controls. SERC determined that the alleged violations began under FAC-009-1 R1 and spanned to FAC-008-3 R6 and FAC-008-5 R6. For twelve Facilities associated with East Blackland Solar Project 1 LLC (EBS), Frontier Windpower, LLC (FRW), Frontier Windpower II, LLC (FRW2), Ledyard Windpower, LLC (LW), Los Vientos Windpower III, LLC (LVWPIII), Los Vientos Windpower IV, LLC (LVIV), Maryneal Windpower, LLC (MRY), Mesquite Creek Wind LLC (MCW), North Rosamond Solar, LLC (NROS), Pisgah Ridge Solar, LLC (PRS), Three Buttes Windpower LLC (3BW), and Top of the World (TOW), the GOs’ Facilities did not have accurate Facility Ratings from the time when the GOs’ registrations first became effective. These registrations became effective during July 17, 2009, through April 27, 2023. For eight of these GOs, the documented Facility Rating was higher than Equipment Rating of the most limiting Element for the Facility by a magnitude of 1.23 MVA to 17.35 MVA. For the remaining four GOs, the documented Facility Rating was lower than the Equipment Rating of the most limiting Element. For three Facilities associated with Cimarron Windpower II, LLC (CWII), Ironwood Windpower, LLC (IW), and Los Vientos Windpower IA, LLC (LVW1A), the GOs’ Facilities had accurate Facility Ratings at the time when the GOs’ registrations first became effective. Later, during February 2023, the parent company reevaluated the Facility Ratings for these Facilities. The vendor performing the reevaluation miscalculated the capacity of the wind turbines at each site as having an apparent power capacity of 2.3 MVA, instead of a Real Power capacity of 2.3 MW. During February 9 through February 16, 2023, based on the vendor’s erroneous calculations, the entities documented incorrect Facility Ratings for these Facilities that were lower than the previous Facility Ratings. During June 2023, the entities reviewed the vendor’s evaluations and identified the calculation error, and, by June 28, 2023, the Facility Ratings were reverted to the previously documented values. All entities completed an extent of condition review, including walking-down its Facilities. The extent of condition review identified inaccurate Equipment Ratings for individual Elements listed in the workpapers supporting Facility Ratings throughout the fleet. The extent of condition review identified Equipment Ratings issues affecting the 15 GOs discussed above, as well as seven additional Facilities associated with Conetoe II Solar, LLC (Conetoe), Jackpot Solar Project, LLC (JSP), Lapetus Energy Project, LLC (LPTS), Los Vientos Windpower IB, LLC (LVW1B), Los Vientos Windpower V, LLC (LVWV), Notrees Windpower, LP (NOTWIN001), and RE Rambler LLC (RAM). The seven GOs documented accurate overall Facility Ratings but had included several inaccurate Equipment Ratings for individual Elements in the workpapers supporting the Facility Ratings. During May through December 2023, the above Facility Ratings and Equipment Ratings issues were corrected, ending the violations. This violation started on July 17, 2009, which is the first date an incorrect Facility Rating occurred, at the time when its registration became effective, and ended on December 21, 2023, when the Facility Ratings issues for the GOs were corrected.

Additional Discussion:

Cause

The cause of this noncompliance was a programmatic failure resulting from deficient fleet-wide internal controls. When the Facility Ratings calculations were first performed for the individual GOs, there was not a secondary review to identify errors. Additionally, the initial control of requiring a sample of nameplate photos to capture element ratings was deficient, as numerous errors in the initial Facility Rating evaluation still occurred. At the time of the initial Facility Rating calculation, the implemented control stopped short of a field verification walk-down for the Facility, which would have reduced the likelihood of errors.

Disposition

These violations posed a moderate risk and did not pose a serious or substantial risk to the reliability of the Bulk-Power System (BPS). The risk posed by this issue is elevated because it was caused by a programmatic failure that impacted affiliates throughout the renewable fleet. In total, the Facilities at issue comprise 751 MW of solar generation and 3,140 MW of wind generation. Individually, each GO within the Deriva Renewable Companies owns between 80 and 370 MW of renewable generation. A programmatic failure to maintain correct Facility Ratings could, and in this case, as discussed below, did result in three Facilities operating in excess of the respective Facility Rating, possibly damaging equipment and causing Facility outages. Additionally, incorrect ratings could cause system instability because planning models and System Operating Limits would not accurately reflect the true limits of the Facility.

As mentioned above, three of the GOs operated above both the correctly and incorrectly documented Facility Ratings. In particular, LVIV’s power plant controller (PPC) capped the maximum operating limit to 210.5 MVA, which is 4.3 MVA above the correct Facility Rating, resulting in the Facility operating above both the correctly and incorrectly documented Facility Ratings 78 times. LVWPIII’s PPC capped the maximum operating limit to 210.5 MVA, which is 17.85 MVA above the correct Facility Rating, resulting in the Facility operating above both the correctly and incorrectly documented Facility Ratings 11 times. NROS’s PPC capped the maximum operating limit to 157.9 MVA, which is 9.13 MVA above the correct Facility Rating, resulting in the Facility operating above both the correctly and incorrectly documented Facility Ratings 486 times. The largest exceedance, which was experienced by NROS, had a magnitude of 7.59 MVA for 21 hours, while the exceedances experienced by LVIV and LVWPIII were more limited in magnitude and duration.

The risk posed by this issue is elevated because it was caused by a programmatic failure that impacted affiliates throughout the fleet. Specifically, 15 GOs in Coordinated Oversight Group #15b had incorrect Facility Ratings. Further, seven additional GOs in Coordinated Oversight Group #15b, for a total of 22 GOs, included several inaccurate Equipment Ratings for individual Elements in the workpapers supporting the Facility Ratings. Among the total of 22 GOs, two Facilities had Equipment Ratings issues affecting fewer than 1 percent of the Elements, but nine Facilities had Equipment Ratings issues relating to more than 20 percent of Facility’s Elements. For NROS and MCW, the supporting workpapers contained inaccurate Equipment Ratings for more than 50 percent of the Facility’s Elements.

However, the risk was reduced by the following factors. First, there were no reported outages or damaged equipment relating to the violations. Nineteen of the Facilities described above did not experience any exceedances, as the PPC was set to be equal to or lower than the correct Facility Rating. For three of the Facilities at issue, the incorrect Facility Ratings were documented for less than five months before being corrected, and, during this period the incorrect Facility Rating was lower than the accurate Facility Rating, reducing the risk of exceedances or damage to equipment. Second, although the total capacity of the GOs exceeds 3,000 MW, the Facilities involved are variable wind generators that have low annualized capacity factors, ranging from 12.87 percent to 43.47 percent. The average annualized capacity factor for the GOs is 26.33 percent. No harm is known to have occurred. SERC and the Affected Regions (the Regions) considered the GOs’ compliance history in determining the penalty and determined it should not serve as a basis for aggravating the penalty. Three of the affiliates have prior noncompliances related to inaccurate element and Facility Ratings. However, these three minimal-risk noncompliances’ mitigations included the implementation of a new process for completing all NERC documentation requirements and compiling the Facility Rating spreadsheets for all future wind sites prior to commercial operation. The prior noncompliances do not warrant aggravation of the penalty due to the length of time between the current and prior noncompliances and because the current noncompliance did not pose a serious or substantial risk to the BPS.

In determining the appropriate penalty amount, the Regions considered the GOs’ cooperation to be a mitigating factor.

The Regions did not award self-reporting credit because the Self-Reports were submitted after receiving a notification letter for an upcoming Compliance Audit.

The Regions considered as an additional factor the programmatic failure resulting from the deficient fleet-wide internal controls. In addition to the 15 Facilities with incorrectly documented Facility Ratings, the Regions noted that seven GOs identified internal workpapers containing incorrectly calculated Equipment Ratings, which further demonstrates deficient fleet-wide internal controls and contributes to the risk assessment of the noncompliances. The identified inconsistencies in their internal supporting workpapers were reflective of the deficient fleet-wide internal controls. Because of these programmatic failures, the Regions did not award credit for the GOs’ internal compliance program in determining the appropriate penalty amount. A civil penalty of $150,000 was issued.