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Florida Utility Company to Pay $25 Million for Blackout

10/08/09

By MATTHEW L. WALD
WASHINGTON — A Florida utility has agreed to pay a record $25 million penalty for causing a blackout that left nearly a million customers in the dark in February 2008.

The next-largest penalty ever assessed for violating grid rules, $250,000, was levied in March against the same utility, Florida Power & Light, for a different problem.

The larger penalty was announced Thursday by the new electric grid enforcement agency, the North American Electric Reliability Council. The council began as a voluntary agency after the 1965 Northeast blackout, and was given enforcement powers by the federal government after the 2003 blackout that stretched from Detroit to New York City. It has brought more than 80 cases, most ending with electric companies being required to make improvements, but not to pay charges, which are technically civil penalties, not fines, because the violations are not criminal.

In the penalty announced Thursday, $10 million will go to the United States Treasury, $10 million will go to the reliability council, and $5 million is to be spent by Florida Power & Light on reliability improvements. Those improvements will be subject to prior approval by the reliability council and the Federal Energy Regulatory Commission. The settlement also requires the company to make additional “substantial, wide-ranging and specific reliability enhancement measures.”

The agreement specifies that the company cannot collect the penalty from ratepayers.

The blackout was caused by an engineer who disabled protective circuits while he tried to fix an equipment problem at a substation west of Miami. The company said Thursday that its engineer had done so “without authorization and contrary to F.P.L.’s policies and procedures.”

The failure led to the sudden shutdown of several generating stations, including the two nuclear plants at Turkey Point. About a third of homes and businesses that lost power were customers of other utilities, illustrating the interconnected nature of the power grid.

As part of the settlement, Florida Power & Light did not admit any violations, or acknowledge any liability. It said that the standards it was accused of violating were “ambiguous and subjective.”

In a statement, the company’s president and chief executive, Armando J. Olivera, noted that the blackout took place more than a year and a half ago and that litigation to resolve the case would be expensive and “would require the time and attention of the same people who are responsible for the reliability of the grid.”

“As a result,” he said, “we believe a settlement is an appropriate course of action at this time.”

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