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FPL expects fine for blunder

Florida Power & Light expects to get hit with 25 or more violations of reliability standards and perhaps millions of dollars in fines for an outage last year in which a field engineer’s blunder caused about one million customers statewide to lose power.

That announcement in a federal securities filing Tuesday came on the same day that the utility’s parent, FPL Group, announced its best year ever — $1.6 billion in profit.

The blunder, on Feb. 26, started when an engineer working alone disabled two levels of relay protection in trying to diagnose a problem in a substation in West Dade. His work then sparked a small fire, which within a minute shut down a major part of the electric grid, including the nuclear reactors at Turkey Point.

Experts wondered why there hadn’t been safeguards in place to stop an error from cascading so quickly through the system.

The filing with the Securities and Exchange Commission said the penalties could come from the Federal Energy Regulatory Commission, which has been investigating the outage.

FERC and FPL have been involved in settlement discussions. If a settlement is not reached, FPL believes federal regulators “will pursue formal enforcement proceedings in which FPL expects the FERC may or will assert up to 25 or more violations of the reliability standards.

“The maximum statutory penalty for any violation of a reliability standard is $1 million per day. FPL believes that, in any such enforcement proceeding, the FERC may or will assert that some of the alleged violations have continued from January 1, 2008,” the utility said in the filing.

“FPL believes that it has meritorious defenses and will vigorously contest any penalties, should they be assessed,” the company said, adding that “FPL does not expect that the ultimate reso lution of this matter will have a material adverse effect on its financial statements.”

That down note marked what was in many ways a highly positive year for FPL Group. Overall, the company had revenue of $16.4 billion, with the utility providing $11.6 billion of that.

While many businesses across America struggled, the holding company’s unregulated utility, which now goes under the name NextEra Energy Resources, brought in $915 million in profit, up from $540 million in 2007.

NextEra provides wind, nuclear and solar power to many areas around the country. Its growth overcame slumping profits from the utility in Florida, which saw net income decline to $789 million, down from $836 million in 2007.

The utility struggled with the downturn in the Florida economy.

After years of adding 2 percent more customers annual, FPL had 11,000 fewer customers at the end of 2008 than it had at the end of 2007.

Retail sales of electricity decreased 2.4 percent for the year — and 8.4 percent in the fourth quarter. Mild weather accounted for 0.9 percent of the annual decline. The rest came from penny-pinching customers reducing their power usage.

The utility compensated by reducing its operations and maintenance costs by 10 percent compared to the amounts budgeted for the year.

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