Electrical Blackouts are Expensive in Florida and Los Angeles

FPL agrees to $25 million penalty for '08 blackout

By SARAH LARIMER (AP) – 4 hours ago

MIAMI — The Florida Power & Light Company must pay a $25 million penalty for a massive outage that left hundreds of thousands of customers without power last year, according to an agreement announced Thursday.

Under the agreement with the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation, FPL must pay $10 million to the U.S. Treasury and $10 million to NERC.

"Overall, we deeply regret the inconvenience this incident caused our customers," FPL spokesman Mayco Villafana said. "We have said that from the beginning, however, we disagree with the assertions with FERC's Office of Enforcement. We believe the evidence and the findings of independent investigations demonstrate that FPL was in compliance with industry standards."

Additionally, $5 million was reserved for "enhancements to FPL's reliability compliance program, equipment maintenance program, and emergency operating procedures," according to a news release. Villafana said the money would go toward improvements to transmission lines that deliver power from plants to substations.

"We believe this agreement is in the best interests of reliability and that the actions taken as a result will reduce the risk of future outages in Florida," Rick Sergel, president and CEO of North American Electric Reliability Corporation, said in a statement.

The massive blackouts in February 2008 started in a Miami-area substation. FPL said the incident occurred after a field engineer who was diagnosing a malfunctioning switch shut off equipment that stops electrical failures from spreading. The switch short-circuited, causing the outage.

Nearly 600,000 customers were affected by the blackout, Villafana said. He noted that though FPL agreed to pay the penalty, it does not admit "any violations or liability."

"It could take several more years and be very costly to resolve through litigation with a federal regulatory agency," Villafana said. "Litigation would require the time and attention of the same people who are responsible for the reliability of the grid. So as a result, we believe a settlement is an appropriate course of action at this time."

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