Florida blackout to be reviewed under stronger rules

HOUSTON (Reuters) - A blackout that left nearly one million electric customers in Florida without power on Tuesday afternoon is the largest U.S. outage yet to fall under tough, mandatory reliability standards put in place after the 2003 Northeast blackout, industry sources said.

After decades of operating under "voluntary" industry rules covering the high-voltage transmission network, the August 2003 blackout - which affected 50 million people from Ohio to Canada - prompted U.S. lawmakers to take action to force the industry to improve reliability.

The Energy Policy Act of 2005 gave responsibility to the Federal Energy Regulatory Commission to add bite to previously unenforceable rules.

FERC named the North American Electric Reliability Corp as the entity to create stricter reliability standards and penalties that went into effect last summer.

"The reliability organization now has "additional authority to order changes where before they could only point out inadequacies," said Branko Terzic, head of global and U.S. regulatory policy in energy and resources for Deloitte Services LP.

Late Tuesday, NERC said it will work the Florida Reliability Coordinating Council to investigate the cause of Tuesday's outage to find lessons to benefit all utilities. A separate review will be conducted to determine if the Florida utilities involved complied with all NERC standards.

If violations are found, enforcement action can include sanctions or fines, ranging from $1,000 to $1 million per day, according to NERC.

No violations may be found, said Terzic, a former state and federal utility regulator. "Systems do shut down for valid reasons," he said.

"You want generation plants to shut down to avoid long-term, permanent damage to the equipment," Terzic said.

Based on preliminary information, NERC said 2,700 megawatts of generation - including two FPL Group nuclear reactors - and 15 transmission lines were knocked out of service in South Florida on Tuesday.

The loss of generation automatically activated an emergency "load-shedding" program to reduce more than 4,000 megawatts of power consumption, spread among four Florida utilities, including FPL's Florida Power & Light, the state's largest utility, and Progress Energy Florida, the second-largest.

The FRCC said the event appeared to stem from a failure at a substation in Miami-Dade County.

In 2003, much of the Northeast and parts of the Midwest and Canada suffered a blackout widely seen as the worst in North American history.

In New York City, thousands of subway riders were trapped underground and thousands of people spent a hot night sleeping on sidewalks or walking miles in the darkness to reach home.

Unlike Florida's blackout which lasted only a few hours, it took days for the power supply to return to normal after the 2003 blackout.

(Reporting by Eileen O'Grady)