March 2010
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FPL could face huge fines for ‘08 outage

JUNO BEACH — A power outage that affected more than 2 million Floridians last February could mean big fines for Florida Power & Light Co.

In a filing Tuesday with the U.S. Securities and Exchange Commission, the utility’s parent, Juno Beach-based FPL Group Inc. (NYSE: FPL, $51.48), warned investors that it’s trying to reach a settlement with the Federal Energy Regulatory Commission. If a settlement is not reached, FPL believes the commission will try to charge the utility with roughly 25 violations of reliability standards. The commission launched a probe into the blackout in March - the first of its kind since federal electric-grid reliability standards took effect in 2007.

The maximum penalty for each violation is $1 million a day, and FPL believes the commission could claim that some of the violations started Jan. 1, 2008. That would mean FPL could be liable for violations on as many as 57 days. If fines for 25 charges were levied for all 57 days, FPL could owe as much as $1.4 billion. The likelihood of such a huge penalty is very small, however.

The utility has attributed the Feb. 26 blackout to a mistake by a field engineer at a Miami-Dade County substation. Against company policy, the engineer disabled two levels of protection, which allowed a fault to roll across the grid, the company has said.

FPL Group spokesman Randy Clerihue declined comment on the investigation.

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