Why NERC Violations Happen: Key Gaps Behind Compliance Failures

When a power plant is hit with a NERC violation, the impact goes far beyond a line item in the budget. These violations signal a breakdown in reliability, a lapse in oversight, and often, a failure in leadership. The fallout? Investors take notice, reputations suffer, and internal morale deteriorates. In an industry where regulatory trust is critical, repeated NERC compliance failures can make even high-performing facilities seem like high-risk assets.

Over the last five years, we’ve seen major hits:

• NERC fined Linde and NIPSCO a staggering $66.7 million for violating CIP standards—one of the largest penalties in its history.
• Big River Steel and Entergy Arkansas paid a $27 million penalty for cybersecurity controls and operational planning failures.

• NERC penalized BP North America $10.75 million, sending ripples across the energy sector.

  
  

These aren’t isolated incidents. They’re warning signs. When fines reach the millions, questions get asked in boardrooms, audit committees, and investor calls.

NERC Standards compliance, in today’s high-stakes energy environment, serves as a foundation for operational reliability and risk mitigation. Yet, registered entities continue to face NERC CIP violations that carry financial penalties and reputational consequences. At the core of many of these violations are persistent organizational and procedural weaknesses.

In this article, we break down the most recent NERC violations—what went wrong, who got hit, and what the rest of the industry should learn before it’s too late.

1. Weak Compliance Infrastructure

Many organizations lack a centralized system to manage and monitor compliance activities. When evidence is not stored in a shared repository or accessible to line management, it becomes difficult to track regulatory tasks or verify completion. This lack of visibility increases the risk of missing key NERC requirements and deadlines—especially during audits or data requests.

2. Compliance Not Integrated With Operations

A disconnect between corporate compliance teams and day-to-day operational staff often results in ineffective internal standards.

When leaders write compliance guidance without involving those doing the work, the documentation often feels abstract or non-actionable. This disconnect increases the risk that teams will overlook or misunderstand critical NERC compliance.

3. Gaps Between Internal Procedures and NERC Standards

Even organizations with formal internal processes can fall short if those processes don’t align with NERC Standards. In many cases, internal procedures are too complex, outdated, or poorly communicated—making them difficult to follow and inadequate for passing a compliance audit. Streamlining documentation to mirror actual operational practices and NERC requirements is essential.

4. Absence of a Compliance Culture

One of the most serious challenges is a lack of awareness across the workforce. When employees do not understand what NERC compliance entails or why it matters, consistency in execution falters. Without widespread engagement, compliance becomes siloed and vulnerable to gaps, especially during personnel turnover or organizational change.

5. Undefined Roles and Responsibilities

NERC violations often happen when accountability is unclear. Many organizations lack formal documentation of regulatory responsibilities, resulting in a concentration of knowledge among a few individuals. This creates serious risks when key personnel retire or transition to other departments, leaving compliance activities unsupported.

6. Ineffective Issue Resolution

Recurring NERC CIP violations frequently stem from a failure to address root causes. When NERC-related issues are resolved superficially—without aligning with a structured corrective action program—organizations are likely to encounter the same compliance breaches repeatedly. Long-term solutions require a strategic approach, not just tactical fixes.

7. Poor Coordination Between IT and CIP Compliance

For standards related to Critical Infrastructure Protection (CIP), coordination between IT and compliance teams is critical. Unfortunately, many organizations struggle with overlapping roles and unclear responsibilities. Without integrated communication, tasks related to cybersecurity controls and CIP documentation can be duplicated—or worse, missed entirely.

How to Reduce NERC Violations

• Develop a centralized compliance management system with shared documentation access
• Align internal procedures with up-to-date NERC Standards and NERC requirements
• Foster communication between IT and compliance to strengthen cybersecurity controls
• Clearly define roles and responsibilities across departments
• Implement structured corrective action plans for issue resolution
• Train staff regularly on NERC CIP violations and compliance protocols
• Encourage a culture where compliance is a shared responsibility, not just a box to check

Conclusion

NERC violations are rarely the result of a single failure. Rather, organizational misalignment, inefficient processes, and unclear responsibility are the root causes of these problems. Building a sustainable, auditable compliance program begins with utility executives and compliance teams identifying these underlying issues. Discover why NERC violations happen, their costly impact, and actionable steps to strengthen compliance and avoid major NERC violation fines. Entities can lower risk exposure and help create a more dependable Bulk Electric System by tackling these flaws head-on.