dear nerc committee, as a major power plant equipment ... dl/section_215_comments_complete.… ·...
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Dear NERC Committee,
As a major power plant equipment manufacturer and supplier, the continuation of pc-GAR and MSS statistics is very important to our business. We use the data to track the performance of our installed base units and assess where we need to focus our resources as to improvements and enhancements to increase reliability. If we are aware that a certain plant in a certain region is experiencing reliability issues, we can offer products and services to help them mitigate these issues. We are requesting that you continue to offer the pc-GAR and MSS products. If you have any questions or need further details, please call me at my work contact number 860-285-9045.
Thank you and Happy Holidays,
Karen Nowak
Director of Strategy and Marketing
Alstom Power
American Transmission Company LLC (ATC) wishes to thank NERC for providing an opportunity to comment on the Draft Proposed Criteria for Determining Scope of Section 215 Activities. As a member of EEI, ATC supports and endorses comments to be submitted by Edison Electric Institute (EEI). If any questions, please contact me. Regards, Andy Pusztai Reliability Policy and Standards Consultant Work: (262) 506-6913 Cell: (262) 424-4332
The one comment I would like to submit is in regard to Footnote 2 below, which is found on the bottom of page 5 of the “Proposed Criteria for Determining Scope of Section 215 Activities – Request for Comment” document.
2 Throughout these criteria, NERC uses the term “bulk power system,” because that is the defined term used in Section 215. NERC recognizes that a different term, “bulk electric system,” is used to define the current reach of reliability standards.
Throughout the history of the NERC standards, the industry has been scratching their heads on what the difference is between the BPS and BES. The above footnote in NERC’s Proposed Criteria for Determining Scope of Section 215 Activities acknowledges that there is a difference in terms, but does not state that the acronyms are synonymous nor explain a distinction. My comment on the proposed criteria would be that “NERC should continue footnote 2 to state that the acronyms BPS and BES mean the same thing with respect to NERC reliability standards and can be used interchangeably, or alternatively explain the difference between the terms with respect to NERC reliability standards.” Thanks for considering.
Bob Case – NERC Compliance Manager
Black Hills Corporation
David, I’ve made two attempts to send the following comments to the e-mail in the request – [email protected]. Unfortunately, it has kicked back to me both times. Please accept these comments or advise as to how I can send them to the proper e-mail address. Thank you. Section 215 is foundational to NERC’s authority. As such, any document that attempts to define the scope of NERC’s section 215 activities should, at a minimum, be clear and provide information useful to NERC and its stakeholders. The proposed criteria, however, are neither clear nor helpful. The proposed criteria are too vague to provide significant value. For example, criterion I.C., which relates to “tools and services that are useful for the provision of adequate reliability,” is opaque. It is entirely unclear what “tools and services” are “useful” to provide “adequate reliability.” Without further definition, this criterion is largely meaningless because NERC can bend it to fit almost any interpretation. Similarly, criterion I.A. is so general that it is largely without value. For example, it refers to activities that are “necessary and appropriate corollaries to carrying out the ERO’s express statutory responsibilities.” This criterion adds little value because it does not define what “necessary and appropriate” corollaries are. Further, the standard set by this criterion is so low that most any activity fits within it. As such, NERC should revise the criteria to provide additional definition and clarity. Further, it is unclear why NERC is proposing these criteria now and how NERC plans to use these criteria in the future. For example, do the proposed criteria have any connection to the new BES definition at issue in the FERC dockets RM 12-6 and 12-7? NERC should provide more information regarding the reasoning behind and potential application of the proposed criteria. Without this basic information, it is difficult for the public to comment intelligently on the proposed criteria. Despite the concerns addressed above, Consumers Energy does strongly support two of the assumptions NERC expressly makes in its Request: that “[m]atters affecting local distribution are left to the states or local authorities” and that the “jurisdiction of the ERO and that of the Commission are coterminous under section 215.” Request at 2. These jurisdictional statements are consistent with the clear language of the Federal Power Act, and thus are appropriate assumptions for the proposed criteria. For the same reason, Consumers Energy also supports criteria II.C., which excludes “[a]ctivities pertaining to facilities to the extent they are used in the local distribution of electric energy” from section 215 activities. Eric Salsbury, Business Support Consultant Transmission and Regulatory Strategies Consumers Energy – Electric Supply 1945 W. Parnall Rd., Jackson, MI 49201 (P25-200-7) (517) 788-7076 [email protected]
December 21, 2012
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Edison Electric Institute Comments on NERC Proposed Criteria
for Determining Scope of Section 215 Activities
On behalf of our member companies, the Edison Electric Institute (EEI) offers these comments on NERC’s Proposed Criteria for Determining Scope of Section 215 Activities. EEI continues to support NERC and appreciates the opportunity to provide these comments. We look forward to continuing the dialogue on this important issue. Overall Comments on Statutory Criteria Issues
I. The ERO Has a Limited Statutory Authorization. Federal agencies, such as FERC, are agencies of limited powers as authorized by their enabling statute. Thus, the ERO activities and the ERO budget are limited by Section 215 of the Federal Power Act, which authorizes: (i) Reliability Standard development, (ii) Reliability Standard enforcement, and (iii) periodic reliability assessment preparation.1
o NERC’s draft criteria do not set limitations on ERO functions to be budgeted under Section 215. The criteria suggest that NERC may undertake activities that are “necessary and appropriate corollaries” to its statutory functions and activities “useful for the provision of adequate reliability” in that they encourage compliance and avoid system disturbances.2 This criteria lacks a statutory basis. Section 215 does not encompass a broad set of activities appropriate to ensuring a reliable bulk-power system. The ERO does not have inherent powers to undertake reliability activities; it can only exercise the authority granted by statute.
o The ERO’s authorized activities under Section 215 are limited to Standards development and enforcement, along with reliability assessments. This is consistent with FERC precedent, which describes statutory activities as those either (1) required by the statute (i.e. Standards development, compliance enforcement, and reliability assessments) or (2) required by the Commission itself when acting under Section 215.3
o Congress sought to establish an ERO using a self-regulatory organization (SRO) model, under FERC oversight, with the purposes of Standards development and
1 See FPA § 215(a)(2) (describing the ERO’s purpose as “to establish and enforce reliability standards”); FPA § 215(g) (directing the ERO to “conduct periodic assessments of the reliability and adequacy of the bulk-power system”). 2 Draft Criteria Part I. 3 North American Electric Reliability Council, 116 FERC ¶ 61,062 at P 185 (2006) (subsequent history omitted) (“We generally believe that anything required of the ERO or a Regional Entity by the statute, Order No. 672 pursuant to the statute, or any subsequent Commission order pursuant to section 215 of the FPA is a statutory actvity.”).
December 21, 2012
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enforcement. The legislative history does not indicate that Congress intended the ERO to be the sole provider of all reliability initiatives and activities.
II. The Criteria Should Reflect the ERO’s Statutory Authorization. Proper criteria would limit Section 215 activities to those that are unique to the ERO and that only the ERO can properly pursue. If the activity is either (i) the exclusive responsibility of the ERO under Section 215 or (ii) depends on NERC’s authority as the Commission-certified ERO, then it is a statutory function.
o For example, gathering information to support Standards development and reliability assessments depends on the authority of NERC as the ERO to request information from users, owners, and operators of the bulk-power system4 to achieve its purpose, and is therefore a proper statutory activity even though information gathering is not per se a Standards development activity.
o If an activity is not given to the ERO by statute, and does not require ERO authority, then it is not within the scope of Section 215. For example, providing “leadership coordination, technical expertise and assistance to the electric industry in responding to bulk power system reliability events”5 is not an ERO function. The statute does not charge the ERO with the responsibility to provide coordination and technical expertise to the industry. While the industry may seek to coordinate with, or obtain assistance from NERC in the event of a system event, responding to bulk power system events fundamentally involves operation of the bulk power system, a matter beyond the scope of the ERO.
o The ES-ISAC is another non-statutory legacy function that NERC has performed following issuance of a Presidential Directive in 1998 establishing the ISAC framework. The ES-ISAC is not a Section 215 function.
III. NERC Can Undertake Reliability Initiatives Outside Section 215. NERC can undertake activities that are beneficial to bulk-power system reliability, but not as part of its Section 215 activities, and must fund these activities separately.
o System operator certification is a good example of an important (but not statutory) function that NERC can perform that is beneficial to bulk-power system reliability. NERC performed operator certification well before it became the ERO, indicating that ERO authority is not necessary for operator certification activities. Furthermore, operator certification is not a Standards development or enforcement activity. Nevertheless, NERC certification remains the industry standard and could continue outside the scope and funding mechanisms for Section 215.
IV. NERC Should Adopt Criteria for Non-ERO Functions. NERC should establish a strong management process to determine whether to take on activities that are not uniquely ERO
4 See 18 C.F.R. § 39.2(d). 5 Draft Criteria Part I.A.e.
December 21, 2012
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activities. The ERO’s priorities are Standards development and enforcement (along with periodic reliability assessments). NERC should take on a non-ERO activity only after (1) evaluating the relative importance and priority of the project with respect to improving reliability, (2) determining that it will not divert NERC resources away from core ERO functions, (3) determining whether other industry groups and organizations could better provide these functions, and (4) providing a governance structure that would completely separate the performance, oversight, and funding of the non-Section 215 activity from the ERO’s statutory activities.6
o As noted above, the ES-ISAC is a non-statutory function. As such, NERC may continue those functions only under a separate governance structure7 and supported by non-statutory funding. EEI members fully support the ES-ISAC and its funding.
o In many cases, existing industry organizations have the expertise and capability to perform non-215 reliability-related tasks that NERC should not incorporate within its Section 215 functions. For example, best practices, peer reviews, metrics, and human performance are the types of issues that can be performed by the North American Transmission Forum (“NATF”) and the Electric Power Research Institute (“EPRI”) can perform many reliability research and technology tasks.
6 NERC should establish a transition period to allow non-ERO activities to be separately funded and performed by NERC or transitioned to another entity. 7 The current NERC board resolution addressing the ES-ISAC, while helpful, does not constitute a separate governance structure.
December 21, 2012
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EEI Markup of NERC 215 Criteria
I. Activities included within section 215:
A. Activities that (i) are expressly required by section 215, or (ii) depend on the authority of the ERO under section 215 are necessary and appropriate corollaries to carrying out the ERO’s express statutory responsibilities, because they are reasonably related to the development and enforcement of reliability standards or periodic assessment of the reliability and adequacy of the bulk power system in North America.
Examples of these activities include, but are not limited to:
a. Information collection activities necessary to reliability standards development, reliability standards enforcement, and periodic reliability assessments using the ERO’s authority under 18 C.F.R. § 39.2(d).
Activities that are part of a continuous cycle of activities to achieve bulk power system reliability improvement: (1) measuring reliability performance – past, present, and future; (2) analyzing the results of those measurements; (3) identifying risks to reliability and assessing existing mitigating activities and gaps; (4) developing appropriate mitigating approaches to address those gaps, including development of new or revised reliability standards; and (5) implementing and working with others to implement solutions, including compliance monitoring and enforcement.
b. Periodic assessment of and reporting on the reliability and
adequacy of the bulk power system of North America. c. Identification and registration of users, owners, and operators of
the bulk power system and organization certification of selected entities.
d. Disseminating alerts regarding lessons learned and potential
reliability risks to users, owners and operators of the bulk power system.
e. Leadership coordination, technical expertise and assistance to the
electric industry in responding to bulk power system reliability events.
f. Education, including auditor training, training for regional entities
and registered entities regarding standards, compliance and other reliability matters.
December 21, 2012
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g. Certification of system operators.
h. Activities that provide awareness of circumstances on the bulk
power system and contribute to understanding risks to reliability, including monitoring, event analysis and investigation of disturbances and near misses.
i. Activities with respect to the sharing and analysis of information
regarding physical and cyber security of the bulk power system among industry participants and between industry and government.
j. Support for various ERO committees and working groups.
B. Activities that FERC directs the ERO to undertake by a FERC rule,
order or regulation adopted under Section 215. Examples of these activities include: but are not limited to:
a. Activities designed to enhance bulk power system reliability, such as the preparation of a reliability action matrix, compliance watch-list, or “best practices” identification and dissemination.
b. Activities to provide oversight of the exercise of delegated responsibilities by the regional entities.
c. The development of periodic performance assessments of NERC and the regional entities.
d. Activities in support of audits of NERC and the regional entities by FERC.
e. Data collections regarding reliability matters mandated by FERC.
C. Tools and services that are useful necessary for the provision of adequate reliability, because they relate specifically to compliance with existing standards and they proactively help avert reliability standard violations and system disturbances, but only in the absence of an independent organization stepping forward to provide such tools and services.
D. Activities necessary or appropriate to maintain certification as the
“electric reliability organization,” and governance and administrative services and functions in support of all of the foregoing activities.
II. Matters excluded from section 215: Any activity that is not (i) expressly required by
section 215; (ii) dependent on the authority of the ERO under section 215; or (iii) required of the ERO by FERC rule, order, or regulation adopted under Section 215.
Examples of these activities excluded from section 215 include, but are not limited to:
December 21, 2012
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A. Developing or enforcing requirements to enlarge bulk power system facilities, or to construct new transmission capacity or generation capacity, or requirements for adequacy or safety of electric facilities or services.
B. Except as otherwise ordered by the Commission, activities entailing
operational control of the bulk power system.
C. Activities pertaining to facilities to the extent they are used in the local distribution of electric energy.
D. Organization certification of selected entities. E. Leadership coordination, technical expertise and assistance to the
electric industry in responding to bulk power system reliability events. F. Certification of system operators. G. ES-ISAC activities. H. Tools and services that are necessary for the provision of adequate
reliability, because they relate specifically to compliance with existing standards and they proactively help avert reliability standard violations and system disturbances, provided by an independent organization.
Dear Mr. David Cook and the NERC Board of Trustees: In response to the North American Reliability Corporation’s (NERC) request to comment on its proposal to adopt criteria for use in determining whether particular activities are within the scope of Section 215 of the Federal Power Act, the General Electric Company would like to emphasize the need of bulk power system reliability data services historically available to consumers from the Generating Availability Data Systems (GADS) through Manufacturer’s Support Service (MSS) and interface application, PC GAR. Relative to NERC’s request for comments to questions:
1) In general GE’s perspective of NERC’s stated criteria do not contain any items which we believe are outside the scope of Section 215.
2) GE would like to recommend the specific addition of NERC’s data services within the criteria developed for determination of whether activities fall within Section 215 of the Federal Power Act. Data is one of the most important aspects of performing reliability analysis, which is also another key criteria for meeting Section 215 of the Federal Power Act. To further explain our recommendation, we believe reliability information from generation facilities (key components of the bulk power system) is an essential piece in assessing performance and identifying areas of improvement. Any improvement in equipment reliability performance within generation facilities directly impacts the reliability of the bulk power system. This importance, we believe, warrants a specific notation in the criteria.
3) At this time GE would not propose an alternate or substitute criteria.
Given the explanation above, GE believes that NERC’s services are of great value to generation & electrical infrastructure original equipment manufacturers, as well as all members in the bulk power system striving for reliability improvements, and should be continued moving forward. Sincerely,
Carlos A. Hein Technical Leader Global Reliability Processes GE Power & Water
T 864 254 3177 F 864 254 5476 E [email protected]
GE Gas Turbines, LLC 300 Garlington Road Greenville, SC 29615 www.ge.com
I generally support the comments submitted on behalf of the ISO/RTO Council . Most legislative language can often be viewed from either a narrow or a broad perspective. I believe the IRC comments take a fairly narrow perspective on the 215 legislative language. I think this narrow vs. broad interpretation of the 215 language is really the crux of the discussion as to what falls within or outside of section 215 scope. By way of example, NERCs obligations to enforce reliability standards can be viewed (narrowly) as investigating, determining and sanctioning standard violations; or (more broadly) to include educating NERC members of their standard obligations, sharing experiences, or developing processes for members that help them to operate reliably. The industry/NERC discussion around standard compliance and enforcement often revolves around whether the focus should be on promoting compliance or promoting reliability. The industry has argued the focus must first be on promoting reliability. Based on my own experience in an organization with authority to set and enforce standards, I believe this can require a somewhat broader interpretation to meet the overall objectives of legislation than might otherwise be the case. Paul
Daniel R. Simon Direct: 202.661.2212 Fax: 202.661.2299 [email protected]
December 21, 2012
By E-mail
North Electric Reliability Corporation 3353 Peachtree Road, N.E. Suite 600, North Tower Atlanta, GA 30326 [email protected]
Re: Proposed Criteria for Determining Scope of Section 215 Activities – Request for Comments
Dear Sir or Madam:
Attached please find the Comments of the ISO/RTO Council on NERC’s Proposed Criteria for Determining Scope of Section 215 Activities, which NERC issued on November 20, 2012.
If you have any questions concerning these comments, please do not hesitate to contact me.
Very truly yours,
/s/ Daniel R. Simon
Daniel R. Simon Counsel for ISO New England Inc.
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COMMENTS OF THE ISO/RTO COUNCIL ON NERC’S PROPOSED CRITERIA FOR DETERMINING SCOPE OF SECTION 215 ACTIVITIES
December 21, 2012
I. INTRODUCTION
The ISO/RTO Council (“IRC”)1 thanks NERC for the opportunity to comment on its
Proposed Criteria for Determining Scope of Section 215 Activities – Request for Comments
(Nov. 20, 2012) (“Request for Comments”). (Attachment A to the Request for Comments is
referred to herein as the “Proposed Criteria”). The IRC believes that it is very useful, after
several years of experience with NERC as the Electric Reliability Organization (“ERO”), to
reevaluate its jurisdictional scope and to develop clear criteria that provide guidance as to what
activities do and do not fall within Section 215 of the Federal Power Act (“Section 215”).
Because the IRC believes that the development of criteria that provide guidance as to what
activities do or do not fall within Section 215 is a critical, necessary effort, it provides responses
to the specific questions that NERC requested each entity to consider while preparing their
comments, as well as some additional comments regarding the Proposed Criteria.
More specifically, in its solicitation for comments, NERC requested that its stakeholders
consider three (3) specific questions. These questions were:
1 The IRC is comprised of the Independent System Operators and Regional Transmission Organizations operating as the Alberta Electric System Operator (“AESO”), the California Independent System Operator (“CAISO”), Electric Reliability Council of Texas (“ERCOT”), the Independent Electricity System Operator of Ontario, Inc., (“IESO”), ISO New England, Inc. (“ISONE”), Midwest Independent Transmission System Operator, Inc., (“MISO”), New York Independent System Operator, Inc. (“NYISO”), PJM Interconnection, L.L.C. (“PJM”), and Southwest Power Pool, Inc. (“SPP”). The IRC’s mission is to work collaboratively to develop effective processes, tools and standard methods for improving the competitive electricity markets across North America. In fulfilling this mission, it is the IRC’s goal to provide a perspective that balances reliability standards with market practices so that each complements the other, thereby resulting in efficient, robust markets that provide competitive and reliable service to customers. The IESO does not join in these comments.
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1. Do the proposed criteria include items that you believe are outside the scope of section
215? If, so please provide the reasoning that supports your conclusion.
2. Do the proposed criteria exclude items that you believe are within the scope of section
215? If so, please provide the reasoning that supports your conclusion.
3. What alternate or additional or substitute criteria would you propose? Please provide the
justification for any alternatives that you propose.
The IRC has considered each of the above questions as well as the purpose for which the
Proposed Criteria was developed and the suitability of Attachment to fulfill that purpose. It
provides a comprehensive response to each question and its additional comments on the
suitability of the Proposed Criteria for its stated purpose below.
II. THE PROPOSED CRITERIA ARE NOT WELL SUITED FOR THEIR INTENDED PURPOSE
As an initial point, the IRC has concerns with the overall framework of the proposed
criteria. More specifically, the Proposed Criteria enumerate the specific activities that NERC
currently performs and those it hopes to perform in the future – not criteria that could be used to
vet a proposed activity and document its statutory status. The Proposed Criteria are problematic
because they generally do not establish actual criteria by which a future, unenumerated,
unplanned activity could be vetted and a determination of whether it falls under NERC’s Section
215 statutory activities made. Additionally, it is notable that the form of the criteria provided by
NERC does not comport with previous criteria developed and utilized by the Commission –
including the criteria set forth for the approval of reliability standards in Order 672.2
2 See Chinook Power Transmission, LLC., 126 FERC 61, 134 (2009); NARUC/FERC Smart Grid Collaborative Proposed Funding Criteria (March 26, 2009); FERC Criteria for Study Requests; FERC Criteria for Approving Reliability Standards (Order 672) (2006).
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More specifically, the Proposed Criteria are almost solely comprised of specific activities
and, while these may be and often are identified as examples of particular criteria, they are not,
in and of themselves, the applicable criteria. While examples are often provided as part of
criteria or as a supplement to stated criteria, such is done in an effort to provide additional
guidance to the user of the criteria regarding the application of the criteria. Further, such
supplemental guidance cannot be effective without an explicit explanation of how the specified
example activity fulfills the criteria it is intended to demonstrate. Therefore, the IRC
recommends that the criteria utilize a format that can be utilized to assess whether current or
future activities fall within the scope of Section 215, rather than a criteria that is largely
comprised of enumerated activities.
Additionally, the IRC respectfully submits that the finding to which NERC is responding
is focused upon differentiating statutory activities from non-statutory activities. As Section 215
is the only authorizing statute that empowers the ERO to perform activities related to the
reliability of bulk-power system, any criteria developed by NERC to identify and define statutory
activities should be both informed and constrained by Section 215 itself. More specifically,
NERC should look within the “four corners” of Section 215 to develop principles of general
applicability that it, the Regional Entities, stakeholders, and FERC can apply to individual
activities to determine if they fall within the scope of Section 215. At a minimum, NERC
should: (1) revise its Proposed Criteria to address only criteria it believes will be useful in vetting
whether an activity falls within the scope of Section 215; (2) explicitly state that enumerated
activities are provided as examples of each criteria; and (3) provide explicit statements as to why
each specified activity demonstrates a particular criterion and/or falls within or advances the
ERO’s obligations under Section 215.
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The IRC appreciates the opportunity to provide the above general comments regarding
the Proposed Criteria. Specific comments in response to NERC’s request for comments are
provided below.
III. RESPONSE TO NERC’s QUESTIONS REQUESTED FOR STAKEHOLDER CONSIDERATION
A. The Proposed Criteria include items that are outside the scope of section 215.
Section 215 authorizes and requires the ERO to perform three overarching activities
intended to fulfill the overall purpose of providing for the reliable operation of the bulk-power
system. These three overarching activities are that the ERO must:
establish reliability standards for the bulk-power system;3
enforce reliability standards for the bulk-power system; 4 and
conduct periodic assessments of the reliability and adequacy of the bulk-power system in North America.5
Consequently, to be considered within the scope of the ERO’s Section 215 authority, an activity
must fall within the scope of one of the three above-enumerated activities.
As currently drafted, the Proposed Criteria include sections enumerating “Activities
included within section 215” and “Matters excluded from section 215.” The inclusion of
“Matters excluded from section 215” are, as stated, outside the scope of Section 215 and should
be removed from the Proposed Criteria. Further, this section is problematic because it creates the
3 See, e.g., FPA § 215(a)(2) (defining “ERO” as “the organization certified by the Commission under subsection (c) the purpose of which is to establish and enforce reliability standards for the bulk-power system, subject to Commission review”); FPA § 215(d)(1) (“The Electric Reliability Organization shall file each reliability standard or modification to a reliability standard that it proposes to be made effective under this section with the Commission.”). 4 FPA § 215(e)(1) (“The ERO may impose, subject to paragraph (2), a penalty on a user or owner or operator of the bulk power system for a violation of a reliability standard approved by the Commission ….”); see also FPA § 215(a)(2) (defining “ERO” as “the organization certified by the Commission under subsection (c) the purpose of which is to establish and enforce reliability standards for the bulk-power system, subject to Commission review”). 5 FPA § 215(g).
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impression that this list of prohibited activities is exhaustive, which it clearly is not. More
specifically, there are numerous activities that by definition are or should be excluded from the
statutory activities performed by the ERO pursuant to its fulfillment of duties under Section 215.
Additionally, the IRC notes that a list of excluded items is not an appropriate criterion for use in
identifying whether an activity falls within the scope of Section 215. Hence, in accordance with
the classification provided by NERC in the Proposed Criteria, all activities categorized as
“Matters excluded from section 215” are outside of the scope of Section 215, and the IRC
respectfully suggests that NERC remove this section from the Proposed Criteria.
Relative to the specific activities identified in the Section enumerating “Activities
included within section 215”, the IRC has evaluated the enumerated activities in the context of
the language of Section 215 as well as in the context of its belief that Congress created the
concept of an enforceable reliability standard through Section 215 to advance a limited purpose.
Specifically, Section 215 explains that a reliability standard is “a requirement . . . to provide for
reliable operation of the bulk-power system.”6 Section 215 indicates (at least indirectly) that the
reliability standards are designed to provide “an adequate level of reliability,”7 which can be
viewed as maintaining then-current levels of reliability before the changing nature and usage of
the bulk-power system leads to a degradation in quality.8 Thus, the IRC believes that Section
6 FPA § 215(a)(3). 7 Specifically, Section 215(c)(1) explains that FERC may certify an ERO if it demonstrates that it “has the ability to develop and enforce . . . reliability standards that provide for an adequate level of reliability of the bulk-power system.” See also NERC Proposed Criteria Request for Comments at 2. 8 A detailed discussion of similar legislation in the U.S. Senate in 2002 demonstrated this intent. Specifically, senators repeatedly stated that enforceable reliability standards were needed because of “the changing nature of the electric power market.” 148 Cong. Rec. S1885 (2002) (Murkowski). Otherwise, senators repeatedly stated that the purpose of the reliability standards was to “maintain” current level of reliability, to “safeguard the integrity of our power grid,” 148 Cong. Rec. S1873 (Thomas), to “keep this system reliable,” 148 Cong. Rec. S1874 (Bingaman), and to “ensure[] our electric transmission grid will continue to be safe and reliable.” 148 Cong. Rec. S1884 (Murkowski).
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215’s requirement that the ERO establish reliability standards obligates the ERO to identify what
constitutes an “adequate level of reliability” to ensure that the reliability standards fulfill their
purpose as dictated by Section 215. Utilizing this construct, the IRC has identified the following
activities discussed in the Proposed Criteria as activities that it believes are outside of the scope
of Section 215:
1. Disseminating Alerts (Section I.A.d)
Without further explanation or detail, the IRC cannot agree that this criterion falls within
the scope of Section 215. The dissemination of alerts – without further explanation of their
purpose or function – does not involve the establishment of reliability standards, the enforcement
of reliability standards, or the periodic assessment of the adequacy of the bulk-power system.
The issuance of alerts can be particularly troubling if they create an obligation not otherwise
stated in a reliability standard with which registered entities must comply. Accordingly, without
further explanation, this activity should be removed from the Proposed Criteria.
2. Assistance in Responding to Reliability Events (Section I.A.e)
This criterion falls outside the scope of Section 215. The ERO does not have the
statutory authority to respond to reliability events or otherwise become involved in real-time
operational decision-making. Such activities are not directly related to or involved with the
establishment of reliability standards, the enforcement of reliability standards, or the periodic
assessment of the adequacy of the bulk-power system. Rather, Section 215 provides the ERO
the authority to investigate reliability events as part of its enforcement of reliability standards as
such reviews are often conducted to determine whether the event involves a violation of a NERC
Reliability Standard. Accordingly, this activity should be removed from the Proposed Criteria.
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3. Certification of System Operators (Section I.A.g)
While system operator certification is a legacy activity performed by NERC prior to its
certification as the ERO, Section 215 does not provide the ERO the authority to perform a
certification function. Such activities are not directly related to or involved with the
establishment of reliability standards, the enforcement of reliability standards, or the periodic
assessment of the adequacy of the bulk-power system. Nonetheless, NERC currently charges
individual entities directly for receiving training. Therefore, NERC’s certification function
appears to be accomplished outside of its role as the ERO and outside of its directives and
funding under Section 215. Accordingly, this activity should be removed from the Proposed
Criteria.
4. Situational Awareness (Section I.A.h)
The IRC finds this activity particularly difficult to tie back to the grant of authority to the
ERO through Section 215. Specifically, use of the word “activities” makes this activity so open-
ended that its scope is unwieldy and indeterminate – rendering it unusable as a criteria to
determine whether activities would fall within the scope of Section 215. As described in the
Proposed Criteria, the broad scope of this activity make it extremely difficult to define or
otherwise limit the activities to be performed by the ERO under this section as legitimate Section
215 activities, i.e., it cannot be determined whether the activities would or would not be directly
related to or involved with the establishment of reliability standards, the enforcement of
reliability standards, or the periodic assessment of the adequacy of the bulk-power system.
As written, certain references such as “awareness of circumstances” could be interpreted
as finding that activities undertaken by NERC to obtain involvement in real-time operations are
within the scope of Section 215 when such activities would be clearly outside the scope of
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Section 215, as they do not directly relate to or involve the establishment of reliability standards,
the enforcement of reliability standards, or the periodic assessment of the adequacy of the bulk-
power system.
References to the investigation of disturbances and near misses is also problematic.
Activities geared toward enforcement of reliability standards are within NERC’s purview under
Section 215. However, by definition, near misses are just that. If NERC wants standards to be
revised to reflect different requirements, the standard should be modified and a revised standard
established.
In short, the language set out in this provision of the Proposed Criteria seems to attempt
to bestow upon NERC the authority to perform a range of investigative activities that are beyond
or over and above the established reliability standards. These activities are clearly outside the
scope of Section 215, and this activity should be removed from the Proposed Criteria.
5. Tools and Services to Provide Adequate Reliability
The IRC does not object to NERC’s performance of the administration of certain data
services and tools. However, that function, like certification of system operators, appears to fall
outside of the scope of Section 215 of the Federal Power Act as it is not directly related to or
involved with the establishment of reliability standards, the enforcement of reliability standards,
or the periodic assessment of the adequacy of the bulk-power system. Inclusion of specific
activities here, regardless or the usefulness or legacy nature of the role, cannot serve to bring
activities that are not contemplated within the enumerated functions of the ERO under Section
215 under that provision. While it may be appropriate for NERC to perform this role as an
activity outside of Section 215, this activity should be removed from the Proposed Criteria.
9
B. The Proposed Criteria include items that are within the scope of section 215.
As discussed above in Section III.A of these comments, Section 215 authorizes and
requires the ERO to perform three overarching activities9 intended to fulfill the overall purpose
of providing for the reliable operation of the bulk-power system. Consequently, all activities
engaged by the ERO that are considered statutory activities within the scope of Section 215 must
fall within the scope of one of the three enumerated activities.
As a general comment, the IRC believes that it is unnecessary to have the Proposed
Criteria identify or distinguish activities performed pursuant to a FERC rule, order, or regulation
adopted under Section 215. As currently drafted, the Proposed Criteria include a sub-section of
the Section enumerating “Activities included within section 215” that is entitled “Activities
performed pursuant to a FERC rule, order or regulation adopted under Section 215.” It is
unnecessary for the Proposed Criteria to include a list of activities the ERO might hypothetically
perform pursuant to a FERC rule, order, or regulation adopted under Section 215. Further, it is
important to note that FERC does not have the authority to alter the scope of Section 215—only
Congress can do that. Hence, an activity either does or does not fall within the scope of Section
215, rendering this delineation unnecessary and increasing the likelihood for confusion regarding
this activity. The subsection should be removed from the Proposed Criteria and the specific
activities enumerated therein re-categorized as an “Activit[y] included within section 215” where
such categorization is applicable and justifiable as directly related to or involved with the
9 These are: 1) establish reliability standards for the bulk-power system; 2) enforce reliability standards for the bulk-power system; and 3) conduct periodic assessments of the reliability and adequacy of the bulk-power system in North America.
10
establishment of reliability standards, the enforcement of reliability standards, or the periodic
assessment of the adequacy of the bulk-power system.
Additionally, utilizing the same construct described above, the IRC has identified the
following activities as activities that it believes are within the scope of Section 215:
1. Activities that (i) are expressly required by section 215 or (ii) are necessary and appropriate corollaries to carrying out the ERO’s express statutory responsibilities (Section I.A(a))
The IRC believes that the specific activities enumerated here could and likely should fall
within the scope of Section 215. However, the justification of these activities as “part of a
continuous cycle” designed “to achieve bulk power system reliability improvement” 10 is not
sufficient. Additionally, NERC does not explain how any of these activities are directly related
to or involved with the establishment of reliability standards, the enforcement of reliability
standards, or the periodic assessment of the adequacy of the bulk-power system. As stated, the
list of activities is very broad and could encompass a range of activities not provided for as part
of the ERO’s duties under Section 215 of the Federal Power Act. Nonetheless, because Section
215 provides that the purpose of such activities is to maintain reliable operation11 of the power
system and to ensure an “adequate level” of reliability, these activities are likely within the scope
of Section 215.12 However, rather than be worded to identify continuous improvement, the
Proposed Criteria should be reworded to tie the stated activity directly to the statutory provisions
by providing that the goal of the activity is to “achieve reliable operation of the bulk power
10 Proposed Criteria at § I.A.a (emphasis added). 11 FPA § 215(a)(2). 12 FPA § 215(c)(1).
11
system” and to revise the items listed that provide which is performed to accomplish the specific
statutory role of the ERO.
2. Periodic Assessment Reliability Reporting (Section I.A.b)
This criterion falls within the scope of Section 215, closely tracking the language of
Section 215(g), which requires the ERO to “conduct periodic assessments of the reliability and
adequacy of the bulk-power system in North America.”
3. Identification and Registration Function (Section I.A.c)
This criterion reasonably falls within the ERO’s Section 215 duties. This criterion,
however, could be improved by explaining that the purpose of performing this identification and
registration function is to determine the owners, users and operators of the bulk-power system
that must comply with reliability standards established pursuant to Section 215, and that such
identification is necessary for the ERO to fulfill its statutory obligation under Section 215 to
enforce the reliability standards.
4. Education and Training (Section I.A.f)
A reasonable reading of Section 215 includes allowing the ERO to train the regional
entities on how to perform any statutory duties delegated to them by the ERO. Such an approach
would tie directly to the statutory scope of Section 215 because the training of regional entities
would directly relate to or the implementation of the establishment of reliability standards, the
enforcement of reliability standards, or the periodic assessment of the adequacy of the bulk-
power system. NERC should delete the phrase “other reliability matters” as too vague and
open-ended.
12
5. Sharing Analysis with Industry and Government (Section I.A.j)
The sharing of analyses under certain circumstances certainly can fall within the scope of
Section 215 because these activities may be directly related to or involved with the establishment
of reliability standards, the enforcement of reliability standards, or the periodic assessment of the
adequacy of the bulk-power system. NERC, however, should modify this criterion to make clear
that such sharing would be conducted specifically as part of the process for establishing or
enforcing reliability standards or performing reliability adequacy assessments.
6. ERO Committee Support (Section I.A.j)
NERC should modify this criterion to clarify that such support will be provided to
perform a statutory function, i.e., to establish or enforce reliability standards or perform
reliability adequacy assessments.
7. Activities Necessary or Appropriate to Maintain ERO Certification
It is reasonable to read Section 215 as allowing an ERO to take necessary or appropriate
steps to continue to satisfy the certification criteria enumerated in Section 215(c).
IV. CONCLUSION
While the Proposed Criteria include a number of activities that fall within the scope of
Section 215, they are also drafted so broadly that NERC ultimately could argue a wide range of
activities not contemplated by Section 215 would nevertheless be statutorily authorized. The
IRC supports FERC’s directive that NERC be required to identify the activities for which it
seeks funding under Section 215 are statutory activities under Section 215. In order to
accomplish this goal, it follows that, for each activity for which funding under Section 215 is
sought, a detailed justification of scope, including references to specific sections of Section 215,
FERC regulations, or FERC orders, should be documented. Because the Proposed Criteria are
13
not drafted as criteria and are – instead - a list of activities already performed by NERC provided
without explanation regarding how most of them fall within the scope of Section 215 and
without a corresponding objective criteria, the Proposed Criteria do not provide to the most
appropriate approach to achieve the goal of identification of statutory activities under Section
215.
The IRC respectfully requests that NERC consider its comments and recommendations
for revision of the Proposed Criteria.
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Respectfully submitted,
/s/ Nancy Saracino Nancy Saracino General Counsel Anthony Ivancovich Deputy General Counsel, Regulatory Anna McKenna Assistant General Counsel, Regulatory California Independent System Operator Corporation 151 Blue Ravine Road Folsom, California 95630 [email protected]
/s/ Carl F. Patka Carl F. Patka Assistant General Counsel Raymond Stalter Director of Regulatory Affairs New York Independent System Operator, Inc. 10 Krey Blvd Rensselaer, New York 12144 [email protected]
/s/ Matthew Morais Matthew Morais Assistant General Counsel Electric Reliability Council of Texas, Inc. 2705 West Lake Drive Taylor, Texas 76574 [email protected]
/s/ Craig Glazer Craig Glazer Vice President-Federal Government Policy PJM Interconnection, L.L.C. Suite 600 1200 G Street, N.W. Washington, D.C. 20005 202-423-4743 [email protected]
/s/ Theodore J. Paradise Raymond W. Hepper Vice President, General Counsel, and Secretary Theodore J. Paradise* Assistant General Counsel, Operations and Planning Matthew F. Goldberg Director, Reliability and Operations Compliance ISO New England Inc. One Sullivan Road Holyoke, Massachusetts 01040 [email protected]
/s/ Paul Suskie Paul Suskie Senior Vice President, Regulatory Policy and General Counsel Southwest Power Pool, Inc. 415 North McKinley, Suite 140 Little Rock, Arkansas 72205 [email protected]
15
/s/ Stephen G. Kozey Stephen G. Kozey Vice President, General Counsel, and Secretary Midwest Independent Transmission System Operator, Inc. P.O. Box 4202 Carmel, Indiana 46082-4202 [email protected]
/s/ Diana D. Pommen Diana D. Pommen, MBA Director Interjurisdictional Affairs and Compliance Alberta Electric System Operator (AESO) 2500, 330 - 5th Avenue SW Calgary, AB T2P 0L4 403 539-2510 Direct [email protected]
Dear Sir or Madam, On behalf of the Large Public Power Council (LPPC), please note our expression of general support for the criteria you have proposed and posted as of this date for activities under Federal Power Act section 215. LPPC recognizes that the proposed criteria are broadly stated, but supports NERC's approach, recognizing the difficulty in being more prescriptive, and the fact that all items are subject to annual review by stakeholders and FERC in the budgeting process. Please specifically note LPPC's expression of support for NERC's ES-ISAC activity. LPPC supports NERC's involvement in this area, and believes that the program provides value to the industry and the nation as a whole. Kindly contact us with any further questions or comments Jonathan Schneider On behalf of the Large Public Power Counci Jonathan D. Schneider | Partner | Stinson Morrison Hecker LLP 1775 Pennsylvania Avenue NW, Suite 800 | Washington, DC 20006-4605 T: 202.728.3034 | F: 202.572.9967 | M: 301.646.7188 [email protected] | www.stinson.com<http://www.stinson.com>
NARUC appreciates the opportunity to comment on “The Proposed Criteria for Determining Scope of Section 215 Activities.” In particular, NARUC appreciates the hard work of the committee in responding to FERC’s request. NARUC briefly responds to the following query contained in the notice: Query: Do the proposed criteria include items that you believe are outside the scope of section 215? NARUC Response: Possibly. Section II.C covering exclusions from the scope of Section 215 activities should be worded more accurately. The Federal Power Act Section 215 precludes NERC from developing standards that affect local distribution. Specifically, the statute provides that the term “bulk-power system” “does not include facilities used in local distribution of electric energy.” However, the section of the Proposed Criteria for Determining Scope of Section 215 Activities that explicitly lists those matters excluded from section 215 does not track the language included in the statute. Specifically, NERC proposes only that “activities pertaining to facilities to the extent they are used in the local distribution of electric energy” be excluded. NARUC requests that NERC follow the statute explicitly and remove the words “to the extent they are” from Section II.C, causing it to read “Activities pertaining to facilities used in local distribution of electric energy.” Holly Rachel Smith, Esq. Assistant General Counsel National Association of Regulatory Utility Commissioners 1101 Vermont Ave, NW Suite 200 Washington, DC 20005 (202) 898-1350 [email protected]
NRECA appreciates the opportunity to submit comments on NERC’s Section 215 criteria proposal. Our comments are focused on seeking additional clarity in the introductory text to the proposed criteria and then also the same for certain provisions of the proposed criteria. Please see the following for our comments: Introductory Text to the Proposed Criteria
• Page 2, 2nd bullet – while most matters affecting local distribution are left to the states or local authorities, this statement seems to be counter to the fact that NERC enforces some reliability standards that apply to facilities used in the local distribution of electricity. If this text is going to be used in any materials filed with FERC on the 215 criteria, the text should be revised to reflect the current position of NERC as it relates to NERC standards applying to local distribution facilities.
• Page 2, footnote 4 – while in most cases BPS or BES is used to define the current reach of reliability standards, this statement seems to be counter to the fact that NERC enforces some reliability standards that apply to facilities used in the local distribution of electricity that are not BPS or BES facilities. If this text is going to be used in any materials filed with FERC on the 215 criteria, the text should be revised to reflect the current position of NERC as it relates to NERC standards applying to local distribution facilities that are not BPS or BES facilities.
Section 215 Criteria
• Page 1, Section I.A. – recommend that “appropriate corollaries” be deleted from the text as it is unnecessarily broad and not helpful in helping in quantifying 215 activities.
• Page 1, Section I.A. – recommend that “reasonably related” be replaced with either “necessary for” or “required for” in order to help quantify 215 activities. The current text is unnecessarily broad.
• Page 1, Section I.A.a., 2nd to last line – recommend providing additional clarity regarding what “others” means. This could be done in the criteria text or in a footnote.
• Page 2, Section I.A.e. – recommend providing additional clarity regarding what “Leadership coordination” means. This could be done in the criteria text or in a footnote.
• Page 2, Section I.A.f. -- recommend providing additional clarity regarding what “other reliability matters” means. This could be done in the criteria text or in a footnote.
• Page 2, Section I.A.h -- recommend providing additional clarity regarding what “monitoring” means. This could be done in the criteria text or in a footnote.
• Page 2, Section I.B.a. -- recommend providing additional clarity regarding what “reliability action matrix” means. This could be done in the criteria text or in a footnote.
• Page 2, Section I.B.b., 2nd line – recommend replacing “by” with “to” or reword this section as it seems to currently state that REs delegate responsibilities to some other party.
• Page 3, Section I.C. – with NERC moving away from owning and managing certain tools and services, and in some cases stating that the move is because it’s not 215-related, this section is confusing in that it seems to state these tools and services are 215-related. Another concern which seems to be somewhat of a conflict of interest, is that if NERC is running a tool and the tool is used to support a compliance activity, and the tool fails, how can NERC hold a registered entity in violation of a standard when the tool was needed for compliance? Recommend addressing these issues in a potentially revised Section I.C.
• Page 3, Section I.C., first line – recommend replacing “useful” with either “necessary” or “required.” Also, please insert “industry” between “the” and “provision.”
• Page 3, Section I.D., first line – recommend providing additional clarity regarding what “appropriate” means. This could be done in the criteria text or in a footnote. Alternatively, consider deleting “appropriate” from the criteria text.
• Page 3, Section II.B. – provide examples in the text of the criteria or in a footnote regarding what “activities entailing operational control of the bulk power system” NERC could be ordered by FERC to perform.
• Page 3, Section II.C. – recommend revising this section to address the concerns we identified in our comments above regarding the introductory text.
Please contact me with any questions. Regards, Barry Barry R. Lawson Associate Director, Power Delivery & Reliability Government Relations National Rural Electric Cooperative Association (NRECA) 4301 Wilson Blvd., Mail Code GR11-253 Arlington, VA 22203 PH 703.907.5781 FX 703.907.5517 CELL 703.966.3123 [email protected]
Section 215 Criteria December 18, 2012
Submission of Comments Comments are due December 21, 2012, and must be submitted electronically to [email protected]
Commenters are requested to consider the following questions in preparing their comments: 1. Do the proposed criteria include items that you believe are outside the scope of section 215? If,
so please provide the reasoning that supports your conclusion. No. Occidental Energy Ventures Corp. (“OEVC”) believes that the line items are clear, thorough, and representative of NERC’s actual activities.
2. Do the proposed criteria exclude items that you believe are within the scope of section 215? If
so, please provide the reasoning that supports your conclusion. OEVC would like to see the implementation of risk-based compliance included in the criteria – perhaps under the list of activities performed pursuant to a FERC directive or ruling. The time and resources that NERC, the Regional Compliance teams, and Registered Entities are investing in this valuable initiative should be captured. If not specifically captured, it seems to us that a future audit would possibly find that such actions are not eligible for Section 215 funding – effectively terminating them. Along the same lines of thinking, OEVC believes that NERC should openly declare an efficiency policy along the lines of the Paragraph 81 initiative to remove outdated and ineffective requirements. The reduction in direct Compliance costs has been well documented, and the public commitment to improving budgetary performance is a powerful statement. Other similar efficiencies can be gained by eliminating overlap with other regulatory authorities – the PUCs immediately come to mind.
3. What alternate or additional or substitute criteria would you propose? Please provide the justification for any alternatives that you propose. As with any business, the General & Administrative line item (Included activity D) is likely to be closely scrutinized by FERC’s audit team. All too often, questionable activities are lumped under G&A – which, if found, can lead to substantial fines. In fact, even valid G&A activities may look suspicious if they are not clearly identified up front. We believe that NERC should commit to a regular (perhaps annual) detailed review of the G&A category with FERC staff to ensure a transparent assessment. The gain in trust will reap dividends down the road. Secondly, this submission should include a discussion about the benefits of ERO’s Section 215 activities. Even though it may be sufficient to say that the FPA requires entity compliance – case closed – the industry and Commission have a vested interest in demonstrating that the Reliability Requirements are leading to cost effective improvements. There are well tested economic concepts such as Present Value which financial staff will resonate with – alternatively, NERC’s Standards prioritization process applies economic rigor to the equation.
1) Do the proposed criteria include items that you believe are outside the scope of
section 215? If so, please provide the reasoning that supports your conclusion.
Yes, the criteria proposed under this draft are outside the scope of Section 215. PacifiCorp endorses comments submitted by the Edison Electric Institute (EEI) on behalf of stakeholders that highlight the following activities as those that are explicitly excluded from section 215:
A. Activities that (i) are expressly required by section 215, or (ii) depend on the authority of the ERO under section 215 are necessary and appropriate corollaries to carrying out the ERO’s express statutory responsibilities, because they are reasonably related to the development and enforcement of reliability standards or periodic assessment of the reliability and adequacy of the bulk power system in North America.
Justification: The criteria should only cover activities expressly required by Section 215 or that depend on ERO authority and therefore are uniquely ERO activities. There is no legal basis to cover within Section 215 those activities considered to be “necessary and appropriate corollaries” to statutory activities. Activities helpful to reliability can be performed by NERC, but are not statutory unless they are necessary for Standards development, compliance enforcement, and reliability assessments.
B. Developing or enforcing requirements to enlarge bulk power system
facilities, or to construct new transmission capacity or generation capacity, or requirements for adequacy or safety of electric facilities or services.
C. Activities entailing operational control of the bulk power system. Justification: Nothing in the statute gives the ERO the authority to operate bulk-power system facilities or the Commission the authority to order such control, and the criteria should not suggest that. D. Activities pertaining to facilities to the extent they are used in the local
distribution of electric energy.
E. Activities that are part of a continuous cycle of activities to achieve bulk power system reliability improvement: (1) measuring reliability performance – past, present, and future; (2) analyzing the results of those measurements; (3) identifying risks to reliability and assessing existing mitigating activities and gaps; (4) developing appropriate mitigating approaches to address those gaps, including development of new or
revised reliability standards; and (5) implementing and working with others to implement solutions, including compliance monitoring and enforcement.
Justification: Defining any “activities that are part of a continuous cycle of activities to achieve bulk power system reliability improvement” as statutory makes the statutory criteria meaningless because it provides no real limitation on what could be considered within the scope of Section 215. The statute’s goal of bulk-power system reliability is not a grant of authority to the ERO. It is an error to list enforcement and Standards development under these activities. They are the core statutory responsibilities of the ERO. F. Organization certification of selected entities. Justification: Organization certification is not necessary for Standards development or enforcement. While NERC can provide such services, organization certification is not given to NERC under the statute and does not depend on ERO authority to be successful. NERC, through Standards, can direct the certifications deemed appropriate, but there is no need to have NERC as the certifying entity. Entity registration, however, is the prerequisite for Reliability Standard compliance responsibility, and therefore is a part of the ERO compliance monitoring and enforcement function. G. Leadership coordination, technical expertise and assistance to the electric
industry in responding to bulk power system reliability events. Justification: This is unrelated to Standards development and enforcement. Although it may be helpful to bulk-power system reliability, it in no way depends on the ERO’s authority for its success. This function could be performed by a third-party organization. Indeed, EEI and others have successfully performed this role in the past, and there is no reliability benefit to bringing those activities within NERC. Instead, NERC’s involvement would drive out the existing structures for these efforts while losing the efficiencies and expertise currently realized through these existing efforts. H. Certification of system operators. Justification: Operator certification is not necessary for Standards development or enforcement. While NERC can provide such services, the responsibility to certify operators is not given to NERC under the statute and does not depend on ERO authority to be successful. NERC, through Standards, can direct the certifications deemed appropriate, but there is no need to have NERC as the certifying entity.
I. Activities with respect to the sharing and analysis of information regarding
physical and cyber security of the bulk power system among industry participants and between industry and government.
Justification: This is unrelated to Standards development and enforcement. Although it may be helpful to bulk-power system reliability, it in no way depends on the ERO’s authority for its success. J. Tools and services that are useful for the provision of adequate reliability,
because they relate specifically to compliance with existing standards and they proactively help avert reliability standard violations and system disturbances, in the absence of an independent organization stepping forward to provide such tools and services.
Justification: This is unrelated to Standards development and enforcement. Although it may be helpful to bulk-power system reliability, it in no way depends on the ERO’s authority for its success. Furthermore, the express acknowledgement that these tools and services could be provided by a separate independent organization indicates that they are not statutory responsibilities of the ERO.
2) Do the proposed criteria exclude items that you believe are within the scope of section 215? If so, please provide the reasoning that supports your conclusion.
No comment.
3) What alternate or additional or substitute criteria would you propose? Please provide
the justification for any alternatives that you propose.
PacifiCorp supports EEI’s comment that the criteria should reflect the ERO’s limited statutory authorization. Proper criteria would limit Section 215 activities only to those that are unique to the ERO—activities that only the ERO can properly pursue. If the activity is either (a) the exclusive responsibility of the ERO under Section 215 or (b) depends on NERC’s authority as the Commission-certified ERO, then it is a statutory function.
For example, gathering information to support Standards development and reliability assessments depends on the authority of NERC as the ERO to demand information from users, owners, and operators of the bulk power system1 to achieve its purpose, and is therefore a proper statutory activity even though information gathering is not per se a Standards development activity.
1 See 18 C.F.R. § 39.2(d).
PacifiCorp also supports EEI’s comment that NERC should adopt criteria for non-ERO functions that are beneficial to bulk power system reliability but are not part of its Section 215 activities (and are thus funded separately). System operator certification is a good example of an important (but not statutory) function that NERC can perform that is beneficial to bulk-power system reliability. NERC performed operator certification well before it became the ERO, indicating that ERO authority is not necessary for operator certification activities.
NERC should take on any non-ERO activities only after (1) evaluating the relative priority of the project among other NERC activities to determine whether it is worthwhile or whether it could distract NERC from its core ERO functions, (2) determining whether other industry groups and organizations could better provide some of these functions, and (3) providing a governance structure for that activity that would completely separate the performance, oversight, and funding of the non-Section 215 activity from the ERO’s statutory activities. As non-statutory activities must be funded outside the Section 215 funding mechanism, the existence of a strong management process and the application of that process to a proposed non-statutory activity prior to seeking funding for such an activity would make it more likely that the industry would agree to finance that activity.
RE: PPL comments specific to NERC GADS reporting (per Request for Comments on Section 215 Criteria). PPL Generation, LLC, on behalf of its NERC registered generating subsidiaries; PPL EnergyPlus, LLC; and LG&E and KU Energy Services, LLC support NERC’s continued support of GADS and GADS-type services (e.g., pc-GAR and MSS) in order to achieve increased system reliability, access and monitor equipment performance, and as a future planning tool, while retaining the confidentiality of the GADS database. From a reliability standpoint, the reported data is useful to NERC and other appropriate entities in conducting studies relating to the bulk power system reliability. Planners use GADS Event data for both long and short term planning. The data is used to trend units of like type, size, vintage, and fuel. Calculations and models across the bulk power system need to have a consistent database, such as GADS Events, as their source of information. GADS is now (as of Jan. 2012) required for all generating units 50 MWs and greater per Requests for Data or Information under NERC’s Rules of Procedures. The reporting threshold will be lowered to 20 MW in 2013. Prior to mandatory reporting, GADS was considered voluntary and historical unit data was only a subset of reporting; thru the year 2010, only about 75% of the North American generating units reported data. Hence, current reporting will contain a greater degree of accuracy and information for a broader base of units. As such, a primary driver of mandatory GADS reporting is to improve Reliability Assessments by being able to analyze event data more effectively and managing information across other related NERC tools (e.g., TADS) to determine unit performance/non-performance during system event(s). With the increased volume of reporting and the increased accuracy of this reporting, there is considerable concern of this data being compromised without NERC‘s oversight and management. An added benefit to the mandatory GADS reporting is the unified approach of data gathering, allowing for improved trend evaluations and benchmarking associated with monitoring equipment performance. This information is expected to increase in importance as existing/future regulations and new technology may lead to future unit retirements. Equipment performance data allows for greater assessment of equipment options, unit life-cycle performance and unit failure rates. This analysis also lends itself to future planning of equipment procurement that is reliable and has a high performance rating. NERC’s support of GADS is essential as NERC is best equipped to collect and analyze this data, including managing changing cause codes and other related event data. PPL Company contact information: Elizabeth (Becky) Davis Compliance Manager – EnergyPlus [email protected] 610-774-3107
To: NERC From: Schneider Engineering, Ltd. Date: December 21, 2012 RE: Proposed Criteria for Determination of Whether Activities Fall Within Section 215
The purpose of this memorandum is to address NERC’s proposed criteria for determining
whether an activity falls within the scope of Section 215. While Schneider Engineering, Ltd. (“Schneider”) is not a registered entity, our Regulatory Affairs division consults with twenty-four electric cooperatives and municipally-owned utilities in the ERCOT region.
Our Clients are registered as Distribution Providers, Load-Serving Entities, Transmission Owners,
and Transmission Planners. Our smallest Clients serve just above 25 MW during peak demand, while our largest Client serves 1,400 MW. Our consultants have served as subject-matter experts for sixteen FERC Order 693 audits and seven FERC Order 706 audits.
In the proposed criteria, NERC outlines a sensible framework for determining whether a specific
activities fall within the scope of Section 215. Using Section 215 as the baseline and FERC rules, orders, and regulations as an ancillary consideration is proper. Specifically excluding matters from Section 215 is also proper.
Over the past four years of audit support, the results of multiple audits covering multiple
Reliability Standards have demonstrated conclusively that our Distribution Provider and Load-Serving Entity Clients pose no risk to the bulk electric system. In that regard, we take a particular interest in Attachment A, Section II(C). This provision indicates that “activities pertaining to facilities to the extent they are used in the local distribution of electric energy” are “excluded from Section 215”.
This language raises several questions. Is the phrase “activities pertaining to facilities…”
intended to indicate that only certain activities related to local distribution are outside the scope of 215 or those entities who perform those activities exclusively are outside the scope of 215?
The phrase “used in the local distribution of electric energy” is also ambiguous. Is “local
distribution of electric energy” meant to indicate that only private distribution systems are excluded or that publicly-owned distribution systems are excluded as well?
The activities explicitly stated as those that fall within the scope of Section 215 do not shed any
light on these questions, which are of interest specifically to small public power entities. We would request that these ambiguities be clarified before final approval.
These comments have been endorsed by: Kerrville Public Utility Board Pedernales Electric Cooperative, Inc. Medina Electric Cooperative, Inc.
TAPS Comments December 21, 2012 Proposed Criteria for Determining Scope of Section 215 Activities
1
via e-mail to [email protected]
Comments of the Transmission Access Policy Study Group on the November 20, 2012 Posting of the Proposed Criteria for Determining Scope of Section 215 Activities
TAPS appreciates the opportunity to comment on the Proposed Criteria for Determining Scope of Section 215 Activities, which is NERC’s response to the suggestion in the May 4, 2012 audit report issued by the Division of Audits of FERC’s Office of Enforcement that NERC “[e]stablish written criteria for determining whether a reliability activity should be funded under section 215.” We also appreciate the collaborative process used in developing the criteria.
The Proposed Criteria are relatively high-level; as such, the details of NERC’s annual budget plans will be important. TAPS feels, however, that with the new approach being developed by the MRC ERO Scope Input Group and NERC staff, NERC will be properly focused on activities that enhance reliability and compliance.
1
Comments of the Western Interconnection Regional Advisory Body on NERC’s Proposed Criteria for Determining Scope of Section 215 Activities
Background
On November 20, 2012, the North American Electric Reliability Corporation (NERC) released its Proposed Criteria for Determining Scope of Section 215 Activities for comment.1 NERC’s criteria were developed in response to FERC’s order approving NERC’s 2013 business plan and budget, directing NERC to file its proposed section 215 criteria by February 1, 2013.2 The Western Interconnection Regional Advisory Body (WIRAB) appreciates this opportunity to comment on NERC’s proposed criteria for determining the scope of activities that can be funded under section 215 of the Federal Power Act.3
Introduction
WIRAB is proposing three amendments to the draft criteria that will enable improved reliability in the Western Interconnection. (See Appendix A for text of suggested changes.) In general, WIRAB does not believe that any of NERC’s proposed criteria are outside the scope of section 215, but rather, that NERC should interpret section 215 as broadly as possible so as not to exclude activities or functions critical to grid reliability. Specifically, WIRAB is recommending that the NERC criteria:
1. Interpret section 215 broadly to include all activities: (1) that advance the goals of section 215; (2) that are required by FERC tariffs and Commission rules, orders and regulations; and (3) that advance the reliability of the electric grid, even if not explicitly required of the ERO.
2. Support the concept of section 215 funding providing a backstop for funding critical functions. This backstop should be available, except where there is an independent organization to undertake the activity and such independent organization has demonstrated that it is capable of providing the tools and services, has a secure long-term funding source that does not allow for free riders, and has a mission and governance structure necessary to ensure that its decisions are imbued with the public interest.
1 North American Electric Reliability Corporation, Proposed Criteria for Determining Scope of Section 215 Activities – Request for Comments, November 20, 2012. 2 More specifically, FERC directed NERC (through a collaborative stakeholder process) to establish written criteria for determining whether a reliability activity is eligible to be funded under section 215 of the Federal Power Act, in order to ensure that all of NERC’s program activities that are funded pursuant to section 215 are statutory. Performance Audit of the North American Electric Reliability Corporation for Budget Formulation, Administration, and Execution, issued May 4, 2012, Docket No. FA11-21-000, p. 11. 3 WIRAB is authorized, pursuant to section 215(j) of the Federal Power Act, to provide advice to WECC, the ERO and FERC on whether proposed reliability standards and the governance and budgets of the ERO and WECC are in the public interest.
2
3. Exclude section 215 activities related to the distribution system, unless such facilities impact the reliability of the bulk power system.
Rationale
1. Interpret section 215 broadly to include all activities: (1) that advance the goals of section 215; (2) that are required by FERC tariffs and Commission rules, orders and regulations; and (3) that advance the reliability of the electric grid, even if not explicitly required of the ERO.
WIRAB agrees with NERC’s intent, in developing its proposed section 215 criteria, to take a broad-based approach.4 This is consistent with NERC’s observation, made in 2006, that Congress’ goal of preventing blackouts is not well served by a narrow reading of section 215.5 A broad interpretation of section 215 funding that includes activities required by tariffs and Commission rules, orders, and regulations, and that advances the reliability goals inherent in section 215, should include (but not be limited to), funding for: interconnection-wide transmission planning, advanced reliability “stress” testing of the system, and new technologies designed to improve grid reliability.
In addition, WIRAB agrees with NERC that the question of whether a particular activity is within the scope of section 215 is a separate issue from whether, because of priorities and finite resources, the ERO and Regional Entities ought to undertake the particular activity in a given budget year. A broad interpretation of allowable expenditures under section 215 will allow Regional Entities, NERC and FERC to weigh specific investments to maintain system reliability. The balancing of costs and benefits of specific proposed investments to improve reliability would be done as part of the annual budget process.
Advancing the goals of section 215
It is important for NERC to remember that activities conducted to protect grid reliability are imbued with the public interest. This “public interest” characteristic is reflected in mandatory funding under section 215 that ensures all parties that benefit from system reliability will pay. Section 215 funding ensures that there will be no “free riders” and that reliability investments reflect the public interest.
A broad reading of section 215 is needed to enable NERC, Regional Entities, and FERC to craft and finance solutions to challenges that reflect on-the-ground conditions found in different parts of the country. The Western Interconnection, in particular, faces unique challenges. For example, large amounts of variable generation will need to be deployed to meet
4 North American Electric Reliability Corporation, Proposed Criteria for Determining Scope of Section 215 Activities – Request for Comments, November 20, 2012. 5 Order Conditionally Accepting 2007 Business Plan and Budget of the North American Electric Reliability Corporation Approving Assessments to Fund Budgets and Ordering Compliance Filings, 117 FERC ¶61,091 (2006).
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state public policy objectives.6 This will require a focused effort by the Regional Entity in the Western Interconnection. Funding under section 215 should be available to address the reliability challenges of integrating large amounts of variable generation.
The unique complexity of the Western Interconnection power system, with 38 Balancing Authorities and an even greater number of Transmission Operators,7 makes it difficult to successfully address issues that require funding of interconnection-wide actions. For example, absent mandatory funding under section 215, it will be very difficult to secure agreement from more than 100 independent entities to voluntarily fund an activity such as interconnection-wide transmission planning.
WIRAB believes a narrow reading of section 215will fail to adequately advance the goals of section 215 and further, will have the perverse effect of undermining the ability to achieve reliability objectives in the Western Interconnection.
Activities required by FERC tariffs and Commission rules, orders and regulations
WIRAB recommends that the NERC criteria include funding of reliability activities required by FERC tariffs, as well as Commission rules, orders and regulations.
An example is the recent bifurcation efforts of the Western Electricity Coordinating Council (WECC). WECC is in the process of considering bifurcating the organization in order to separate registered functions (now performed by WECC) from the delegated functions under section 215. Critical functions necessary for reliability, including reliability coordination and interconnection-wide transmission expansion planning, are proposed to be funded by a tariff. In Section 215, Congress granted FERC authority over both jurisdictional and non-jurisdictional utilities to ensure uninform application of reliability requirements. It will be important that FERC’s section 215 authority be used when approving tariffs to fund critical reliability functions.
Advancing electric grid reliability, even if not required of the ERO
WIRAB believes that section 215 funding should be available to promote innovation in order to protect reliability and that there should be flexibility to fund such innovation outside the current ERO structure.
More specifically, WIRAB is concerned that NERC’s proposed criteria are focusing on the old reliability paradigm of “standards and compliance activities to ensure compliance with standards”. Lessons learned from the September 8, 2011 Southwest outage and technology advances, such as the widespread deployment of synchrophasers in the Western Interconnection, 6 Such public policy objectives are embodied in western state Renewable Portfolio Standards and greenhouse gas policies, and are foundational elements of WECC’s interconnection-wide transmission expansion planning studies. 7 Without changes in NERC policies, this fragmentation is likely to continue, making the role of reliability coordination more challenging.
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suggest that we need to consider new approaches to reliability. For example, one new approach may be to conduct simulated “stress tests” of the regional power system and target reforms to address weaknesses in the system. The identification of such stress tests could be conducted by researchers outside of the current ERO structure and be funded under section 215.
A broad definition of activities eligible for section 215 funding provides the ERO and FERC with flexibility adapt to rapid advances in grid information and management technologies. These technology advances may overturn the current ERO paradigm that applies standards to every Registered Entity, no matter how small, and relies on Reliability Coordinators as the last line of defense against cascading outages.
2. Support the concept of section 215 funding providing a backstop for funding critical functions. This backstop should be available, except where there is an independent organization to undertake the activity and such independent organization has demonstrated that it is capable of providing the tools and services, has a secure long-term funding source that does not allow for free riders, and has a mission and governance structure necessary to ensure that its decisions are imbued with the public interest.
Any new organization assuming critical reliability functions, such as the Reliability Coordinator function, needs to demonstrate that it has the capability and governance to execute these functions in the public interest. If an organization cannot make such a demonstration, section 215 funding should continue to be available to enable the performance of these functions.
WIRAB is uncertain whether critical reliability functions, such as Reliability Coordination, in the Western Interconnection will be funded when WECC is bifurcated and the consequences for reliability if these critical functions are not funded. One proposal has been considered to fund the Reliability Coordinator Company (RCCo) reliability activities under a proposed tariff that allows companies to decide which services from the RCCo they want to receive and pay for. Unfortunately, NERC standards are not explicit regarding which companies must receive and pay for Reliability Coordinator services and the consequences if they do not. The tariff approach may also open the door to the proliferation of multiple Reliability Coordinators in the Western Interconnection, undermining grid reliability. In the event a tariff approach is not successful, a narrow interpretation of activities that can be funded under section 215 would leave the West without a stable, funded reliability coordination function.
Similarly, interconnection-wide transmission expansion planning (currently executed by WECC), could be jeopardized by inadequate voluntary funding if it is transferred to a new organization that is funded under a tariff. This would negate the progress made in the West over
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the past 12 years,8 undermine FERC’s efforts to promote coordinated planning across subregions (“regions” in FERC vernacular), and degrade the Regional Entity’s capability to assess how the development of new generation and transmission impacts grid reliability.
3. Exclude from section 215 funding activities related to the distribution system, unless such facilities impact the reliability of the bulk power system.
WIRAB generally agrees with the NERC proposed criteria to exclude from section 215 funding activities pertaining to facilities, to the extent they are used in the local distribution of electric energy. However, with the increasing deployment of distributed generation, storage and demand response in the distribution system, NERC should recognize that distribution facilities are likely to have an increasing impact on the bulk power system. Therefore, the NERC criteria should be sufficiently broad to enable the ERO to understand activities in the distribution system that impact bulk power system reliability.
Attachment A
Attachment A contains WIRAB’s recommended changes to the text of the proposed NERC criteria for determining the scope of activities that can be funded under section 215 of the Federal Power Act.
8 Interconnection-wide transmission planning began at the request of Western Governors in 2001, was institutionalized under the now defunct Seams Steering Group-Western Interconnection (SSG-WI), and was transferred to WECC in 2005 (where it was significantly expanded under a grant from the Department of Energy).
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ATTACHMENT A
NERC-Proposed Criteria and WIRAB-Recommended Amendments (in red, italics)
I. Activities included within section 215: A. Activities that (i) are expressly required by section 215, or (ii) are necessary and appropriate corollaries to carrying out the ERO’s express statutory responsibilities, because they are reasonably related to the development and enforcement of reliability standards or periodic assessment of the reliability and adequacy of the bulk power system in North America or advance the reliability objectives of section 215. B. Activities performed pursuant to a FERC-approved tariff, rule, order or regulation adopted under Section 215. C. Tools and services that are useful for the provision of adequate reliability, because they relate specifically to compliance with existing standards and they proactively help avert reliability standard violations and system disturbances, in the absence of an independent organization stepping forward to provide such tools and services, provided such independent organization has demonstrated that it is capable of providing the tools and services, has a secure long-term funding source that does not allow for free riders, and has a mission and governance structure necessary to ensure that its decisions are imbued with the public interest.
D. Activities that advance the objectives of section 215 but which may be outside of the ERO structure.
D. E. Activities necessary or appropriate to maintain certification as the “electric reliability organization,” and governance and administrative services and functions in support of all of the foregoing activities. II. Matters excluded from section 215:
A. Developing or enforcing requirements to enlarge bulk power system facilities, or to construct new transmission capacity or generation capacity, or requirements for adequacy or safety of electric facilities or services. B. Except as otherwise ordered by the Commission, activities entailing operational control of the bulk power system. C. Activities pertaining to facilities to the extent they are used in the local distribution of electric energy, unless such facilities impact the reliability of the bulk power system.