Tuesday, April 21, 2015
FERC Conditionally Approves Risk-based Electric System Reliability Registration
On March 19, 2015, The Federal Energy Regulatory Commission ("FERC") issued an order in Docket No. RR15-4 (the “Order”) addressing a proposal by the North American Electric Reliability Corporation ("NERC") to implement a Risked-Based Registration (“RBR”) proposal. The goal of NERC’s RBR proposal is to achieve an effective application of industry resources by considering the potential impact an entity has on the reliability of the Bulk Electric System (BES) when determining that entity’s Compliance Registry and Reliability Standards obligations. The Order was generally supportive of NERC’s RBR concept and accepted much of the RBR proposal. However, FERC rejected some parts of the RBR proposal, expressing concern about potential harm to BES reliability. The highlights of the Order are as follows:
FERC accepted NERC’s proposal to base BES reliability registration and compliance requirements on the potential impact an entity poses to BES reliability.
FERC accepted NERC’s proposal to create a NERC-led centralized Review Panel that will analyze requests to: 1) have entity either not be added to, or else removed from, NERC’s Compliance Registry; 2) add an entity to the Compliance Registry due to that entity’s potential impact on BES reliability when the entity would otherwise not be required to register; 3) settle disputes over application of Registry Criteria; and 4) develop recommendations on whether an entity should be responsible for only a subset of applicable Reliability Standards requirements.
FERC approved NERC’s proposal to increase the threshold for registration as a Distribution Provider from systems having a peak load of 25 MW to those with a peak load of 75 MW. However, distribution systems that have Under-frequency Load Shed equipment must continue to meet certain reliability requirements regardless of peak load.
FERC accepted the removal of the Purchase-Selling Entity (PSE) and Interchange Authority (IA) functional classes from the Compliance Registry, agreeing those classes perform market or commercial activities that have no material impact on BES reliability.
FERC rejected, without prejudice, NERC’s proposal to remove the Load Serving Entity (LSE) functional category from the Compliance Registry. FERC's expressed concern was removal of the LSE category could result in some load and load forecast information not being reported for system modeling and transmission planning. FERC recognized that load potentially not reported amounts to a fraction of a percent of overall system load. However, FERC appeared unwilling to accept any loss of load information. FERC directed NERC to resubmit this aspect of its proposal with additional support in order to satisfy FERC's concerns. NERC is expected to make its compliance filing addressing FERC’s concerns by mid-July.
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