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NERC as the ERO

NERC as the ERO. Craig Lawrence Manager of Organization Registration, Certification, and Compliance Monitoring. U.S. Energy Policy Act of 2005. Reliability Legislation One industry self-regulatory ERO FERC oversight Delegates authority to set and enforce mandatory standards to ERO

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NERC as the ERO

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  1. NERC as the ERO Craig Lawrence Manager of Organization Registration, Certification, and Compliance Monitoring

  2. U.S. Energy Policy Act of 2005 Reliability Legislation • One industry self-regulatory ERO • FERC oversight • Delegates authority to set and enforce mandatory standards to ERO • ERO delegates authority to regional entities • Standards apply to all owners, operators, and users of bulk power system • Independent governance and Compliance Program

  3. Canada NEB, Alberta, British Columbia, Manitoba, Ontario, New Brunswick, Nova Scotia, Quebec, and Saskatchewan United States Federal Energy Regulatory Commission Mexico Comision Reguladora de Energia Reliability Standards Government Oversight Compliance Enforcement Electric Reliability Organization Regional Entities Reliability Assessment Other ERO Members Bulk Power System Owners, Operators, Users Electric Reliability Organization Overview

  4. ERO Implementation • Aug. 2005: Energy Policy Act • Feb. 2006: FERC Implementing Rule • April 2006: NERC ERO Application Filing NERC Standards Filing • July 2006: ERO Certification Order • Oct. 2006: NERC Compliance Filing FERC Standards NOPR Budget Approval Order • Nov. 2006 Uniform Compliance Program Filing Regional Delegation Agreements Filed • Jan. 2007 Standards NOPR Comments Filings NERC Non-Governance Order • Mar. 2007 Order on Standards Response to January 18 FERC Order • Apr. 2007 Order on Compliance Program and Delegation Agreements • Summer 2007 – Mandatory Compliance

  5. President & CEO Training, Education & Personnel Certification Standards Compliance & Organization Certification Reliability Assessment & Performance Analysis Legal & Regulatory Finance & Accounting Reliability Readiness & Improvement Members’ Forums Situation Awareness & Infrastructure Security Information Technology Human Resources NERC Organization

  6. Regional Entities

  7. Regional Delegation Agreements • Delegated functions • Compliance • Standards • Organization registration • Reliability assessment • Reliability readiness and improvement • Regional consistency is key • Transparency • Predictability • Uniform outcomes

  8. ERO Program Areas • Standards • Compliance • Reliability Performance • Reliability Readiness and Improvement • Training and Education • Situation Awareness & Infrastructure Security • Members Forums

  9. Funding • Funding for ERO and regional delegated functions allocated to load-serving entities • Bulk power system users • Based on Net Energy for Load (NEL) • ERO will fund regions for delegated functions • Penalties offset costs • Funded regardless of penalty collections

  10. Questions

  11. NERC Standards Development Process and Standards Work Plan

  12. Standards Establish the Basis Established by the Industry ANSI-accredited process Ballot Pools Standards Requestors StandardsProcess Manager Elected Standards Committee SAR & Standard Drafting Teams

  13. ERO Standards Process • ANSI-accredited open process • Registered ballot body of stakeholders vote on standards • Elected standards committee • Participation is encouraged: • It’s free • Provide comments and vote remotely online • Go to www.nerc.com and click on Standards

  14. Standards Work Plan: Overview • Work plan filed December 1, 2006 • Dynamic management tool • Communicate vision • Coordinate work • Measure progress • 31 projects grouped by subject matter • Aggressive but achievable schedule • Detailed project descriptions listing ‘to dos’ • More efficient use of drafting teams • Integrates ‘fill-in-the-blank’ plan

  15. Standards Work Plan: Inputs • FERC NOPR on reliability standards • FERC staff assessment of standards • Version 0 comments • Comments on other standards projects • Comments from missing compliance elements and risk factor teams • Blackout report • Other reports and references

  16. Projects Started in 2006 • 2006-01 System Personnel Training • 2006-02 Transmission Assessments & Plans • 2006-03 System Restoration and Blackstart • 2006-04 Backup Facilities • 2006-05 Phase III & IV Field Tests • 2006-06 Reliability Coordination • 2006-07 ATC, TTC, CBM, and TRM • 2006-08 Transmission Loading Relief • 2006-09 Facility Ratings

  17. Projects Starting in 2007 • 2007-01 Underfrequency Load Shedding • 2007-02 Operating Personnel Communications • 2007-03 TOP and BA Operations • 2007-04 Certifying System Operators • 2007-05 Balancing Authority Controls • 2007-06 System Protection • 2007-07 Vegetation Management • 2007-08 Emergency Operations • 2007-09 Generator Verification • 2007-10 Modeling Data • 2007-11 Disturbance Monitoring

  18. Projects Starting in 2008 • 2008-01 Voltage and Reactive Control • 2008-02 Undervoltage Load Shedding • 2008-03 Demand Data • 2008-04 Protection Systems • 2008-05 Cyber Security • 2008-06 Phasor Measurement Units • 2008-07 Resource Adequacy Assessments

  19. Projects Starting in 2009/10 • 2009-01 Disturbance/Sabotage Reporting • 2009-02 Facility Connections • 2009-03 Interchange Information • 2010-01 Support Personnel Training

  20. Representative Changes to Standards • Concise title/purpose with a reliability value • Applicability • More specific with regard to entity, facilities, and responsibilities • Changes from Functional Model • Remove RRO (RE remains compliance monitor) • Compliance elements • Measures, violation severity levels, risk factors, time horizons, etc.

  21. Other Improvements • Review technical adequacy and performance metrics • Address fill-in-the-blank standards • Reorganize, streamline standards • Merge in organization certification standards • References • Variances

  22. Level 1: mostly compliant with minor exceptions Level 2: mostly compliant with significant exceptions Level 3: marginal performance or results Level 4: poor performance or results Violation Severity Levels

  23. Questions

  24. NERC Organization Registration Program

  25. Organization Registration Who Must Comply? • Any entity responsible for any part of bulk power system reliability • Historically defined as control areas and reliability coordinators • Functional entities • Aligns reliability requirements with functional unbundling

  26. Registered In 2005 Reliability Coordinator Balancing Authority Transmission Operator Generation Operator Generation Owner Transmission Owner Planning Authority Load Serving Entity Distribution Provider Purchasing Selling Entity Regional Reliability Organization Reserve Sharing Group Transmission Planner Transmission Service Provider Resource Planner Functional Responsibilities

  27. Owners, Operators, and Users • Energy Policy Act: • All users, owners, and operators of the bulk-power system shall comply with reliability standards • FERC Rule • All entities subject to the Commission’s reliability jurisdiction… (users, owners, and operators of the bulk-power system) shall comply with applicable Reliability Standards … • Who are they?

  28. Organization Registration • Creates a Compliance Registry • Identifies owners, operators, and users of the bulk power system • Separate from funding or membership • Establishes scope of Compliance Monitoring Program • Notice of compliance responsibility • Opportunity to appeal

  29. Registration Selection Criteria Bulk Power System Owner, Operator, or User Functional Entities Identified in Reliability Standards Minimum Size Criteria Joint Registration Org.

  30. ERO Organization Registration • Registration process • Entities may register directly • Regions or NERC may add to the registration list • Others may nominate those with material impact for registration • Entity may challenge placement in the compliance registry • Challenge process • Entities must demonstrate they are not a bulk power system owner, operator, or user

  31. Current Regional Registration Data

  32. Questions

  33. NERC Compliance Monitoring

  34. Compliance Monitoring Methods Compliance Monitoring • Periodic reporting • Self-certification • Exception reporting • Investigations • Random spot-checking or audits • Compliance audits • Self Reporting

  35. Compliance Program – RequirementsFERC Order 672 • Single audit program for rigorous audit activities • Prompt reporting • Confidentiality provisions • ERO files summary reports to FERC • ERO or region imposes fair penalties and sanctions • Single appeals process

  36. NERC Sanction Guidelines ERO Sanction Guidelines • Comparable to levels of threat to reliability • Promotes compliance with standards • Rewards self-reporting & voluntary corrective actions • Flexible to adapt to all relevant facts surrounding the violation • Consistent application of guidelines • Meets FERC policy statement

  37. Application of Penalties • Penalties will be applied by the Regional Entity • Staff will determine initial penalty or sanction • Regions may reach a settlement – must be filed with FERC • Penalties may be appealed • Once finalized NERC files “notice of penalty” • Penalties may be adjusted by FERC • Penalties become effective 31 days after filing • Remedial actions may be applied immediately to preserve reliability

  38. Questions

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