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NERC Revising “Bulk Electric System” Definition and Related Exception Procedure

It’s been nearly a year since the Federal Energy Regulatory Commission (FERC) issued Order 743 (on November 18, 2010) directing the North American Electric Reliability Corporation (NERC) to revise the definition of the Bulk Electric System (BES).  That definition for many years had been:

As defined by the Regional Reliability Organization, the electrical generation resources, transmission lines, interconnections with neighboring systems, and associated equipment, generally operated at voltages of 100 kV or higher. Radial transmission facilities serving only load with one transmission source are generally not included in this definition.

That definition had given FERC concern about several possible ambiguities and inconsistencies, especially in connection with the discretion apparently given to what are now termed “Regional Entities.” The consistency and completeness of the definition is important because it generally establishes at least the broad outlines of the scope of electric equipment to which mandatory reliability standards (as adopted by NERC and approved by FERC) apply.

 In Order 743 and as later clarified in Order 743-A, FERC directed NERC to adopt a more bright-line standard that eliminates any regional discretion but can be applied nationwide to identify those elements and facilities necessary for the reliable operation and planning of the interconnected bulk power system.  Recognizing the complexity of the power system, FERC also directed NERC to create any necessary procedures for handling special cases where the strict application of the bright line would either include unnecessary equipment or fail to include necessary equipment.  The Commission set a filing deadline of January 25, 2012 for the project.

NERC has been developing its response, designated Project 2010-17, through the work of two committees: a standard development team (SDT) to draft a new BES definition and technical requirements for entities seeking exceptions from the definition, and a team to draft additions to NERC’s Rules of Procedure which would provide the process through which an entity would seek such exceptions.

In August and September, the two teams posted the most recent drafts of their work product.  The SDT posted a revised Bulk Electric System definition and  Detailed Information to Support on Exception Request on the web page.  The ROP team posted various documents, including in particular a new Appendix 5C to NERC’s Rules of Procedure, a copy of which along with a process flowchart can be found at  In each case, the industry was given 45 days to review and comment on the drafts (and in the case of the SDT posting, to vote on them).

In proposing its definition, the SDT not only establishes a core statement that would include in the BES electric elements interconnected at 100 kV, but provides further specific treatment with respect to (i) the  inclusion of certain transformers, generating resources, blackstart units, dispersed power producing units, and reactive power devices, and (ii) the exclusion of certain radial systems, retail-side generation, and local networks.  It is believed that the additional detail provided by these bright-line inclusions and exclusions in the definition will reduce the number of cases in which an entity needs to seek  an exception.  Nonetheless, the SDT also posted the specifications for the detailed technical information that an entity requesting such an exception would be required to file in support of its request.

The exception procedure drafted by the ROP team is designed to provide the continent-wide consistency which FERC requires, as well as the necessary openness, transparency and repeatability. Specified entities with an interest in an electric element’s or facility’s BES status will be able to seek an exception to the definition (either to include equipment otherwise excluded or to exclude equipment otherwise included) by filing a request form with the applicable Regional Entity, which will review the request, first for completeness and then substantively, and make a recommendation to NERC regarding whether the request should be approved or disapproved.  NERC would have the sole authority to grant an exception from the definition, but an entity dissatisfied with NERC’s decision will have the opportunity to appeal, both within NERC and, ultimately, to FERC.

Comments and ballots on the documents posted by the SDT are due October 10, and comments on the ROP documents are due October 27.  Each team will carefully review the comments it receives and  decide to what extent it will revise its current drafts.  Depending on the extent of the edits and on the results of the votes on the SDT documents, either or both teams may post a revision for further review in the coming weeks.

None of these proposed changes will go into effect, of course, before they are approved by FERC, and even then, FERC has indicated a willingness to provide some period of time (perhaps eighteen months to two years) for the transition to any new compliance obligations.  In any case, though, an owner and operator of electric equipment that has been or may be included in the Bulk Electric System is encouraged to consult with their attorneys and/or consultants for reliability matters to determine the potential effects, if any, of the proposed changes to the BES definition. When the new definition is approved, if an entity believes the definition would mis-categorize any equipment, the entity should take advantage of the exception procedure.

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