Agenda Standards Committee s Executive Committee

Transcription

1 Agenda Standards Committee s Executive Committee Monday, March 21, :30 a.m. Eastern Conference Call: Code: Administrative Items a. Introductions and Quorum (A. Mosher) b. Conference Call Reminder c. NERC Antitrust Compliance Guidelines* (M. Long) 2. Refine SC 2011 Action Plan* (A. Mosher) 3. Adjourn Village Blvd. Princeton, NJ

2 1. Administrative Items a. Introductions and Quorum Chair, Allen Mosher will introduce those on the conference call and will determine if there is a quorum, consisting of at least three of the five members of the Executive Committee identified below: Allen Mosher Ben Li Linda Campbell Michael Gildea Jason Shaver b. Conference Call Reminder Participants are reminded that the conference call meeting is public and open to all interested parties. The access number was posted on the NERC web site and widely distributed. Speakers on the call should keep in mind that the listening audience may include members of the press and representatives of various governmental authorities, in addition to the expected participation by industry stakeholders. c. NERC Antitrust Compliance Guidelines Maureen Long will remind those participating of their obligation to comply with the Antitrust Compliance Guidelines. 2. Refine SC 2011 Goals Action Plan Allen Mosher will lead the Executive Committee in a project management planning session. During the meeting, the committee will: Verify that each goal is properly assigned Develop a brief description of the deliverable(s) for each goal (where applicable) Identify interim milestone(s) for delivery and target completion date 3. Adjourn SC Executive Committee Meeting Agenda March 21,

3 Attachment 1c Antitrust Compliance Guidelines Standards Committee s Executive Committee March 21, 2011 Agenda Antitrust Compliance Guidelines I. General It is NERC s policy and practice to obey the antitrust laws and to avoid all conduct that unreasonably restrains competition. This policy requires the avoidance of any conduct that violates, or that might appear to violate, the antitrust laws. Among other things, the antitrust laws forbid any agreement between or among competitors regarding prices, availability of service, product design, terms of sale, division of markets, allocation of customers or any other activity that unreasonably restrains competition. It is the responsibility of every NERC participant and employee who may in any way affect NERC s compliance with the antitrust laws to carry out this commitment. Antitrust laws are complex and subject to court interpretation that can vary over time and from one court to another. The purpose of these guidelines is to alert NERC participants and employees to potential antitrust problems and to set forth policies to be followed with respect to activities that may involve antitrust considerations. In some instances, the NERC policy contained in these guidelines is stricter than the applicable antitrust laws. Any NERC participant or employee who is uncertain about the legal ramifications of a particular course of conduct or who has doubts or concerns about whether NERC s antitrust compliance policy is implicated in any situation should consult NERC s General Counsel immediately. II. Prohibited Activities Participants in NERC activities (including those of its committees and subgroups) should refrain from the following when acting in their capacity as participants in NERC activities (e.g., at NERC meetings, conference calls and in informal discussions): Discussions involving pricing information, especially margin (profit) and internal cost information and participants expectations as to their future prices or internal costs. Discussions of a participant s marketing strategies. Discussions regarding how customers and geographical areas are to be divided among competitors. Discussions concerning the exclusion of competitors from markets Village Blvd. Princeton, NJ

4 Discussions concerning boycotting or group refusals to deal with competitors, vendors or suppliers. Any other matters that do not clearly fall within these guidelines should be reviewed with NERC s General Counsel before being discussed. III. Activities That Are Permitted From time to time decisions or actions of NERC (including those of its committees and subgroups) may have a negative impact on particular entities and thus in that sense adversely impact competition. Decisions and actions by NERC (including its committees and subgroups) should only be undertaken for the purpose of promoting and maintaining the reliability and adequacy of the bulk power system. If you do not have a legitimate purpose consistent with this objective for discussing a matter, please refrain from discussing the matter during NERC meetings and in other NERC-related communications. You should also ensure that NERC procedures, including those set forth in NERC s Certificate of Incorporation, Bylaws, and Rules of Procedure are followed in conducting NERC business. In addition, all discussions in NERC meetings and other NERC-related communications should be within the scope of the mandate for or assignment to the particular NERC committee or subgroup, as well as within the scope of the published agenda for the meeting. No decisions should be made nor any actions taken in NERC activities for the purpose of giving an industry participant or group of participants a competitive advantage over other participants. In particular, decisions with respect to setting, revising, or assessing compliance with NERC reliability standards should not be influenced by anti-competitive motivations. Subject to the foregoing restrictions, participants in NERC activities may discuss: Reliability matters relating to the bulk power system, including operation and planning matters such as establishing or revising reliability standards, special operating procedures, operating transfer capabilities, and plans for new facilities. Matters relating to the impact of reliability standards for the bulk power system on electricity markets, and the impact of electricity market operations on the reliability of the bulk power system. Proposed filings or other communications with state or federal regulatory authorities or other governmental entities. Matters relating to the internal governance, management and operation of NERC, such as nominations for vacant committee positions, budgeting and assessments, and employment matters; and procedural matters such as planning and scheduling meetings. 2

5 Attachment 2 SC 2011 Goals Standards Committee s Executive Committee March 21, 2011 Agenda Policy Issues Involving BOT, FERC, NERC Executives Activity Entire Standards Committee Executive Committee Standards Committee Officers Process Subcommittee Communications & Planning Subcommittee Other a. Capitalize on relationship with the BOT Standards Oversight and Technology Committee (BOTC); ensure SC work plan aligns with the BOTC Mandate (in particular, Items 5(b)(c) and 6(g)-6(m)* b. Prepare to implement process modifications to ROP identified in NERC s response to March 18 Order * c. Obtain approval for modifications to criteria for VRFs and VSLs d. Obtain approval for modifications to ROP for SC Election Procedure e. Obtain approval for Resultsbased standards* f. Revise the SC Charter to include responsibility for coordination Need coordination with CCC Need to assign additional members to team Done H. Schrayshuen (Feb) Done M Long Draft M Long H Hawkins Submitted for stakeholder comment period (Mar) March 10,

6 Attachment 2 SC 2011 Goals Standards Committee s Executive Committee March 21, 2011 Agenda Policy Issues Involving BOT, FERC, NERC Executives Activity Entire Standards Committee Executive Committee Standards Committee Officers Process Subcommittee Communications & Planning Subcommittee Other with Regional Standards Group and revisions to section related to voting of officers g. Develop work plan mapping proposed Objectives identified in ERO Strategic Goal 1 to Standards Committee and Standards Program activities.* h. Participate in ERO development of a revised definition of Adequate Level of Reliability with associated performance metrics. i. Develop proposal to integrate the consideration of reliability improvements versus costs into standard development and approval. j. Ensure approval of SC Project Prioritization Initiative. Identified top 12 projects in Feb A Rodriquez (Feb) Done submitted to SC (Mar) L Campbell M Long A Mosher Communicated results to teams in Feb Project Management Need to finalize response to comments/revise tool/post Need volunteer? Communicated results to teams in Feb Activity Entire Standards Committee Executive Committee Standards Committee Officers Process Subcommittee Communications & Planning Subcommittee Other a. Manage standards program capacity to increase throughput March 10,

7 Attachment 2 SC 2011 Goals Standards Committee s Executive Committee March 21, 2011 Agenda Policy Issues Involving BOT, FERC, NERC Executives Activity Entire Standards Committee Executive Committee Standards Committee Officers Process Subcommittee Communications & Planning Subcommittee Other capability b. Track FTEs for all phases of project development c. Consider phasing development of some projects d. Address need to monitor and support the complete cycle of a project (through all regulatory approvals) Standard Processes Activity Entire Standards Committee Executive Committee Standards Committee Officers Process Subcommittee Communications & Planning Subcommittee Other a. Complete implementation of results-based standards process b. Achieve closer alignment between Measures and RSAWs c. Monitor and refine the Quality Review process d. Improve interpretation processes e. Field test expedited initial standard development through use of a small professional team that may include NERC, Regional Entity, stakeholders, and contractors to test development March 10,

8 Attachment 2 SC 2011 Goals Standards Committee s Executive Committee March 21, 2011 Agenda Policy Issues Involving BOT, FERC, NERC Executives Activity Entire Standards Committee Executive Committee Standards Committee Officers Process Subcommittee Communications & Planning Subcommittee Other and approval of a high priority standard within one year. Coordination and Communication Activity Entire Standards Committee Executive Committee Standards Committee Officers Process Subcommittee Communications & Planning Subcommittee Other a. Tighten the working relationship with the technical committees a. Identify and implement improvements to standards web pages b. Provide quarterly webinars with updates on standards activities c. Formalize/use a communications network to reach smaller entities March 10,

9 Board of Trustees Standards Oversight and Technology Committee Mandate Approved by Board of Trustees: November 4, The Standards Oversight and Technology Committee (SOTC) shall be composed of not less than three and not more than six Trustees. 2. The members of the SOTC shall be appointed or reappointed by the Board at the regular Meeting of the Board immediately following each Annual Meeting of the Member Representatives Committee. Each member of the SOTC shall continue to be a member thereof until his/her successor is appointed, unless he/she shall resign or be removed or shall cease to be a Trustee of the Corporation. Where a vacancy occurs at any time in the membership of the SOTC, it may be filled by the Board of Trustees. 3. The Board of Trustees or, in the event of their failure to do so, the members of the SOTC, shall appoint a Chair from among their members. The SOTC shall also appoint a Secretary who need not be a Trustee. 4. The place of meeting of the SOTC and the procedures at such meeting shall be the same as for regular Board meetings of the Corporation, or as determined by the members of the SOTC, provided that: (a) A quorum for meetings shall be a majority of the number of members of the SOTC. (b) The SOTC shall meet as required and at least twice a year. 5. The objectives of the SOTC are as follows: (a) To provide the board with a thorough evaluation of and recommendations for action on proposed NERC projects that employ new technology. Such projects could include, but not be limited to: real-time system monitoring and visualization tools, reliability performance analysis tools, information and data exchange networks, reliability performance data bases, etc. (b) To provide the board and the NERC Standards Committee with a thorough evaluation of and recommendations for action regarding the strategic direction of NERC s standards development program. (c) To provide advice and recommendations to the board on any technical or standards issue referred to it by the board Village Blvd. Princeton, NJ

10 6. To achieve its objectives, the SOTC shall: (a) Review all projects that employ new technology that may be proposed from time to time by the Corporation s staff or one of the Corporation s committees; (b) Thoroughly evaluate all such proposals from both technical and financial standpoints; (c) Make recommendations, as appropriate, to the board, including recommendations to include such projects in the NERC business plan and budget; (d) Respond to the board s requests for advice and recommendations on any technical issues referred to it by the board; (e) Review with management the corporation s computer systems, including procedures to keep the systems secure and contingency plans developed to deal with possible computer failures; (f) Provide oversight of NERC s implementation of the North American SynchroPhasor Project; (g) Identify strategic priorities for reliability standards development and provide feedback to NERC Standards Committee and board on annual work plan; (h) Monitor overall results, including quality and timeliness of standards development work, and make recommendations to NERC Standards Committee and board regarding needed improvements; (i) Assess emerging reliability risks affecting standards and make recommendations as appropriate; (j) Monitor progress in addressing regulatory mandates and directives related to standards; (k) Serve as the Level 2 Appeals Panel as set forth in the NERC Standards Process Manual, Appendix 3A to the NERC Rules of Procedure; (l) Periodically review NERC s status with the American National Standards Institute; (m) Respond to the board s requests for advice and recommendations on any technical issues referred to it by the board; (n) Review this mandate on an annual basis and recommend to the board Corporate Governance and Human Resources Committee any changes to it that the SOTC considers advisable; (o) Complete a self-assessment annually to determine how effectively the SOTC is meeting its responsibilities; and (p) Perform such other functions as may be delegated from time to time by the board. Board of Trustees Standards Oversight and Technology Committee Mandate Approved by Board of Trustees: November 4,

11 Draft Agenda Open Session Standards Oversight and Technology Committee February 16, :30 8:30 a.m. MT Hyatt Regency Phoenix 122 N. Second Street Phoenix, AZ Introductions and Chair s Remarks NERC Antitrust Compliance Guidelines 1. Minutes* Approve November 3, Review Technology Committee Self-Assessment Results* 3. Review of Standards Committee Strategic Goals for 2011 NERC as a learning organization and implications for standards improvement/ measuring registered entity and bulk electric system performance trends Standards program resource requirements 4. Review of Standards Program Prioritization Process and Results 5. Response to FERC Directives* Status 6. Regional Standards Program Overview and Policy Issues* 7. Future Meetings May 10, 2011 Washington, DC April Technology Day (TBD) *Background material included Village Blvd. Princeton, NJ

12 Draft Agenda Closed Session Standards Oversight and Technology Committee February 16, :00 7:30 a.m. MT Hyatt Regency Phoenix 122 N. Second Street Phoenix, AZ Introductions and Chair s Remarks NERC Antitrust Compliance Guidelines 1. Approve November 3, 2010 Closed Session Minutes 2. Review Portal Security 3. Review Technology Infrastructure Planning 4. Situation Awareness for NERC, FERC, and Regional Entities Version 2 Project Update Village Blvd. Princeton, NJ

13 Attachment 2b Rules of Procedure Section 321 Standards Committee s Executive Committee March 21, 2011 Agenda 321. Special Rule to Address Certain Regulatory Directives In circumstances where this Rule 321 applies, the Board of Trustees shall have the authority to take one or more of the actions set out below. The Board of Trustees shall have the authority to choose which one or more of the actions are appropriate to the circumstances and need not take these actions in sequential steps. 1. The Standards Committee shall have the responsibility to ensure that standards drafting teams address specific matters that are identified in directives issued by applicable ERO governmental authorities. If the Board of Trustees is presented with a proposed standard that fails to address such directives, the Board of Trustees has the authority to remand, with instructions (including establishing a timetable for action), the proposed reliability standard to the Standards Committee. 2. Upon a written finding by the Board of Trustees that a ballot pool has failed to approve a proposed reliability standard that contains a provision to address a specific matter identified in a directive issued by an ERO governmental authority, the Board of Trustees has the authority to remand the proposed reliability standard to the Standards Committee, with instructions to (i) convene a public technical conference to discuss the issues surrounding the regulatory directive, including whether or not the proposed standard is just, reasonable, not unduly discriminatory or preferential, in the public interest, helpful to reliability, practical, technically sound, technically feasible, and cost-justified; (ii) working with NERC staff, prepare a memorandum discussing the issues, an analysis of the alternatives considered and other appropriate matters; and (iii) re-ballot the proposed reliability standard one additional time, with such adjustments in the schedule as are necessary to meet the deadline contained in paragraph 2.1 of this Rule Such a re-ballot shall be completed within forty-five (45) days of the remand. The Standards Committee memorandum shall be included in the materials made available to the ballot pool in connection with the re-ballot In any such re-ballot, negative votes without comments related to the proposal shall be counted for purposes of establishing a quorum, but only affirmative votes and negative votes with comments related to the proposal shall be counted for purposes of determining the number of votes cast and whether the proposed standard has been approved. 3. If the re-balloted proposed reliability standard achieves at least an affirmative two-thirds majority vote of the weighted segment votes cast, with a quorum established, then the proposed reliability standard shall be deemed approved by the ballot pool and shall be considered by the Board of Trustees for approval. 4. If the re-balloted proposed reliability standard fails to achieve at least an affirmative two-thirds majority vote of the weighted segment votes cast, but does achieve at least a sixty percent affirmative majority of the weighted segment votes cast, with a quorum established, then the Board of Trustees has the authority to consider the proposed reliability standard for approval under the following procedures: 4.1. The Board of Trustees shall issue notice of its intent to consider the proposed reliability standard and shall solicit written public comment particularly focused on the technical aspects of the provisions of the proposed reliability standard that address the specific matter identified in the regulatory directive, including whether or not the proposed standard is just, reasonable, not unduly discriminatory or preferential, in the public interest, helpful to reliability, practical, technically sound, technically feasible, and cost-justified.

14 Attachment 2b Rules of Procedure Section 321 Standards Committee s Executive Committee March 21, 2011 Agenda 4.2. The Board of Trustees may, in its discretion, convene a public technical conference to receive additional input on the matter After considering the developmental record, the comments received during balloting and the additional input received under paragraphs 4.1 and 4.2 of this Rule, the Board of Trustees has authority to act on the proposed reliability standard If the Board of Trustees finds that the proposed reliability standard is just, reasonable, not unduly discriminatory or preferential, and in the public interest, considering (among other things) whether it is helpful to reliability, practical, technically sound, technically feasible, and cost-justified, then it has authority to approve the proposed reliability standard and direct that it be filed with applicable ERO governmental authorities with a request that it be made effective If the Board of Trustees is unable to find that the proposed reliability standard is just, reasonable, not unduly discriminatory or preferential, and in the public interest, considering (among other things) whether it is helpful to reliability, practical, technically sound, technically feasible, and cost-justified, then it has authority to treat the proposed reliability standard as a draft reliability standard and direct that the draft reliability standard and complete developmental record, including the additional input received under paragraphs 4.1 and 4.2 of this Rule, be filed with the applicable ERO governmental authorities as a compliance filing in response to the order giving rise to the regulatory directive, along with a recommendation that the standard not be made effective and an explanation of the basis for the recommendation. 5. Upon a written finding by the Board of Trustees that standard drafting team has failed to develop, or a ballot pool has failed to approve, a proposed reliability standard that contains a provision to address a specific matter identified in a directive issued by an ERO governmental authority, the Board of Trustees has the authority to direct the Standards Committee (with the assistance of stakeholders and NERC staff) to prepare a draft reliability standard that addresses the regulatory directive, taking account of the entire developmental record pertaining to the matter. If the Standards Committee fails to prepare such draft reliability standard, the Board of Trustees may direct NERC management to prepare such draft reliability standard The Board of Trustees may, in its discretion, convene a public technical conference to receive input on the matter. The draft reliability standard shall be posted for a 45-day public comment period If, after considering the entire developmental record (including the comments received under paragraph 5.1 of this Rule), the Board of Trustees finds that the draft reliability standard, with such modifications as the Board of Trustees determines are appropriate in light of the comments received, is just, reasonable, not unduly discriminatory or preferential, and in the public interest, considering (among other things) whether it is practical, technically sound, technically feasible, cost-justified and serves the best interests of reliability of the bulk power system, then the Board of Trustees has the authority to approve the draft standard and direct that the proposed standard be filed with ERO governmental authorities with a request that the proposed standard be made effective If, after considering the entire developmental record (including the comments received under paragraph 5.1 of this Rule), the Board of Trustees is unable to find that the draft reliability standard, even with modifications, is just, reasonable, not unduly discriminatory or

15 Attachment 2b Rules of Procedure Section 321 Standards Committee s Executive Committee March 21, 2011 Agenda preferential, and in the public interest, considering (among other things) whether it is practical, technically sound, technically feasible, cost-justified and serves the best interests of reliability of the bulk power system, then the Board of Trustees has the authority to direct that the draft standard and complete developmental record be filed as a compliance filing in response to the regulatory directive with the ERO governmental authority issuing the regulatory directive, with a recommendation that the draft standard not be made effective The filing of the reliability standard under either paragraph 5.2 or paragraph 5.3 of this Rule shall include an explanation of the basis for the decision by the Board of Trustees A reliability standard approved under paragraph 5 of this Rule shall not be eligible for submission as an American National Standard. 6. NERC shall on or before March 31st of each year file a report with applicable ERO governmental authorities on the status and timetable for addressing each outstanding directive to address a specific matter received from an applicable ERO governmental authority.

16 Attachment 2ei RBS Transition Plan Endorsed by SC in July, 2010 Standards Committee s Executive Committee March 21, 2011 Agenda Results-based Reliability Standards Transition Plan As Proposed by the Ad Hoc Team for Resultsbased Reliability Standards July 2010

17 Table of Contents Table of Contents Introduction... 3 Background... 3 Results-based Reliability Standards... 3 Train-the-Trainer Program... 4 Transition Plan... 5 Philosophy... 5 Drafting Team Training... 5 Existing Projects Not Subject to Results-based Implementation... 6 Projects for Results-based Implementation... 6 Appendix A Guidance... 8 Appendix B Acceptance Criteria Appendix C Standard Format Appendix D Training Program Appendix E Project Priorities Appendix F Ad Hoc Team July

18 Introduction Introduction Background In Attachment 2 of the ERO Three-Year Assessment, stakeholders recommend that the industry should focus existing reliability standards and reliability standards development on areas that will lead to the greatest improvement in bulk power system reliability. Relevant stakeholder suggestions include: (i) focus the development of new reliability standards on those that will lead to the greatest improvement in reliability; i.e., address the greatest risks of wide-area cascading outages; and (ii) develop a more systematic process for prioritizing new reliability standards development projects based on risks to the bulk power system. NERC acknowledged these stakeholder comments and committed to resolving the issues by: i) addressing quality issues to ensure each reliability standard has a clear statement of purpose, and has outcome-focused requirements that are clear and measurable; and ii) ensuring the Energy Policy Act of 2005 is followed by ensuring requirements consist only of items that involve the reliable operation of the bulk power system. An Ad Hoc Team representing industry and NERC and regional staffs was formed to develop recommendations to ensure that NERC s reliability standards can have the greatest possible positive effect on the reliability of the bulk power system. The Ad Hoc Team s initial recommendations outlined a guiding set of principles for improving the development and format of reliability standards. Those recommendations were endorsed by the NERC Board of Trustees during the Board s November 4, 2009 meeting along with a request by the Board to the Ad Hoc Team to further develop a proposal for integrating the results-based principles into the set of NERC Reliability Standards. This report outlines the proposal for integrating the results-based principles into the set of NERC Reliability Standards as requested by the NERC Board of Trustees. Results-based Reliability Standards The Ad Hoc Team established that each standard drafting team should strive to achieve a portfolio of performance, risk, and competency-based mandatory reliability requirements that support an effective defense-in-depth strategy. Each requirement should identify a clear and measurable expected outcome, such as: a) a stated level of reliability performance, b) a reduction in a specified reliability risk, or c) a necessary competency: Performance-based defines a particular reliability objective or outcome to be achieved. In its simplest form, a performance-based requirement specifies: who, under what conditions (if any), shall perform what action in order to achieve a particular result or outcome. Risk-based preventive requirements to reduce the risks of failure to acceptable levels. A risk-based requirement specifies: who, under what conditions (if any), shall July

19 Introduction perform what action in order to achieve a particular result or outcome that reduces a stated risk to the reliability of the bulk power system. Competency-based defines a minimum set of capabilities an entity needs to have to demonstrate it is able to perform its designated reliability functions. The Ad Hoc team further established that an effective defense-in-depth strategy for reliability standards should recognize that each requirement in the NERC set of standards has a role in preventing system failures, and that these roles are complementary and reinforcing. Reliability standards should not be viewed as a body of unrelated requirements, but rather should be viewed as part of a coordinated portfolio of requirements designed to achieve an overall defense-indepth strategy. The Ad Hoc Team developed a number of supporting documents to further define the concept of results-based reliability standards to aid the industry in understanding and implementing resultsbased reliability standards: Results-Based Reliability Standard Development Guidance (see Appendix A) Acceptance Criteria of a Reliability Standard (see Appendix B) New Format for Results-Based Reliability Standards (see Appendix C) Train-the-Trainer Program In conjunction with the Results-based Reliability initiative, NERC contracted with Compliance Automation Inc. to develop a Train-the-Trainer program for results-based reliability standard development. This Train-the-Train program consists of a core package incorporating resultsbased standards principles and guides into a module for use in training the drafting teams responsible for drafting results-based reliability standards. The objectives of the training program are: Develop a customized training program that enhances the competencies of NERC s working groups as they develop results-based standards (see Appendix D). Deliver hands-on training to a core group of individuals involved in standards development. Deliver to and work with NERC training personnel so that they have the knowledge needed to assume responsibility for the conduct and rollout of the results-based training program. July

20 Transition Plan Transition Plan Philosophy The Ad Hoc Team considered a number of factors when developing this transition plan, including both the priority of projects as established by the Standards Committee (see Appendix E), as well as the current status of each individual project. The goal of the plan is to smoothly transition existing standards to results-based based standards while respecting and considering the amount of work existing standard drafting teams have expended in their respective projects to date relative to the planned completion date of the project. For example, to a large degree projects that are expected to be completed by year-end 2010 are not good candidates for transition to results-based because doing so would require the respective drafting team to redraft work which is essentially complete and ready for industry ballot, thereby extending the project by as much as six months. Consequently, projects which are in the very early stages of development or which have not been initiated are optimal candidates for results-based implementation. Based upon the project status at the time the decision was made, Project Vegetation Management was designated as the proof-of-concept project for the results-based initiative. Furthermore, Project Disturbance and Sabotage Reporting was recently initiated as next in line for a results-based project formatting testing. Drafting team training as proposed in the next section below will build a solid foundation for the transition to a complete set of resultsbased reliability standards. Once this transition plan is approved by the NERC Board of Trustees, it will be the responsibility of the Standards Committee to oversee the transition and the Ad Hoc Team will be dissolved. Drafting Team Training To commence the rollout to the industry of the results-based initiative, NERC staff will provide a one-time training Webinar on the concepts of results-based reliability standards. This initial training effort would be generic in nature and based upon the training program developed by Compliance Automation Inc. More detailed training sessions will be provided to the individual drafting teams by the NERC coordinator assigned to the team. The Train-the-Trainer program requires that the NERC coordinator assigned to a drafting team will be responsible for training their specific drafting teams in the results-based concepts. The core program provides a structure for developing standards starting with explicitly identifying the Needs, Goals, and Objectives of the particular standard under development. Since the majority of active standards development projects are beyond the Needs, Goals, and Objectives phase of the process, portions of the program are not directly applicable to them but will be summarized in the one-time training Webinar. The initial Webinar training will be beneficial to the existing drafting teams concepts as wit will provide them with the knowledge of the results-based principles that they can then apply to their respective projects in the event the team has an opportunity arises. For example in the event they have the opportunity to modify July

21 Transition Plan their standard in response to comments received with a negative vote during the final formal comment period or balloting phase of the project. Existing Projects Not Subject to Results-based Implementation The following projects will be permitted to reach completion without fully implementing the results-based concepts and format. However, the drafting teams associated with these projects should incorporate results-based concepts if the opportunity arises in the course of the project (for example between the last formal comment period and ballot or between ballots as permitted by the Standards Committee). Project Assess Transmission and Future Needs Project Backup Facilities Project Reliability Coordination Project Transmission Loading Relief Project Underfrequency Load Shedding Project Operating Personnel Communications Protocols Project Real-time Transmission Operations Project Certifying System Operators Project Generator Verification Project Disturbance Monitoring Project Frequency Response Project Protection System Maintenance & Testing Project Cyber Security - Order 706 Project Coordinate Interchange Standards Project Facility Ratings Project Functional Model Glossary Revisions Project NUC Implementation Plans for CIP Version 2 and 3 Project FAC Order 729 Project TPL Table 1 Order PRC Transmission Relay Loadability Order (Project Number not yet assigned) The standards associated with these projects, along with any other standards currently not associated with any project, will be fully transferred to include the results-based principles the next time the standard is opened for review or revision. Projects for Results-based Implementation July

22 Transition Plan The following projects will fully implement the results-based concepts. Leadership of this would take place via the NERC Coordinator for their specific project. Project Balancing Authority Controls Project System Protection Coordination Project Vegetation Management Project Reliability-based Control Project Voltage and Reactive Planning and Control Project Undervoltage Load Shedding Project Disturbance and Sabotage Reporting Project : Real-time Reliability Monitoring and Analysis Capabilities Project Emergency Operations Project Phasor Measurements Project Resource Adequacy Assessments Project Reliability of Protection Systems Project Support Personnel Training Project Connecting New Facilities to the Grid Project Modeling Data Project Demand Data Project Protection Systems Project Transmission Requirements at the Generator Interface Project Equipment Monitoring and Diagnostic Devices All future projects will be required to be developed flowing the results-based principles and formats identified in the appendices to this document. It will be the responsibility of the NERC Standards Committee to ensure that this plan is implemented accordingly. July

23 Appendix A Appendix A Guidance Results-Based Reliability Standard Development Guidance The Standard Drafting Team (SDT) should employ a defense-in-depth strategy for reliability standards development where each requirement in a NERC reliability standard has a role in preventing system failures, and that these roles are complementary and reinforcing. Reliability standards should be viewed as a portfolio of requirements designed to achieve an overall defense-in-depth strategy and comply with the quality objectives identified in the Acceptance Criteria of a Reliability Standard document. The SDT should strive to achieve a portfolio of performance, risk, and competency-based mandatory reliability requirements that support an effective defense-in-depth strategy. Each requirement should identify a clear and measurable expected outcome, such as: a) a stated level of reliability performance, b) a reduction in a specified reliability risk, or c) a necessary competency. a) Performance-based - defines a particular reliability objective or outcome to be achieved. In its simplest form, a results-based requirement has four components: who, under what conditions (if any), shall perform what action, to achieve what particular result or outcome? b) Risk-based - preventive requirements to reduce the risks of failure to acceptable tolerance levels. A risk-based reliability requirement should be framed as: who, under what conditions (if any), shall perform what action, to achieve what particular result or outcome that reduces a stated risk to the reliability of the bulk power system? c) Competency-based - defines a minimum set of capabilities an entity needs to have to demonstrate it is able to perform its designated reliability functions. A competencybased reliability requirement should be framed as: who, under what conditions (if any), shall have what capability, to achieve what particular result or outcome to perform an action to achieve a result or outcome or to reduce a risk to the reliability of the bulk power system? Each reliability standard should enable or support one or more of the reliability principles (see below). Each reliability standard should also be consistent with all of the reliability principles. a) Interconnected bulk power systems shall be planned and operated in a coordinated manner to perform reliably under normal and abnormal conditions as defined in the NERC Standards. July

24 Appendix A b) The frequency and voltage of interconnected bulk power systems shall be controlled within defined limits through the balancing of real and reactive power supply and demand. c) Information necessary for the planning and operation of interconnected bulk power systems shall be made available to those entities responsible for planning and operating the systems reliably. d) Plans for emergency operation and system restoration of interconnected bulk power systems shall be developed, coordinated, maintained, and implemented. e) Facilities for communication, monitoring, and control shall be provided, used, and maintained for the reliability of interconnected bulk power systems. f) Personnel responsible for planning and operating interconnected bulk power systems shall be trained, qualified, and have the responsibility and authority to implement actions. g) The reliability of the interconnected bulk power systems shall be assessed, monitored, and maintained on a wide-area basis. h) Bulk power systems shall be protected from malicious physical or cyber attacks. July

25 Appendix B Appendix B Acceptance Criteria Acceptance Criteria of a Reliability Standard Quality Objectives Note: The Federal Energy Regulatory Commission (FERC) has established in Order No. 672 criteria that will be used to assess reliability standards that are submitted to the Commission for approval. Each criterion has been provided for reference in a text box following the Quality Objective that addresses the specific issue. Drafting teams working on assigned projects are charged to ensure their work adheres to the following quality objectives: 1. Applicability Each reliability standard shall clearly identify the functional classes 1 of entities responsible for complying with the reliability standard, with any specific additions or exceptions noted. The applicability section of the standard should include any limitations on the applicability of the standard based on electric facility characteristics, such as a requirement that applies only to the subset of distribution providers that own or operate underfrequency load shedding systems. Must be applicable to users, owners, and operators of the bulk power system, and not others 322. The proposed Reliability Standard may impose a requirement on any user, owner, or operator of such facilities, but not on others. 2. Purpose Each reliability standard shall have a clear statement of purpose that describes how the standard contributes to the reliability of the bulk power system. 3. Requirements Each reliability standard shall state one or more requirements, which if achieved by the applicable entities, will provide for a reliable bulk power system, consistent with good utility practices and the public interest. Requirements should have the following characteristics: Each requirement should establish an objective that is the best approach for bulk power system reliability, taking account of the costs and benefits of implementing the proposal. To the maximum extent possible the requirement should be designed to apply throughout the interconnected North American Bulk-Power System. Each requirement should identify what functional entity shall do what, under what conditions, for what reliability benefit. 1 These functional classes of entities are documented in NERC s Statement of Compliance Registry Criteria. When a standard identifies a class of entities to which it applies, that class must be defined in the Glossary of Terms Used in Reliability Standards and must be identified in the Statement of Compliance Registry Criteria. July

26 Appendix B Each requirement should be aimed at achieving one objective at a time. It is permissible to include prescriptive, administrative (document something), and commercial requirements within the reliability standard, however these types of requirements should be limited in number. Reliability standards should not contain: Requirements that prescribe commercial business practices which do not contribute directly to reliability. Requirements that duplicate or conflict with one another. Must be designed to achieve a specified reliability goal 321. The proposed Reliability Standard must address a reliability concern that falls within the requirements of section 215 of the FPA. That is, it must provide for the reliable operation of bulk power system facilities. It may not extend beyond reliable operation of such facilities or apply to other facilities. Such facilities include all those necessary for operating an interconnected electric energy transmission network, or any portion of that network, including control systems. The proposed Reliability Standard may apply to any design of planned additions or modifications of such facilities that is necessary to provide for reliable operation. It may also apply to cyber security protection The proposed Reliability Standard must be designed to achieve a specified reliability goal and must contain a technically sound means to achieve this goal. Although any person may propose a topic for a Reliability Standard to the ERO, in the ERO s process, the specific proposed Reliability Standard should be developed initially by persons within the electric power industry and community with a high level of technical expertise and be based on sound technical and engineering criteria. It should be based on actual data and lessons learned from past operating incidents, where appropriate. The process for ERO approval of a proposed Reliability Standard should be fair and open to all interested persons. Must be designed to apply throughout North American to the maximum extent achievable with a single reliability standard while not favoring one area or approach 331. A proposed Reliability Standard should be designed to apply throughout the interconnected North American Bulk-Power System; to the maximum extent this is achievable with a single Reliability Standard. The proposed Reliability Standard should not be based on a single geographic or regional model but should take into account geographic variations in grid characteristics, terrain, weather, and other such factors; it should also take into account regional variations in the organizational and corporate structures of transmission owners and operators, variations in generation fuel type and ownership patterns, and regional variations in market design if these affect the proposed Reliability Standard. July

27 Appendix B Should achieve a reliability goal effectively and efficiently - but does not necessarily have to reflect best practices without regard to implementation cost 328. The proposed Reliability Standard does not necessarily have to reflect the optimal method, or best practice, for achieving its reliability goal without regard to implementation cost or historical regional infrastructure design. It should however achieve its reliability goal effectively and efficiently. Cannot be lowest common denominator, i.e., cannot reflect a compromise that does not adequately protect bulk power system reliability 329. The proposed Reliability Standard must not simply reflect a compromise in the ERO s Reliability Standard development process based on the least effective North American practice the so-called lowest common denominator if such practice does not adequately protect Bulk-Power System reliability. Although the Commission will give due weight to the technical expertise of the ERO, we will not hesitate to remand a proposed Reliability Standard if we are convinced it is not adequate to protect reliability. Balance with other vital public interests 335. Finally, we understand that at times development of a proposed Reliability Standard may require that a particular reliability goal must be balanced against other vital public interests, such as environmental, social and other goals. We expect the ERO to explain any such balancing in its application for approval of a proposed Reliability Standard. No undue negative effect on competition or restriction of the grid 332. As directed by section 215 of the FPA, the Commission itself will give special attention to the effect of a proposed Reliability Standard on competition. The ERO should attempt to develop a proposed Reliability Standard that has no undue negative effect on competition. Among other possible considerations, a proposed Reliability Standard should not unreasonably restrict available transmission capability on the Bulk-Power System beyond any restriction necessary for reliability and should not limit use of the Bulk-Power System in an unduly preferential manner. It should not create an undue advantage for one competitor over another. 4. Measurability Each requirement should be stated so as to be objectively measurable by a third party with knowledge or expertise in the area addressed by that requirement. Each requirement should have one or more associated measures used to objectively evaluate compliance with the requirement. If specific results can be practically measured quantitatively, metrics should be provided within the requirement to indicate satisfactory performance. Words and phrases such as sufficient, adequate, be ready, be prepared, consider, etc. should not be used. When an exact level of performance can t be specified, the required performance should be bounded by measurable conditions/parameters. July

28 Appendix B Must identify clear and objective criterion or measure for compliance, so that it can be enforced in a consistent and non-preferential manner 327. There should be a clear criterion or measure of whether an entity is in compliance with a proposed Reliability Standard. It should contain or be accompanied by an objective measure of compliance so that it can be enforced and so that enforcement can be applied in a consistent and non-preferential manner. 5. Technical Basis in Engineering and Operations Each reliability standard should be based upon sound engineering and operating judgment and the collective experience of the Standard Drafting Team members. Analysis of data collection activities, field test results and the comments received from industry experts should also be utilized in the development of each reliability standard. Must contain a technically sound method to achieve the goal 324. The proposed Reliability Standard must be designed to achieve a specified reliability goal and must contain a technically sound means to achieve this goal. Although any person may propose a topic for a Reliability Standard to the ERO, in the ERO s process, the specific proposed Reliability Standard should be developed initially by persons within the electric power industry and community with a high level of technical expertise and be based on sound technical and engineering criteria. It should be based on actual data and lessons learned from past operating incidents, where appropriate. The process for ERO approval of a proposed Reliability Standard should be fair and open to all interested persons. 6. Completeness Each reliability standard should be complete and self-contained. A standard should not depend on external information to determine the required level of performance. 7. Consequences for Noncompliance Each reliability standard shall establish a combination of elements (identified below) which will serve as guidelines for the determination of penalties and sanctions when assessing the consequences of violating a standard. Time Horizon - Each requirement shall have an associated Time Horizon to identify the time frame an entity would have to correct a violation of the requirement. Time horizons are used as a factor in determining the size of a penalty or sanction for noncompliance with a requirement. Violation Risk Factor - Each requirement shall have an associated Violation Risk Factor (VRF). The VRF is a factor in determining the size of a penalty or sanction for noncompliance with a requirement. Violation Severity Levels Each requirement shall have an associated set of Violation Severity Levels (VSLs) that identify degrees of noncompliance with the associated requirement. Must include clear and understandable consequences and a range of penalties (monetary and/or nonmonetary) for a violation 326. The possible consequences, including range of possible penalties, for violating a proposed Reliability Standard should be clear and understandable by those who must comply. July