Risk-Based Registration Highlights nad... · Risk-Based Registration. Val Agnew, Senior Director, Reliability Assurance. Member Representatives Committee Meeting. November 4, 2015

Risk-Based Registration

Val Agnew, Senior Director, Reliability AssuranceMember Representatives Committee MeetingNovember 4, 2015

RELIABILITY | ACCOUNTABILITY2

• Phase I – Industry Engagement Organized Advisory group to discuss policy issues Task Force created to address technical considerations

• Phase I – ROP changes Remove Purchasing-Selling Entities (PSEs) and Interchange Authorities (IAs) Modify criteria for Distribution Providers (DPs) Include NERC-led panel FERC Order March 19, 2015 Additional information to remove Load Serving Entities (LSEs) requested FERC approved removal of LSEs October 15, 2015

Risk-based Registration


• Phase II – Identify classes Generator Owner (GO), Generator Operator (GOP), and Transmission

Owner (TO), Transmission Operator (TOP) Collaboration with NAGF, ISO/RTO, ORCS, RCFG

• Phase II – Industry Engagement Continued use of advisory group and technical task force Engaged industry more broadly through workshops

• NERC examined: Submissions for registered entities Pre-identified Reliability Standards Detailed analysis of events and enforcement data

Risk-based Registration


• GO/GOPs and TO/TOPs that were not involved in an event • No violation or possible violation dating back to 2007• Analyze for potential group or groups• Identified potential candidate organizations for consideration by

the NERC-led panel

Phase II – Data Analysis


Phase II – GO/GOP Data Analysis

• 412 out of 8,525 generation units• 112 out of 922 registered GO/GOPs• No similar characteristics identified MW size as a bright-line was inconclusive Entity’s units may be critical during peak and emergency conditions 28 potential candidates identified for review by the NERC-led panel


Phase II – TO/TOPs Data Analysis

• 38 out of 497 registered TO/TOPs• Not sole indicator of risk• No similar characteristics identified• Identified potential candidates for review by the NERC-led panel


Recommendations

• Use the NERC-led review panel as defined in Phase I Review individual entity’s requests Monitor trends Identify similarly situated entities for potential groups or candidates

• Provide periodic updates to FERC, ERO, and industry with determinations and trends


Compliance Guidance Policy

Compliance Guidance Team MembersMember Representatives Committee MeetingNovember 4, 2015


• Purpose of the policy paper Develop approaches useful in providing guidance for implementing

standards

• May 2015: compliance guidance team (Team) formed Clarify the role, purpose, development, use, and maintenance of

compliance guidance Reduce controversial approaches to provide guidance Provide additional clarity on implementation of standards

Background


Compliance Guidance Team

• NERC executives and Board of Trustees (Board) members Ken Peterson Doug Jaeger Janice Case Mark Lauby

• Regional Entity Leadership Dan Skaar

• Leadership Sylvain Clermont Valerie Agnew Kristin Iwanechko

• Team Members Nabil Hitti Tony Montoya Tom Bowe Nelson Peeler Carol Chinn Jason Marshall Brian Murphy Patti Metro Steve Noess Sonia Mendonca


1. Guidance cannot change the scope of a Reliability Standard2. Contents of guidance are not the only way to comply with a

standard3. Clear compliance expectations during standards development

should minimize need for guidance after regulatory approval4. Forms of guidance should not conflict5. Guidance should be developed collaboratively and posted for

transparency

Principles


• Should be a finite and limited set of guidance tools• All forms of guidance related to the same standard should be

coordinated and collected in one location• To the extent guidance does not address all issues that arise,

consideration should be given to revising the standard• NERC and the Regional Entities (ERO Enterprise) will exercise

professional judgement and maintain processes to ensure its independence

• There are other methods for addressing risks not subject to a standard (i.e., feedback loops)

Additional Considerations


• Implementation Guidance Examples for implementing a standard

• CMEP Practice Guides Provides direction to ERO Enterprise compliance monitoring and

enforcement program (CMEP) staff on approaches to carry out compliance and enforcement activities

Proposed Types of Guidance


• Led and developed by industry experts• Does not prescribe the only approach• Endorsed for deference by ERO Enterprise

Implementation Guidance


• Endorsement ERO Enterprise CMEP staff will give the examples deference when

conducting compliance monitoring activities

• Deference Registered entities may rely upon the example with reasonable assurance

that guidance meets compliance requirements Compliance determinations depend on facts, circumstances, and system

configurations Following guidance alone is not a guarantee to meet compliance

Endorsement and Deference


• Initiation and Vetting Standard drafting team (during standards development) Through a pre-qualified organization (after final ballot)

• Submitted to a NERC email after being vetted• Example is posted to a central location on NERC’s website for

transparency

Implementation Guidance Development


• ERO Enterprise considers guidance for endorsement NERC facilitates resolution of any open questions Subject to technical soundness and compatibility with the standard

language ERO Enterprise leadership will ensure consensus among Regional Entities

• If endorsed, move to one-stop shop ERO Enterprise leadership ensures deference is given during CMEP

activities If not endorsed, removed from website

Obtaining Endorsement


• APPA• CEA• EEI• ELCON• EPSA• ISO/RTO Council• LPPC• NARUC• NRECA

Pre-Qualified Organizations

• NAGF• NATF• TAPS• WICF• NERC Planning Committee• NERC Operating Committee• NERC CIPC• Regional Entity Stakeholder

Committees


• Provides direction to ERO Enterprise CMEP staff on approaches to carry out compliance and enforcement activities

• Developed by the ERO Enterprise• May be initiated through policy discussions with industry• Posted for transparency

CMEP Practice Guides


One location on NERC website for:• Implementation Guidance• CMEP Practice Guides• Other supporting documents Other documents created during standards development (i.e., RSAWs,

white papers) Other types of guidance (i.e. Events Analysis Lessons Learned) Reports

One-Stop Shop for Guidance


• Compliance and Certification Committee (CCC) review, with Standards Committee (SC) support, of existing documents to submit for ERO Enterprise endorsement

• Review by the SC of Section 11 of the Standard Processes Manual to determine whether revisions should be considered

• CCC and SC jointly review, with ERO Enterprise CMEP staff, measures and RSAWs

• Develop CMEP Practice Guide on providing deference to endorsed Implementation Guidance

• Create a “one-stop shop” on the NERC website

Recommendations


• November 4, 2015: Present to MRC and request that MRC recommends the Board accept the policy and endorse the recommendations

• November 5, 2015: Request Board acceptance of the policy and endorsement of the recommendations

Next Steps


Clean Power Plan Final RuleNERC Reliability Assessment Plan (Phase II)

John Moura, Director of Reliability Assessment and System AnalysisMember Representatives Committee MeetingNovember 4, 2015


CPP Overview

• Issued August 3, 2015• Federal registry on October 23, 2015• Extends compliance to 2022 from 2020• Increase in total reduction from 30% to 32% of 2005 levels• Significant increase in renewables and energy efficiency • State plans must consider reliability Elements of a Reliability Assurance Mechanism Due Sept 2016, extension possible to 2018

• Trading to achieve compliance goals• Reliability Safety Valve


Example of Envisioned Glide Slope

Example: ArizonaCEIP early reductions 2020-2021

1st Interim Period 2022-

2024

2nd Interim Period 2025-

2027

3rd Interim Period

2028-2029

1st Compliance Period

2030-2031

Proposed 2030 Goal = 702 lb/MWh

Final 2030 Goal = 1,031 lb/MWh

Source: Salt River Project


Example of Envisioned Glide Slope

Example: KentuckyCEIP early reductions 2020-2021

1st Interim Period 2022-

2024

2nd Interim Period 2025-

2027

3rd Interim Period

2028-2029

1st Compliance Period

2030-2031

Proposed 2030 Goal = 1,918 lb/MWh

Final 2030 Goal = 1,286 lb/MWh


• Provides limited flexibility if a state encounters an unexpected reliability concern

• Designed as a short-term (90 day) narrowly focused fix Not likely to provide large benefits to states during the compliance period May be able to support an approaching peak period

Reliability Safety Valve


Remaining Uncertainties

• Requirements of the final Federal Plan • Mass versus rate-based approaches• Aggregate impacts of other environmental regulations (i.e.,

regional haze, cooling water, MATS)• Uncertainty with neighboring state plans and available transfers• Energy efficiency expectations and impacts to demand forecasts • Timing and location of retirements• Robustness of trading and allowances• Legal impediments• Market sensitive information sharing


• Formed to advise NERC on assessment scope and goals• Representation All NERC Regions ISO/RTOs and Planning Coordinators Independent Power Producers and Renewable Energy Producers Trade Organizations Power Marketers Consultants Canada

• Sub-group to author the state recommendations document Reliability Considerations for CPP Plan Development

• Work with modelers to develop scenarios and assumptions

Planning Committee Advisory Group


Special Reliability Assessment:CPP Phase II

Report Deliverable

Tentatively Scheduled for March

31, 2016

Project Timeline

October 7, 2015

Policy Input Letter

distributed

EPA Special AssessmentCPP Phase II

January 2016

Begin outreach and coordination

engagements with state

agencies and plan developers

Completion of Reliability

Considerations for CPP Plan

Development

October through December

Planning Committee Advisory Group on CPP:

1. Development of Reliability Considerations for CPP Plan Development

2. Design scope of the assessment, define scenarios, vet assumptions


RISC Priorities and 2015 Reliability Leadership Summit ResultsPeter Brandien, Vice President of System Operations, ISO New EnglandMember Representatives Committee MeetingNovember 4, 2015


• August 25, 2015 Hosted over 100 industry leaders

• Focused on three topics Changing nature of reliability Changing nature of the grid Cyber and physical security

• Three risk themes emerged Identifiable and measurable through existing processes and procedures Evolving and accelerating due to regulation and economics Large potential impacts from extreme events and intentional acts

• Integrated outcomes into 2015 RISC report

Reliability Leadership Summit


• Reliability Issues Steering Committee (RISC) process Built on 2014 work Adjusted RISC report schedule to support strategic planning cycle Conducted industry pulse point interviews FERC Technical Conference Reliability Leadership Summit

• Report structure Risk analysis of profiles Recommendations

Report Overview


Risk Mapping


Key Risk Themes

Reliability

Human Role

Regulatory and Uncertainty

System AssetsResources

Recovery/Restoration

Resiliency


1. Identify and report on interdependent and evolving business models

2. Expand long-term reliability assessment (LTRA) to measure potential reliability impacts from the changing resource mix

3. Build on Essential Reliability Services (ERS) framework 4. Continue maturation of E-ISAC, deployment of Cyber Security

Risk Information Sharing Program (CRISP) technology, and strengthen physical and cyber security

Recommendations


5. Ensure planning data and modeling effectively and accurately reflect behavior of all generation and transmission additions

6. Promote sharing mechanisms among entities, including across RTO/ISO markets, bi-lateral regions, and non-market seams

7. Continue to leverage the forums and other industry practice-sharing-groups to enhance resilience and improve reliability

8. Differentiate the meaning and character of resilience as well as effective ways to measure it

Recommendations continued


• Request Board acceptance of the report• Consider improvements for 2016 Seek feedback and assess deliverable usefulness Adjust timing of report for earlier in the year Engage NERC leadership earlier in 2016

• Initiate RISC member replacement process

Next Steps


Evolution of Essential ReliabilityServices

John Moura, Director of Reliability Assessment and System AnalysisMember Representatives Committee MeetingNovember 4, 2015


ERSTF Achievements


INFORM EDUCATE BUILD AWARENESS

Key Messages for Policy Makers


Synchronous inertia is declining……

Monitor Trends in Frequency

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2.2

2.4

2.6

2.8

3

3.2

3.4x 10

5

2010 2011 2012 2013 2014 2015 2016 2017

Kin

etic

ene

rgy,

MW

s

ERCOT Historic Kinetic Energy Boxplots (2010–2017)


Frequency Deviation

Decline in inertia Increase in Frequency Deviation

Calculated ERCOT System Frequency after 2750 MW Generation Trip(2010-2017)

Where we’ve been

Where we’re going


Need to Evaluate Frequency Response

Need to evaluate Point C’ – Governor Withdrawal

Frequency Response Example for Large Disturbance in Eastern Interconnection(with Governor Withdrawal)


Need More Flexibility for Ramping

-8,000

-6,000

-4,000

-2,000

0

2,000

4,000

6,000

8,000

Hourl

y Net

Load

Ramp

s, MW

CAISO Yearly One-Hour Ramp DistributionRed shaded area represents 2 σ from the mean

How do we address the need for flexibility?


Need to Establish Reactive Areas

• Difficult to measure and project—report recommends a number of enhanced industry practices

• Need to establish sub-areas to understand reactive trends • Determine static and dynamic reactive capability of the system


• Defining Adequate Level of Reliability in terms of ERS• Distributed Energy Resources• Flexibility, Visibility, Control

Additional Work Needed Going Forward


Incorporate Measures into NERC Reliability Evaluations

• Long-Term Reliability Assessment Supplement Reserve Margin Assess future frequency/inertial response; conduct resource mix sensitivities Project ramping needs

• State of Reliability Report Identify trends in voltage performance Enhancements identified for frequency response trending

• Special Reliability Assessments


ERO Enterprise Longer-term Strategic Planning Considerations

Mark Lauby, Senior Vice President and Chief Reliability OfficerMember Representatives Committee MeetingNovember 4, 2015


• Significant Cross-cutting Emerging Trends Changing resource mix Regulatory and economic impact Essential reliability services (ERS) Operational control and visibility Cyber and physical security New technology

• Areas of Focus Resource and Planning Adequacy Recovery and Restoration Situation Awareness and System Control

Background


• Be a credible and independent information source• Further assessing reliability risks associated with natural gas

infrastructure, including gas storage and pipeline delivery• Add probabilistic analysis into the traditional reserve margin• Incorporate the distribution-centric distributed resources and

demand response into the assessment of reliability risk• Document reliability considerations and requirements for fuel

diversity, distribution, and variable energy resources (VERs)

Resource and Planning Adequacy


• Develop a risk-based approach to extreme conditions• Promote an all-hazards approach to grid restoration and

recovery plans• Study interdependent infrastructure more for extreme events Natural gas, telecommunications, and transportation

• Develop understanding of supply chain cyber security issues

Recovery and Restoration


• Assess the impact of changing technologies• Consider the impacts of ERS on reliable operations• Ensure the visibility, awareness, and control of a sufficient amount

of distributed and non-traditional resources as needed• Foster system operator training and situation awareness• Engage equipment vendors• Engage IEEE and the IEC in producing technical standards• Work with regulators to develop interconnection requirements

Situational Awareness and System Control


ERO Enterprise Strategic Plan 2016–2019 and 2016 ERO Enterprise and Corporate MetricsMark Lauby, Senior Vice President and Chief Reliability OfficerMember Representatives Committee MeetingNovember 4, 2015


Annual Strategic & Operational Planning

Reliability Issues Steering Committee

Report


Evaluate of Historical and Emerging Trends

Pulse Interviews with select Industry Leaders




Report




Board & EMG

Strategic Sessions

FERC Tech. Conference

MRC Policy Input

ERO Enterprise

Survey




Report




ERO Enterprise Staff Input

Board & EMG

Strategic Sessions


MRC Policy Input

ERO Enterprise

Survey




Report



ERO Enterprise Longer-term Strategic Planning

Considerations

ERO Enterprise Strategic Plan 2016-2019


Business Plan & Budget

Technical Committee

Work Plans

Enterprise/Corporate

Metrics

ERO Enterprise Staff Input

Board & EMG

Strategic Sessions


MRC Policy Input

ERO Enterprise

Survey


Goals:1. Clear and technically sound Reliability Standards2. Risk-based Compliance Monitoring, Enforcement, and

Registration3. Identification and mitigation of significant reliability risks4. Assessment of emerging risks and essential reliability services5. Collaboration and coordination

ERO Enterprise Strategic Plan 2016–2019


1. Reliability results2. Assurance effectiveness3. Risk mitigation effectiveness4. Program execution effectiveness

2016 ERO Enterprise and Corporate Metrics


• ERO Enterprise Strategic Plan and Metrics Continued focus on highest priority risk Redesign in 2016

Summary


FERC Notice of Proposed Rulemaking on Availability of Certain NERC Databases to FERC

Holly A. Hawkins, Associate General CounselMember Representatives Committee MeetingNovember 4, 2015


• NOPR Proposes a New Regulation—18 C.F.R. §39.11(c) “The Electric Reliability Organization shall make available to the

Commission, on a non-public and ongoing basis, access to the Transmission Availability Data System, Generating Availability Data System, and protection system misoperations databases, or any successor databases thereto.”

NOPR Proposal


• FERC states: FERC access would be viewable and downloadable data Limited to U.S. facilities Data would help FERC:o determine need for new or modified Reliability Standards, and o understand NERC assessments

Intends to take “appropriate steps” in handling confidential information Would not require NERC to collect new information or

compile/reformulate data

NOPR Proposal (cont’d)


• Implications of the Proposed Rule include: Scope Data vulnerability and confidentiality Duplicative and ambiguous regulation Negative unintended consequences

NERC Review of Database NOPR


• NERC will submit comments proposing an alternative to the Proposed Rule with the goal of addressing FERC’s objectives articulated in the NOPR

• Comments are due on November 30, 2015

NERC Review of Database NOPR


ERO EnterpriseEffectiveness SurveyKristin Iwanechko, Associate Director, Member Relations and MRC SecretaryMember Representatives Committee MeetingNovember 4, 2015


• Issued January 2015 to 1,112 individuals 73 survey questions across 10 topic areas 23.9 percent response rate

• Final report presented in August 2015 Positive overall results Seven initial areas identified for improvement

• Industry request for additional favorability analysis Four additional areas identified Over 6% unfavorable and under 60% favorable ratings

2014 Survey


• Ensures efficiencies and minimizes duplication and any activities not affecting reliability outcomes

• Achieves results and methods that are predictable, consistent, and timely

Actions• Included in sub-metric E for 2016

Additional Areas


• Avoids undue burden, discrimination, or capriciousness Comments focused on administrative and regulatory burden

Actions• Reduced scope of audit based on risk• Implementation of risk-based registration

Additional Areas


• Penalty process and penalties are transparent, consistently applied, and clearly communicated

No Action• Penalty process governed by NERC Rules of Procedure• Penalties are publicly posted

Additional Areas


• To be issued January 2016• Working with ad hoc survey group• Changes and improvements Frequency of future surveys Clarity of questions Analysis of data Distribution list Demographics User-friendliness of survey tool

2015 Survey


Documents

Risk-Based Registration Highlights nad... · Risk-Based Registration. Val Agnew, Senior Director, Reliability Assurance. Member Representatives Committee Meeting. November 4, 2015