CIP Version 5 Transition Steven Noess, Director of Compliance Assurance Member Representatives Committee Meeting November 12, 2014
Purpose of the Transition Program Transitioning entities confident in implementation Vision 2016: smooth transition to CIP Version 5 Support all entities in the timely, effective, and efficient transition to CIP Version 5 2
Advisory Group Foundation NERC, Regions, and stakeholder group Topics to support confidence in implementing CIP Version 5 Partner with Regions and stakeholders Team composition Implementation study participants Standard drafting team representation NERC and Regional Entity staff Role Prioritizes and supports unity of approach on references to enhance stakeholder understanding and implementation of the standards Additional topics for enhanced training/guidance 3
Key Activities Implementation Study report (October 2014) Lessons learned comment posting period Far-end relay (October) Generation segmentation (October) CIP Version 5 FAQs (starting in November) Reliability Assurance Initiative CIP Version 5 program document (Q4 2014) 4
Compliance Monitoring and Continued Outreach Focus on implementation Auditor training and multi-regional workshops Transparency and guidance Confidence in transition Continued stakeholder outreach in 2015 5
6
Risk-Based Registration Initiative Earl Shockley, Senior Director, Compliance Analysis and Certification Rebecca Michael, Senior Director, Reliability Member Representatives Committee Meeting November 12, 2014
Proposed Risk-Based Registration Design Highlights Remove functions with little impact on reliability Enhance Distribution Provider (DP) threshold criteria Synchronize thresholds and criteria to the new Bulk Electric System (BES) definition Establish NERC-led review process to ensure consistency Implement a one-time attestation process Increase clarity on materiality 8
Technical Basis Highlights Functions removed create little or no risk to BES reliability Other entities responsible for impacts from transactions Low number of violations attributed to functions removed No reliability gaps from raising DP threshold from 25 to 75MW No BES reliability impact by deactivating about 60 DPs (3,500MW) 9
Technical Basis Highlights Reliability Coordinator studies indicate no adverse impacts from not receiving operational data from deactivated DPs DPs <75 MW who contribute to underfrequency load shedding (UFLS) programs are small compared to the total UFLS-armed load (52 out of 485 total DPs) UFLS-armed load at risk of failing to trip less than 0.44% Impact from UFLS-only DPs not providing their load shedding obligation is statistically insignificant (0.73% to 0.44%) 10
ROP Changes: Main Body and Appendix 2 Section 302 Essential Attributes for Technically Excellent Reliability Standards Remove Interchange Authorities (IAs), Load-Serving Entities (LSEs), and Purchasing-Selling Entities (PSEs) Section 501 Scope of the Organization Registration and Organization Certification Programs Deactivation, subset lists of Reliability Standards, and NERC-led panel Appendix 2 Excerpts from Definitions Used in the Rules of Procedure (ROP) Generator Owner/Generator Operator replacement of units with Facilities Deactivation Reactivation 11
ROP Changes: Appendix 5A Remove references to IA, LSE, PSE Registration process for UFLS-only DPs Deactivation process Reactivation process Establishment of a NERC-led, centralized review panel 12
ROP Changes: Appendix 5B Delete IA, LSE, and PSE Section III revised criteria for the DP function Section III (b) UFLS-only DPs Note 1 materiality test non-exclusive set of factors Note 5 sub-set lists of Reliability Standards 13
Next Steps Present to Board in November Final Design and Implementation Plan Technical and Risk Considerations ROP changes 2014 by the end of the year File ROP changes with applicable governmental authorities 2015 full year activities Begin implementation of Phase I Phase II technical studies completed 14
15
Reliability Review of Proposed Environmental Regulations Tom Burgess, Vice President and Director, Reliability Assessment and Performance Analysis Member Representatives Committee Meeting November 12, 2014
Report Overview Identify reliability implications and potential consequences from proposed Clean Power Plan (CPP) Environmental Protection Agency (EPA) proposed regulations would cut power sector carbon emissions to 30% of 2005 levels by 2030 Support electric power industry and NERC stakeholders Inform policy discussions on BPS reliability from proposed EPA regulation Does not advocate or support policy decisions or compliance approaches 17
Report Insights Calls attention to potential reliability concerns Demonstrate adequacy, dispatchability and system stability before making sweeping changes Framework for states, stakeholders and policy makers to be aware of key reliability considerations 18
EPA s Proposed Clean Power Plan Four Building Blocks Building Block 1 Coal Unit Heat Rate Improvement Implementing a 6% unit heat rate improvement for coal-fired units Building Block 2 Gas Unit Re-Dispatching Re-dispatching natural gas combined-cycle units before coal and oil/gas steam units Building Block 3 Clean Energy Building capacity by adding renewable generation and planned nuclear generation Building Block 4 Energy Efficiency Expanding state-driven energy efficiency programs 19
Key Findings Proposed plan reduces fossil-fired generation Heat rate improvements may be difficult to achieve Greater reliance on variable resources and gas-fired generation Essential Reliability Services may be strained Energy efficiency expansion displaces electricity demand growth More implementation time may be needed to accommodate reliability enhancements 20
NERC Recommendations NERC Continue to assess and provide independent evaluations Industry planning and analysis groups Immediately begin coordinated detailed system evaluations Policy makers and the EPA Consider a more timely approach to meet environmental goals 21
Timeline and Schedule Initial Reliability Review of EPA s Proposed Clean Power Plan Special Reliability Assessment: Phase I Special Reliability Assessment: Phase II Special Reliability Assessment: Phase III High-level reliability considerations Evaluation of generation and transmission adequacy leveraging industry studies Additional assessment of emerging states implementation plans reflecting final rule Placeholder for assessment once a selection of implementation plans are developed November 2014 April 2015 December 2015 December 2016 22
23
RISC Priorities and 2014 Reliability Summit Results Bob Schaffeld, Reliability Issues Steering Committee Chair Member Representatives Committee Meeting November 12, 2014
Reliability Leadership Summit September 11, 2014 100+ attendees: industry executives plus federal and state officials Reinforced themes on trends for existing and emerging risks Interdependencies Resiliency Regulatory and structural uncertainty Resource adequacy of both transmission and generation Resource commitment confidence and visibility Situational awareness Integrated outcomes into 2014 RISC report 25
Report Overview Reliability Issues Steering Committee (RISC) process Build on 2013 work Adjusted RISC report development schedule to support NERC strategic planning cycle Examine Operating Committee, Planning Committee and Critical Infrastructure Protection Committee reports Reliability Leadership Summit Report structure Risk analysis Theme discussion Recommendations 26
Risk Mapping 1 Changing Resource Mix 2 Cyber Attack 3 Extreme Physical Events Acts of Nature 4 Extreme Physical Events Man-made 5 Failure to Maintain and Manage Assets 6 Generator Unavailability 7 Loss of Situational Awareness 8 Pandemic 9 Poor Event Response/Recovery 10 Poor Human Performance 11 Poor Resource Planning 12 Protection System Failure 13 Regulatory Uncertainty 14 Uncoordinated Planning 27
Key Risk Themes Interdependencies Resiliency Situational Awareness Reliability Regulatory and Structural Uncertainty Gen Resources: Commitment Confidence and Visibility Resource Adequacy (Gen and Trans) 28
Recommendations 1. Address gaps between interdependent business models 2. Strengthen long term reliability assessment efforts 3. Conclude essential reliability services (ERS) efforts 4. Ensure the maturation of the ES-ISAC and engage the ESCC 5. Complete the Regionally consistent implementation of RAI 6. Ensure resource adequacy (long-term) and situational awareness (real-time) 7. Continue to leverage best practice sharing forums 29
Next Steps Request Board acceptance of report Consider improvements for 2015 Seek feedback and assess deliverable usefulness Adjust timing of report to align with business plan and budget and strategic planning Engage NERC leadership in 2015 2016 business plan and budget 2016-2018 strategic planning Initiate RISC member replacement process 30
31
2015-2018 ERO Enterprise Strategic Plan and 2015 ERO Enterprise and Corporate Metrics Michael Moon, Senior Director of Regional Entity Coordination Member Representatives Committee Meeting November 12, 2014
Background Alignment of strategic and operational documents Previously Realignment Strategic Plan Q4 / Q1 Strategic Plan Q3 / Q4 Metrics Q4 / Q1 Metrics Q3 / Q4 Common Assumptions Q1 Common Assumptions Q4 Business Plan And Budget Q1-2 Business Plan And Budget Q1-2 33
2015 2018 ERO Enterprise Strategic Plan Three years of maturation Earlier in the process Better support business plan and budget development Minor changes: Operationalize RAI: transform from concept to implementation Addition of a supplemental longer range strategic view Continued consideration of cost Move RSAWS to Standards Application Guides Continued assessment of FFT within broader oversight 34
2015 ERO Enterprise Metrics Three years of maturation Earlier in the process No changes to 4 main metrics Refinement of sub metrics Remove enforcement statistics and review at BOTCC Assess the consistency of compliance monitoring and enforcement 35
2015 ERO Enterprise Metrics 1. Reliability results 2. Assurance effectiveness 3. Risk mitigation effectiveness 4. Program execution effectiveness 36
Summary Both ERO Enterprise; strategic plan and metrics Continued maturation Developed earlier Realigned to business plan and budget development Refined; no major changes 37
38
ERO Enterprise Longer-term Strategic Planning Considerations Gerry Cauley, President and CEO Member Representatives Committee Meeting November 12, 2014
Summary and Discussion Recurring theme in 2014 - a period of profound change Numerous external factors, relationships, influencers Considerations for assuring reliability long term Resource planning and adequacy/reliability assessment Resilience Situational awareness and system control (while integrating new technologies) 40
41
Physical Security Reliability Standard Implementation Steven Noess, Director of Compliance Assurance Member Representatives Committee Meeting November 12, 2014
Purpose and Approach Physical security for critical Transmission stations and Transmission substations, and associated primary control centers* Three steps proposed Perform risk assessment to identify pertinent facilities Evaluate potential threats and vulnerabilities Develop and implement a security plan Implementation Critical facility identification complete before effective date Tiered timeline for balance of requirements (within 15 months) * NOTE: If rendered inoperable or damaged would cause instability, uncontrolled separation, or cascading within an Interconnection 43
FERC Proposes Approval NOPR issued July 17, 2014 36 different entities submitted comments Majority of stakeholders supportive Proposes to direct two modifications Governmental authorities may add or subtract from critical facilities Revise wording narrowing scope ( widespread ) Proposes to direct two informational filings High Impact Control Centers Possible resiliency measures following loss of critical facilities 44
Guidelines and Outreach Common approaches and guidance development NERC Critical Infrastructure Protection Committee (CIPC) NERC Planning Committee (PC) Trade organizations Training and other coordination Regional audit and enforcement alignment Multi-regional auditor training Focused stakeholder workshops (Q1/Q2 2015) 45
ERO to Monitor Implementation Number of assets critical under the standard Defining characteristics of the assets identified as critical Scope of security plans (types of security and resiliency contemplated) Timelines included for implementing security and resiliency measures Industry s progress in implementing the standard 46
47
ERO Enterprise Effectiveness Survey Mark Lauby, Senior Vice President and Chief Reliability Officer Kristin Iwanechko, Associate Director, Member Relations and MRC Secretary Member Representatives Committee Meeting November 12, 2014
Survey Overview, Structure and Results Annual survey on ERO Enterprise effectiveness Program areas defined in NERC s Rules of Procedure 69 survey questions Compliance and Certification Committee (CCC) survey Five-year performance assessment industry survey ERO Enterprise core values Strategic plan goals Results will inform 2016-2019 strategic plan and 2015 metrics 49
Schedule September 2014 Engaged ERO effectiveness survey focus group January 2015 issue survey for 30 days April 2015 present results at MRC informational session May 2015 present results at Board meeting Subsequent quarterly progress reports on focused areas 50
51