There is a different feel out there in the NERC world, the Electric Reliability Organization (ERO) and the registered entities are working together more than ever since the mandatory implementation of the NERC standards in June 2007. I attended the NERC Member Representatives Committee (MRC) and Board of Trustees (BOT) meetings in Phoenix, AZ on February 5-6, 2014. There are many initiatives that are being implemented and proposed to the registered entities. Not only are the registered entities trying to keep up with very important and impacting standard changes such as COM-002, PRC-005, and the CIP version 5; they are also focused on some serious changes to their existing compliance programs.
Even as we were attending the NERC management meeting in Phoenix, the story of the serious physical attack on a California substation, not far from my own office headquarters, hit the news.
Registered entities have been working hard to manage the ongoing challenges with a struggling economy impacting revenues, more competition, environmental regulations, and cyber security threats. Never has it been more important for large, medium, and small registered entities to focus on risk-management and their internal controls. As the NERC staff was making presentations to the NERC Compliance Committee, the MRC and the NERC BOT, it was obvious that the registered entities have opportunities to improve their overall compliance programs and working relationships with NERC and the Regional Entities.
Some of the ERO’s key initiatives that are:
- Definition of BES implementation
- Reliability Assessment Initiative (RAI)
- Risk-based Registration Assessment Project
- Cyber Security
- Human Performance
If you have never had the opportunity to experience a NERC MRC and/or BOT meeting, I really encourage you to go to one. You can go to regional workshops and NERC Standards and Compliance workshops, but there is no better way to understand the goals and vision of the ERO unless you are there first hand. There are open discussions, shared industry experience and lessons learned not only from NERC subcommittees, but also the North American Transmission Forum (NATF) and the North American Generator Forum (NAGF) leadership.
Gerry Cauley, NERC President and CEO, also provides a comprehensive overview of the goals, accomplishments, and direction of the ERO. The Regional Entities’ senior management staffs are there and dialogue between industry members is encouraged.
Mr. Cauley highlighted the ERO Enterprise’s top strategic 5 goals:
- Goal #1: Develop clear, reasonable and technically sound mandatory Reliability Standards in a timely and efficient manner.
- Goal #2: Be a strong enforcement authority that is independent, without conflict of interest, objective and fair and promote a culture of reliability excellence through risk-informed compliance monitoring and enforcement.
- Goal #3: Promote a culture of compliance that supports reliability excellence within industry.
- Goal #4: Identify the most significant risks to reliability, be accountable for mitigating reliability risks and promote a culture of reliability excellence.
- Goal #5: Improve transparency, consistency, quality and timeliness of results; operate as a collaborative enterprise; and improve efficiencies and cost effectiveness.
These goals have been communicated in prior meetings and workshops, but never to the degree of actual implementation and working with the industry to accomplishing these goals. The real challenge for FERC, the ERO, and the registered entity is the identification of significant risks to reliability and mitigating these risks (Goal #4).
It is extremely important for the registered entities to be engaged in these initiatives and start developing their own risk-management program, the appropriate internal controls, and corrective action programs. Currently, there are pilot programs going on with registered entities and the ERO. Their results along with newly revised auditor handbooks, risk-based registration (not treating every functional entity the same), the RAI program will improve the focus on the critical issues regarding reliability.
After spending years in the industry and consulting with dozens of customers ranging from large to small utilities, co-ops and generators, it is encouraging to see registered entities working to identify their risks, implementing stronger compliance programs from industry experience and lessons learned, and developing internal controls. The transition will be challenging for everyone involved, but companies that build strong internal programs, controls, and focus on human performance will end up as industry leaders, have less burdensome oversight, and most importantly, provide a reliable bulk electric system for their customers and North America.