On September 22, 2009, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) held a public meeting on the Mandatory Reliability Standards for the Bulk Power System.  The purpose of the meeting was to present the research conducted by the University of Wisconsin-Madison on Topological and Impedance Element Ranking (“TIER”) of the Bulk-Power System.
 The Commission’s Office of Electric Reliability (“OER”) sponsored the research project to develop a methodology to aid in identifying and ranking the elements of the bulk-power system in the United States.  Specifically, OER staff is seeking to use the University of Wisconsin-Madison team’s mathematical model to further define what qualifies as a bulk-power system. 

 Section 215 of the Federal Power Act defines the bulk-power system to include (1) facilities and control systems necessary for operating an interconnected electric energy transmission network (or any portion thereof), and (2) electric energy from generating facilities needed to maintain transmission system reliability.  However, the term explicitly excludes from the definition facilities used in local distribution of electric energy.   

 The problem with the statutory definition is that it includes any elements of the transmission system that are necessary for operating an interconnected electric energy network to achieve reliable operations, but the law is silent on an objective test to classify an element as part of the bulk-power system.  If OER implements the new model, it will have profound effects on the industry, for the Energy Policy Act of 2005 requires FERC to certify an Electric Reliability Organization (“ERO”) to develop and enforce reliability standards for users, owners, and operators of the bulk-power system.  Thus, transmission “elements” that were previously excluded from these reliability standards in the past may have to comply in the future depending on their ranking or tiering according to this new research.

 The preliminary report present to FERC is available at: http://www.ferc.gov/EventCalendar/Files/20090911112656-TIER%20REPORT.pdf.