On March 17, 2011, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) denied rehearing of a November 2010 order and affirmed that the North American Electric Reliability Corporation (“NERC”) is directed to revise the Bulk Electric System (“BES”) definition (see March 19, 2010 edition of the WER). However, the Commission did clarify that NERC must address the discretion regional entities currently have regarding the definition of BES.
FERC also rejected the notion that the Federal Power Act establishes a standard of review that the Commission must use with respect to NERC submissions, and the Commission reiterated that the 100 kV bright-line threshold is an effective way to determine BES facilities. However, NERC may propose a different test that is just as, if not more, effective. If NERC does develop another test, then the alternative must be consistent, repeatable, and verifiable. FERC did agree that local distribution facilities are exempt from the BES, and the Commission agreed that the historic seven-factor test is a good starting point for determining which facilities classify as transmission and which count as local distribution. Again, NERC still has the discretion on how to implement the Seven Factor Test and, whether or not it is used. NERC also has discretion over the exemption process, and FERC emphasized although they do not have jurisdiction over local distribution, they do have jurisdiction over determining what is transmission versus what is distribution. While FERC affirmed the need for NERC to define BES, FERC declined to provide a definition itself.
The order on revisions to the BES definition is available here.