On October 18, 2012, FERC issued a Notice of Proposed Rulemaking (“NOPR”) directing the North American Electric Reliability Corporation (“NERC”) to submit for FERC approval reliability standards that address and mitigate the effects of geomagnetic disturbances (“GMDs”) on the bulk-power system.  This NOPR is the first step in developing reliability standards to mitigate the effects of GMDs.

GMDs are atmospheric disruptions that cause distortions of the Earth’s magnetic field.  These disruptions result in geomagnetic induced currents (“GICs”) that can cause half-cycle saturation in transformers, which in turn causes the transformers to fail.  Additionally, GICs can result in loss of reactive support, leading to voltage instability and the collapse of the grid.

FERC’s NOPR proposes that NERC develop the reliability standards through a two-stage process.  During the first stage, NERC would develop standards requiring owners and operators to develop and implement operational procedures to mitigate the effects of GMDs and ensure grid reliability.  These standards should also ensure that the operating procedures are coordinated among all entities across the grid.  Additionally, the NOPR directed NERC during the first stage to identify and evaluate facilities most at risk for disruption, with special attention paid to facilities that provide service to critical and priority loads.  The NOPR directs NERC to file these standards with FERC 90 days after a Final Rule is issued.

The second stage would require NERC to develop standards that require affected companies to conduct initial and continuing assessments of the potential impacts of GMDs on grid equipment and the grid as a whole.  Relying on these assessments, affected companies would then develop and implement procedures to ensure the reliable operation of the bulk-power system.  These procedures should not be limited to operational procedures and enhanced training alone, but rather focus on what needs were identified in the assessment.  This stage would be implemented in phases, with an emphasis placed on the most critical and vulnerable assets first.  NERC would be required to file these standards within six months of the issuance of a Final Rule.

While FERC did not mandate what criteria the reliability standards should be based on, FERC did recommend criteria for NERC to consider: (1) the standards should be uniform; (2) the assessments should evaluate primary and secondary effects of GMDs on the grid; (3) the assessment should evaluate all grid equipment, operation, and grid ability; (4) wide-area or regional assessments of GIC impacts should be conducted; and (5) the assessments should be periodically updated to include new information and technology.

Comments are due 60 days after publication in the Federal Register.

A copy of the NOPR is available here.