On May 16, 2013, the Commission issued Order No. 779, “Reliability Standards for Geomagnetic Disturbances,” directing the North American Electric Reliability Corporation (“NERC”) to submit for approval reliability standards that address the impact of Geomagnetic Disturbances (“GMD”) on the “reliable operation of the Bulk Power System.”  Order No. 779 follows an October 12, 2012 Notice of Proposed Rulemaking (“NOPR”), and reflects comments on the NOPR received by the Commission (see October 21, 2012 edition of the WER).  At the May 16, 2013 Commission meeting, FERC Chairman Jon Wellinghoff thanked Commissioner Cheryl LaFleur for leading efforts regarding GMD reliability standards.

Order No. 779 requires NERC to develop proposed GMD reliability standards in two stages, each with set timing requirements.  In the first stage, NERC must file one or more reliability standards that require owners and operators of the Bulk-Power System to implement “operational procedures” to mitigate GMD effects that are consistent with the reliable operation of the Bulk-Power System.  FERC stated in its order that the operational procedures may help “alleviate abnormal system conditions due to transformer absorption of reactive power during GMD events.”  The Commission did not direct NERC to outline specific operational procedures, and indicated that it expects owners and operators of the Bulk-Power System to structure operational procedures in a way that fits their particular equipment and system.  NERC must file these proposed standards within six months of the effective date of Order No. 779.   In addition to the first stage of reliability standards, FERC also directed NERC to identify facilities that are most at-risk from a severe GMD and “conduct wide-area geomagnetic disturbance vulnerability assessment.”

For the second stage, FERC directed NERC to file proposed standards that require owners and operators of the Bulk-Power System to complete initial and on-going assessments of the “potential impact of benchmark GMD events on Bulk-Power System equipment and the Bulk-Power System as a whole.”  FERC specified that “benchmark GMD events” are the severity of GMD events that the responsible entities must look at for potential impacts.  FERC indicated that benchmark GMD events should be based on items like duration, geographic footprint of the GMD, and varying severity of GMD, among other items, yet FERC did not specify a benchmark GMD for NERC.   FERC also directed NERC to submit proposed reliability standards that require owners and operators to implement a plan for protection against: (1) instability; (2) uncontrolled separation; and (3) cascading failures from a benchmark GMD event and its impact on the Bulk-Power System.  FERC clarified that the second stage of GMD reliability standards should not impose “strict liability” on parties for failing to ensure reliable operation of the Bulk-Power System due to a “GMD event of unforeseen severity.”  NERC must submit the second set of proposed standards within 18 months of the effective date of Order No. 779.

Also on May 16, 2013, Commissioner LaFleur issued a separate statement regarding Order No. 779, highlighting “significant changes or clarifications” from the NOPR reflecting comments the Commission received.  Commissioner LaFleur noted that Order No. 779 does not prescribe a specific technology or methodology for the standards in the second-stage of the NERC process, nor impose “strict liability” for outages caused by GMD events of “unforeseen severity.”  Commissioner LaFleur thanked NERC, the industry, and other stakeholders for their work to help better understand GMD events.

A copy of the final rule is available here.