On March 19, 2015, the Commission approved in part and denied in part NERC’s Risk-Based Registration (“RBR”) initiative—an initiative aimed at focusing compliance resources on areas that have the greatest impact on the reliability of the Bulk Electric System (“BES”).

NERC originally submitted its proposed initiative on December 11, 2014 (see December 22, 2014 edition of the WER).  NERC’s proposal involved, among other things:  (i) modifications to the NERC Registry Criteria, including the removal of three functional registration categories: Purchasing-Selling Entity (“PSE”), Interchange Authority (“IA”), and Load-Serving Entity (“LSE”); (ii) the risk-based application of “sub-set” lists of Reliability Standards within specific functions—a contrast with the currently-effective Rules of Procedure, which require an entity registered for a function to comply with all of the Reliability Standards applicable to that function; and (iii) various procedural modifications to the registration process.

In its March 19, 2015 order, the Commission found that NERC’s overall goal of transitioning to a risk-based registration scheme was reasonable.  In doing so, the Commission approved many of the proposed changes to the NERC Rules of Procedure, including:  (i) the removal of PSE and IA as functional registration categories, and modifications to the threshold for registering entities as distribution providers (increased from 25 MW to 75 MW peak load); (ii) the risk-based application of sub-set lists of Reliability Standards to underfrequency load shedding-only distribution providers; and (iii) the proposed procedural revisions to the registration process, including the creation of a NERC-led review panel that will, among other things, rule on applications by Registered Entities for sub-set lists of Reliability Standards.

However, the Commission also denied certain revisions proposed by NERC.  Specifically, the Commission found, without prejudice, that NERC had not provided sufficient justification for eliminating the LSE function.  Among the concerns expressed by the Commission was that NERC had not sufficiently explained how certain LSE reliability responsibilities would be performed once the function was eliminated, and directed NERC to submit a compliance filing within 60 days addressing its concerns about the removal of this functional category.  The Commission also directed NERC to include Reliability Standard PRC-005 (Transmission and Generation Protection System Maintenance and Testing) within the sub-set list for underfrequency load shedding-only distribution providers.  NERC had originally proposed to include only PRC-006 (Automatic Underfrequency Load Shedding) within this sub-set list.

Lastly, the Commission directed NERC to submit a one-year informational filing in which it will address:

  • any potential unintended consequences to reliability that resulted from the RBR initiative;
  • any specific costs associated with the implementation of the initiative; and
  • information regarding decisions from the NERC-led review panel that will review applications for sub-set lists of Reliability Standards, including the kinds of functional entities seeking application of sub-set lists and Reliability Standards that are most frequently removed from compliance via sub-set lists.

A copy of the Commission’s order may be found here.