On September 28, 2015, the North American Electric Reliability Corporation (“NERC”) submitted to FERC its annual analysis on the use of Technical Feasibility Exceptions (“TFEs”).  TFEs are exceptions from strict compliance with NERC Critical Infrastructure Protection (“CIP”) Reliability Standards that Registered Entities may apply for, pursuant to a process established in the NERC Rules of Procedure.

On January 18, 2008, the Commission issued Order No. 706, in which it approved eight CIP Reliability Standards, and, among other things, directed NERC to develop a procedural mechanism by which entities could seek TFEs.  The Commission also required NERC to submit an annual report that provides a wide-area analysis of the use of TFEs, and their associated impact on Bulk-Power System reliability.

In its September 28, 2015 report, NERC presented data indicating that, for the 2015 reporting period of July 1, 2014 through June 30, 2015, a total of 342 new TFE requests were submitted and approved across all eight NERC Regional Entities within the United States, with the largest number of new requests (116) coming from the ReliabilityFirst Corporation region—a significantly higher number than the next-highest region, the Western Electricity Coordinating Council (“WECC”), which accounted for only 70.  Only two new TFE requests were disapproved across all eight Regions.  The data also indicated that 911 amendments to existing TFEs were requested and approved during the reporting period across all eight Regions, with ReliabilityFirst Corporation again accounting for a significantly higher total (287) than the next-highest region, WECC, which had 187.  Only three amendments to existing TFE requests were disapproved across all eight regions.  The report noted that, as of September 28, 2015, over 4,300 TFEs remain active across all eight Regions, within the United States.

Importantly, the report specifically identified the active TFEs that will be administratively terminated as of April 1, 2016—the date that the CIP Version 5 Reliability Standards become mandatory and enforceable.  According to NERC, on that date, over 82 percent of the currently active TFEs will become obsolete and no longer accountable in the program, because there are no comparable requirements in the CIP Version 5 Reliability Standards that authorize TFEs.  NERC noted, however, that there will be some TFEs from the currently-effective CIP Version 3 Reliability Standards that will remain active, because there are comparable requirements in the CIP Version 5 Reliability Standards.

A copy of NERC’s report may be found here.