Reliability

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On July 21, 2016, in Order No. 829, FERC directed the North American Electric Reliability Corporation (“NERC”) to develop a new or modified Critical Infrastructure Protection (“CIP”) Reliability Standard that addresses supply chain risk management for industrial control system hardware, software, and computing and networking services associated with Bulk Electric System operations. FERC directed NERC to submit the new or modified Reliability Standard within one year of the effective date of the order, which is 60 days after the order’s publication in the Federal Register.

On May 19, 2016, FERC issued a Notice of Proposed Rulemaking in which it proposed to approve Reliability Standard BAL-002-2, Disturbance Control Standard—Contingency Reserve for Recovery from a Balancing Contingency Event (“May 19 NOPR”). In the May 19 NOPR, FERC described BAL-002-2 as designed to ensure that Registered Entities “are able to recover from system contingencies by deploying adequate reserves to return their Area Control Error to defined values and by replacing the capacity and energy lost due to generation or transmission equipment outages.” FERC also proposed in the May 19 NOPR to direct the North American Electric Reliability Corporation (“NERC”) to: (i) modify BAL-002-2 to address concerns related to the possible extension or delay of the periods for Area Control Error recovery and contingency reserve restoration; and (ii) address a reliability “gap” associated with NERC’s proposed definition of “Reportable Balancing Contingency Event.”

On March 17, 2016, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued an order approving Reliability Standard PRC-026-1 (Relay Performance During Stable Power Swings). According to the Commission, PRC-026-1 is “designed to ensure that applicable entities use protective relay systems that can differentiate between faults and stable power swings.” The Commission also approved the proposed violation risk factors, violation severity levels, and implementation plan for PRC-026-1. Under the approved implementation plan, Requirement R1 of PRC-026-1 will become effective 12 months after Commission approval, and Requirements R2, R3, and R4 will become effective 36 months after Commission approval.