NERC Standards Under Development – Interesting Yes, Surprising No

Although the pace of new NERC Reliability Standards rolling out of the development process is not as rapid as in recent years, they are still being drafted, argued about, and voted on. Many entities have asked our advice on how to prepare for and deal with these “standards NERC is forever creating.” A two-part response is in order.

First, NERC doesn’t actually create standards, and second, the process is completely transparent. The process is not quick, and Registered Entities typically have about two years to review the initial drafts of the standard, or revision, before final approval and publication of an effective date by FERC. Sometimes a little less, sometimes more.

Standards are created and/or revised by Drafting Teams made up of industry participants. You too can be on a drafting team if you prefer. NERC staff facilitates the standard development process, but they have no vote on the approval of the document.

While the standards development process has many decision points and balloting measures, focusing on the following information will help assure you’re not blindsided by something that can materially affect how you run your business. All the posting steps in the process afford ample opportunity for comment and even dissent from Registered Entities. No one must simply wait and deal with whatever is processed and ultimately approved by FERC. If some component of a proposed change does not conform to how you operate, potentially impose undue costs, or the applicability to your scope is questionable, your comments and concerns are not only permitted, they are encouraged.

Here are the steps you should be aware of:

• Standards Authorization Request (SAR) – this form must be completed and vetted for each proposed new reliability standard or material revision to an existing standard. SARs are posted for industry comment. The SAR states the nature of the issues involved and the reason the new standard or revisions should be mandatory, and often includes draft language for the intended requirements. These comments are posted, for comment, on the NERC site.
• Draft of new or revised standard – these drafts are also posted for comment on the NERC site referenced above. Here, the concepts and content of the SAR become draft standards with the associated applicability, requirements, and risk factors. This is a great point to begin looking ahead to what it would take for you to include the proposed requirements, if adopted as is, in your operations.
• Balloting of standards – As mentioned earlier, NERC doesn’t get a vote here. Only members of the Registered Ballot Body who have opted in for the Ballot Pool of a particular standard can vote. These voters are by and large Registered Entities. If your organization is a current Registered Entity, then a representative from your company can vote. A valuable feature of the voting process is that all negative votes with comments must be addressed by the drafting team. A review of the issues raised by others can facilitate your review of concerns that may impact your operations but which maybe you haven’t thought about.
• Approval by FERC – at this point, the standard or group of standards have been under transparent development for at least a year and sometimes for several years. A review of the FERC notice of approval reveals ongoing concerns with the standard, and FERC’s opinion. Sometimes the requirements stay as is. Sometimes changes are directed by FERC staff. Again, knowing what these issues are and the expectations related to compliance well ahead of time will help avoid the dreaded fire drill. To that point, one of the most interesting features of the FERC notice is the implementation date.

Registered Entities subject to mandatory compliance with the NERC Reliability Standards can be perplexed, disgusted, or pleased by the ongoing changes to the requirements within a standard. What Registered Entities need not be is surprised by the changes. You can see them coming from a long way off.