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Agenda Standards Committee Process Subcommittee Conference Call January 4, 2017 | 2:00 p.m. – 3:30 p.m. Eastern Dial-in: 1-415-655-0002 | Access Code: 735 789 166 | Password: 010417 Click here for: Webinar Access Introduction and Chair’s Remarks NERC Antitrust Compliance Guidelines and Public Announcement* Agenda Items

1. Review Meeting Agenda and Objectives

2. SCPS Work Plan* (Discussion)

a. SCPS Activities - (P. Heidrich)

i. Project Assignments

(1) Revised SAR Form*

ii. Conceptual Projects

(1) Process for Revising Implementation Plan prior to Final Ballot*

3. Items Slated for Presentation at Standards Committee Meeting (January 18, 2016) - (P. Heidrich)

a. Guidance Document for Management of Remanded Interpretations*

b. Acceptance Criteria for a Reliability Standard*

c. Revised SAR Form*

4. Review of Actions/Assignments - (M. Bunch)

5. Review and Confirm 2017 Proposed SCPS Call Schedule

6. Future Meetings*

a. March 14, 2017 (WECC)

b. June 13, 2017 (NERC)

c. September 6, 2017 (MRO)

d. December 5, 2017 (NERC)

7. Adjourn

https://nerc.webex.com/nerc/j.php?MTID=m403da02a23ddf9d6ca1a582277df988c

Agenda – Standards Committee Process Subcommittee Meeting – January 4, 2017 2

*Background materials included.

Antitrust Compliance Guidelines I. General It is NERC’s policy and practice to obey the antitrust laws and to avoid all conduct that unreasonably restrains competition. This policy requires the avoidance of any conduct that violates, or that might appear to violate, the antitrust laws. Among other things, the antitrust laws forbid any agreement between or among competitors regarding prices, availability of service, product design, terms of sale, division of markets, allocation of customers or any other activity that unreasonably restrains competition. It is the responsibility of every NERC participant and employee who may in any way affect NERC’s compliance with the antitrust laws to carry out this commitment. Antitrust laws are complex and subject to court interpretation that can vary over time and from one court to another. The purpose of these guidelines is to alert NERC participants and employees to potential antitrust problems and to set forth policies to be followed with respect to activities that may involve antitrust considerations. In some instances, the NERC policy contained in these guidelines is stricter than the applicable antitrust laws. Any NERC participant or employee who is uncertain about the legal ramifications of a particular course of conduct or who has doubts or concerns about whether NERC’s antitrust compliance policy is implicated in any situation should consult NERC’s General Counsel immediately. II. Prohibited Activities Participants in NERC activities (including those of its committees and subgroups) should refrain from the following when acting in their capacity as participants in NERC activities (e.g., at NERC meetings, conference calls and in informal discussions):

• Discussions involving pricing information, especially margin (profit) and internal cost information and participants’ expectations as to their future prices or internal costs.

• Discussions of a participant’s marketing strategies.

• Discussions regarding how customers and geographical areas are to be divided among competitors.

• Discussions concerning the exclusion of competitors from markets.

• Discussions concerning boycotting or group refusals to deal with competitors, vendors or suppliers.

NERC Antitrust Compliance Guidelines 2

• Any other matters that do not clearly fall within these guidelines should be reviewed with NERC’s General Counsel before being discussed.

III. Activities That Are Permitted From time to time decisions or actions of NERC (including those of its committees and subgroups) may have a negative impact on particular entities and thus in that sense adversely impact competition. Decisions and actions by NERC (including its committees and subgroups) should only be undertaken for the purpose of promoting and maintaining the reliability and adequacy of the bulk power system. If you do not have a legitimate purpose consistent with this objective for discussing a matter, please refrain from discussing the matter during NERC meetings and in other NERC-related communications. You should also ensure that NERC procedures, including those set forth in NERC’s Certificate of Incorporation, Bylaws, and Rules of Procedure are followed in conducting NERC business. In addition, all discussions in NERC meetings and other NERC-related communications should be within the scope of the mandate for or assignment to the particular NERC committee or subgroup, as well as within the scope of the published agenda for the meeting. No decisions should be made nor any actions taken in NERC activities for the purpose of giving an industry participant or group of participants a competitive advantage over other participants. In particular, decisions with respect to setting, revising, or assessing compliance with NERC reliability standards should not be influenced by anti-competitive motivations. Subject to the foregoing restrictions, participants in NERC activities may discuss:

• Reliability matters relating to the bulk power system, including operation and planning matters such as establishing or revising reliability standards, special operating procedures, operating transfer capabilities, and plans for new facilities.

• Matters relating to the impact of reliability standards for the bulk power system on electricity markets, and the impact of electricity market operations on the reliability of the bulk power system.

• Proposed filings or other communications with state or federal regulatory authorities or other governmental entities.

Matters relating to the internal governance, management and operation of NERC, such as nominations for vacant committee positions, budgeting and assessments, and employment matters; and procedural matters such as planning and scheduling meetings.

Public Announcements

Conference call: Participants are reminded that this conference call is public. The access number was posted on the NERC website and widely distributed. Speakers on the call should keep in mind that the listening audience may include members of the press and representatives of various governmental authorities, in addition to the expected participation by industry stakeholders.

SCPS Work Plan Activities Document—December 22, 2016

Standards Committee Process Subcommittee Work Plan (SC Endorsed Project Scopes)

Task

General Scope of Task

Task Initiated

Target Completion

Status/Remarks

1. Revisions to NERC Standard Processes Manual (SPM)

a. Section 6: Processes for Conducting Field Tests and Collecting and Analyzing Data

b. Section 7: Process for Developing an Interpretation

c. Section 11.0: Process for Approving Supporting Documents

Team Lead: Pete Heidrich

John Bussman Ben Li Jennifer Flandermeyer Andy Pusztai Steve Rueckert Jason Smith

a. Develop and propose recommendations to the SC for revisions and/or modifications to the SC Charter Section 10 and Section 6 of the Standards Processes Manual (SPM), which will address the coordination and oversight involvements of the NERC technical committees.

b. Develop and propose recommendations to the SC for revisions and/or modifications to the Interpretation Process in Section 7 of the SPM which will improve the effectiveness and efficiency of (i) validation of a request for Interpretation (RFI), and (ii) development of an interpretation of an approved Reliability Standard or individual Requirement(s) within an approved Reliability Standard.

c. Develop and propose recommendations to the SC for revisions and/or modifications to the Technical Document Approval Process in Section 11 of the SPM.

July 2015

March 2017

UPDATE:

Section 6: Processes for Conducting Field Tests and Collecting and Analyzing Data • SC Endorsed (09.14.2016)

the SCPS proposed revisions to Section 6 Process for Conducting Field Tests of the Standard Processes Manual (SPM).

Section 11: Process for Approving Supporting Documents • SCPS Subgroup provided a

proposal for comment to the SCPS, SC Leadership and NERC staff. Currently reviewing comments and making associated revisions to the proposal for consideration. SCPS Subgroup meeting/call will be scheduled to discuss the revised proposal.

Agenda Item 2 Standards Committee Process Subcommittee January 4, 2017

SCPS Work Plan Activities Document—November 21, 2016


Task


Task Initiated

Target Completion

Status/Remarks

Chris Gowder Sean Bodkin Guy Zito (consulting) Lauren Perotti (NERC Legal) Sean Cavote (NERC) Mat Bunch (NERC)

Section 7: Process Developing an interpretation • SCPS Subgroup provided a

proposal for comment to the SCPS, SC Leadership and NERC staff. Currently reviewing comments and making associated revisions to the proposal for consideration. SCPS Subgroup meeting/call will be scheduled to discuss the revised proposal.



Task


Task Initiated

Target Completion

Status/Remarks

2. SAR Submittal Form/SAR Comment Form (Common Question Development)

Team Lead: Ben Li

Chris Gowder Andy Pusztai Sean Bodkin Ruida Shu

The objective of this project is to review the SAR and related comment form, and propose recommendations to the Standards Committee on:

a. Revisions and/or modifications to the

SAR Form, b. Explore the merit of developing

certain common questions for the comment form for SAR posting.

July 2016

December 2016

SCPS to present to the Standards Committee for comment at the December meeting.


Standards Committee Process Subcommittee Work Plan (Projects On-Hold)

Task


Task Initiated

Target Completion

Status/Remarks

1. Cost of Risk Reduction Analysis (CRRA)

Team Lead: TBD Pete Heidrich Randy Crissman Steven Rueckert Guy Zito (consulting)

To conduct CEAP pilots via:

a. Conducting the CEA portion of the CEAP on the second project of the pilot. The Team will develop a report for the SC and the Industry.

b. Proposing a list of standards development projects to conduct the CEAP on along with potential criteria for choosing projects for 2014 and beyond and bring these to the SC for endorsement

c. Revise the current CEAP guideline document into a second-generation document to reflect lessons learned during the pilot and to address potential “benefits” of standard projects and bring to the SC for endorsement.

Task was initiated prior to use of scope documents

April 2012

a) March 2014 SC Meeting

b) August 2014 SC Meeting

c) September 2015 SC Meeting

a) Completed b) Complete (note: proposal submitted to NERC staff in lieu of SC)

c) On hold pending Cost Effectiveness Pilot project and results.

In progress

Scope of the project was revised to reflect a Cost of Risk Reduction Analysis (CRRA) approach. Endorsed at Sept. 23, 2015 Standards Committee meeting.

SCPS continue working with Standards Leadership to evaluate this item and determine next steps.

A draft document has been presented to H. Gugel for review. The MRC may need to review some of the issues


Standards Committee Process Subcommittee Work Plan (Projects On-Hold)

Task


Task Initiated

Target Completion

Status/Remarks

contained within the document. H. Gugel stated that the NERC Board and others may request input from the MRC, and that NERC staff is currently working to determine the mechanism by which this should occur.

UPDATE: Michelle D’Antuono has assumed the role of Project Liaison to coordinate efforts between NERC staff and the SCPS.

Project is ‘on hold’ pending the results of the Cost Effectiveness Pilot project and a determination is made on the future role of the SCPS concerning ‘pilot’ results analysis and process development.


Standards Committee Process Subcommittee Work Plan (Conceptual Project Stage-No Scope or Endorsement)

Proposed Task


Presented to SC for Project

Initiation

Scope, Development

Initiated

SC Approval of Scope *

Status/Remarks

*Upon approval of project Scope, the project will be moved to the “Standards Committee Process Subcommittee Work Plan (SC Endorsed Project Scopes) section.

Agenda Item 2a(ii)(1) Standards Committee Process Subcommittee January 4, 2017

For Endorsement by the SCPS

An SCPS Proposed Item for SC Action A Project Scope to Explore

Options to Handle Changes to Implementation Plan Prior to Recirculating Ballot

Action Endorse the attached scope document for a proposed project, to be included in the Standards Committee Process Subcommittee’s (SCPS’s) work plan, to explore options to manage changes to the implementation plan for draft standards prior to their posting for final ballot.

Background At its December 2016 meeting, the Standards Committee (SC) discussed potential issues regarding changes to an implementation plan prior to final ballot. Specifically, members of the SC discussed whether a change to the effective date in an implementation plan would be considered a substantive change under Section 4.14 of the Standard Processes Manual (SPM), such that an additional ballot would be required prior to a final ballot. NERC staff presented the view that the language of the SPM does not provide that changes to an implementation plan are substantive changes.

To further explore this issue, the SC directed the SCPS to initiate a project to review the provisions in the existing SPM regarding changes to an implementation plan, and explore options on ways, moving forward, with handling such changes.

Action Requested The SCPS has developed the attached scope document for the assigned project. It is seeking the SC’s approval of the attached scope document.

Agenda Item 2a(iii)(1) Standards Committee Process Subcommittee January 4, 2017

SCPS Project Scope Document Options to Handle Changes to Implementation Plan

Prior to Recirculating Ballot

Need for Project At its December 2016 meeting, the Standards Committee (SC) directed the Standards Committee Process Subcommittee (SCPS) to initiate a project to review the provisions in the existing Standard Processes Manual (SPM) regarding changes to an implementation plan prior to final ballot, and explore options for addressing such changes.

Project Scope Statement The objective of this project is to explore options on ways, moving forward, with handling changes to the implementation plan associated with draft standards under development, with due consideration to the provisions in the existing SPM.

To accomplish this objective, the SCPS will, collaboratively with NERC staff:

• Review the existing SPM to identify any provisions that already exist that duly addresschanges to the implementation plan prior to posting for recirculating ballot.

• With consideration of the above findings, explore options to handle such changes,including:

o Evaluating the pros and cons of another round of commenting and balloting;

o Developing the criteria for “substantive” changes to the implementation plan for usein determining the trigger for another round of posting for commenting andballoting;

o List various options going forward, including their pros and cons.

• Recommend to the SC a preferred option.

Resources A small team comprised of several SCPS members and NERC Standards staff and Legal staff will be required to complete this project in a timely manner. The project is expected to last approximately five to six months, with an expected start in February 2017 and ending June 2017, pending SC approval of this scope document.

Guidance Document for Management of Remanded Interpretations Approved by the Standards Committee December 14, 2016 This document provides guidance regarding the management of Reliability Standard Interpretations that have been remanded by an Applicable Governmental Authority.

In the event an Applicable Governmental Authority issues an order remanding a proposed Reliability Standard Interpretation, NERC Legal and NERC Standards staff will consult with the original requestor regarding whether further action is necessary to provide clarity on the issue.

• If the requestor provides written notice that further action is not necessary, then NERC Legal andStandards staff will report the decision to the other Applicable Government Authorities in thesame manner as is contemplated by Section 309 of the NERC Rules of Procedure for remandedStandards. A copy of the communication will be provided to: 1. the Standards Committee (SC); 2.the Regional Entities; and 3. the original requestor of the Interpretation. If the SC determines thatthere is an outstanding issue, it may submit a new Request for Interpretation or StandardAuthorization Request pursuant to the NERC Standard Processes Manual (SPM).

• If the requestor provides written notice requesting further action to provide clarity on the issue,then NERC Legal and NERC Standards staff will evaluate the remand order as soon as is practicableand will make a recommendation to the SC regarding whether the Interpretation should be re-developed or the applicable standard(s) be revised.

o The SC will decide whether the Interpretation should be redeveloped as soon as is practicableor the applicable standard(s) should be revised and will document the basis of this decision.This decision is a procedural decision only and is not a substantive decision based on thetechnical content of the Interpretation.

o If the Interpretation will be redeveloped, the SC should also decide whether to assign theInterpretation to the existing interpretation drafting team, or whether to dismiss the existinginterpretation drafting team and assign the project to a new interpretation drafting team. TheInterpretation will be redeveloped in accordance with the SPM. If a new Interpretationrequest is required, it shall be reviewed by NERC Standards and NERC Legal staff to ensure thatthe request is consistent with Section 7.0 of the NERC SPM.

o If the Interpretation will not be redeveloped or the applicable standard(s) will be revised in lieuof redeveloping the interpretation, the SC will dismiss the existing interpretation draftingteam.

Agenda Item 3a Standards Committee Process Subcommittee January 4, 2017

Guidance Document for Management of Remanded Interpretations 2

o If the SC determines that revisions to the applicable standard(s) are necessary, a Standard Authorization Request may be submitted by any entity or individual, including NERC committees or subgroups and NERC staff, to initiate development pursuant to the NERC SPM.

o Once the SC has made a decision regarding the procedural status of the Interpretation, NERC shall report the decision to the other Applicable Government Authorities in the same manner as is contemplated by Section 309 of the NERC Rules of Procedure for remanded Standards. A copy of the communication will be provided to: 1. the SC; 2. the Regional Entities; and 3. the original requestor of the Interpretation.

The SC will refer any compliance questions arising from the remand to the Compliance & Certification Committee.

Version History

Version Date Owner Change Tracking 1 April 19, 2014 Standards Information Staff Approved by Standards Committee

2 December 14, 2016

Standards Information Staff Periodic review; clarifying updates made.

Acceptance Criteria of a Reliability Standard Quality Objectives

Note: The Federal Energy Regulatory Commission (FERC or the Commission) established criteria in Order No. 672 that are used to assess Reliability Standards that are submitted to the Commission for approval. Each criterion has been provided for reference in a text box following the Quality Objective that addresses the specific issue.

Drafting teams working on assigned projects are charged to ensure their work adheres to the following quality objectives:

1. Applicability – Each Reliability Standard shall clearly identify the functional classes1 of entitiesresponsible for complying with the Reliability Standard, with any specific additions or exceptionsnoted. The applicability section of the standard should include any limitations on the applicabilityof the standard based on electric facility characteristics or impacts to the bulk power system (BPS),such as a requirement that applies only to the subset of distribution providers that own or operateunderfrequency load shedding systems.

2. Purpose – Each Reliability Standard shall have a clear statement of purpose that describes how thestandard contributes to the reliability of the BPS.

1 These functional classes of entities are documented in NERC’s Statement of Compliance Registry Criteria, Appendix 5B to the North American Electric Reliability Corporation (NERC) Rules of Procedure. When a standard identifies a class of entities to which it applies, that class must be defined in the Glossary of Terms Used in NERC Reliability Standards and must be identified in the Statement of Compliance Registry Criteria.

Must provide for the reliable operation of Bulk Power System facilities and apply to the users, owners, and operators of such facilities, but not on others

“321. The proposed Reliability Standard must address a reliability concern that falls within the requirements of section 215 of the F[ederal] P[ower] A[ct]. That is, it must provide for the reliable operation of Bulk-Power System facilities. It may not extend beyond reliable operation of such facilities or apply to other facilities. Such facilities include all those necessary for operating an interconnected electric energy transmission network, or any portion of that network, including control systems. The proposed Reliability Standard may apply to any design of planned additions or modifications of such facilities that is necessary to provide for reliable operation. It may also apply to Cybersecurity protection. 322. The proposed Reliability Standard may impose a requirement on any user, owner, or operator of such facilities, but not on others.”

Agenda Item 3b Standards Committee Process Subcommittee January 4, 2017

Acceptance Criteria of a Reliability Standard – Quality Objectives January 4, 2017 2

3. Requirements – Each Reliability Standard shall state one or more requirements, which if achieved by the applicable entities, would help provide for a reliable BPS, consistent with good utility practices and the public interest. Requirements should have the following characteristics:

• Each requirement should establish an objective that is reasonably determined to be the best approach for BPS reliability, taking account of the costs and benefits of implementing the proposal.

• To the maximum extent possible, the requirement should be designed to apply throughout the interconnected North American BPS.

• Each requirement should identify which functional entity shall do what, under what conditions, for what reliability benefit.

• Each requirement should be aimed at achieving one objective at a time.

It is permissible to include prescriptive, documentation, and commercial requirements within the Reliability Standard, however these types of requirements should be justified in the record and limited in number in light of Paragraph 81 Criteria.2

Reliability Standards should not contain:

• Requirements that prescribe commercial business practices which do not contribute directly to reliability.

• Requirements that duplicate or conflict with one another.

2 In 2012, the Commission invited NERC to propose for retirement those Reliability Standards and requirements that provide little protection for Bulk Power System reliability or may be redundant. See N. American Electric Reliability Corp., 138 FERC ¶ 61,193 at P 81, order on reh’g and clarification, 139 FERC ¶ 61,168 (2012). In response this order, NERC developed criteria for a Reliability Standard to be retired or modified: (1) Criterion A: an overarching criteria designed to determine that there is no reliability gap created by the proposed retirement; (2) Criterion B: consists of seven separate identifying criteria designed to recognize requirements appropriate for retirement (administrative; data collection/data retention; documentation; reporting; periodic updates; commercial or business practice; and redundant); and (3) Criterion C: consists of seven separate questions designed to assist an informed decision whether requirements are appropriate to propose for retirement..

Must be designed to achieve a specified reliability goal “324. The proposed Reliability Standard must be designed to achieve a specified reliability goal and must contain a technically sound means to achieve this goal . . . .”


Must be designed to achieve a specified reliability goal “321. The proposed Reliability Standard must address a reliability concern that falls within the requirements of section 215 of the FPA. That is, it must provide for the reliable operation of bulk power system facilities. It may not extend beyond reliable operation of such facilities or apply to other facilities. Such facilities include all those necessary for operating an interconnected electric energy transmission network, or any portion of that network, including control systems. The proposed Reliability Standard may apply to any design of planned additions or modifications of such facilities that is necessary to provide for reliable operation. It may also apply to Cybersecurity protection.” “324. The proposed Reliability Standard must be designed to achieve a specified reliability goal and must contain a technically sound means to achieve this goal. Although any person may propose a topic for a Reliability Standard to the E[lectric] R[elaibility] O[rganization], in the ERO’s process, the specific proposed Reliability Standard should be developed initially by persons within the electric power industry and community with a high level of technical expertise and be based on sound technical and engineering criteria. It should be based on actual data and lessons learned from past operating incidents, where appropriate. The process for ERO approval of a proposed Reliability Standard should be fair and open to all interested persons.”

Must be designed to apply throughout North American to the maximum extent achievable with a single reliability standard while not favoring one area or approach

“331. A proposed Reliability Standard should be designed to apply throughout the interconnected North American Bulk-Power System; to the maximum extent this is achievable with a single Reliability Standard. The proposed Reliability Standard should not be based on a single geographic or regional model but should take into account geographic variations in grid characteristics, terrain, weather, and other such factors; it should also take into account regional variations in the organizational and corporate structures of transmission owners and operators, variations in generation fuel type and ownership patterns, and regional variations in market design if these affect the proposed Reliability Standard.”

Should achieve a reliability goal effectively and efficiently - but does not necessarily have to reflect “best practices” without regard to implementation cost

“328. The proposed Reliability Standard does not necessarily have to reflect the optimal method, or “best practice,” for achieving its reliability goal without regard to implementation cost or historical regional infrastructure design. It should however achieve its reliability goal effectively and efficiently.”


4. Measurability – Each requirement should be stated so as to be objectively measurable by a third party with knowledge or expertise in the area addressed by that requirement. Each requirement should have one or more associated measures used to objectively evaluate compliance with the requirement. If specific results can be practically measured quantitatively, metrics should be provided within the requirement to indicate satisfactory performance.

• Words and phrases such as “sufficient”, “adequate”, “be ready”, “be prepared”, “consider”, etc. should not be used.

• When an exact level of performance cannot be specified, the required performance should be bounded by measurable conditions/parameters.

Cannot be “lowest common denominator,” i.e., cannot reflect a compromise that does not adequately protect bulk power system reliability

“329. The proposed Reliability Standard must not simply reflect a compromise in the ERO’s Reliability Standard development process based on the least effective North American practice — the so-called “lowest common denominator”—if such practice does not adequately protect Bulk-Power System reliability. Although the Commission will give due weight to the technical expertise of the ERO, we will not hesitate to remand a proposed Reliability Standard if we are convinced it is not adequate to protect reliability.”

Balance with other vital public interests “335. Finally, we understand that at times development of a proposed Reliability Standard may require that a particular reliability goal must be balanced against other vital public interests, such as environmental, social and other goals. We expect the ERO to explain any such balancing in its application for approval of a proposed Reliability Standard.”

No undue negative effect on competition or restriction of the grid “332. As directed by section 215 of the FPA, the Commission itself will give special attention to the effect of a proposed Reliability Standard on competition. The ERO should attempt to develop a proposed Reliability Standard that has no undue negative effect on competition. Among other possible considerations, a proposed Reliability Standard should not unreasonably restrict available transmission capability on the Bulk-Power System beyond any restriction necessary for reliability and should not limit use of the Bulk-Power System in an unduly preferential manner. It should not create an undue advantage for one competitor over another.”

Must identify clear and objective criterion or measure for compliance, so that it can be enforced in a consistent and non-preferential manner

“327. There should be a clear criterion or measure of whether an entity is in compliance with a proposed Reliability Standard. It should contain or be accompanied by an objective measure of compliance so that it can be enforced and so that enforcement can be applied in a consistent and non-preferential manner.”


5. Technical Basis in Engineering and Operations — Each Reliability Standard should be based upon sound engineering and operating judgment and the collective experience of the standard drafting team (SDT) members. Analysis of data collection activities, field test results, and the comments received from industry experts should also be utilized in the development of each Reliability Standard.

6. Completeness — Each Reliability Standard should be complete and self-contained. A standard should not depend on external information to determine the required level of performance.

7. Consequences for Noncompliance — Each Reliability Standard shall establish a combination of elements (identified below) which will serve as guidelines for the determination of penalties and sanctions when assessing the consequences of violating a standard.

• Time Horizon — Each requirement shall have an associated Time Horizon to identify the time frame an entity would have to correct a violation of the requirement. Time horizons are used as a factor in determining the size of a penalty or sanction for noncompliance with a requirement.

• Violation Risk Factor — Each requirement shall have an associated Violation Risk Factor (VRF). The VRF is a factor in determining the size of a penalty or sanction for noncompliance with a requirement.

• Violation Severity Levels — Each requirement shall have an associated set of Violation Severity Levels (VSLs) that identify degrees of noncompliance with the associated requirement.

Must contain a technically sound method to achieve the goal “324. The proposed Reliability Standard must be designed to achieve a specified reliability goal and must contain a technically sound means to achieve this goal. Although any person may propose a topic for a Reliability Standard to the ERO, in the ERO’s process, the specific proposed Reliability Standard should be developed initially by persons within the electric power industry and community with a high level of technical expertise and be based on sound technical and engineering criteria. It should be based on actual data and lessons learned from past operating incidents, where appropriate. The process for ERO approval of a proposed Reliability Standard should be fair and open to all interested persons.”

Must include clear and understandable consequences and a range of penalties (monetary and/or non-monetary) for a violation

“326. The possible consequences, including range of possible penalties, for violating a proposed Reliability Standard should be clear and understandable by those who must comply.”


8. Clear Language — Each Reliability Standard should be stated using clear and unambiguous language. Responsible entities, using reasonable judgment and in keeping with good utility practices, should be able to arrive at a consistent interpretation of the required performance.

9. Practicality— Each Reliability Standard should establish requirements that can be practically implemented by the assigned responsible entities within the specified effective date and thereafter.

10. Consistent Terminology— Each Reliability Standard should use a set of standard terms and definitions (NERC Glossary of Terms) that were developed and approved through the NERC Reliability Standards Development Process.

11. Regulatory Directives — SDTs should adequately address all applicable FERC regulatory directives when revising or developing Reliability Standards.

12. Consideration of Comments — SDTs should be responsive to all comments received during the formal comment periods and to the formal comments received during the initial ballot periods.

Must include clear and understandable consequences and a range of penalties (monetary and/or non-monetary) for a violation “326. The possible consequences, including range of possible penalties, for violating a proposed Reliability Standard should be clear and understandable by those who must comply.”

Costs to be considered for smaller entities but not at consequence of less than excellence in operating system reliability

“330. A proposed Reliability Standard may take into account the size of the entity that must comply with the Reliability Standard and the cost to those entities of implementing the proposed Reliability Standard. However, the ERO should not propose a “lowest common denominator” Reliability Standard that would achieve less than excellence in operating system reliability solely to protect against reasonable expenses for supporting this vital national infrastructure. For example, a small owner or operator of the Bulk-Power System must bear the cost of complying with each Reliability Standard that applies to it.”

Implementation time “333. In considering whether a proposed Reliability Standard is just and reasonable, the Commission will consider also the timetable for implementation of the new requirements, including how the proposal balances any urgency in the need to implement it against the reasonableness of the time allowed for those who must comply to develop the necessary procedures, software, facilities, staffing or other relevant capability.”


Appropriate technical justification should be provided by the SDT for each response to the comments and stakeholder issues.

Version History

Version Date Owner Change Tracking 1 May 16, 2014 Standards Information Staff Updated template

2 December X, 2016 Standards Information Staff Periodic review; clarifying updates made.

Whether the reliability standard process was open and fair “334. Further, in considering whether a proposed Reliability Standard meets the legal standard of review, we will entertain comments about whether the ERO implemented its Commission-approved Reliability Standard development process for the development of the particular proposed Reliability Standard in a proper manner, especially whether the process was open and fair. However, we caution that we will not be sympathetic to arguments by interested parties that choose, for whatever reason, not to participate in the ERO’s Reliability Standard development process if it is conducted in good faith in accordance with the procedures approved by the Commission.”

1

Standard Authorization Request (SAR) Form The North American Electric Reliability Corporation (NERC) welcomes suggestions to improve the reliability of the bulk power system through improved Reliability Standards.

Requested information SAR Title: Date Submitted: SAR Requester Name: Organization: Telephone: Email: SAR Type (Check as many as apply)

New Standard Revision to Existing Standard Add, Modify or Retire a Glossary Term

Withdrawal/retirement of an Existing Standard Imminent Action/ Confidential Issue (SPM

Section 10) Variance development or revision

Justification for this proposed standard development project (Check all that apply to help NERC prioritize development)

Regulatory Initiation Emerging Risk (Reliability Issues Steering

Committee) Identified Reliability Standard Development Plan

NERC Standing Committee Identified Enhanced Periodic Review Initiated Industry Stakeholder Identified

Industry Need (What Bulk Electric System (BES) reliability benefit does the proposed standard development project provide?):

Purpose or Goal (How does this proposed standard development project provide the reliability-related benefit described above?):

Project Scope (Define the parameters of the proposed standards development project):

Detailed Description (Describe the proposed deliverable(s) with sufficient detail for a drafting team to execute the SAR. If you propose a new or substantially revised Reliability Standard or definition, provide: (1) a technical justification1which includes a discussion of the reliability-related benefits of developing a new Reliability Standard or definition, and (2) a technical foundation document (e.g. research paper) to guide development of the Standard or definition):

Cost Impact Assessment, if known (Provide a paragraph describing the cost impacts associated with the proposed standard development project):

Describe any unique characteristics of the BES facilities that may be impacted by this proposed standard development project (e.g. Dispersed Generation Resources):

1 The NERC Rules of Procedure require a technical justification for new or substantially revised Reliability Standards. Please attach pertinent information to this form before submittal to NERC.

Complete and please email this form, with attachment(s) to: [email protected]

Agenda Item 3c Standards Committee Process Subcommittee Janua ry 4, 2 01 7

mailto:[email protected]

2

Requested information To assist the NERC Standards Committee in appointing a drafting team with the appropriate personnel, please indicate to which Registered Entities the proposed standard development project should apply (e.g. Transmission Operator, Reliability Coordinator, etc.): Do you know of any consensus building activities2 in connection with this SAR? If so, please provide any recommendations or findings resulting from the consensus building activity. Are there any related standards or SARs that should be assessed for impact as a result of this proposed project? If so which standard(s) or project number(s)? Are there alternatives that have been considered or could meet the objectives? If so, please list the alternatives.

Reliability Principles

Does this proposed standard development project support at least one of the following Reliability Principles (Reliability Interface Principles)? Please check all those that apply.

1. Interconnected bulk power systems shall be planned and operated in a coordinated manner to perform reliably under normal and abnormal conditions as defined in the NERC Standards.

2. The frequency and voltage of interconnected bulk power systems shall be controlled within defined limits through the balancing of real and reactive power supply and demand.

3. Information necessary for the planning and operation of interconnected bulk power systems

shall be made available to those entities responsible for planning and operating the systems reliably.

4. Plans for emergency operation and system restoration of interconnected bulk power systems shall be developed, coordinated, maintained and implemented.

5. Facilities for communication, monitoring and control shall be provided, used and maintained for the reliability of interconnected bulk power systems.

6. Personnel responsible for planning and operating interconnected bulk power systems shall be trained, qualified, and have the responsibility and authority to implement actions.

7. The security of the interconnected bulk power systems shall be assessed, monitored and maintained on a wide area basis.

8. Bulk power systems shall be protected from malicious physical or cyber attacks.

Market Interface Principles Does the proposed standard development project comply with all of the following Market Interface Principles?

Enter (yes/no)

1. A reliability standard shall not give any market participant an unfair competitive advantage.

2. A reliability standard shall neither mandate nor prohibit any specific market structure.

2 Consensus building activities are occasionally conducted by NERC and/or project review teams. They typically are conducted to obtain industry inputs prior to proposing any standard development project to revise, or develop a standard or definition.

http://www.nerc.com/pa/Stand/Standards/ReliabilityandMarketInterfacePrinciples.pdf

http://www.nerc.com/pa/Stand/Resources/Documents/Market_Principles.pdf

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Market Interface Principles 3. A reliability standard shall not preclude market solutions to achieving compliance

with that standard.

4. A reliability standard shall not require the public disclosure of commercially sensitive information. All market participants shall have equal opportunity to access commercially non-sensitive information that is required for compliance with reliability standards.

Identified Existing or Potential Regional Variances

Region(s) Explanation e.g. NPCC

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For Use by NERC Only

SAR Status Tracking (Check off as appropriate)

Draft SAR reviewed by NERC Staff Draft SAR presented to SC for acceptance DRAFT SAR approved for posting by the SC

Final SAR endorsed by the SC SAR assigned a Standards Project by NERC SAR denied or proposed as Guidance

document Version History Version Date Owner Change Tracking

1 June 3, 2013 Revised

1 August 29, 2014 Standards Information Staff Updated template

2 December X, 2016 Standards Information Staff Revised

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Mar 15, Salt Lake City, UT 10 -3 p.m. Mar 15, Salt Lake City, UT 8 -10 a.m. Mar 14, Salt Lake City, UT 1-5 p.m.Jun 14, Atlanta, GA, 10 -3 p.m. Jun 14, Atlanta, GA, 8 -10 a.m. Jun 13, Atlanta, GA, 1-5p.m.Sept 7, St. Paul, MN, 10 -3 p.m. Sept 7, St. Paul, MN, 8 -10 a.m. Sept 6, St. Paul, MN, 1-5 p.m.Dec 6, Atlanta, GA 10 -3 p.m. Dec 6, Atlanta, GA 8 -10 a.m. Dec 5, Atlanta, GA 1-5 p.m.

Standards & Compliance WorkshopJan 18

Sep. 28, 2-3:30pFeb. 21, 2-4p

Mar. 29, 2-330p

Jun. 28, 1-3:30pSC Conference Calls (1 - 4 p.m.)

Apr 19Jul 19Oct 18

SCPS In-Person Meetings

SCPS Conference CallsPMOS Conference Calls

PMOS In-Person MeetingsSC In-Person Meetings

Aug. 18, 1:30-3:30pApr 27Jan 4, 2-3:30p

2017 Meetings & HolidaysApril

August

January February March

May June July

Jul XX-XX, TBDJan 26 Jul 27Oct 12

September October November December

US Holidays National Canadian Holidays

BoardFeb 8-9, San Diego, CA

May 10-11, St. Louis, MOAug 9-10, Ottawa, CanadaNov 7-8 New Orleans, LA

May 22, 2-4p Nov. 14, 2-3:30p

Agenda Item 6