North American Electric Reliability Corporation History and Developments Rhaiza Villafranca Reliability Assessment Performance Analysis Technical Analyst GRIDSCHOOL, Institute of Public Utilities, Richmond Virginia December 8-9, 2009

2 What is NERC? FERC has designated the North American Electric Reliability Corporation (NERC) as the “Electric Reliability Organization” (ERO) for the United States.

33 Electric Power: Players, Drivers, Etc. RELIABILITY POLICITAL REALITIES & OBJECTIVES $ - FINANCEENVIRONMENT REGULATORS SOCIAL CONCERNS ENGINEERING FEASIBILITY POWER INDUSTRY NATIONAL SECURITY CONSUMERS

4 Fully Functioning ERO  Develop strong reliability standards  Strictly enforce compliance  Independent Reliability Assessment  Evaluate Past Performance & Root Cause Analysis  Promote excellence in planning and operations  Promote continuous improvement through analysis of events and “Lessons Learned”  Training, education, and certification of personnel  Real-time situation awareness

5 Primary Functions Mission: Ensure the reliability of the Bulk Power system (BPS)  Assess the BPS operations & future reliability  Collaboratively Set Standards for BPS Performance  Enforce requirements of these Standards  Collaborate with the government  Train and certify operators

6 Evolution of Electricity Competition  1978 – PURPA introduced competition  1991 – DOE National Energy Strategy Allow independent power producers Encourage open access to transmission  1992 – EPAct NERC action plan for the future  1996 – FERC Orders on Open Access Put NERC on a course to become a self-regulatory reliability organization and ERO

7 Regulation of Electricity  FERC Promoted wholesale competition, Order No. 888 Entrants of ISOs and RTOs  States Adequate, safe, reliable service Rates for retail power sales, T&D rates Facility certification and siting

8 About NERC: Vitals  Independent non-profit corporation headquartered in Princeton, NJ  Second office in Washington, DC  NERC has over 112 employees Engineers, auditors, system operators, analysts, trainers, accountants, policy specialists, lawyers, and administrative assistants

9  Delegated functions Compliance Regional standards Organization registration Reliability assessment  Regional consistency is key Transparency Predictability Uniform outcomes About NERC: 8 Regional Entities

10

11 NERC Reliability Coordinators CMRC -California Mexico Reliability Coordinator ERCOT - ERCOT ISO FRCC -Florida Power & Light TE - Hydro Quebec, TransEnergie ICTE - Independent Coordinator Transmission – Entergy ISNE - ISO New England Inc. MISO - Midwest ISO NBSO – New Brunswick System Operator NYIS - New York Independent System Operator ONT - Ontario - Independent Electricity System Operator PNSC - Pacific Northwest Reliability Coordinator PJM - PJM Interconnection RDRC - Rocky Desert Reliability Coordinator SPC - Saskatchewan Power Corporation – SOCO - Southern Company Services, Inc. SWPP - Southwest Power Pool TVA - Tennessee Valley Authority VACS - VACAR-South

12

13 RTO/ISOs (chart from IRC Council) RTOs: MISO, ISO-NE, PJM, SPP ISOs: AESO, CAISO, ERCOT, IESO, NYISO, NBSO ISOs and RTOs

14 Self Regulation Means…  Regulation Mandatory compliance with standards Penalties for standards violations  Self – Industry Stakeholders … Develop standards Elect independent board Approve changes to bylaws  Audited Independent review of actions, first by board and then by FERC

15 Program Areas

16  Standards Development  Compliance Enforcement  Compliance Operations  Reliability Assessments and Performance Analysis  Critical Infrastructure Protection  Engineering and Operations  Situational Awareness  Training, Education, and Personnel Certification Program Areas (Revised Acc. To Gerry’s letter)

17 Monitoring and Standards Implementation  94 NERC standards mandatory in the U.S. 24 pending  54 actively monitored Transitional phase in of CIP standards per implementation plan  Regional Entities perform compliance monitoring activities on behalf of NERC (with NERC oversight)

18 Compliance Monitoring and Enforcement Program (CMEP)  Consistency and uniformity of CMEP implementation RSAWs (Reliability Standards Audit Worksheets) Standardized CMEP process documents  Self-Reporting Form  Self-Certification Form  Mitigation Plan submittal forms Formal direction and guidance  e.g. Process Directives NERC training  Auditor, CVI, & CIP training Audits of RE conformance to and performance of the Uniform CMEP

19 Reliability Assessment 2009 Findings  NERC Annual Completes A Long-Term Reliability Assessment for a 10-year period  For example, in 2009 analysis included: Monitor reserve margins Monitor performance of demand response Assess the natural gas supply/delivery and impacts Monitor transmission siting and planning delays Assess the challenges of technology demands for integration of variable generation

Emerging Issues  Economic Recession– Demand Uncertainty  Transmission Siting  Energy Storage  Workforce Issues  Cyber Security

Emerging & Standing Issues Greenhouse Gas Regulations Cyber Security Transmission Siting Variable Generation Issues Reactive Power Energy Storage Economy Issues 1-5 Years 6-10 Years Workforce Issues Smart Grid & AMI Likelihood Consequence Lower Higher Higher

22 Standing Issues (Ongoing work)  Variable Generation Integration  Greenhouse Gas Initiatives  Reactive Power  Smart Grid and AMI

23 Critical Infrastructure Protection  Cyber-security  Determine High-Impact, Low-Frequency Events and risks involved  NERC Secure Alert System in deployment  Modification of Reliability Standards for CIP

24 NERC’s Sample of Task Forces

25 New Renewable Capacity 2018 Variable Generation Capacity 1.2,000 MW of Solar Generation (Includes Existing, Future, and Conceptual Generation Resources 2,000 MW of Solar Generation Less than 2,000 MW of Wind Generation 2,000 MW of Wind Generation Less than 2,000 MW of Solar Generation 12,392 MW 18,125 MW 46,268 MW 62,041 MW 49,039 MW 45,700 MW

26 IVGTF – Integration of Variable Generation Task Force Areas of Further Study & Effort  High levels of variable generation will require significant transmission additions and reinforcements. Barriers to transmission development should be addressed  Additional flexible resources, such as demand response, plug-in hybrid electric vehicles, and energy storage may help balance steep “ramps”  Improved measurement, forecasting, and modeling of variable generation output is needed 2010 All Electric Chevrolet Volt Courtesy of General Motors

27 Areas of Further Study & Effort continued  More comprehensive planning approaches and operational practices are needed, including probabilistic planning approaches  In aggregate, variable generation connected at the distribution level (i.e. local wind generation and rooftop solar panels) may impact bulk power system reliability  Deploying complementary types of variable generation (e.g. wind and solar), leveraging fuel diversity over large geographic regions, and advanced control technologies show promise in managing unique operating characteristics  Greater access to larger pools of generation and demand may facilitate the large-scale integration of variable resources

28 RMWG - Reliability Metrics Working Group  Scope Identify reliability indicator trends over a period of time Assessing metrics through continuous communication and data validation from regions Informing the industry and the public of lessons learned Develop a performance metric to benchmark

29 Smart Grid – Everybody has a vision…

30 SGTF - Smart Grid Task Force Objectives  Identify the technologies and its contribution to reliability of BPS  Determine the implications of cyber security and protection implications on critical infrastructure  Determine the standards in effect  Provide recommendations

31 Summary  NERC’s History and Developments  Regulatory Engagement FERC & DOE  8 Regional Entities/ Interconnections/ ISOs & RTOs  Program Areas: Standards, CMEP, RAPA, and CIP  Task Forces: IVGTF, RMWG, and SGTF

32 Question & Answer