‘Bulk Up’ on the Changing Landscape of NERC Compliance

June 5, 2015 by Nicholas R. Merker, Partner | Kristina M. Tridico, Partner
‘Bulk Up’ on the Changing Landscape of NERC Compliance

The following is an excerpt from Ice Miller's Pathways to Success for Utilities Guide which provides insights on a variety of topics potentially impacting utility service providers. 
How will the changing landscape of the North American Electric Reliability Corporation (NERC) impact your utility operations? Two key areas of NERC are in transition—monitoring and enforcement compliance with mandatory electric reliability standards and the CIP Version 5 Reliability Standards. NERC’s transition to a risk-based approach for compliance monitoring and enforcement reflects an expansion of NERC’s enforcement discretion, an over-arching change to the compliance programs at each Registered Entity and change to the Regional Entities’ audit approach.

NERC’s Reliability Assurance Initiative
NERC, the Federal Energy Regulatory Commission’s (FERC) certified Electric Reliability Organization (ERO), submitted a filing in November to FERC describing a new approach to compliance and monitoring enforcement. NERC’s proposal outlined its overall goal to focus ERO and industry compliance resources on higher-risk issues with more significance to reliability. This Reliability Assurance Initiative (RAI) outlines a transition to a risk-based approach for compliance and monitoring enforcement. FERC approved this risk-based approach on February 19, 2015.

The RAI Focus on Risk
NERC launched the RAI to ensure that the right entities are subject to the right set of applicable Reliability Standards, using a consistent approach across the ERO for risk assessment and registration. As NERC states, the initiative was developed collaboratively with industry stakeholders, and advisory and ad-hoc groups were tasked with exploring how the riskbased initiative will affect the function groups. The RAI is based upon two separate programs—risk-based compliance monitoring and risk-based enforcement. According to NERC, this new approach is meant to prioritize the ERO’s limited compliance and enforcement resources based on risk to the reliability of the Bulk-Power System.

To learn more, download the Pathways to Success for Utilities Guide or contact any member of Ice Miller's Energy and Utilities Law practice group.

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