Agenda Standards Oversight and Technology Committee November 12, :00 a.m. 9:30 a.m. Eastern

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1 Agenda Standards Oversight and Technology Committee November 12, :00 a.m. 9:30 a.m. Eastern The Westin Buckhead Atlanta 3391 Peachtree Road NE Atlanta GA Call to Order and Chair s Remarks NERC Antitrust Compliance Guidelines and Public Announcement Agenda 1. Minutes* Approve a. August 13, 2014 Meeting 2. ERO Enterprise IT Application Strategy* Update 3. Projects with Deadlines* Review 4. Reliability Standards Development Plan and Enhanced Periodic Review Template* Review 5. Standards Committee Elections* Review 6. Reliability Standards Quarterly Status Report (including Standards Committee Report)* Information 7. Adjournment *Background materials included.

2 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.

3 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. NERC Antitrust Compliance Guidelines 2

4 DRAFT Minutes Standards Oversight and Technology Committee August 13, :15 a.m. - 12:15 p.m. Pacific Agenda Item 1.a The Westin Bayshore 1601 Bayshore Drive Vancouver, BC V6G 2V4 Canada Call to Order and Chair s Remarks Mr. Peterson, Chair, convened a duly noticed open meeting of the Standards Oversight and Technology Committee (the Committee ) of the North American Electric Reliability Corporation ( NERC ) on August 13, 2014 at 11:15 a.m. Pacific, and a quorum was declared present. The agenda is attached as Exhibit A. Committee Members: Kenneth G. Peterson, Chair Paul F. Barber Frederick W. Gorbet David Goulding Douglas Jaeger Bruce A. Scherr Board of Trustees Members: Janice B. Case Gerald W. Cauley, President and Chief Executive Officer Robert G. Clarke Jan Schori Roy Thilly NERC Staff: Valerie Agnew, Director of Standards Charles A. Berardesco, Senior Vice President, General Counsel, and Corporate Secretary Thomas Burgess, Vice President and Director of Reliability Assessment and Performance Analysis Jerry Hedrick, Director of Regional Oversight Compliance Stanley M. Hoptroff, IT Consultant Mark G. Lauby, Vice President and Director of Standards Development Steven Noess, Associate Director of Standards Development Janet Sena, Senior Vice President and Director of Policy and External Affairs Brady Walker, Associate Counsel Michael Walker, Senior Vice President, Chief Financial and Administrative Officer, and Corporate Treasurer Other: John A. Anderson, Chair, Member Representatives Committee Sylvain Clermont, Vice-Chair, Member Representatives Committee

5 Mr. Brian Murphy, Chair, Standards Committee NERC Antitrust Compliance Guidelines Mr. Peterson directed the participants attention to the NERC Antitrust Compliance Guidelines included in the agenda, and stated that any additional questions regarding these guidelines may be directed to himself or to Mr. Berardesco. Minutes Upon motion duly made and seconded, the May 6, 2014 meeting minutes were approved in the form as presented to the Committee at the meeting. CIP Version 5 Standard Development Process Mr. Noess provided an update on NERC s response to the directives in FERC Order No He outlined the four major directives and discussed the progress of the standard drafting team in addressing those directives. Mr. Noess stated that the standard drafting team is on schedule to present the proposed revisions to CIP Version 5 to the Board for approval in November ERO Enterprise IT Application Strategy Mr. Cauley emphasized the importance of ensuring that the tools and infrastructure are in place to manage the core functions of the ERO Enterprise. He highlighted the need for common tools between NERC and the Regions. Mr. Cauley discussed NERC s focus on improving its ability to manage large IT projects. He introduced Mr. Hoptroff who had been working on a contractual basis to evaluate NERC s existing project management capabilities and make recommendations on areas for improvement. Mr. Hoptroff summarized his progress over the past 90 days. He highlighted the creation of an ERO Technology Leadership Team which will provide oversight for IT projects as well as other processes to ensure IT resources are utilized effectively. Geomagnetic Disturbance ( GMD ) Mitigation Reliability Standard Ms. Agnew provided an update on the GMD Reliability Standard development process. She outlined the Requirements contained in the current draft of the proposed Reliability Standard and stated that the standard drafting team is currently considering industry comments from a recent posting. Ms. Agnew summarized ongoing work by the standard drafting team to develop a benchmark GMD event which will be used by entities to determine vulnerability. Mr. Cauley highlighted the work of the standard drafting team in addressing stakeholder concerns regarding the benchmark event. Committee members and stakeholders engaged in a discussion of the GMD Reliability Standard development process. Definition of Bulk Electric System ( BES ) Implementation Mr. Burgess provided an overview of the implementation of the recently approved BES definition and the BESnet tool, an ERO Enterprise-wide platform. He outlined outreach and training efforts and highlighted the collaborative nature of the program development and deployment. Mr. Burgess indicated that the tool will be refined as feedback is received. 2

6 Reliability Standard Audit Worksheet ( RSAW ) Revision Process Mr. Berardesco summarized the finalized RSAW Revision Process which has been posted to the NERC website and implemented. A copy of the policy was included with the advance meeting materials. Reliability Standards Quarterly Status Report (including Standards Committee Report) Ms. Agnew presented the Reliability Standards Quarterly Status Report which (i) outlined Reliability Standards that will be presented to the Board for approval, (ii) updated the number of outstanding FERC directives, and (iii) provided an update on projects slated for development as outlined in the Reliability Standards Development Plan. Mr. Murphy presented a summary of the policy input letter he submitted on behalf of the Standards Committee. Adjournment There being no further business, and upon motion duly made and seconded, the meeting was adjourned at 12:15 p.m. Pacific. Submitted by, Charles A. Berardesco Corporate Secretary 3

7 ERO Enterprise IT Application Strategy Update Agenda Item 2 Standards Oversight and Technology Committee Meeting November 12, 2014 Action Information Background In late 2012, NERC and the Regional Entities collaboratively developed a framework to oversee the development and execution of a strategy governing the identification, development, and implementation of software applications supporting common NERC and Regional Entity operations including data collection, management, and analysis. This strategy (ERO Enterprise IT Strategy) and associated application development is a multi-year initiative tailored to improve productivity and visibility to data, and reduce the complexity of managing multiple applications. Detailed information regarding the ERO Enterprise IT Strategy, applications, and budget was included in NERC s 2014 business plan and budget and has been updated in NERC s 2015 business plan and budget. The Standards Oversight and Technology Committee (SOTC) also formed a subgroup comprised of three committee members to provide additional oversight to this effort as well as feedback to the SOTC on the development and execution of the ERO Enterprise IT Strategy. During the August 2014 SOTC meeting, NERC management provided an update on the ERO Enterprise IT Strategy, which included an update on six ERO IT Guiding Principles including a bias for proven off-the-shelf solutions and the deployment of a consistent, disciplined decision making process. Updates were also provided on six priority ERO applications including BES Notifications and Exceptions Application, Standards Balloting Applications, Reliability Assessment Data, Events Analysis and Compliance Tools Assessment. A presentation will be made at the November 2014 meeting on the progress of the ERO Enterprise Strategy, the changes in the governance structure that NERC and the Regional Entities have put in place to oversee the selection, development and execution of Enterprise IT applications, a status of the priority applications for deployment the time frame

8 Agenda Item 3 Standards Oversight and Technology Committee Meeting November 12, 2014 Projects with Deadlines Action Information Background Four of the projects to revise Reliability Standards and address outstanding FERC directives are subject to regulatory deadlines or a deadline that NERC has committed to meet in proceedings at FERC, as indicated below. (Projects that include a regulatory deadline are marked with an asterisk). [Project Relay Loadability Stable Power Swings] December 31, 2014 [Project Geomagnetic Disturbance Mitigation Stage 2] January 21, 2015* [Project TOP/IRO Revisions] January 31, 2015 [Project CIP Version 5 Revisions] February 3, 2015* All of the above projects are in development, and NERC staff will provide an update at the November Standards Oversight and Technology Committee (SOTC) meeting. The discussion below provides the deadline, the current status of the Project, and next steps for the Project. Summary Project Relay Loadability Stable Power Swings NERC committed to complete this project by December 31, 2014 Prior ballot closed with a percent approval rating. Current status: Standards Committee authorized a shortened 21-day comment and additional ballot period through November 20, Next steps: Expect to present to the NERC Board of Trustees (Board) for adoption in December Project Geomagnetic Disturbance Mitigation Stage 2 Regulatory deadline of January 21, 2015 Current status: Standards Committee authorized a shortened 25-day comment and additional ballot period through November 21, Next steps: Expect to present to the Board for adoption in December

9 Project TOP/IRO Revisions NERC committed to complete this project by January 31, 2015 FERC agreed to delay action on the Notice of Proposed Rulemaking until January 31, Current status: All Reliability Standards in the Project are proposed for adoption, subject to ballot body approval of TOP-001-3, which is expected to pass the final ballot in midto late-november. Project CIP Version 5 Revisions Regulatory deadline of February 3, 2015 Current status: All standards passed additional ballot on October 17, 2014 and the time sensitive changes to meet FERC directives will be presented to the Board in November in order to meet the February 3, 2015 deadline. Next steps: The standard drafting team is making revisions related to the non-time sensitive low impact and transient devices aspects of the Reliability Standards. The standard drafting team will post the revisions for an additional comment period and ballot in November. Expect to present to the Board for adoption in early

10 Reliability Standards Development Plan and Enhanced Periodic Review Template Agenda Item 4 Standards Oversight and Technology Committee Meeting November 12, 2014 Action Information Reliability Standards Development Plan (RSDP) The Reliability Standards Development Plan (RSDP), developed by NERC staff in conjunction with members of the Standards Committee (SC), is a continuation of the approach set forth in the RSDP and RSDP. Overall, the RSDP accounts for the majority of the work 1 necessary to bring the NERC Reliability Standards to steady-state by addressing FERC directives, Paragraph 81 and the Independent Experts Review Panel (IERP) recommendations for retirement, and considering other initiatives such as results-based standards. The RSDP identified 26 projects for completion in 2014 and an additional four projects were added in response to FERC directives (GMD, CIP V5 Revisions, TOP/IRO Revisions and Physical Security). NERC staff anticipates that 23 projects will be completed in 2014 and seven projects will continue into As most of the work to get to steady-state is complete, the RSDP is scaled back and identifies four new projects notwithstanding any new FERC directives or additional work that is not completed in Completion of the work to transform the standards to steady-state provides an opportunity for an overall strategic review of the NERC Reliability Standards, which will be guided by the Enhanced Periodic Review Template. This strategic review will allow for greater industry stakeholder interaction into the work begun by the IERP, asking critical questions regarding whether the standards are addressing the critical risks to reliability of the Bulk-Power System, either by being preventative or by addressing issues; whether the standards are being effective; and finally, if they are clear. Enhanced Periodic Review Template This template also provides a consistent basis from which to develop a metric that reflects the quality and content of the NERC Reliability Standards. This fulfills the February 6, 2014 request from the NERC Board of Trustees (Board) for NERC management and the leadership of the SC to develop a mutually-acceptable metric for , including a content and quality grading system for the Reliability Standards. The concept of creating the template was discussed by the Corporate Governance and Human Resources Committee of the Board on March 20, There are a small number of Paragraph 81 and IERP recommendations for retirement (estimated at 7, depending upon the outcome of some standards development ballots) remaining. They will be addressed during the periodic reviews of the standards. 1

11 Background The RSDP was developed by NERC staff in conjunction with members of the SC Executive Committee (SCEC). The Enhanced Periodic Review Template was developed by an SC appointed development team (consisting of the SCEC and the Project Management and Oversight and Process Subcommittees chairs) working with NERC staff and legal department. Both documents were posted for a stakeholder comment period ending on July 21, Modifications were made to the RSDP and the Enhanced Periodic Review Template based on stakeholder comments. An additional time period was subsequently provided for SC members to conduct an additional review. On September 30, 2014, the SC endorsed the RSDP and the Enhanced Periodic Review Template. Additional Information A link to the project page (and the associated files) for both the RSDP and the Enhanced Periodic Review Template are included here for reference: [ RSDP Project Page] [Enhanced Periodic Review Template] 2

12 Agenda Item 5 Standards Oversight and Technology Committee Meeting November 12, 2014 Standards Committee Elections Action Information Background There are ten segment terms for the Standards Committee (SC) that will conclude at the end of December NERC will post a notice for nominations and subsequently will conduct an election to fill the two-year terms ( ) for each of the ten segments. See the table below for the ten SC members whose terms expire after the current term. Segment Representative Title Organization 1 Lou Oberski Managing Director, NERC Compliance Policy Dominion Resources Services, Inc. 2 Charles Yeung Executive Director Southwest Power Pool Interregional Affairs 3 Jennifer Sterling Director, Exelon NERC Exelon Compliance Program 4 Joseph Tarantino Regulatory Compliance Coordinator Sacramento Municipal Utility District 5 Gary Kruempel Compliance Director, MidAmerican Energy Company Energy Supply 6 Brenda Hampton Regulatory Policy Energy Future Holdings Luminant Energy Company LLC 7 Michelle D'Antuono Manager, Energy Occidental Energy Ventures Corp 8 Robert Blohm Managing Director Keen Resources Asia Ltd. 9 Klaus Lambeck Chief Facilities, Siting and Environmental Analysis Public Utilities Commission of Ohio/the Ohio Power Siting Board 10 Steve Rueckert Director of Standards Western Electricity Coordinating Council According to the Procedures for Election of Members of the Standards Committee, Appendix 3B to the Rules of Procedure, nominations will be requested approximately 90 days prior to the start of a new term to fill SC positions that will become open with the expiration of the current term. Membership terms start on January 1 of each year, in this case, January 1,

13 Notice of the nominations process for segment representatives was announced and published on October 2, 2014, with a nomination period of 21 days. An election will be conducted in accordance with Appendix 3B to the Rules of Procedure. Additionally, the SC will be electing a new Vice Chair to serve for the remainder of the Vice Chair s term, which ends on December 31, 2015, due to the current Vice Chair s resignation from the committee. This special election will be conducted prior to the general election described above. An update on the Vice Chair candidate will be provided to the NERC Board of Trustees at the November meeting. 2

14 Agenda Item 6 Standards Oversight and Technology Committee Meeting November 12, 2014 Reliability Standards Quarterly Status Report Action Information Background Attached is the Reliability Standards Quarterly Status Report. Highlights include: Draft Reliability Standard Development Plan (RSDP) and Enhanced Periodic Review Template Provides the plan for standards development in and a template for conducting future periodic reviews. The Enhanced Periodic Review Template also provides a basis to measure the content and quality of the NERC Reliability Standards. Standards Development Forecast Provides a forecast of the standards anticipated for completion and submission to the NERC Board of Trustees (Board) for adoption through Paragraph 81 Phase 2 and Independent Experts Review Panel Recommendations - Quarterly Update Provides an update on the status of the Paragraph 81 and Independent Experts Review Panel recommendations for standard requirement retirement and an overview of the total number of requirements in effect. Regulatory Directives Update Provides a report on the progress made in addressing outstanding FERC directives and guidance. Standards Committee (SC) Report SC overview of key activities and progress from the previous quarter, including: o an update of the draft RSDP, o development of the draft Enhanced Periodic Review Template, and o an update on the standards metrics measuring quality and content in Reliability Standards for 2016 and beyond.

15 Reliability Standards Standards Oversight and Technology Quarterly Report November 12, 2014 SOTC Reliability Standards Quarterly Status Report November 12, 2014 I

16 Table of Contents Preface... iii Draft Reliability Standards Development Plan...1 Standards Development Forecast (Continent-wide)...2 Board Forecast for Standard Projects in Active Development...2 February May August November Projects with Regulatory Deadlines...3 Paragraph 81 and Independent Experts Quarterly Update...4 Progress to Date...4 Background...4 Trend in P81/IERP Progress...5 Trend in Number of Requirements...5 Regulatory Directives Update...7 Pre-2013 Directives Filed...7 Post 2012 Directives Issued...7 Summary of Total Directives...8 Trend in Directives Progress...9 Standards Committee Report Background and Summary SOTC Reliability Standards Quarterly Status Report November 12, 2014 ii

17 Preface The North American Electric Reliability Corporation (NERC) is a not-for-profit international regulatory authority whose mission is to ensure the reliability of the bulk power system (BPS) in North America. NERC develops and enforces Reliability Standards; annually assesses seasonal and long term reliability; monitors the BPS through system awareness; and educates, trains, and certifies industry personnel. NERC s area of responsibility spans the continental United States, Canada, and the northern portion of Baja California, Mexico. NERC is the electric reliability organization (ERO) for North America, subject to oversight by the Federal Energy Regulatory Commission (FERC) and governmental authorities in Canada. NERC s jurisdiction includes users, owners, and operators of the BPS, which serves more than 334 million people. The North American BPS is divided into several assessment areas within the eight Regional Entity (RE) boundaries, as shown in the map and corresponding table below. FRCC MRO NPCC RF SERC SPP- RE TRE WECC Florida Reliability Coordinating Council Midwest Reliability Organization Northeast Power Coordinating Council ReliabilityFirst SERC Reliability Corporation Southwest Power Pool Regional Entity Texas Reliability Entity Western Electricity Coordinating Council SOTC Reliability Standards Quarterly Status Report November 12, 2014 iii

18 Draft Reliability Standards Development Plan The RSDP, developed by NERC staff in conjunction with members of the Standards Committee (SC), is a continuation of the approach set forth in the RSDP and RSDP. It outlines a plan to complete the majority of the work 1 necessary to bring the NERC Reliability Standards to steady-state by addressing FERC directives, Paragraph 81 (P81) and the Independent Experts Review Panel (IERP) recommendations for retirement, and considering other initiatives such as results-based standards. This RSDP is being presented by the NERC staff to the NERC Board of Trustees (Board) for adoption. Completion of the work in this plan provides an opportunity for a strategic review of the NERC Reliability Standards, which will be guided by the Enhanced Periodic Review Template. This template will also provide a consistent basis from which to develop metrics that measure the quality and content of the NERC Reliability Standards. The template fulfills the February 6, 2014 request from the Board for NERC management and the leadership of the Standards Committee (SC) to develop a mutually-acceptable approach for , including a content and quality grading system for the Reliability Standards. The template was endorsed in concept by Corporate Governance and Human Resources Subcommittee of the Board on March 20, 2014 and in final form by the Standards Committee on September 30, The Enhanced Periodic Review Template is being presented to the Board for endorsement by the Standards Committee. 1 There are a number of P81 and IERP recommendations for retirement (estimated at 7, depending upon the outcome of some standards development ballots) remaining. They will be addressed during the periodic reviews of the standards. SOTC Reliability Standards Quarterly Status Report November 12,

19 Standards Development Forecast (Continent-wide) Board Forecast for Standard Projects in Active Development 2 February Project : Phase 1 of Balancing Authority Reliability-based Controls: Reserves (BAL-002) May 2015 Project : Standards Applicability for Dispersed Generation Resources (medium priority standards) Project : System Protection Coordination (PRC-027-1, PRC-001-1) Project : Periodic Review of BAL Standards (BAL-004, BAL-005, BAL-006) August 2015 Project : Phase 2 Protection Systems: Special Protection Systems (Standard) Project : Implementation of IRO Five-year Review Recommendations November 2015 Project : System Protection Coordination (PRC-001-1) 4 Project Real Time Reliability Monitoring and Analysis Capabilities 5 2 Does not include any Enhanced Periodic Reviews that may be started during the year. 3 Additional projects that did not pass ballot for the November Board meeting may be presented at the February Board meeting. 4 Project may receive a new project number. Project only impacts certain Requirements in PRC-001 and Project Revisions to TOP and IRO Standards did not address all of the issues pertaining to PRC-001 as anticipated. 5 The issues and directives assigned to Project may be addressed in Project Revisions to TOP/IRO Reliability Standards, which has a filing deadline of January 31, 2015, subject to the outcome of balloting in that project. SOTC Reliability Standards Quarterly Status Report November 12,

20 Standards Development Forecast (Continent-Wide) Projects with Regulatory Deadlines Some of the above projects are subject to regulatory deadlines and include NERC commitments to revise Reliability Standards and address outstanding FERC directives, as indicated in the table below: Project Regulatory Deadline Project Relay Loadability Stable Power Swings December 31, 2014 Project Geomagnetic Disturbance Mitigation Stage 2 January 21, 2015 Project TOP/IRO Revisions January 31, 2015 Project CIP Version 5 Revisions February 3, 2015 Table 1: Projects with Regulatory Deadlines A discussion of the status of these projects is provided separately in the Standards Oversight & Technology Committee November agenda. SOTC Reliability Standards Quarterly Status Report November 12,

21 Paragraph 81 and Independent Experts Quarterly Update Progress to Date The below table provides a summary of the progress that has been made in addressing the P81 Phase 2 and the IERP recommendations for retirement. A spreadsheet outlining the specific requirements, the projects that addressed them and the resolution has been posted to the standards page on the NERC website. Background On November 21, 2013, FERC issued Order No. 788 approving the retirement of the requirements proposed for retirement under Phase 1 of the P81 project. At the conclusion of Phase 1, 217 requirements remained for consideration in Phase 2 of the project. In addition, the IERP recommended a total of 257 requirements for retirement. Some requirements were included in both sets of recommendations, and eliminating these duplications resulted in a total of 281 requirements proposed for retirement. Of these, all except seven candidates have either been addressed or are in the process of being addressed in either a current project or five-year review. P81 and IERP Current Status Recommendations for Retirement Total* 281 Addressed 208 In current projects 66 Not assigned 7 *Unique requirements Table 2: Progress Addressing P81 and IERP Recommendations for Retirement There are three possible ways in which one of the requirements proposed for retirement (above) may have been addressed. The standard drafting teams may have retired the requirement in its entirety, modified it, or it may have been retained in its entirety. The analysis is qualitative and was conducted with a conservative approach; thus a categorization of modified indicates that a portion, but not all, of the requirement, sub-requirement or part was retired. If any action in the original requirement was retained, the requirement received a categorization of modified. Of the 1202 requirements that have been addressed to date: Resolution Number Percent Retired % Modified 89 44% Retained 24 12% 208 Table 3: Resolutions for P81 and IERP Recommendations for Retirement 6 Twelve of these were retired in the P81 Phase 1, but were included on the list as they were recommended for retirement by the Independent Expert Review Panel. SOTC Reliability Standards Quarterly Status Report November 12,

22 Paragraph 81 and Independent Experts Quarterly Update Trend in P81/IERP Progress Progress in addressing these requirements has been reported each quarter through The chart below illustrates the progress. Progress Addressing P81 and IERP Recommendations Q1 Q2 Q3 Q4 Addressed In Current Projects Not Assigned Chart 1: Trend in Progress Addressing P81 and IERP Recommendations Trend in Number of Requirements As the NERC Reliability Standards become steady-state, the IERP recommendations for retirements and gaps are addressed, and the standards are strategically reviewed to ensure that standards are addressing the appropriate risks and actions for which there should be accountability, there is an expectation that the total number of requirements subject to enforcement will be reduced. To measure the accuracy of NERC s expectation, NERC staff used the US Enforcement Status/Functional Applicability spreadsheet 7 to analyze the trend in the total number of Board-approved requirements at the end of each year since standards became enforceable in the United States in In the August 2014 SOTC Standards Quarterly Report and during the August 2014 Board meeting, NERC staff provided a chart illustrating the trend in the number of requirements 8, based on the date the Board adopted or retired the requirement. At that same Board meeting there was a request to review the data based on each requirement s U.S. enforcement date. The trend of requirements by Board adoption dates and by enforcement dates are provided in Chart 2. As anticipated, the Board adoption dates show a downward trend in a compressed timeframe. The enforcement dates shows a longer timeframe before the downward trend is realized, due to the time required to obtain regulatory approval and to allow for the implementation time period. In both charts, the analysis categorized requirements as either Order 693, Emerging Risk (currently Critical Infrastructure Protection (cyber and physical security), and GMD), or Regional (requirements that do not apply continent-wide, including regional standards or variances in continent-wide standards). 7 Available from the Standards section of the NERC website: 8 This is at the requirement level, as sub-requirements are now parts of the requirement and not considered separately. SOTC Reliability Standards Quarterly Status Report November 12,

23 Paragraph 81 and Independent Experts Quarterly Update 600 Trend for Number of Requirements Number of Requirements Year Order 693 by Board Adoption Date Emerging Risks by Board Adoption Date Total of Order 693 and Emerging Risk Requirements by Board Adoption Date Total of Order 693 and Emerging Risk Requirements by Enforcement Date Regional By Board Adoption Date Chart 2: Trend in Number of Requirements Based on Board Adoption 9 9 The number of Board-adopted requirements at year-end for each year was determined by the total number of requirements that were adopted by the Board on or before December 31 of that year, minus the total number of requirements retired by the Board on or before December 31 of that same year. The number of enforceable requirements at year-end for each year was determined by the total number of requirements that became enforceable on or before December 31 of that year, minus the total number of requirements that became inactive during that year, regardless of the year in which the requirement became effective. SOTC Reliability Standards Quarterly Status Report November 12,

24 Regulatory Directives Update Pre-2013 Directives Filed 10 Throughout 2013, NERC reported on the progress of FERC directives that were issued prior to and, for consistency, this report continues to provide a status for those directives. At 2013 year-end, there were 76 directives remaining from the 191 pre-2013 directives. As of the previous Standards Quarterly Report (June 30, 2014), 39 directives remain to be addressed. As of September 30, 2014, two additional filings would, once approved, resolve another four directives, resulting in 35 directives remaining to be addressed. The standards that address these directives were developed in the following projects: Q1 Q2 Q3 Project MOD 032 and MOD 033 Modeling Data (4 directives) Project PRC Reclosing Relays (1 directives) Project PER Operations Personnel Training (6 directives) Project Reliability Coordination (10 directives) Project Operating Personnel Communications Protocols (1 directive) Project Demand Data (14 directives) Project Balancing Authority Reliability-based Controls (1 directive) Project Phase 1 of Protection Systems: Misoperations PRC (2 directives) Project Connecting new facilities to the grid (2 directives) Post 2012 Directives Issued FERC issued 56 additional directives between November 20, 2012, and September 30, 2014, 47 of which are related to modification of standards. NERC has begun to address these directives and has filed proposed standards with FERC that address 11 of the additional directives. The directives that FERC issued include: 12 Four directives in FERC Order No. 779 regarding Stage 1 and Stage 2 of the Geomagnetic Disturbance Mitigation Project. 13 Five directives in FERC Order No. 773 related to the definition of the Bulk Electric System. 14 Six directives in FERC Order No. 777 approving FAC Pre-2013 directives include FERC directives that were issued prior to November 20, While Project ATC Revisions (Mod A) and Project Coordinate Interchange Standards were filed in 2014, these directives were included in the number of directives addressed in NERC conducts a verification for the number of directives issued in each order before including those directives for reporting purposes. Any directives contained in FERC orders issued after September 30, 2014 are not included on this list. 13 Reliability Standards for Geomagnetic Disturbances, Order No. 779, 143 FERC 61,147 (2013). 14 These directives were issued in Revisions to Electric Reliability Organization Definition of Bulk Electric System and Rules of Procedure, 141 FERC 61,236 (Dec. 20, 2012), after the 2012 year-end number of directives was established. One of the directives was resolved in the April 4, 2013 NERC Compliance Filing. 15 Revisions to Reliability Standard for Transmission Vegetation Management, Order No. 777,142 FERC 61,028 (2013). SOTC Reliability Standards Quarterly Status Report November 12,

25 Regulatory Directives Update Two directives in FERC Order No. 772 approving the SERC Regional Standard PRC-006-SERC Thirteen directives in FERC Order No. 791 regarding CIP Version Four directives in FERC Order No. 786 approving TPL Six directives in FERC Order No. 794 approving BAL Two directives in FERC Order No. 793 approving PRC One directive in FERC Order No. 796 approving MOD-025, MOD-026, MOD-027, PRC-019 and PRC Of the 47 directives related to further standards development, 22 directives have been addressed through revisions filed with FERC: Bulk Electric System: Four directives 22 FAC-003-2: Three directives 23 PRC-006-SERC-01: Two directives 24 Stage 1 GMD standard (EOP-010-1): Two directives 25 CIP V5 (VSL/VRFs): Seven directives 26 TPL-001-4: One directive 27 BAL-003-1: One directive 28 MOD-026 and MOD-027: One directive 29 PRC (VSL): One directive 30 Summary of Total Directives As of September 30, 2014, there were 60 standards-related directives, including FERC guidances, to be resolved. The table below illustrates the progress to address FERC directives issued prior to 2013, post 2013 and in total. It does not include non-standards related directives. 16 These directives were issued by FERC in Order No. 772, Regional Reliability Standard PRC-006-SERC-01 Automatic Underfrequency Load Shedding Requirements, 141 FERC 61,243 (2012), after the 2012 year-end number of directives was established and were resolved in the March 11, 2013 NERC Compliance Filing in response to FERC Order No Version 5 CIP Reliability Standards, Order No. 791,145 FERC 61,160 (2013). 18 FERC Order 786, Transmission Planning Reliability Standards (October 17, 2013). 19 Frequency Response and Frequency Bias Setting Reliability Standard, Order No, 794, 146 FERC 61,024 (2014). 20 Protection System Maintenance Reliability Standard, Order No. 793, 145 FERC 61,253 (2013). 21 Generator Verification Reliability Standards, Order No. 796, 146 FERC 61,213 (2014). 22 One directive was filed in the NERC Compliance Filing in Response to Order No. 773 Approving Revisions to the ERO Definition of BES and Rules of Procedure, on April 4, 2013; three directives were filed in the Petition of NERC of Approval of Revision to the Definition of Bulk Electric System and Request for Expedited Action, on December 13, Filed in the NERC Compliance Filing of Reliability Standard FC-003-2, on July 12, Filed in the NERC Compliance Filing in Response to Order No. 772 on Regional Reliability Standard PRC-006-SERC-01, on March 11, Filed in the Petition of the North American Reliability Corporation for Approval of Proposed Reliability Standard EOP Geomagnetic Disturbance Operations, on November 14, Filed in the NERC petition NERC Revisions to the VRFs and VSLs Assigned to Certain CIP Reliability Standards, on May 15, Filed in the NERC petition NERC Revisions to the VRFs and VSLs to Certain Reliability Standards, on August 20, Filed in the NERC petition NERC Revisions to the VRFs and VSLs to Certain Reliability Standards, on August 20, Filed in the NERC petition NERC Revisions to the VRFs and VSLs to Certain Reliability Standards, on August 20, Filed in the NERC petition NERC Revisions to a Violation Severity Level Assigned to Protection System Maintenance Reliability Standards, on June 4, SOTC Reliability Standards Quarterly Status Report November 12,

26 Regulatory Directives Update 2012 Directives 2013/2014 Directives Total Issued prior to year-end Issued in 2013/ Resolved as of September 30, Remaining Projected to be resolved in Projected to be remaining at year-end *Does not include non-standards' related directives Table 4: Summary of Total Directives Trend in Directives Progress Progress in addressing these requirement has been reported each quarter through 2014, which now provides a trend to demonstrate the progress. As of September 30, 2014, there have been 238 FERC directives issued that are standards-related. With the projected standards development projects completed in 2014, there will be 18 directives remaining to be addressed. The trend for addressing FERC directives in 2014 is shown in the chart below: Progress Addressing FERC Directives Q1 Q2 Q3 Q4 YEAR END Directives Addressed 2013/2014 Directives Addressed Total Chart 3: Progress Addressing FERC Directives SOTC Reliability Standards Quarterly Status Report November 12,

27 Standards Committee Report Background and Summary This report highlights key activities of the SC and its associated subcommittees Reliability Standards Development Plan The SC worked with NERC staff to develop the RSDP, which continues the transformation of the NERC Reliability Standards to steady state (for purposes of this Plan, that term means a stable set of clear, concise, high quality and technically sound Reliability Standards that are results based, including retirement of requirements that do little to promote reliability). During 2015, the NERC Reliability Standards will reach steady-state and the number of active projects are expected to decrease. A draft of the RSDP was shared with the Reliability Issues Steering Committee for their input, as well as posted for stakeholder comment. On September 30, 2014, the SC endorsed the RSDP. Enhanced Periodic Review The Enhanced Periodic Review Template is a response to the request from the Board meeting on February 6, 2014 to address the proposed ERO Enterprise Strategic Plan (ERO SP) Goal 1, Standards and/or Metric 4: Program Execution Effectiveness, Sub metric A (Primary NERC) Standards. This template guides future reviews of the NERC Reliability Standards as discussed in the RSDP, and will provide a consistent basis from which to develop metrics that measure the quality and content of the NERC Reliability Standards. The Enhanced Periodic Review Template is an expanded version of the existing template successfully used for the periodic reviews. It was developed with NERC management and posted for stakeholder comment. The SC Executive Committee, NERC staff, and the chairs of the Process and Project Management Oversight Subcommittees helped develop the drafts and refine the template. On September 30, 2014, the SC endorsed the Enhanced Periodic Review, which includes the use of a template and crossfunctional Review Teams. The Enhanced Periodic Review establishes a Standing Review Team to ensure consistency across reviews of various standards. The Standing Review Team shall be appointed consistent with Section 13 of the Standards Processes Manual. This chart illustrates the Review team composition. Review Team Composition Non-CIP Standards Standing Review Team Chairs of the following NERC Standing Committees 31 : Standards Committee (Also, the SC chair or delegate from the SC will chair the Standing Review Team) 32 Planning Committee Operating Committee Plus Section 13 (SMEs): The Standards Committee will appoint stakeholder subject matter experts for the particular standard(s) being reviewed. The SMEs will work together with the Standing Review Team to conduct its review of the standard(s) and complete the template. 31 Each committee chair may, at his or her discretion, delegate participation on the Standing Review Team to another member of his or her committee. 32 The Standards Committee chair may delegate one member of the SC to chair one Standing Review Team s review of a standard(s), and another SC member to chair a review of another standard(s). SOTC Reliability Standards Quarterly Status Report November 12,

28 CIP Standards Standards Committee Report The Standing Review Team will meet with SMEs and ensure a consistent strategy and approach across all reviews. Chairs of the following NERC Standing Committees 33 : Standards Committee (Also, the SC chair or delegate from the SC will chair the Standing Review Team) CIPC The Standards Committee will appoint stakeholder SMEs for the particular standard(s) being reviewed. The SMEs will work together with the Standing Review Team to conduct its review of the standard(s) and complete the template. With consideration of stakeholder comments, the Standing Review Team will indicate for each Standard it reviews the following: REAFFIRM (GREEN) REVISE - Indicate whether the revisions are necessary to support reliability (RED), or discretionary (YELLOW) (Would include revision of associated RSAW.) RETIRE (RED) (Would include revision of associated RSAW.) For those Red Standards, the Standing Review Team shall develop a Standard Authorization Request for consideration by the SC. Additional Activities The SC is working on the Strategic Work Plan, which will track the implementation activities of the RSDP and Enhanced Periodic reviews, and reviewing its charter. Both the Strategic Work Plan and any proposed changes to SC charter will be provided to the Board in February of Each committee chair may, at his or her discretion, delegate participation on the Standing Review Team to another member of his or her committee. SOTC Reliability Standards Quarterly Status Report November 12,