NERC Petition on BES Exception Process

SCHIFF HARDIN

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Owen E. MacBride
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Email: omacbride@schiffhardin.com

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January 25, 2012
VIA ELECTRONIC FILING
Ms. Kimberly D. Bose, Secretary
Federal Energy Regulatory Commission
888 First Street, N.E.
Washington, D.C. 20426
Re:

North American Electric Reliability Corporation
Docket No. RR__-___-__
Petition of the North American Electric Reliability Corporation for Approval of
Revisions to its Rules of Procedure to Adopt a Bulk Electric System Exception
Procedure

Dear Ms. Bose:
The North American Electric Reliability Corporation (NERC) hereby submits the
“Petition of the North American Electric Reliability Corporation for Approval of Revisions to its
Rules of Procedure to Adopt a Bulk Electric System Exception Procedure.”
NERC’s filing consists of: (1) this transmittal letter, (2) the Petition, which follows this
transmittal letter, and (3) Attachments 1, 2A, 2B, 3A, 3B, 4A, 4B, 5A, 5B, 6A, 6B, 7A, 7B, 8A,
8B and 9, all of which is being transmitted in a single pdf file. The Table of Contents to the
Petition lists and identify the Attachments.
Please contact the undersigned if you have any questions concerning this filing.
Respectfully submitted,
/s/ Owen E. MacBride
Owen E. MacBride
Attorney for North American Electric
Reliability Corporation

UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
NORTH AMERICAN ELECTRIC
RELIABILITY CORPORATION

)
)

Docket No. RR__-__-____

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE
Gerald W. Cauley
President and Chief Executive Officer
North American Electric Reliability Corporation
3353 Peachtree Road N.E.
Suite 600, North Tower
Atlanta, GA 30326-1001
(404) 446-2560
David N. Cook
Senior Vice President and General Counsel
Holly A. Hawkins
Assistant General Counsel for Standards and
Critical Infrastructure Protection
Andrew Dressel, Attorney
North American Electric Reliability Corporation
1325 G Street N.W., Suite 600
Washington, D.C. 20005
(202) 400-3000
(202) 644-8099 – facsimile
david.cook@nerc.net
holly.hawkins@nerc.net
andrew.dressel@nerc.net

Owen E. MacBride
Debra A. Palmer
Schiff Hardin LLP
1666 K Street, N.W., Suite 300
Washington, D.C. 20036-4390
(202) 778-6400
(202) 778-6460 – facsimile
omacbride@schiffhardin.com
dpalmer@schiffhardin.com

January 25, 2012

TABLE OF CONTENTS
I. INTRODUCTION.....................................................................................................................1
II. NOTICES AND COMMUNICATIONS..................................................................................6
III. PROPOSED REVISIONS TO THE RULES OF PROCEDURE.............................................7
A. Order Nos. 743 and 743-A...................................................................................................7
B. Proposed Section 509 of the Rules of Procedure...............................................................10
C. Proposed Appendix 5C to the Rules of Procedure.............................................................11
1. Overview......................................................................................................................11
2. Section-by-Section Summary of Proposed Exception Procedure................................16
a. Section 1.0 – Introduction......................................................................................17
b. Section 2.0 – Definitions........................................................................................18
c. Section 3.0 – Basis for Approval of an Exception................................................ 19
d. Section 4.0 – Form, Contents, and Submission of an Exception Request.............20
e. Section 5.0 – Review, Acceptance or Rejection, and Recommendation
Regarding Exception Requests..............................................................................25
f. Section 6.0 – Supplementation of an Exception Request Prior to a
Recommendation...................................................................................................30
g. Section 7.0 – Appeal of Rejection of an Exception Request.................................30
h. Section 8.0 – Approval or Disapproval of an Exception Request.........................31
i. Section 9.0 – Appeal of Approval or Disapproval of an Exception Request........32
j. Section 10.0 – Implementation Period for Exceptions..........................................33
k. Section 11.0 – Termination of an Approved Exception........................................34
D. Proposed Section 1703 of the Rules of Procedure........................................................... 36
E. Proposed Revisions to Appendix 2 to the Rules of Procedure..........................................37

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F. Proposed Revisions to Appendix 5B to the Rules of Procedure.......................................40
G. Proposed Revisions to Other Sections of the Rules of Procedure and to Appendices
3D, 4B, 6 and 8..................................................................................................................41
IV. NERC APPROVALS FOR THE PROPOSED REVISIONS.................................................41
V. NERC LIST OF FACILITIES THAT HAVE RECEIVED EXCEPTIONS...........................48
VI. CONCLUSION........................................................................................................................50
List of Attachments
Attachment 1: Proposed Appendix 5C to the Rules of Procedure, Procedure for Requesting and
Receiving an Exception from the NERC Definition of Bulk Electric System
Attachments 2A and 2B: Clean and Redlined Versions of the Revised Rules of Procedure,
Sections 100-1700 (including proposed new Sections 509 and 1703)
Attachments 3A and 3B: Clean and Redlined Versions of Revised Appendix 2 of the Rules of
Procedure – Definitions Used in the Rules of Procedure
Attachments 4A and 4B: Clean and Redlined Versions of Revised Appendix 3D of the Rules
of Procedure – Registered Ballot Body Criteria
Attachments 5A and 5B: Clean and Redlined Versions of Revised Appendix 4B of the Rules
of Procedure – Sanction Guidelines of the North American Electric Reliability Corporation
Attachments 6A and 6B: Clean and Redlined Versions of Revised Appendix 5B of the Rules
of Procedure – Statement of Compliance Registry Criteria
Attachments 7A and 7B: Clean and Redlined Versions of Revised Appendix 6 of the Rules of
Procedure – System Operator Certification Program Manual
Attachments 8A and 8B: Clean and Redlined Versions of Revised Appendix 8 of the Rules of
Procedure – NERC Blackout and Disturbance Response Procedures
Attachment 9: “The Development Process and Basis for the RoP Team’s Recommended
Provisions – Including How Stakeholder Comments Were Considered and Addressed,” prepared
by the BES Rules of Procedure Team

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I. INTRODUCTION
The North American Electric Reliability Corporation (“NERC”) respectfully requests the
Commission to approve, in accordance with §215(f) of the Federal Power Act (“FPA”)1 and the
Commission’s regulations at 18 C.F.R. §39.10, revisions to NERC’s Rules of Procedure
(“ROP”) for the purpose of adopting a procedure for requesting and receiving exceptions from
the NERC definition of Bulk Electric System (“BES Exception Procedure”), as directed by the
Commission in Order No. 743.2

NERC requests approval for the following revisions and

additions to the ROP:

1

•

Proposed new Appendix 5C to the ROP, Procedure for Requesting and Receiving an
Exception to the NERC Definition of Bulk Electric System (Attachment 1)

•

Proposed new Sections 509 (“Exceptions to the Definition of the Bulk Electric
System”) and 1703 (“Challenges to NERC Determinations of BES Exception
Requests Under Section 509”) of the ROP (included in Attachments 2A (clean) and
2B (redlined))3

16 U.S.C. §824o.

2

Revision to Electric Reliability Organization Definition of Bulk Electric System, 133 FERC ¶
61,150 (2011) (“Order No. 743”); Order on Rehearing, 134 FERC ¶ 61,210 (2011) (“Order No.
743-A”).
3

On November 29, 2011, NERC filed with the Commission, for approval, revisions to sections
100-1600 of the ROP. Petition for Approval of Revisions to the Rules of Procedure of the North
American Electric Reliability Corporation, Docket No. RR12-3-000 (“November 29, 2011 ROP
Revisions Filing”). Further, on November 7, 2011, NERC made a compliance filing with the
Commission in Docket No. RR10-11-004 in response to an October 7, 2011 Order, to amend one
section of the Rules of Procedure. Compliance Filing of the North American Electric Reliability
Corporation in Response to October 7, 2011 Order. In addition, on March 18, 2011, NERC
filed proposed new sections 1701 and 1702 of the ROP with the Commission for approval, in
connection with the request for approval of Reliability Standard PRC-023-2. Petition of the
North American Electric Reliability Corporation for Approval of a Protection and Control
(PRC) Reliability Standard, Docket No. RM08-13-000. As of the date of this Petition, the
Commission has not acted on any of these filings. Attachments 2A and 2B incorporate the
revisions to the ROP filed in the November 29, 2011 ROP Revisions Filing and the November 7,
2011 compliance filing, and to ROP sections 1701-1702 filed on March 18, 2011, as though all
these revisions had been approved by the Commission.

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•

Revisions to sections 302.2.2, 501.1.4.4, 804, 1102.2 and 1701 of the ROP to reflect
the adoption of the revised BES Definition and new section 1703 and Appendix 5C of
the ROP (these revisions are shown in Attachments 2A and 2B).

•

Revisions to Appendix 2 to the ROP, Definitions Used in the Rules of Procedure
(Attachments 3A (clean) and 3B (redlined)) 4

•

Revisions to Appendix 3D to the ROP, Registered Ballot Body Criteria
(Attachments 4A (clean) and 4B (redlined).5

•

Revisions to Appendix 4B to the ROP, Sanction Guidelines of the North American
Electric Reliability Corporation (Attachments 5A (clean) and 5B (redlined).6

•

Revisions to Appendix 5B to the ROP, Statement of Compliance Registry Criteria
(Attachments 6A (clean) and 6B (redlined)) 7

•

Revisions to Appendix 6 to the ROP, System Operator Certification Program Manual
(Attachments 7A (clean) and 7B (redlined).8

4

NERC filed proposed Appendix 2, as a new appendix to the ROP, for Commission approval in
the November 29, 2011 ROP Revisions Filing. As of the date of the instant filing, the
Commission has not acted on NERC’s request for approval of proposed Appendix 2.
Attachments 3A and 3B are based on Appendix 2 as filed in the November 29, 2011 ROP
Revisions filing as though it were already approved.
5

The November 29, 2011 ROP Revisions Filing included proposed revisions to Appendix 3D.
As of the date of the instant filing, the Commission has not yet acted on the November 29, 2011
ROP Revisions Filing. Attachments 4A and 4B incorporate the revisions to Appendix 3D
submitted for approval in the November 29, 2011 ROP Revisions Filing, as though approved.
6

The November 29, 2011 ROP Revisions Filing included proposed revisions to Appendix 4B.
As of the date of the instant filing, the Commission has not yet acted on the November 29, 2011
ROP Revisions Filing. Attachments 5A and 5B incorporate the revisions to Appendix 4B
submitted for approval in the November 29, 2011 ROP Revisions Filing, as though approved.
7

The November 29, 2011 ROP Revisions Filing included proposed revisions to Appendix 5B.
As of the date of the instant filing, the Commission has not yet acted on the November 29, 2011
ROP Revisions Filing. Attachments 6A and 6B incorporate the revisions to Appendix 5B
submitted for approval in the November 29, 2011 ROP Revisions Filing, as though approved.
8

The November 29, 2011 ROP Revisions Filing included proposed revisions to Appendix 6. As
of the date of the instant filing, the Commission has not yet acted on the November 29, 2011
ROP Revisions Filing. Attachments 7A and 7B incorporate the revisions to Appendix 6
submitted for approval in the November 29, 2011 ROP Revisions Filing, as though approved.

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•

Revisions to Appendix 8 to the ROP, NERC Blackout and Disturbance Response
Procedures (Attachments 8A (clean) and 8B (redlined).9

In Order No. 743, the Commission directed NERC to develop, using its Reliability
Standards development process, a revised definition of the term “Bulk Electric System” (“BES
Definition”);10 and to also develop, through a stakeholder process, a process to exempt facilities
from inclusion in the Bulk Electric System through application of the BES Definition.11 The
Commission directed NERC to file the revised BES Definition and the exemption procedure
within one year following the effective date of the final rule adopted in Order No. 743. Order
No. 743 specified the effective date of the final rule to be 60 days following the date of its
publication in the Federal Register. The final rule was published in the Federal Register on
November 26, 201012; the date 60 days following the date of publication was January 25, 2011.
As directed in Order No. 743, NERC has developed both a revised BES Definition and a
proposed BES Exception Procedure.13 NERC is submitting the revised BES Definition to the
Commission for approval in a separate petition that is being filed contemporaneously with the
instant Petition. The petitions for approval of the revised BES Definition and of the BES

9

The November 29, 2011 ROP Revisions Filing included proposed revisions to Appendix 8. As
of the date of the instant filing, the Commission has not yet acted on the November 29, 2011
ROP Revisions Filing. Attachments 8A and 8B incorporate the revisions to Appendix 8
submitted for approval in the November 29, 2011 ROP Revisions Filing, as though approved.
10

Order No. 743 at PP 29-33.

11

Order No. 743 at PP 112-13.

12

75 FR 72910 (2010).

13

Proposed Sections 509 and 1703 and Appendix 5C use the term “exception” rather than the
term “exemption” used in Order No. 743. Use of the term “exception” is consistent with the
terminology used in section 411 of the ROP and Appendix 4D pertaining to requests for
Technical Feasibility Exceptions (“TFE”) from NERC Critical Infrastructure Protection
Standards.

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Exception Procedure are being filed within one year following January 25, 2011.
The proposed BES Exception Procedure addresses the applicable concerns raised by the
Commission, in Order No. 743, with respect to the current processes for determining what
facilities are part of the BES and what facilities are not.14 The BES Exception Procedure
provides for decisions to approve or disapprove Exception Requests15 to be made by NERC,
rather than by the Regional Entities, thereby eliminating the potential for inconsistency and
subjectivity that the Commission was concerned was created by having decisions as to what
facilities are included in or excluded from the BES made at the Regional Entity level.
This filing also includes proposed conforming revisions to sections 302.2, 501.1.4.4, 804,
1102.2 and 1701 of the ROP and to Appendices 2, 3D, 4B, 5B, 6 and 8 of the ROP which are
necessary in light of the revised BES Definition and the new BES Exception Procedure
provisions in section 1703 and Appendix 5C. The revisions to Appendix 2, Definitions Used in
the Rules of Procedure, add new defined terms that are used in the revised BES Definition or in
proposed Appendix 5C, modify certain other definitions to distinguish their meanings as used in
Appendix 5C from their meanings as used elsewhere in the ROP, and make minor revisions to
other definitions resulting from adoption of the revised BES Definition.

The revision to

Appendix 5B, Statement of Compliance Registry Criteria, replaces the existing BES Definition
with the revised BES Definition in the text of Appendix 5B. The revision to section 1701 of the
ROP is necessary to reference the addition of new section 1703 to section 1700. The revisions to
14

As shown in the separate petition being filed contemporaneously for approval of the revised
BES Definition, the revised BES Definition fully addresses the concerns the Commission
expressed in Order No. 743 with respect to the current definition of Bulk Electric System and its
application to determine what facilities are included in or excluded from the BES.
15

Capitalized terms used in this Petition, such as “Exception Requests,” that are not otherwise
defined herein, are defined terms in proposed Appendix 5C, or in proposed ROP Appendix 2
which is currently pending before the Commission.

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sections 302.2.2, 501.1.4.4, 804 and 1102.2 of the ROP and to Appendices 3D, 4B, 6 and 8 are
necessary to reflect capitalization of certain terms that become defined terms in the ROP as the
result of the revised BES Definition.
The NERC Board of Trustees voted to adopt the proposed ROP revisions, including
proposed new Appendix 5C and proposed new sections 509 and 1703 of the ROP, on January 18,
2012.
Attachment 1 to this Petition is the proposed Appendix 5C to the ROP, Procedure for
Requesting and Receiving an Exception from the NERC Definition of Bulk Electric System.
Attachments 2A and 2B are clean and redlined versions of the ROP, Sections 100-1700,
showing proposed new Sections 509 and 1703 and the revisions to other sections as enumerated
above. Attachments 3A and 3B are clean and redlined versions of proposed revised Appendix 2
to the ROP, Definitions Used in the Rules of Procedure. Attachments 4A and 4B are clean and
redlined versions of proposed revised Appendix 3D to the ROP, Registered Ballot Body Criteria.
Attachments 5A and 5B are clean and redlined versions of proposed revised Appendix 4B to the
ROP, Sanction Guidelines of the North American Electric Reliability Corporation.
Attachments 6A and 6B are clean and redlined versions of proposed revised Appendix 5B to the
ROP, Statement of Compliance Registry Criteria. Attachments 7A and 7B are clean and
redlined versions of proposed revised Appendix 6 to the ROP, System Operator Certification
Program Manual. Attachments 8A and 8B are clean and redlined versions of proposed revised
Appendix 8 to the ROP, NERC Blackout and Disturbance Response Procedures. Attachment 9,
captioned “The Development Process and Basis for the RoP Team’s Recommended Provisions –
Including How Stakeholder Comments Were Considered and Addressed,” was prepared by the
stakeholder-based BES Rules of Procedure Team (“BES ROP Team”) that developed a proposed

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Exception Procedure on which Appendix 5C and ROP sections 509 and 1703 are based.
Attachment 9 describes the process that was followed by the BES ROP Team in developing
these documents, and key issues that were identified and addressed by the Team in the course of
developing its proposals.
NERC requests that the Commission approve Appendix 5C and the other proposed ROP
revisions with the same effective date as the proposed effective date of the revised BES
Definition, as discussed in NERC’s separate petition for approval of the revised BES Definition.
NERC is also filing the proposed revisions to the ROP, including proposed new Sections
509 and 1703 and Appendix 5C, with Applicable Governmental Authorities in Canada.
II. NOTICES AND COMMUNICATIONS
Notices and communications with respect to this filing may be addressed to:
Gerald W. Cauley
President and Chief Executive Officer
North American Electric Reliability Corporation
3353 Peachtree Road N.E.
Suite 600, North Tower
Atlanta, GA 30326-1001
(404) 446-2560
David N. Cook*
Senior Vice President and General Counsel
Holly A. Hawkins
Assistant General Counsel for Standards and
Critical Infrastructure Protection
Andrew Dressel, Attorney
North American Electric Reliability Corporation
1325 G Street N.W., Suite 600
Washington, D.C. 20005
(202) 400-3000
(202) 644-8099 – facsimile
david.cook@nerc.net
holly.hawkins@nerc.net
andrew.dressel@nerc.net

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Owen E. MacBride*
Debra A. Palmer
Schiff Hardin LLP
1666 K Street, N.W., Suite 300
Washington, D.C. 20036-4390
(202) 778-6400
(202) 778-6460 – facsimile
omacbride@schiffhardin.com
dpalmer@schiffhardin.com
*Persons to be included on the official
service list for this proceeding.

III. PROPOSED REVISIONS TO THE RULES OF PROCEDURE
A.

Order Nos. 743 and 743-A
In Order No. 743, the Commission directed NERC to develop a process for exempting

facilities from being included in the BES by the application of the BES Definition.
[W]e direct the ERO to develop a proposed exemption process. We believe that it
is appropriate that NERC develop the process in its function as the ERO. Further,
allowing the ERO to develop an appropriate exemption process should provide
interested stakeholders an opportunity to participate in the development of the
process, as requested by some commenters.16
The Commission also expressed a number of concerns that it believed needed to be
addressed in the development of the exemption process.
P 115. “NERC should develop an exemption process that includes clear,
objective, transparent, and uniformly applicable criteria for exemption of facilities
that are not necessary for operating the grid. The ERO should also determine any
related changes to its Rules of Procedure that may be required to implement the
exemption process, and file the proposed exemption process and rule changes
with the Commission.”
P 116. “. . . [W]e no longer contemplate a process that requires Commission
review of each request for exemption. However, in order to avoid an inconsistent
application of the exemption process, NERC should oversee the facility-byfacility exemption process to ensure an objective and uniform application of the
exemption criteria that it develops.
NERC may consider delegating
responsibilities for the exemption process to Regional Entities, so long as the
process is clear and capable of being applied consistently, objectively and
uniformly across all regions. However, consistent with out statements in Order
No. 672 concerning the need for a strong ERO, NERC should maintain oversight
of any Regional Entity activity. We believe ERO oversight is also vital in
ensuring consistent application of any nation-wide exemption criteria that the
ERO develops.” (Footnote omitted.)
P 117. “While the Commission will not require that we review each exemption
on a facility-by-facility basis, we would maintain the authority to conduct audits
to determine the appropriateness of a particular exemption. We contemplate that
a Commission staff audit would review the application of the exemption criteria
developed by NERC in NERC’s or a Regional Entity’s determination to approve
an exemption for a particular facility. However, to facilitate such audits, the ERO
16

Order No. 743 at P 112.

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should maintain a list of exempted facilities that can be made available to the
Commission upon request. NERC can decide how best to maintain the list,
including determining whether or not to post it on the NERC website.”
P 118. “Additionally, the ERO should consider developing criteria for revoking
an exemption if a particular transmission facility no longer qualifies for such an
exemption. This may be appropriate, for example, when a transmission system in
the vicinity undergoes a significant change.”
P 119. “. . . [T]he exemption process provides a means of ensuring that relatively
high voltage distribution facilities are excluded from compliance with mandatory
Reliability Standards. In this light, we believe that it would be beneficial for the
ERO in maintaining a list of exempted facilities, to consider including a means to
track and review facilities that are classified as local distribution to ensure
accuracy and consistent application of the definition. Similarly, the ERO could
track exemptions for radial facilities.”
P 120. “In response to comments seeking a blanket exemption for industrial
facilities, the Commission is not inclined to grant categorical exemptions of any
kind. However, NERC should consider the parties’ concerns regarding exemption
categories in developing an exemption process and criteria. Entities can submit
specific facilities for exemption through the NERC-developed exemption process
. . . .”
P 121. “We agree with ERCOT’s suggestion that the ERO should develop a
parallel process for including as part of the bulk electric system ‘critical’
facilities, operated at less than 100 kV, that the Regional Entities determine are
necessary for operating the interconnected transmission network. Currently,
Regional Entities have the ability to include ‘critical’ facilities operated below
100 kV. We believe that it would be worthwhile for NERC to consider
formalizing the criteria for inclusion of critical facilities operated below 100 kV in
developing the exemption process. Additionally, we note that Order No. 716
creates a process to include critical facilities under NUC-001-1. Similarly, we
note that Order No. 733 creates an additional ‘add in’ approach to sub-100 kV
facilities that Regional Entities and planning coordinators have identified as
critical to the reliability of the bulk electric system.” (Footnotes omitted.)
P 150. “We disagree with commenters that definitions of ‘integrated transmission
elements’ and ‘material impact’ are needed to implement this Final Rule. These
terms are not defined by the present bulk electric system definition, and defining
these terms is not necessary to revise the definition as directed herein. Whether
specific facilities have a material impact is not dispositive with respect to whether
they are needed for reliable operation. These questions are more appropriately
addressed through development of an exemption process at NERC.”

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In Order No. 743-A, the Commission provided additional clarification with respect to the
scope of the exemption process.
P 76. “The Commission notes some confusion regarding ‘exclusions’ versus
‘exemptions.’ We understand that a facility that is excluded would not have to go
through any process at NERC to determine applicability. On the other hand,
where an entity applies to NERC to seek to exempt its facility from the bulk
electric system, NERC would follow an exemption process. With that
understanding, we clarify that, as discussed herein, we envision that the process
for determining which facilities will be included under the bulk electric system
will involve several steps. NERC will develop criteria for determining whether a
facility that falls under the definition of bulk electric system may qualify for
exclusion. If, for example, the application of the criteria clearly indicates that a
facility is local distribution, the facility is excluded, and no process before the
ERO is required. If application of the NERC criteria does not lead to a definitive
result, the entity could apply for an exemption, invoking a factual inquiry before
the ERO to determine the proper categorization of facilities.” (Italics in original.)
P 84. “In Order No. 743, . . . while the Commission stated that the ERO should
develop an exemption process that includes ‘clear, objective, transparent, and
uniformly applicable criteria’ for determining exemptions, the Commission
otherwise left it to the ERO’s discretion to develop an appropriate exemption
process, which the Commission will review. Any exemption of radial facilities is
not based on a statutory requirement, unlike exclusion of local distribution.
However, the Commission believes that certain categories of radial facilities may
lend themselves to an ‘exclusion’ process as described above (i.e., once identified
as belonging to a certain radial category, the facilities could be excluded without
further review). For example, should the revised bulk electric system definition
maintain the exclusion of radial facilities serving only load from one transmission
source, these types of facilities easily could be excluded without further analysis.”
P 86. “The Commission clarifies that Order No. 743 granted NERC discretion to
make a determination regarding whether to exclude or exempt radial facilities.
One consideration in this regard is whether an exclusion process will avoid NERC
having to review thousands of exemptions for facilities outside the NPCC region
that previously were excluded as radial.”
P 88. “With respect to Consumers’ request for clarification regarding how much
incidental generation a line could serve and continue to meet the bulk electric
system radial line exclusion, this is an issue that should be raised with NERC as it
develops criteria for determining what is considered radial.”
P 98. “Order No. 743 directed the ERO to develop an exemption process, and
specifically declined to ‘dictate the substance or content of the exemption
process.’ However, we provided guidance, stating that the process should include

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clear, objective, transparent and uniformly applicable criteria for exemption of
facilities that are not necessary for operating the interconnected transmission
system. Accordingly, the Commission grants EEI’s, Consumers Energy’s and
Wisconsin Electric’s requests for clarification that the discussion regarding which
facilities should or should not be included in the bulk electric system definition
was intended to provide guidance, not to prejudge what should be included in the
exemption criteria. . . .”
As discussed in the balance of this §III, the proposed Exception Procedure appropriately
addresses the Commission’s directives and concerns expressed in Order Nos. 743 and 743-A
with respect to the exemption procedure. In addition, in §V below, NERC acknowledges the
need to maintain a list of facilities that have been granted Exceptions from the BES Definition,
as indicated in Order No. 743.
B.

Proposed Section 509 of the Rules of Procedure
Proposed new Section 509 of the ROP, “Exceptions to the Definition of the Bulk Electric

System,” identifies the availability of the procedure in Appendix 5C to request a determination
that an Element that falls within the BES Definition should be excluded from the BES or that an
Element that falls outside of the BES Definition should be included in the BES:
An Element is considered to be (or not be) part of the Bulk Electric System by
applying the BES Definition to the Element (including the inclusions and
exclusions set forth therein). Appendix 5C sets forth the procedures by which (i)
an entity may request a determination that an Element that falls within the
definition of Bulk Electric System should be exempted from being considered a
part of the Bulk Electric System, or (ii) an entity may request that an Element that
falls outside the definition of the Bulk Electric System should be considered a part
of the Bulk Electric System.
Section 509 specifies that the Exception Procedure in Appendix 5C is available with
respect to (i) Elements that are considered to be part of the BES by applying the BES Definition,
and (ii) Elements that are not considered to be part of the BES based on applying the BES
Definition, but which the Submitting Entity believes should be excluded from or included in,
respectively, the BES. The Exception Procedure is not intended to be used to resolve ambiguous

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situations in which it cannot be determined by applying the BES Definition whether an Element
is part of or not part of the BES.
C.

Proposed Appendix 5C to the Rules of Procedure
1.

Overview

Proposed Appendix 5C sets forth the detailed procedures for requesting and receiving an
Exception from inclusion in or exclusion from the Bulk Electric System based on application of
the BES Definition. As discussed in greater detail in §IV below, following the issuance of Order
No. 743, NERC established a stakeholder-based BES ROP Team to develop a proposed
Exception Procedure. The BES ROP Team developed a proposed Exception Procedure which
the Team submitted to NERC. As also discussed in §IV, proposed Appendix 5C as approved by
the NERC Board and submitted for approval in this filing incorporates several modifications to
the BES ROP Team’s proposal, both revisions recommended by NERC staff and revisions
directed by the NERC Board of Trustees. However, the basic structure and concepts of the
proposed Exception Procedure for which approval is requested herein are the same as in the BES
ROP Team’s proposal.
Taking into account the directives and concerns set forth in Order Nos. 743 and 743-A,
the BES ROP Team considered several process attributes to be important in developing the
Exception Procedure:
•

The Exception Procedure should maintain the exemption for facilities used in the
local distribution of electric energy and the exemption for radial facilities.

•

The Exception Procedure, including the criteria for allowing Exceptions, should be
clear, objective, transparent and uniformly applicable.

•

The Exception Procedure should allow any Registered Entity to utilize the process to
seek an Exception either for its own facilities or for the facilities of others with
respect to which the Registered Entity has ERO-related reliability responsibilities.

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•

NERC should be the ultimate decision-maker for Exception Requests, in order to
retain facility-by-facility oversight of the objective and uniform application of the
Exception criteria.

•

The Exception Procedure should include provisions for revoking a previously-granted
Exception for a facility if the Exception is no longer warranted.

With respect to establishing criteria for Exceptions, the proposed Exception Procedure
establishes specific steps to be followed in submitting, reviewing and deciding Exception
Requests.

It also specifies detailed Required Information that must be submitted with an

Exception Request, or it will be rejected. In terms of technical criteria for allowing Exceptions,
it was determined jointly by the NERC Standards Committee, NERC Reliability Standards
Program management, the leaders of the BES Definition Standard Drafting Team (“SDT”) and
the BES ROP Team that the SDT would take responsibility for determining the technical criteria
for Exceptions. As discussed in detail in §III.D of NERC’s petition for approval of the proposed
BES Definition, which is being filed contemporaneously with this Petition, the SDT determined
that developing a single set of technical criteria that would be applicable to all Exception
Requests was not feasible. The SDT determined, instead, that a common set of data and
information that the Submitting Entity would be required to submit with each Exception Request
should be developed (the “Detailed Information to Support an Exception Request”).

The

Detailed Information is intended to ensure that a consistent baseline of technical information is
provided to the Regional Entity and NERC with all Exception Requests, in addition to the
specific information and arguments submitted by the Submitting Entity in support of its
Exception Request. The Submitting Entity remains responsible to present sufficient information
and argument to justify the Exception Request.17

17

See section 3.2 of proposed Appendix 5C.

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Additionally, several significant issues were identified during development of the
Exception Procedure (some of these were raised by stakeholder comments) that the BES ROP
Team needed to address. These issues generally fell into the following categories:
•

Who is eligible to initiate and/or participate in the process by which an Exception is
granted? What is the role of state regulators?

•

What should be the scope of the Elements for which an Exception can be requested in
a single Exception Request?

•

Should an entity that is unable to determine the status of an Element by applying the
BES Definition be able to use the Exception Procedure to obtain a determination?

•

What is the appropriate balance between allowing open access to the Exception
process and ensuring the resources of NERC and the Regional Entities are spent
processing and analyzing valid, permissible requests?

•

What is the appropriate balance between allowing open access to the Exception
process and an appropriate level of consistency, respecting the varied roles and proper
exercise of discretion by each participant?

•

How transparent should the Exception process be? In addition to the Submitting
Entity (and Owner of the facility, if different), should any entities other than the
Regional Entity, NERC, the Commission, and Applicable Governmental Authorities
in Canada, be allowed access to facility-specific information filed with an Exception
Request?

•

What should be the status for compliance purposes of an Element during the
pendency of the request?

These and other issues were resolved in the development of the BES Exception Procedure, and
their resolution is reflected in proposed Appendix 5C.18
The Exception Procedure developed by the BES ROP Team – and, with relatively minor
modifications, approved by the NERC Board and submitted in this Petition for the Commission’s
approval – provides, for most circumstances, a fairly simple and direct process of discrete steps:

18

See Attachment 9 for further discussion of how the BES ROP Team addressed these issues
and other stakeholder concerns.

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1. An entity applies the BES Definition to an Element, but nonetheless believes that the
Element, contrary to its characterization based on the BES Definition, should either
be included in or excluded from the BES. The entity therefore submits an Exception
Request to the Regional Entity in which the Element is located.
2. The Regional Entity receives the Exception Request.
a. The Regional Entity conducts an initial screening looking for three items to
determine if the Exception Request is a valid request for processing:
i. Is the Exception Request from an eligible submitter?
ii. Is the Exception Request a request for an Exception from the BES Definition?
iii. Is all the Required Information provided with the Exception Request?
If the initial answer to each question is yes, the Exception Request is moved along
in the process to a substantive review. If the answers to all questions are not yes,
the submitter is given an opportunity to modify or supplement the Exception
Request before the Regional Entity rejects it.
b. The Regional Entity substantively evaluates the Exception Request and makes a
recommendation to NERC as to whether it should be approved or disapproved.
3. NERC reviews the Exception Request and all information developed at the Regional
Entity level, and either approves or disapproves the Exception Request.
4. The Submitting Entity either accepts the NERC decision, or appeals it to the NERC
Board of Trustees Compliance Committee (“BOTCC”).
Importantly, in response to the Commission’s directives and concerns expressed in Order
Nos. 743 and 743-A, the decision as to whether to approve or disapprove an Exception Request
is made only by NERC. The Regional Entity performs a non-substantive initial screening of the
Exception Request and, if the Exception Request passes the initial screening, conducts a
substantive review and makes a recommendation to NERC as to whether the Exception Request
should be approved or disapproved. However, the actual decision to approve or disapprove the
Exception Request is made by the NERC President after considering the opinion provided by a
three-person NERC review panel (as well as the Recommendation of the Regional Entity and

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other information placed into the record at the Regional Entity and NERC levels). Further, if the
Regional Entity rejects the Exception Request based on the initial screening but the Submitting
Entity believes the Exception Request is proper and complete as submitted, the Exception
Procedure allows the Submitting Entity to appeal the Rejection to NERC.
Placing the decision-making responsibility with NERC will provide for a consistent
approach to and determination of Exception Requests coming from Submitting Entities in all
Regions, thereby eliminating Regional Entity discretion in the determination of Exception
Requests.

Further, not only will NERC be able to provide consistent determinations on

Exception Requests coming from Submitting Entities in different Regions but involving the same
or similar facts and circumstances, but NERC, as the sole decision-maker, will be able to take
into account the aggregate impact on the BES of approving or disapproving all the Exception
Requests submitted. NERC’s ability to provide for consistency and to assess aggregate impacts
is enhanced by the provision added to Appendix 5C at the direction of the NERC Board (as
described in §IV below) specifying that the final decision on all Exception Requests will be
issued by the NERC President.
Additionally, the proposed Exception Procedure includes provisions for requesting and
approving an Inclusion Exception, by which an Element that the BES Definition would not
include in the BES can be included in the BES.19 A request for an Inclusion Exception can be
submitted by the Owner of an Element, or by a Regional Entity, Planning Authority (“PA”),
Reliability Coordinator (“RC”), Transmission Operator (“TOP”), Transmission Planner (“TP”)
or Balancing Authority (“BA”) that has the Element within its Scope of Responsibility.20
19

See Order No. 743 at P 121.

20

Scope of Responsibility is defined in section 2.26 of Appendix 5C as “The registered functions
of a PA, RC, TOP, TP or BA and the geographical or electric region in which the PA, RC, TOP,
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Finally, the Exception Procedure also includes provisions for monitoring that an
Exception that has been granted continues to be warranted, and for revoking an Exception that is
no longer warranted.21
In Order No. 743-A, the Commission noted that NERC would need to determine whether
local distribution facilities and radial facilities would be “excluded” from the BES, or
“exempted” through the exemption process.22 The proposed BES Definition expressly excludes
both “facilities used in the local distribution of electric energy,” and radial systems as described
in Exclusion E1 of the BES Definition, from the Bulk Electric System.23 Therefore, it was not
necessary for the BES Exception Procedure to contain detailed criteria or procedures to exempt
local distribution facilities or radial facilities from inclusion in the Bulk Electric System.
In summary, the proposed Exception Procedure establishes a process that (1) balances the
need for effective and efficient administration with due process and clarity of expectations; (2)
promotes consistency in determinations and eliminates Regional discretion by having all
decisions on Exception Requests made at NERC; (3) provides for involvement of persons with
applicable technical expertise in making decisions on Exception Requests; and (4) should
alleviate concerns about a “one-size-fits-all” approach.
2.

Section-by-Section Summary of Proposed Exception Procedure

The following subsections provide a section-by-section summary of the Exception

TP or BA operates to perform its registered functions, or with respect to a Regional Entity, its
Regional Entity Region.”
21

See Order No. 743 at P 118.

22

Order No. 743-A at PP 76, 84, 86 and 88.

23

See the discussion in §III.C of NERC’s contemporaneously-filed petition for approval of the
revised BES Definition.

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Procedure in proposed Appendix 5C.
a.

Section 1.0 – Introduction

Section 1.1, Purpose, states the purpose of Appendix 5C:
The NERC definition of the Bulk Electric System uses specific terms and
thresholds that, in most cases, should appropriately identify Elements and groups
of Elements that are appropriately classified as part of the Bulk Electric System.
Conversely, the BES Definition should, in most cases, exclude Elements that are
not part of the Bulk Electric System. In certain cases, however, the BES
Definition may classify certain Elements as part of the Bulk Electric System that
are not necessary for the Reliable Operation of the interconnected bulk-power
transmission system or the BES Definition may classify certain Elements as nonBulk Electric System that are necessary for the Reliable Operation of the
interconnected bulk-power transmission system.
This Appendix . . . provides the procedure by which an entity may request
and receive an Exception which will have the effect of either including within the
BES an Element or Elements that would otherwise be excluded by application of
the BES Definition or excluding from the BES an Element or Elements that
would otherwise be included by application of the BES Definition.
Section 1.1 also states the status of an Element until the time that an Exception from the
BES Definition has been requested and granted:
An entity must request and obtain an Exclusion Exception pursuant to an
Exception Request under this Exception Procedure before any Element that is
included in the BES by application of the BES Definition shall be excluded from
the BES. Likewise, an entity must request and obtain an Inclusion Exception
pursuant to an Exception Request under this Exception Procedure before any
Element that is excluded from the BES by application of the BES Definition shall
be included in the BES.
During the pendency of an Exception Request, the status of an Element(s)
that is the subject of an Exception Request shall remain as it is determined based
on application of the BES Definition. This status will continue until all appeals to
all Applicable Governmental Authorities are completed.
Section 1.1 further provides that an entity planning the connection of a new Element for which it
believes an Exception would be appropriate may request an Exception prior to commercial
operation of the Element.

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Finally, section 1.1 details who is entitled to file an Exception Request. The right to file
an Exception Request is not limited to the Owner of the Element that is the subject of the
Exception Request. Rather, the Regional Entity or a Registered Entity performing reliability
functions that would have the Element within its Scope of Responsibility may submit an
Exception Request with respect to the Element:
The Owner of the Element to which the Exception Request applies or, with
respect to an Element owned by another Registered Entity, any Regional Entity,
Planning Authority (“PA”), Reliability Coordinator (“RC”), Transmission
Operator (“TOP”), Transmission Planner (“TP”) or Balancing Authority (“BA”)
that has (or will have upon inclusion of the Elements in the BES) the Elements
covered by an Exception Request within its Scope of Responsibility may submit
an Exception Request for the Element as provided in this Exception Procedure.
Section 1.2, Authority, includes a statement relating to adoption of the Exception
Procedure or a comparable procedure by Applicable Governmental Authorities in Canada and
Mexico: “This Exception Procedure or an equivalent procedure is to be implemented in Canada
and Mexico consistent with their respective laws and agreements.”
Section 1.3 states obligations of Canadian and Mexican Entities and Cross-Border
Regional Entities with regard to seeking Exceptions from Applicable Governmental Authorities
consistent with their respective laws and agreements.24 This section states that a Canadian Entity
or Mexican Entity “shall not be required to subject itself to United States federal or state laws not
otherwise applicable to the entity in order to utilize this Exception Procedure or an equivalent
procedure.”
b.

Section 2.0 – Definitions

Section 2.0 sets forth the definitions of defined terms that are frequently used in
24

A Canadian Entity is defined in section 2.5 of Appendix 5C as “a Registered Entity that is
organized under Canadian federal or provincial law;” and a Mexican Entity is defined in section
2.18 as “a Registered Entity that is organized under Mexican law.”

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Appendix 5C. The text of section 2.0 assumes that proposed Appendix 2, Definitions Used in
the Rules of Procedure, of the ROP is approved by the Commission and in effect prior to
Appendix 5C becoming effective. Therefore, section 2.0 of Appendix 5C states:25
For purposes of this Appendix, capitalized terms shall have the definitions
set forth in Appendix 2 to the Rules of Procedure. For ease of reference, the
definitions of the following terms that are used in this Appendix are also set forth
below.
This text is consistent with the modified text in a number of existing ROP Appendices (e.g.,
Appendices 4C and 4D) as submitted in the November 29, 2011 ROP Revisions Filing. If
proposed Appendix 5C is approved and becomes effective prior to the effective date of proposed
Appendix 2, then the above-quoted text should be replaced by the following text, until Appendix
2 is approved and becomes effective:
For purposes of this Appendix, the following terms shall be defined as set
forth in this section 2.0. Capitalized terms used in this Appendix that are not
defined in this section 2.0 shall have the meanings as defined in, as applicable, (i)
the NERC Glossary of Terms Used in Reliability Standards, or (ii) section 1.0 of
the NERC Uniform Compliance Monitoring and Enforcement Program,
Appendix 4C to the NERC Rules of Procedure, or (iii) page 20 of the
Organization Registration and Certification Manual, or (iv) section 1501 of the
NERC Rules of Procedure.
A number of the defined terms and their definitions in section 2.0 are taken from existing
Appendix 4D, including Canadian Entity, Classified National Security Information, Eligible
Reviewer, FOIA, NRC Safeguards Information, and Protected FOIA Information.
c.

Section 3.0 – Basis for Approval of an Exception

Section 3.1, Grounds for an Exception, identifies the two types of Exception Requests
and their grounds – Exclusion Exceptions and Inclusion Exceptions. An Exclusion Exception
may be requested and obtained “on the grounds that the Element(s) for which the Exception
25

As noted above, Appendix 2 was filed for approval in the November 29, 2011 ROP Revisions
Filing and is pending before the Commission as of the date of this Petition.

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Request is filed is included within the BES based on application of the BES Definition but is not
necessary for the Reliable Operation of the interconnected bulk-power transmission system as
evidenced by Required Information provided pursuant to Detailed Information to Support an
Exception Request (Section III.B of the Exception Request Form).” An Inclusion Exception may

be requested and obtained “on the grounds that the Element(s) for which the Exception Request
is filed is not included within the BES based on application of the BES Definition but is
necessary for the Reliable Operation of the interconnected bulk-power transmission system as
evidenced by Required Information provided pursuant to Detailed Information to Support an
Exception Request (Section III.B of the Exception Request Form).”

Section 3.2, Burden, specifies that the burden to provide a sufficient basis for Approval
of an Exception Request is on the Submitting Entity. This provision is consistent with the
placement of the burden to justify a Technical Feasibility Exception as set forth in section 3.3 of
existing Appendix 4D, the TFE Procedure. This is an important provision because it establishes
that where an Element is included in the BES by application of the BES Definition, the entity
submitting an Exception Request must prove that the Element should not be included in the BES,
or else the Element will remain in the BES; and where an Element is not included in the BES by
application of the BES Definition, the entity submitting the Exception Request must prove that
the Element should be included in the BES, or else the Element will continues to be excluded
from the BES. Section 3.2 also specifies that all evidence provided as part of an Exception
Request or response thereto will be considered in determining whether the Exception Request
shall be approved or disapproved.
d.

Section 4.0 – Form, Contents, and Submission of an Exception
Request

Section 4.1, Eligible Submitting Entities, details what entities may submit Exception

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Requests:
•

The Owner of an Element may submit an Exception Request for either an Inclusion
Exception or an Exclusion Exception regarding that Element.

•

A Regional Entity, PA, RC, TOP, TP, or BA that has (or will have upon inclusion in
the BES) the Elements covered by an Exception Request within its Scope of
Responsibility may submit an Exception Request for the inclusion in the BES of an
Element or Elements owned by a Registered Entity, provided that before doing so, (i)
the Submitting Entity conferred with the Owner about the reasons for an Exception,
and (ii) could not reach agreement regarding the submission of such an Exception
Request. (If the Owner agrees with submitting an Exception Request, the Owner
should be the Submitting Entity.)

•

A Regional Entity may submit an Exception Request for the inclusion in the BES of
an Element or Elements owned by an Owner that is not a Registered Entity.

•

An Owner or a Regional Entity may submit an Exception Request for the exclusion
from the BES of an Element.

Section 4.2, Separate Submissions for Each Exception Request, specifies as general rules
that (i) a separate Exception Request shall be submitted for each Element or set of connected
Elements for which the Submitting Entity seeks an Exception, and (ii) a single Exception
Request may not be submitted for separate Elements within the geographic boundaries of more
than one Regional Entity. Additionally, where the Submitting Entity seeks Exceptions for
multiple, similar Elements (all within the boundaries of a single Regional Entity) on the same
basis, the Exception Requests for all the Elements may be included in one Exception Request
with all the Elements or sets of connected Elements separately identified. Finally, section 4.2
specifies a procedure by which multiple Submitting Entities may jointly file Exception Requests
for similar Elements on the same basis; in this situation, one of the Submitting Entities will be
designated as the Lead Entity and will submit the Exception Request Form with all Required
Information to support the Exception Request.

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Section 4.3, Withdrawal of an Exception Request, specifies that a Submitting Entity may
withdraw an Exception Request at any time prior to Approval or Disapproval of the Exception
Request by NERC.
Section 4.4, Form and Format of Exception Request, specifies that the Exception Request
shall consist of three sections. (The required contents of the three sections are enumerated in
sections 4.5.1, 4.5.2 and 4.5.3, respectively.) This section also requires that if the Submitting
Entity is not the Owner of the Element, the Submitting Entity shall provide a copy of the
Exception Request to the Owner (or to the operator(s) of the Element if the Owner is unknown)
when the Exception Request is submitted to the Regional Entity.
Section 4.5, Required Information to be Included in the Exception Request, details the
Required Information that is to be included in each section of the Exception Request. Section
4.5.1 details the Section I Required Information, section 4.5.2 details the Section II Required
Information, and section 4.5.3 describes the Section III Required Information. Each of sections
4.5.1, 4.5.2 and 4.5.3 specifies that failure to provide all of the Required Information for Section
I, Section II or Section III, respectively, may result in Rejection of the Exception Request as
incomplete.
Section 4.5.1 specifies the Required Information to be included in Section I of the
Exception Request. The Section I Required Information is identifying information concerning
the Submitting Entity (and Owner, if different), the Exception Request and the Element(s).
Section 4.5.2 specifies the Required Information to be included in Section II of the
Exception Request. The Section II Required Information includes (among other things):
•

Identification and location of the Element(s) for which the Exception is being
requested.

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•

A statement of the basis on which the Submitting Entity contends the Exception
Request should be approved, and if the Submitting Entity is not the Owner, a
statement of the basis of the Submitting Entity’s reason for submitting the Exception
Request.

•

A statement, signed and dated by an authorized representative of the Submitting
Entity’s senior management, stating that the representative has read the Exception
Request on behalf of the Submitting Entity and that the Submitting Entity believes
Approval of the Exception Request is warranted.

The Section II Required Information will not be publicly posted or disclosed to third parties
except for persons involved in reviewing the Exception Request.
Sections 4.5.1 and 4.5.2 each specifies that at the same time the Submitting Entity
submits the Exception Request Form to the Regional Entity, the Submitting Entity shall submit a
copy of Section I and Section II to each PA, RC, TOP, TP and BA that has (or will have upon
inclusion of the Elements in the BES) the Elements covered by the Exception Request within its
Scope of Responsibility.
Section 4.5.3 specifies that Section III of the Exception Request shall contain the
Detailed Information to Support an Exception Request as specified on the Exception Request
Form. The Detailed Information to Support an Exception Request was developed by the SDT for
the BES Definition through the NERC Reliability Standard development process.26

The

development and contents of the Detailed Information to Support an Exception Request are
described in §III.D of NERC’s Petition for approval of the revised BES Definition, which is
being filed contemporaneously with this Petition.

26

Because the Detailed Information to Support an Exception Request was developed and
adopted through the Reliability Standard development process, it can only be modified through
the Reliability Standard development process, and not through the procedure for revising the
ROP.

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Section 4.5.3 states that the Submitting Entity may designate all or part of the Section III
Required Information as Confidential Information. It sets forth specific provisions for the
handling of and access to any Classified National Security Information, NRC Safeguards
Information and/or Protected FOIA Information that is submitted in support of the Exception
Request.
Section 4.5.4 provides for information to be submitted by entities in addition to the
Submitting Entity:
•

If the Owner is different than the Submitting Entity, the Owner may file a response to
supplement, correct or disagree with all or any part of the Exception Request.

•

Any PA, RC, TOP, TP, and BA that has (or will have upon inclusion of the
Element(s) in the BES) the Elements covered by an Exception Request within its
Scope of Responsibility may also provide input to the Regional Entity regarding the
request.

Section 4.5.4 also sets forth procedures by which the Owner (if different than the Submitting
Entity) or a PA, RC, TOP, TP or BA, in order to enable it to evaluate the Exception Request,
may request and obtain the Section III Required Information from the Regional Entity. Section
4.5.4 includes provisions to protect, in such a transaction, any Confidential Information included
in the Section III Required Information.
Section 4.6, Access to Confidential Information, Classified National Security
Information, NRC Safeguards Information, and Protected FOIA Information Included in
Required Information, sets forth provisions by which the Regional Entity can obtain access to
any Confidential Information, Classified National Security Information, NRC Safeguards
Information, and Protected FOIA Information included in the Exception Request from the
Submitting Entity or Owner, while protecting the confidentiality of the information.

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e.

Section 5.0 – Review, Acceptance or Rejection, and Recommendation
Regarding Exception Requests

Section 5.0 specifies that the Regional Entity’s evaluation of an Exception Request will
consist of two stages:
•

an initial screening to determine whether to accept or reject the Exception Request,
and

•

a substantive review to determine the Regional Entity’s recommendation to NERC as
to whether or not the Exception Request should be approved.

The details of the procedures for the Regional Entity’s initial screening and substantive review of
the Exception Request are set forth in sections 5.1, 5.2 and 5.3. Sections 5.1.3(a) and 5.2.2 set
forth the time periods for completion of the initial screening and substantive review. However,
section 5.0 also allows the Regional Entity the ability to establish an alternative time period
objective and work plan:
If the Regional Entity determines at any time that for a specified period of
time, the Regional Entity will be unable to complete initial screenings of
Exception Requests within the time provided by section 5.1.3(a) and/or
substantive reviews of Exception Requests within the time provided in section
5.2.2, the Regional Entity, based on consultation with NERC, shall establish an
alternative time period objective and work plan for completing initial screenings
and substantive reviews of Exception Requests during the specified period of
time. The alternative time period and work plan shall be publicized by posting on
the Regional Entity’s website.27
Section 5.0 also sets forth exceptions to the procedures for the initial screening and
substantive review of an Exception Request where the Regional Entity is the Submitting Entity:

27

•

There will be no initial screening, and no Acceptance or Rejection, of the Exception
Request.

•

The Regional Entity will begin substantive review of the Exception Request (and of
any responses received from the Owner and other applicable entities) within sixty

This provision is comparable to sections 5.1.3(b) of Appendix 4D, the TFE Procedure.

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days after submitting the Exception Request to the Owner and other applicable
entities, and shall complete the substantive review within six months.
•

Before the Regional Entity issues a Recommendation to NERC to approve or
disapprove the Exception Request in whole or in part, the Technical Review Panel
shall review the proposed Recommendation and issue an opinion on it, with copies
provided to the Owner and to NERC.

Section 5.1, Initial Screening of Exception Request for Acceptance or Rejection, sets
forth the detailed procedures relating to the Regional Entity’s initial screening of an Exception
Request. Section 5.1.3 specifies that the Regional Entity is to complete the initial screening
within 60 days after receiving the Exception Request or, if the Submitting Entity is not the
Owner, within 30 days after receiving the Owner’s response, unless (i) the Regional Entity has
established an alternative time period objective and work plan (as described above), or (ii) the
Regional Entity issues a notice to the Submitting Entity (and to the Owner, if different), prior to
the deadline date, stating a revised deadline date.
The initial screening shall review (i) whether the Exception Request is from an eligible
(in accordance with section 4.1) Submitting Entity, and (ii) whether all Required Information has
been provided; the Exception Request may be rejected for failure to meet either criterion.
(Sections 5.1.4 and 5.1.5.) However, the Regional Entity may not reject the Exception Request
because it is missing Required Information, unless (1) it first contacts the Submitting Entity to
request that the missing Required Information be provided, and (2) the Submitting Entity fails to
submit the missing Required Information within 30 days or such additional period of time that
the Regional Entity allows based on the circumstances.

If the Submitting Entity submits

supplemental Required Information in response to the Regional Entity’s request, the time for the
Regional Entity to complete the initial screening is extended by 15 days from the receipt of the
supplemental Required Information.

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Section 5.1.6 specifies that the Regional Entity may either accept the Exception Request
in its entirety, reject it in its entirety, or if the Exception Request is for more than one Element,
may accept it with respect to a subset of the Elements and reject it with respect to the remainder
of the Elements. Section 5.1.5(b) specifies that if the Regional Entity rejects the Exception
Request, its notice must explain the reason for the Rejection. Section 5.1.6 also specifies that the
Submitting Entity may, within 30 days after receipt of the Rejection, appeal to NERC to reverse
the Rejection and to direct the Regional Entity to proceed with a substantive review of the
Exception Request.
Section 5.2, Substantive Review of Exception Request for Approval or Disapproval, sets
forth the detailed procedures for the Regional Entity’s substantive review of the Exception
Request. Section 5.2.1 specifies that in conducting its substantive review, the Regional Entity:
•

may request access to and review the Required Information, including any
Confidential Information, Classified National Security Information, NRC Safeguards
Information, and Protected FOIA Information;

•

may conduct one or more physical inspections of the relevant Element(s) and its
(their) context and surrounding Elements and Facilities;

•

may request additional information from the Submitting Entity, Owner, or applicable
PAs, RCs, BAs, TOPs and TPs; and

•

may engage in further discussions concerning possible revisions to the Exception
Request.

Section 5.2.2 specifies that at the outset of its substantive review of the Exception
Request, the Regional Entity shall develop a milestone schedule pursuant to which it plans to
conduct the substantive review, and shall send a copy of the milestone schedule to the
Submitting Entity and the Owner (if different) for information. Section 5.2.2 further provides
that the Regional Entity shall complete the substantive review and issue a notice with its
Recommendation within six months following Acceptance of the Exception Request or within an

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alternative time period established pursuant to section 5.0. However, the Regional Entity may
extend the period for substantive review by issuing a notice stating the revised date by which it
will issue its Recommendation.
Section 5.2.3 specifies that upon completion of its substantive review of the Exception
Request, the Regional Entity shall issue a Recommendation to NERC (with a copy to the
Submitting Entity and to the Owner if different) as to whether the Exception Request should be
approved or disapproved (in whole or in part), and stating the basis for the Recommendation.
The Regional Entity shall also transmit to NERC the Exception Request Form and all other
information considered by the Regional Entity in arriving at its Recommendation.
Section 5.2.4 provides that the Regional Entity shall not recommend Disapproval of an
Exception Request, in whole or in part, without first submitting the Exception Request to a
Technical Review Panel and receiving its opinion, in accordance with section 5.3 (summarized
below).
Section 5.2.5 states that NERC shall develop, and post on its web site, a reporting
program and schedule pursuant to which Regional Entities will be required to submit to NERC
periodic reports on the numbers, status and timing of their initial screenings and substantive
reviews of Exception Requests.

While NERC considered establishing specific reporting

requirements, including specific content, in Appendix 5C, it was determined that (i) it would be
premature to do so prior to the Commission’s approval of the BES Exception Procedure, and (ii)
in any event, flexibility should be maintained to change the reporting requirements and content,
once developed, by not hard-wiring these requirements in Appendix 5C.28 These reports may

28

Candidate data items for the reporting requirements could include he number of new
Exception Requests received during the quarter; the number of Exception Requests for which
initial screening was completed during the quarter; the number of Exception Requests for which
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also be posted on the Regional Entity and NERC websites, and would provide a basis for the
development of periodic reports that NERC could submit to the Commission. Submission and
posting of periodic status reports will enable NERC to maintain oversight, and stakeholders to
have visibility, of the Regional Entities’ success or lack thereof in processing Exception
Requests within the time periods specified in Appendix 5C.
Section 5.3, Technical Review Panel, contains the provisions relating to the Regional
Entity Technical Review Panels. Each Regional Entity shall have a Technical Review Panel
comprised of not less than three individuals appointed by the Regional Entity senior executive.
Any panel members who are industry subject matter experts or Regional Entity members shall
comply with section 403.7 of the ROP (pertaining to confidentiality and to lack of conflicts of
interest and financial interest in the matter), shall not have participated in the Regional Entity’s
review of the Exception Request that they are to evaluate, and shall have the required technical
background to evaluate Exception Requests. Section 5.3 requires that if the Regional Entity
intends to issue a Recommendation of Disapproval, in whole or in part, it must first submit its
proposed determination to the Technical Review Panel and receive the Panel’s opinion. If the
Regional Entity decides to recommend Disapproval of the Exception Request, a copy of the
Technical Review Panel’s opinion is to be provided to the Submitting Entity (and to the Owner,
if different). The Regional Entity is not bound by the Technical Review Panel’s opinion, but the

substantive review was completed during the quarter; the number of Exceptions Requests in the
process of initial screening; the number of Exception Requests for which the original deadline
date as specified in section 5.1.3 has not been reached; the number of Exception Requests for
which the deadline date for the initial screening has been extended pursuant to section 5.1.3; the
number of Exception Requests undergoing substantive review, the number of Exception
Requests undergoing substantive review that are within the six month review period pursuant to
section 5.2.2; and the number of Exception Requests undergoing substantive review for which
the six month review period has been extended pursuant to section 5.2.2. However, no
determination has been made as to the content requirements for the periodic reports.

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Panel’s opinion will be part of the record associated with the Exception Request and shall be
provided to NERC.
f.

Section 6.0 – Supplementation of an Exception Request Prior to a
Recommendation

Section 6.0 specifies that a Submitting Entity or Owner, at any time prior to the Regional
Entity issuing its Recommendation, may supplement the Exception Request, either at the
Regional Entity’s request or at the Submitting Entity’s or Owner’s own initiative, for the purpose
of providing additional or revised Required Information. The Submitting Entity or Owner shall
submit a written explanation of what Required Information is being added or revised and the
purpose of the supplementation. Section 6.0 provides that supplementing a pending Exception
Request may, in the Regional Entity’s discretion, reset the time period for the Regional Entity’s
initial screening or substantive review.
g.

Section 7.0 – Appeal of Rejection of an Exception Request

Section 7.0 sets forth procedures by which a Submitting Entity may appeal to NERC the
Regional Entity’s Rejection of an Exception Request.

The submission to NERC must

demonstrate that the Submitting Entity is eligible (in accordance with section 4.1) to submit the
Exception Request and that all Required Information has been provided. If NERC determines
that the Submitting Entity is eligible to submit the Exception Request, that all Required
Information has been provided, and that the Exception Request should proceed to substantive
review, NERC shall issue a decision directing the Regional Entity to proceed to a substantive
review of the Exception Request. NERC’s decision to direct, or not to direct, the Regional
Entity to proceed to substantive review, is to be issued within 45 days after receiving the
Submitting Entity’s submission, with copies to the Submitting Entity (and Owner if different).

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h.

Section 8.0 – Approval or Disapproval of an Exception Request

Section 8.0 sets forth the process by which NERC will review an Exception Request,
following receipt of the Regional Entity’s Recommendation. The Submitting Entity or Owner
will have 30 days following the date of the Regional Entity’s recommendation to NERC to
submit a comment in support of or opposition to the Recommendation. The Exception Request
will be reviewed by a team of at least three persons, appointed by the NERC President, with the
required technical background to evaluate Exception Requests. The members of the review team
must have no financial, contractual, employment or other interest in the Submitting Entity or
Owner that would present a conflict of interest and must be free of any conflicts of interest in
accordance with NERC policies.29 NERC may ask the Regional Entity and the Submitting
Entity and Owner (if different) to appear at a NERC office, or to participate in a teleconference
or webinar, to discuss questions concerning the Exception Request.30
The NERC team’s review shall be completed within 90 days after NERC receives the
Regional Entity’s Recommendation, at the conclusion of which the team will issue a written
proposed decision to approve or disapprove the Exception Request. If the Exception Request

29

At the present time, NERC anticipates that its review teams would be drawn from staff
resources, supplemented by contractors as necessary, particularly where needed to provide
specific relevant subject matter expertise. However, situations may also arise in which NERC
may need to call on industry subject matter experts to participate as members of review teams.

30

In addition to the Regional Entity’s Recommendation, the materials available to the NERC
review team (and to the NERC President, see below) will include the Exception Request itself
(including the Detailed Information to Support an Exception Request), any opinion from the
Regional Entity Technical Review Panel, and any information submitted at the Regional Entity
level by a PA, RC, BA, TOP or TP concerning the Exception Request. Although it is presumed
that a PA, RC, BA, TOP or TP will present a comprehensive statement of its comments and
concerns, if any, at the Regional Entity review stage, NERC would have the ability to ask the
PA, RC, BA, TOP or TP if it needs to supplement the information, comments or concerns that
were submitted to the Regional Entity, in order to provide the NERC review team and the NERC
President with the most complete information on which to base their respective decisions.

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concerns more than one Element, the review team’s proposed decision may approve a portion
and disapprove a portion of the Exception Request. The written proposed decision shall state the
basis for the decision. If the review team’s proposed decision is not unanimous, the dissenting
team member may, if he or she wishes to do so, issue a minority report stating the dissenting
member’s reasons for disagreement with the proposed decision.
Within 30 days after the date of the NERC review team’s proposed decision, the NERC
President will issue a final written decision on the Exception Request on behalf of NERC. The
NERC President’s decision may adopt the review panel’s proposed decision or modify the
proposed decision, and may reach a different conclusion than the proposed decision as to
whether the Exception Request is approved or disapproved. The decision issued by the NERC
President shall be the decision of NERC with respect to the Approval or Disapproval of the
Exception Request.
Section 8.0 also specifies that NERC shall provide to the Submitting Entity and to the
Owner, if different, copies of any documents considered by the NERC review team in reaching
its proposed decision, and any additional documents considered by the NERC President in
reaching the final decision, that were not originally provided by, or have not previously been
provided to, the Submitting Entity or Owner. Finally, Section 8.0 provides that NERC shall
retain the documentation used to substantiate the decision related to an Exception Request for the
longer of seven years or as long as the Exception is in effect, unless a different retention period is
otherwise identified.
i.

Section 9.0 – Appeal of Approval or Disapproval of an Exception
Request

Section 9.0 specifies that a Submitting Entity or Owner aggrieved by NERC’s Approval
or Disapproval of an Exception Request or termination of an Exception (pursuant to section 11.0,

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described below) may, within 30 days following the date of the NERC decision, challenge the
determination pursuant to ROP section 1703 (described in §III.D below).

If neither the

Submitting Entity nor the Owner challenges NERC’s decision within the 30 day period with
respect to any Element to which the Exception Request or the Exception applies, the
determination becomes effective with respect to that Element on the thirty-first day following the
date of the NERC decision.
j.

Section 10.0 – Implementation Period for Exceptions

Section 10.1, Inclusion Exceptions, specifies that for an Element for which an Inclusion
Exception is approved, the Owner must submit to the Regional Entity a proposed implementation
plan detailing the schedule for the Owner to achieve compliance with any Reliability Standards
that are applicable to the newly included Element. The Owner and the Regional Entity shall
confer to agree upon the implementation schedule. If they are unable to agree on a schedule, the
Regional Entity shall notify the NERC director of compliance operations of the disagreement
and provide statements of the Regional Entity’s and the Owner’s positions, and NERC shall
specify a reasonable implementation schedule.
Section 10.2 pertains to establishing the compliance implementation plan for an Element
for which an Exclusion Exception has been denied.
-- Subsection (a) specifies that in the case of a newly-constructed or installed Element
which is included in the BES by application of the BES Definition but for which an
Exception Request for an Exclusion Exception was submitted at least 12 months
before commercial operation of the Element, but either is still pending or has been
rejected or disapproved at the time of commercial operation, the Owner shall submit
an implementation plan to the Regional Entity detailing the schedule for the Owner to

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achieve compliance with any Reliability Standards applicable to the newly
constructed or installed Element.
-- Subsection (b) specifies that in the case of an Element that was not included in the
BES under the previously effective BES Definition but is included in the BES based
on application of the revised BES Definition, and for which an Exception Request for
an Exclusion Exception was submitted within 12 months after the revised BES
Definition became effective but either is still pending or has been rejected or
disapproved at the end of the applicable BES Definition implementation plan time
period,31 the Owner shall submit a proposed implementation plan to the Regional
Entity detailing the schedule for the Owner to achieve compliance with any
Reliability Standards applicable to the newly included Element.
Under both subsections, the Owner and the Regional Entity shall confer to agree upon the
implementation schedule. If they are unable to agree on a schedule, the Regional Entity shall
notify the NERC director of compliance operations of the disagreement and provide statements
of the Regional Entity’s and the Owner’s positions, and NERC shall specify a reasonable
implementation schedule.
k.

Section 11.0 – Termination of an Approved Exception

Section 11.1 specifies that an Exception Request typically will be approved without a
specified date of termination but will be subject to review to verify continuing justification for
the Exception. Section 11.2 requires that a Submitting Entity must notify the Regional Entity
and NERC within 90 days after learning of any change of condition which would affect the basis
stated by NERC in its decision approving the Exception Request. NERC will review the
31

The proposed implementation period for the revised BES Definition is addressed in §III.E of
NERC’s contemporaneously-filed petition for approval of the revised BES Definition.

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notification and determine whether to direct the Regional Entity to perform a substantive review
pursuant to section 5.2 to verify continuing justification for the Exception and to issue a
Recommendation to NERC on whether the Exception should be continued or terminated.
Section 11.3 requires a Submitting Entity that has received an Exception to certify
periodically to the Regional Entity that the basis for the Exception remains valid, and in
connection with each certification, shall provide any changes to the Section I Required
Information or Section II Required Information. (Section 11.6 requires that upon request by the
Regional Entity, the Submitting Entity or Owner (if different) shall, within 30 days, provide the
most recent versions of any Section III Required Information requested.) The certification is to
consider the effect on the basis for the Exception of changes such as load growth and topological
changes and the effects on system limits and impacts as a result of contingencies listed in Table 1
of each applicable TPL Reliability Standard. The certifications must be provided every 36
months for as long as the Exception remains in effect. The first certification is due on the first
day of the first quarter 36 months after the date on which the Exception Request was approved.
If the certification is not provided, the Exception is subject to termination 90 days after the date
the certification was due.
Additionally, section 11.4 specifies that if the Regional Entity obtains information
through means other than those described in sections 11.2 (notification from the Submitting
Entity) or 11.3 (periodic certifications submitted by the Submitting Entity) indicating an
Exception may no longer be warranted, the Regional Entity shall provide the information to
NERC. NERC will determine whether to direct the Regional Entity to perform a substantive
review pursuant to section 5.2 to verify continuing justification for the Exception and to issue a
Recommendation to NERC on whether the Exception should be continued or terminated. This

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process will also provide NERC the ability to direct the Regional Entity to conduct a substantive
review of the Exception, if NERC obtains information indicating the Exception may no longer be
warranted.
Section 11.5 specifies that if the Regional Entity recommends that an Exception be
terminated, NERC shall take the following actions:
•

issue a written notice to the Submitting Entity (and the Owner, if different) that the
exception is under review for possible termination;

•

allow the Submitting Entity and/or Owner 30 days to submit comments or
information to NERC to show that the Exception continues to be justified and should
remain in effect; and

•

cause the Regional Entity’s Recommendation to be reviewed by a NERC review
panel for purposes of issuing a proposed decision, followed by a final decision by the
NEC President, in accordance with section 8.0.

If the conclusion of the NERC review is that the Exception should be terminated, NERC shall
send a written notice to the Submitting Entity and/or Owner stating that the Exception is
terminated and the reasons for the termination. When an Element will be included in the BES as
a result of the termination of an Exclusion Exception, an implementation plan detailing the
schedule for complying with any Reliability Standards applicable to the newly-included Element
will be developed in accordance with section 10.1 as if it were being included by an Inclusion
Exception.
D.

Proposed Section 1703 of the Rules of Procedure
Proposed ROP section 1703 (included in Attachments 2A and 2B) provides a procedure

for a Submitting Entity or Owner to challenge the NERC decision to approve or disapprove an
Exception Request pursuant to Appendix 5C. The Submitting Entity (or Owner, if different)
must file the challenge within 30 days of the date of the NERC decision, by submitting it to the
NERC director of compliance operations, with copies to the Regional Entity and to the

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Submitting Entity or Owner (if different). The Regional Entity, and the Submitting Entity or
Owner if different, may file a response within 30 days after the date the challenge is filed with
NERC. The challenge will be decided by the NERC BOTCC. The BOTCC must issue its
decision within 90 days after the submission of the challenge, unless the BOTCC issues a notice
extending the deadline for its decision to a stated date later than the 90-day deadline, and stating
the reason for the extension. The BOTCC decision will be the final NERC decision on the
Exception Request.
Section 1703.4 states that the Submitting Entity, or Owner if different, may appeal the
final NERC decision to, or seek review of the final NERC decision by, the Applicable
Governmental Authority(ies), in accordance with the legal authority and rules and procedures of
the Applicable Governmental Authority(ies).

An appeal to an Applicable Governmental

Authority must be filed within 30 days following the date of the BOTCC’s decision or within
such other time period as is provided for in the legal authority, rules or procedures of the
Applicable Governmental Authority.
E.

Proposed Revisions to Appendix 2 to the Rules of Procedure
In the November 29, 2011 ROP Revisions Filing, which is still pending before the

Commission as of the date of this Petition, NERC submitted for approval (among other revisions
to the ROP) proposed new Appendix 2, Definitions Used in the Rules of Procedure. Appendix 2
is intended to collect, in one appendix to the ROP, all defined terms used anywhere in the ROP
and appendices.
Proposed Appendix 5C includes a number of new defined terms that are not included in
proposed Appendix 2 as filed with the Commission in the November 29, 2011 ROP Revisions
Filing (including, of course, the revised definition of Bulk Electric System). In addition, it is

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necessary to slightly modify several other definitions in proposed Appendix 2, which are already
used elsewhere in the ROP, to make them consistent with definitions in proposed Appendix 5C.
Accordingly, NERC is submitting for approval, as part of this filing, proposed revisions to
Appendix 2 as originally filed in the November 29, 2011 ROP Revisions Filing. Attachment
3A is a clean version of Appendix 2 incorporating the additional and revised definitions that are
being added due to Appendix 5C, and Attachment 3B is a redlined version of Appendix 5C, as
originally submitted in the November 29, 2011 ROP Revisions Filing, showing the additional
and revised definitions that are being added due to Appendix 5C.32
Following is a list of the new and revised definitions in Appendix 2:
Acceptance of the Exception Request or Acceptance (new defined term from Appendix
5C)
Approval of the Exception Request or Approval (new defined term from Appendix 5C)
Balancing Authority (minor revision to reflect inclusion of new defined terms in the BES
through adoption of the revised BES Definition)
Balancing Authority Area (minor revision to reflect inclusion of new defined terms in the
BES through adoption of the revised BES Definition)
BES Definition (new defined term from Appendix 5C)
Blackstart Resource (minor revision to reflect inclusion of new defined terms in the BES
through adoption of the revised BES Definition)
Bulk Electric System or BES (revised definition from NERC Glossary)
Canadian Entity (revised definition to distinguish the meanings of this term as used in
Appendix 4D and Appendix 5C, respectively)
Disapproval of the Exception Request or Disapproval (new defined term from Appendix
5C)

32

NERC is making the assumption that the November 29, 2011 ROP Revisions Filing will be
acted upon by the Commission before the instant Petition is acted on.

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Distribution Factor (defined term from the NERC Glossary being added to the defined
terms in the ROP as a result of adoption of the revised BES Definition)
Exception (new defined term from Appendix 5C)
Exception Procedure (new defined term from Appendix 5C)
Exception Request (new defined term from Appendix 5C)
Exception Request Form (new defined term from Appendix 5C)
Flowgate (defined term from the NERC Glossary being added to the defined terms in the
ROP due to its use in the revised BES Definition)
Inclusion Exception (new defined term from Appendix 5C)
Interchange Distribution Calculator (defined term from the NERC Glossary being added
to the defined terms in the ROP as a result of adoption of the revised BES Definition)
Lead Entity (new defined term from Appendix 5C)
Load (defined term from the NERC Glossary being added to the defined terms in the
ROP due to its use in the revised BES Definition)
Mexican Entity (new defined term from Appendix 5C)
Owner (new defined term from Appendix 5C)
Reactive Power (defined term from the NERC Glossary being added to the defined terms
in the ROP due to its use in the revised BES Definition)
Real Power (defined term from the NERC Glossary being added to the defined terms in
the ROP due to its use in the revised BES Definition)
Recommendation (new defined term from Appendix 5C)
Rejection of the Exception Request or Rejection (new defined term from Appendix 5C)
Required Information (revised definition to distinguish the meanings of this term as used
in Appendix 4D and Appendix 5D, respectively)
Scope of Responsibility (new defined term from Appendix 5C)
Section I Required Information (new defined term from Appendix 5C)
Section II Required Information (new defined term from Appendix 5C)

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Section III Required Information (new defined term from Appendix 5C)
Sink Balancing Authority (minor revision to reflect inclusion of new defined terms in the
BES through adoption of the revised BES Definition)
Special Protection System (minor revision to reflect inclusion of new defined terms in the
BES through adoption of the revised BES Definition)
Submitting Entity (revised definition to distinguish the meanings of this term as used in
Appendix 5C and in section 1500 of the ROP, respectively)
Technical Review Panel (new defined term from Appendix 5C)
F.

Proposed Revisions to Appendix 5B to the Rules of Procedure
Appendix 5B of the ROP, Statement of Compliance Registry Criteria, includes within its

text the current definition of Bulk Electric System. Accordingly, and assuming the revised
definition of Bulk Electric System is approved by the Commission, Appendix 5B needs to be
revised to include the revised BES Definition. In addition, several other terms in Appendix 5B
will now be capitalized because they become defined terms due to adoption of the revised BES
Definition.
Attachment 6A to this Petition is a clean version of Appendix 5B, as filed with the
Commission for approval in the November 29, 2011 ROP Revisions Filing, with the existing
definition of Bulk Electric System replaced by the revised BES Definition. Attachment 6B is a
redlined version of Appendix 5B, as filed in the November 29, 2011 ROP Revisions Filing,
showing, in legislative style, the deletion of the current definition of Bulk Electric System and
the insertion of the revised BES Definition, as well as the other capitalization revisions described
above.33
33

In Attachments 6A and 6B, the proposed revisions to Appendix 5B for which approval has
been sought in the November 29, 2011 ROP Revisions Filing, which is still pending before the
Commission as of the date of this Petition, are assumed to have been accepted and therefore are
incorporated in the existing text.

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G.

Proposed Revisions to Other Sections of the Rules of Procedure and to Appendices
3D, 4B, 6 and 8
NERC also requests approval of minor revisions to sections 302.2.2, 501.1.4.4, 804,

1102.2 and 1701 of the ROP and Appendices 3D, 4B, 6 and 8. The revisions to section 1701 are
necessary to reflect the addition of new section 1703 to section 1700 of the ROP. The revisions
to the other sections of the ROP and to Appendices 3D, 4B, 6 and 8 are all necessary to
capitalize (consistent with the capitalization convention adopted in the November 29, 2011 ROP
Revisions Filing) terms that become defined terms as the result of adoption of the revised BES
Definition and several defined terms from the NERC Glossary that are used within the revised
BES Definition. The revisions to these ROP sections and Appendices are shown in the redlined
versions in Attachments 2B, 4B, 5B, 7B and 8B, respectively.34
IV. NERC APPROVALS FOR THE PROPOSED REVISION
Following the issuance of Order No. 743 on November 28, 2010, a SDT was formed
charged with the responsibility to develop a revised BES Definition, technical criteria for
Exception Requests, and an implementation plan (Standards Project 2010-17); and the BES ROP
Team was formed to develop a proposed BES Exception Procedure to be added to the NERC
ROP. The BES ROP Team members were selected, from stakeholder names that were submitted
for participation on the Standards Project 2010-17 SDT, to provide a good mixture of technical,
policy and industry view. The Team included Canadian representatives.35
During the course of the BES ROP Team’s work, interested stakeholders were provided
multiple opportunities to participate in the development of a BES Exception Procedure, through
34

Each of these Attachments was prepared assuming that the proposed revisions submitted to the
Commission in the November 29, 2011 ROP Revisions Filing will be approved.
35

The BES ROP Team roster is available at:
http://www.nerc.com/docs/standards/dt/BESROP_ROSTER_08312011.pdf.

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open meetings of the Team as well as through extensive use of e-mail, web postings, and
informational and question-and-answer sessions held jointly with the BES Definition SDT. An
extensive stakeholder e-mail list (the same list used for the BES Definition SDT’s work) was
compiled and used to distribute status information about the Team’s work as well as draft
documents. The use of a common e-mail list kept the BES Definition SDT and the BES ROP
Team aware of each other’s work. As an additional source of information for stakeholders, a
BES ROP Team web page was created and hyperlinked to the “Standards Under Development”
page on the NERC web site. Further, the NERC Member Representatives Committee was
briefed on the BES ROP Team’s progress on several occasions during 2011; two joint (with the
SDT) NERC webinars with questions and answers were presented; and there was one joint
presentation at a NERC Standards workshop.
Through two separate postings and comment periods, stakeholders were provided the
opportunity to provide feedback on draft amendments to the ROP for the BES Exception
Procedure. A 30-day posting for comment was held from May 10, 2011 through June 10, 2011,
in conjunction with the first posting of the draft revised BES Definition. Seventy sets of
comments were received on this draft posting, including comments from more than 176 different
people from approximately 131 organizations representing all ten Registered Ballot Body
Segments. A special electronic comment form was utilized to facilitate the submission and
review of stakeholder comments.
After considering the comments received in the first posting, the BES ROP Team made
substantial revisions to the proposed ROP amendments. A second posting for a 45-day comment
period was conducted from September 13, 2011 through October 27, 2011, in conjunction with
the second posting and initial ballot of the revised BES Definition. There were 72 sets of

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comments received on the second posting, including comments from more than 134 different
people from approximately 86 organizations representing nine of the ten Segments.

An

electronic comment form was again used which included specific questions that stakeholders
were asked to respond to, as well as providing the ability to comment generally on the proposed
text.36
After reviewing the second set of comments, the BES ROP Team made additional
revisions to the draft ROP provisions, and submitted the Team’s proposed versions of Appendix
5C and ROP sections 509 and 1703 to NERC.
A more detailed discussion of the development process followed by the BES ROP Team
and how the Team considered and addressed a number of issues it identified, including issues
raised in stakeholder comments, in arriving at its final proposed ROP provisions, is provided in
Attachment 9, which was prepared by the BES ROP Team.
The provisions proposed by the BES ROP Team were reviewed and discussed by NERC
Reliability Standards, Compliance Operations, Reliability Assessment and Performance
Analysis, and Legal staffs to identify any revisions to the Team’s documents that NERC staff
should recommend to the Board.

Although generally accepting the structure and process

embodied in the ROP provisions proposed by the BES ROP Team, NERC staff did make a
number of specific revisions to the Team’s proposed documents for the versions that were
submitted to the NERC Board for approval. A number of these revisions were non-substantive
revisions for purposes of internal consistency within Appendix 5C and/or for consistency

36

The NERC Bylaws (Article XI, section 2) only require that one, 45-day comment period be
provided for proposed additions or revisions to the ROP, before the additions or revisions are
submitted to the Board for approval. By providing for two postings and stakeholder comment
periods, the BES ROP Team exceeded the requirements of the Bylaws.

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(including format consistency) with other ROP provisions. Substantive revisions that were made
to proposed Appendix 5C include the following items:
•

Sections 5.0 item (iii), 5.1.5 and 5.3 – The Team’s proposal included a requirement
for a review by the Regional Entity Technical Review Panel if the Regional Entity
proposes to reject an Exception Request. This provision has been deleted. In deleting
this provision, NERC staff considered both this specific provision and the overall
amount of process and resource requirements that Appendix 5C and ROP section
1703 would require of the Regional Entities and NERC, as well as the time
potentially required to complete the overall Exception Request process, and
concluded that the amount of process steps, resources and time required needed to be
reduced. NERC Staff also noted that sections 5.1.5(b) and 7.0 give the Submitting
Entity the right to appeal a Rejection of an Exception Request by the Regional Entity
to NERC, thereby providing an opportunity for review of the Rejection decision.

•

Section 5.1.3. The time periods for the Regional Entity to complete initial screening
of Exception Requests, described in the Team’s proposal as “typical,” were changed
to deadlines, with a provision added whereby the Regional Entity can extend the
deadline to a new date by issuing a notice.37

•

Section 5.0 item (ii) and 5.2.2. The Team’s version included a requirement for the
Regional Entity to confer with the Submitting Entity (and Owner, if different) to
establish milestones for the Regional Entity to complete its substantive review of the
Exception Request within six months. This requirement for such consultations has
been deleted. The necessity to engage in such conferences and negotiations in
connection with every substantive review of an Exception Request was viewed as an
excessive time and resource requirement for the Regional Entities. However, in its
place, a provision was added in section 5.2.2 requiring the Regional Entity, at the
outset of its substantive review, to develop a milestone schedule pursuant to which it
plans to conduct the substantive review, and to send a copy of the milestone schedule
to the Submitting Entity and the Owner (if different) for information.

•

A new section 5.2.5 was added stating that NERC shall develop, and post on its web
site, a reporting program and schedule pursuant to which Regional Entities will be
required to submit to NERC periodic reports on the numbers, status and timing of
their initial screenings and substantive reviews of Exception Requests.

37

In addition, section 5.0 allows a Regional Entity to establish an alternative time period
objective and work plan for completing initial screenings and substantive reviews of Exception
Requests, for a period of time, if the Regional Entity determines it will be unable to complete
these activities within the time periods specified in section 5.0.

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•

Section 8.0. The Team’s proposed version included a requirement that if the decision
of the three-person NERC team reviewing an Exception Request is not unanimous, its
decision must note that fact and state the basis on which the minority disagreed. This
provision has been eliminated and replaced with a provision that the dissenting team
member may, if he or she wishes, submit a minority report stating the dissenting
member’s reasons for disagreement with the decision. NERC staff did not see a need
to require a statement of the minority position if the dissenting member did not feel
sufficiently strongly to provide one.

•

Section 8.0. The minimum time period for NERC to retain documentation of the
NERC decision was increased from six years (in the Team’s proposal) to seven years,
to be more consistent with other NERC document retention policies.

•

Section 8.0. A provision in the Team’s version that “The Submitting Entity and/or
Owner if different shall be given access to this record upon request, subject to
applicable confidentiality provisions” was deleted. Entities should be responsible to
maintain their own copies of the record of the Exception Request process; further,
responding to requests for documents from the record (including ensuring that
confidentiality requirements are maintained when access or copies are provided)
would be an unnecessary resource requirement for NERC. However, this provision
was replaced with a requirement that NERC shall provide to the Submitting Entity
and to the Owner (if different), copies of any documents considered by the NERC
review team in reaching its proposed decision, and any additional documents
considered by the NERC President in reaching the final decision, that were not
originally provided by, or have not previously been provided to, the Submitting Entity
or Owner. (The references to the review team’s “proposed decision” and to the
NERC President’s “final decision” were added as the result of the additional changes
made to Section 8.0 at the direction of the NERC Board, as discussed below.)

•

Sections 10.1, 10.2(a) and 10.2(b). In the Team’s version, the three cited sections
each provided that if the Regional Entity and the Owner are unable to agree on an
implementation plan for compliance with Reliability Standards applicable to an
Element that is included in the BES due to Approval or Disapproval of an Exception
Request, “the Regional Entity Board or a Board-appointed committee shall specify a
reasonable implementation schedule.” NERC staff concluded that designating
Regional Entity boards to make these determinations was inappropriate for a number
of reasons, including lack of expertise and the fact that some Regional Entity boards
meet infrequently so that the determination of the implementation plan schedule
could be unduly delayed. These provisions were deleted and replaced with provisions
specifying that if the Regional Entity and the Owner are unable to agree on an
implementation plan, the matter shall be brought to NERC and NERC will determine
an appropriate implementation schedule.

•

Section 11.3. The frequency with which the Submitting Entity must certify that the
basis for the Exception remains valid was changed from 24 months (in the Team’s
version) to 36 months. NERC staff noted that (i) the underlying system conditions

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and configurations on which the Exception was based are not likely to change
frequently, (ii) Regional Entity resources will be required to track the certification
due dates and process and review the certifications, and (iii) section 11.2 imposes a
separate requirement on Submitting Entities to notify the Regional Entity and NERC
within 90 days after learning of any change in condition which would affect the basis
stated in the NERC decision approving the Exception Request.
Substantive revisions that NERC staff made to the BES ROP Team’s proposed ROP
section 1703 (providing the procedures for a challenge of the NERC decision on an Exception
Request to the NERC Board) are the following items:
•

The Team’s proposed version of ROP section 1703 provided for two levels of review:
review by a separate standing technical panel appointed by the NERC Board,
followed by review (if requested by the appellant) by the NERC BOTCC. NERC
Staff concluded that providing for two levels of review at the appeal stage, including
review by another panel of technical experts, was unnecessary in light of the review
steps in the process leading up to the “initial” NERC decision on the Exception
Request, which already will have included review by two separate panels of technical
experts. Therefore, section 1703 was revised to eliminate review by the standing
panel of experts, and instead to provide for only one step in the challenge process,
i.e., consideration of the challenge by the BOTCC.

•

The Team’s version also provided that the BOTCC, when asked to review the
decision of the standing panel, could simply allow the 90-day period for BOTCC
review to expire with no action, thereby making the standing panel’s decision the
final NERC decision. However, because the review by the standing panel was
eliminated, section 1703 was also revised to specify that the BOTCC must render a
decision on each challenge. A provision was also added to allow the BOTCC to
extend its decision deadline date beyond 90 days by issuing a notice to the parties
stating the extended deadline date. This “extension” provision gives the BOTCC
flexibility in scheduling and to ensure it has sufficient time to consider the challenge.

During the course of consideration of the BES ROP Team’s proposed Exception
Procedure, there was also consideration of whether provisions should be added to Appendix 5C
to provide for coordination among Regional Entities concerning Exception Requests. Section
4.1 of proposed Appendix 5C specifies that:
With respect to an Element that crosses a boundary between Regional
Entities, (1) the Submitting Entity will submit the Exception Request to both (or
all) Regional Entities, which will cooperate to process the Exception Request
pursuant to section 5.1 below, or (2) the Regional Entities must jointly submit an

-46-

Exception Request to NERC (neither Regional Entity shall be allowed to submit
such Exception Request unilaterally).
However, consideration was also given to whether to include procedures by which neighboring
Regional Entities in an Interconnection to the Region in which the Element is located would be
sent notification of, and could submit comments on, an Exception Request concerning how the
Exception Request could impact reliability in the neighboring Region, even where the
Element(s) that are the subject of the Exception Request are located solely within a single
Region. It was the near-unanimous conclusion of the Regional Entities and NERC that such
additional procedures were not needed and would, in fact, create additional prescriptive
administrative requirements that could burden efficient implementation of the Exception
Procedure. Rather, the Regional Entities can work cooperatively together to keep each other
apprised of Exception Requests that could, if granted, have impacts on the Reliable Operation of
the interconnected bulk-power transmission system in a neighboring Region within the
Interconnection, and seek input from the neighboring Regional Entity where appropriate.
Additionally, NERC, in its role under the Exception Procedure as the entity deciding whether
Exception Requests should be approved or disapproved, can consider and evaluate the potential
impacts of an Exception Request on the Reliable Operation of the interconnected bulk-power
transmission system in neighboring Regional Entities.
The NERC Board accepted the revisions to the Exception Procedure recommended by
NERC staff and directed that two additional revisions be made to the BES ROP Team’s
proposed version of Appendix 5C. Both of the revisions directed by the Board have been
implemented in section 8.0.
•

The Board determined that the three-person NERC review team should not make the
decision on behalf of NERC to approve or disapprove the Exception Request, but
rather that the decision should be made by the NERC President. Accordingly, section

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8.0 was revised to specify that the review team is to issue a proposed decision within
90 days after the Regional Entity’s Recommendation is received, and that within 30
days thereafter, the NERC President will issue a final decision to approve or
disapprove the Exception Request, which shall be the NERC decision.
•

The Board directed that a provision be added to specify that the NERC review team
members shall be free of any conflicts of interest with respect to the Submitting
Entity or Owner. Based on this direction, the following sentence was added in
section 8.0: “The members of the review team shall have no financial, contractual,
employment or other interest in the Submitting Entity or Owner that would present a
conflict of interest and shall be free of any conflicts of interest in accordance with
NERC policies.”

On January 18, 2012, the NERC Board approved proposed Appendix 5C, as modified by
NERC staff and subject to revisions as directed by the Board (as described above), proposed
ROP section 509, and proposed ROP section 1703 (also as modified by NERC staff). The Board
also approved the proposed revisions to ROP sections 302.2.2, 501.1.4.4, 804, 1102.2 and 1701
and to Appendices 2, 3D, 4B, 5B, 6 and 8 that are submitted with this Petition.
V. NERC LIST OF FACILITIES THAT HAVE RECEIVED EXCEPTIONS
In Order No. 743, the Commission indicated that NERC should maintain a list of
facilities that are granted exemptions from the BES Definition pursuant to the exemption process
that NERC was directed to develop:
While the Commission will not require that we review each exemption on a
facility-by-facility basis, we would maintain the authority to conduct audits to
determine the appropriateness of a particular exemption. We contemplate that a
Commission staff audit would review the application of the exemption criteria
developed by NERC in NERC’s or a Regional Entity’s determination to approve
an exemption for a particular facility. However, to facilitate such audits, the ERO
should maintain a list of exempted facilities that can be made available to the
Commission on request. NERC can decide how best to maintain the list,
including determining whether or not to post it on the NERC website.38
. . . [T]he exemption process provides a means of ensuring that relatively high
voltage distribution facilities are excluded from compliance with mandatory
Reliability Standards. In this light, we believe that it would be beneficial for the
38

Order No. 743 at P 117.

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ERO in maintaining a list of exempted facilities, to consider including a means to
track and review facilities that are classified as local distribution to ensure
accuracy and consistent application of the definition. Similarly, the ERO could
track exemptions for radial facilities.39
The proposed BES Exemption Procedure and the other new ROP provisions submitted in
this Petition do not include provisions for NERC to maintain a list of facilities that have received
Exceptions, as this is an internal administrative matter for NERC to implement that does not
need to be embedded in the ROP. However, NERC recognizes the Commission’s statement that
NERC should maintain such a list, and plans to do so. NERC will develop a specific internal
plan and procedures for maintaining a list of facilities for which Exceptions have been granted,
in order to be prepared to initiate the list when the BES Definition and the BES Exception
Procedure go into effect and Exception Requests begin to be received and processed. NERC has
not yet determined specifically how the list will be organized and structured, nor whether or
under what conditions the list will be made available on the NERC web site or otherwise made
available to any entities other than the Commission (and other Applicable Governmental
Authorities) and the Regional Entities. One overriding issue will be the extent of Confidential
Information (including Critical Energy Infrastructure Information) that will be included in
Exception Requests and in decisions on Exception Requests, and how to make the list of
facilities with Exceptions available (if at all) to other stakeholders while continuing to protect
Confidential Information.
In addition to the list that NERC will maintain, it will be necessary for Regional Entities
to maintain lists of facilities within their Regions for which Exceptions have been granted, in
order to monitor compliance with the requirement to submit periodic certifications pursuant to
section 11.3 of Appendix 5C.
39

Order No. 743 at P 119.

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VI. CONCLUSION
NERC respectfully requests that the Commission approve (1) proposed new Appendix
5C to the NERC Rules of Procedure, Procedure for Requesting and Receiving Exceptions from
the NERC Definition of the Bulk Electric System, (2) proposed new Sections 509 and 1703 of the
ROP, and (3) the proposed revisions to sections 302.2.2, 501.1.4.4, 804, 1102.2 and 1701 of the
ROP and to Appendices 2, 3D, 4B, 5A, 6 and 8 submitted with and described in this Petition,
and that the Commission find this filing and the proposed new provisions of the ROP to
constitute full compliance with the Commission’s directives in Order Nos. 743 and 743-A
concerning development of a procedure for exemptions from application of the BES Definition.
NERC requests that the Commission approve the proposed ROP revisions with the same
effective date as the proposed effective date of the revised BES Definition.
Respectfully submitted,
Gerald W. Cauley
President and Chief Executive Officer
North American Electric Reliability Corporation
3353 Peachtree Road N.E.
Suite 600, North Tower
Atlanta, GA 30326-1001
(404) 446-2560
David N. Cook
Senior Vice President and General Counsel
Holly A. Hawkins
Assistant General Counsel for Standards and
Critical Infrastructure Protection
Andrew Dressel, Attorney
North American Electric Reliability Corporation
1325 G Street N.W., Suite 600
Washington, D.C. 20005
(202) 400-3000
(202) 644-8099 – facsimile
david.cook@nerc.net
holly.hawkins@nerc.net
andrew.dressel@nerc.net

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/s/Owen E. MacBride
Owen E. MacBride
Debra A. Palmer
Schiff Hardin LLP
1666 K Street, N.W., Suite 300
Washington, D.C. 20036-4390
(202) 778-6400
(202) 778-6460 – facsimile
omacbride@schiffhardin.com
dpalmer@schiffhardin.com

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 1

PROPOSED APPENDIX 5C TO THE RULES OF PROCEDURE,
PROCEDURE FOR REQUESTING AND RECEIVING AN EXCEPTION
FROM THE NERC DEFINITION OF BULK ELECTRIC SYSTEM

Proposed Version 1-25-2012

PROCEDURE FOR REQUESTING AND RECEIVING
AN EXCEPTION FROM THE APPLICATION
OF THE
NERC DEFINITION OF BULK ELECTRIC SYSTEM

Table of Contents
1.0
1.1.
1.2.
1.3

2.0.
3.0.
3.1.
3.2.

4.0.

INTRODUCTION........................................................................................................................... 1
Purpose.........................................................................................................................................................1
Authority ......................................................................................................................................................2
Canadian and Mexican Entities and Cross-Border Regional Entities ..........................................................2

DEFINITIONS ................................................................................................................................ 2
BASIS FOR APPROVAL OF AN EXCEPTION ........................................................................ 5
Grounds for an Exception ............................................................................................................................5
Burden..........................................................................................................................................................5

FORM, CONTENTS, AND SUBMISSION OF AN EXCEPTION REQUEST........................ 5

4.1.
Eligible Submitters of an Exception Request...............................................................................................5
4.2.
Separate Submissions for Each Exception Request .....................................................................................6
4.3.
Withdrawal of an Exception Request...........................................................................................................7
4.5.
Required Information to be Included in the Exception Request...................................................................7
4.6
Access to Confidential Information, Classified National Security Information, NRC Safeguards
Information, and Protected FOIA Information Included in Required Information...................................................9

5.0
REVIEW, ACCEPTANCE OR REJECTION, AND RECOMMENDATION REGARDING
EXCEPTION REQUESTS ...................................................................................................................... 10
5.1.
5.2
5.3

Initial Screening of Exception Request for Acceptance or Rejection ........................................................11
Substantive Review of Exception Request for Approval or Disapproval ................................................133
Technical Review Panel...........................................................................................................................144

6.0
SUPPLEMENTATION OF AN EXCEPTION REQUEST PRIOR TO A
RECOMMENDATION ............................................................................................................................ 14
7.0
APPEAL OF REJECTION OF AN EXCEPTION REQUEST................................................ 14
8.0
APPROVAL OR DISAPPROVAL OF AN EXCEPTION REQUEST.................................... 15
9.0
CHALLENGES TO APPROVAL OR DISAPPROVAL OF EXCEPTION REQUESTS... 166
10.0 IMPLEMENTATION PERIOD FOR EXCEPTIONS.............................................................. 16
10.1
10.2

11.0

Inclusion Exceptions ..................................................................................................................................16
Denials of Exception Requests for Exclusion ............................................................................................16

TERMINATION OF AN APPROVED EXCEPTION ............................................................ 177

i

1.0

INTRODUCTION
1.1.

Purpose

The NERC definition of the Bulk Electric System uses specific terms and thresholds that,
in most cases, should appropriately identify Elements and groups of Elements that are
appropriately classified as part of the Bulk Electric System. Conversely, the BES Definition
should, in most cases, exclude Elements that are not part of the Bulk Electric System. In certain
cases, however, the BES Definition may classify certain Elements as part of the Bulk Electric
System that are not necessary for the Reliable Operation of the interconnected bulk-power
transmission system or the BES Definition may classify certain Elements as non-Bulk Electric
System that are necessary for the Reliable Operation of the interconnected bulk-power
transmission system.
This Appendix to the Rules of Procedure of the North American Electric Reliability
Corporation provides the procedure by which an entity may request and receive an Exception
which will have the effect of either including within the BES an Element or Elements that would
otherwise be excluded by application of the BES Definition or excluding from the BES an
Element or Elements that would otherwise be included by application of the BES Definition.
This Appendix is intended to implement authorization granted by FERC to allow such
Exceptions from the BES Definition.1
An entity must request and obtain an Exclusion Exception pursuant to an Exception
Request under this Exception Procedure before any Element that is included in the BES by
application of the BES Definition shall be excluded from the BES. Likewise, an entity must
request and obtain an Inclusion Exception pursuant to an Exception Request under this
Exception Procedure before any Element that is excluded from the BES by application of the
BES Definition shall be included in the BES.
During the pendency of an Exception Request, the status of an Element(s) that is the
subject of an Exception Request shall remain as it is determined based on application of the BES
Definition. This status will continue until all appeals to all Applicable Governmental Authorities
are completed. An entity that is planning a connection of a new Element for which it believes an
Exception would be appropriate may request an Exception prior to commercial operation of the
Element.
The Owner of the Element to which the Exception Request applies or, with respect to an
Element owned by another Registered Entity, any Regional Entity, Planning Authority (“PA”),
Reliability Coordinator (“RC”), Transmission Operator (“TOP”), Transmission Planner (“TP”)
or Balancing Authority (“BA”) that has (or will have upon inclusion of the Elements in the BES)
the Elements covered by an Exception Request within its Scope of Responsibility may submit an
Exception Request for the Element as provided in this Exception Procedure.
1

Revision to Electric Reliability Organization Definition of Bulk Electric System, 133 FERC ¶
61,150 (“Order No. 743”) (2010), Order on Reh’g, Revision to Electric Reliability Organization
Definition of Bulk Electric System, 134 FERC ¶61,210 (“Order No. 743-A”) (2011).
1

1.2.

Authority

This Appendix is a NERC Rule of Procedure and an Electric Reliability Organization
Rule. This Appendix has been approved by (i) the NERC Board of Trustees and (ii) FERC. Any
future revisions to this Appendix must be adopted in accordance with Article XI, section 2 of the
NERC Bylaws and Section 1400 of the NERC Rules of Procedure, including approval by the
NERC Board of Trustees and by FERC, in order to become effective. This Exception Procedure
or an equivalent procedure is to be implemented in Canada and Mexico consistent with their
respective laws and agreements.
1.3

Canadian and Mexican Entities and Cross-Border Regional Entities

A Registered Entity that is a Canadian Entity or a Mexican Entity seeking an Exception
will be expected to work with the Regional Entity, NERC, and Applicable Governmental
Authorities in Canada or Mexico, as appropriate, consistent with their respective laws and
agreements, and without being obligated to authorize the disclosure of information prohibited by
applicable federal, state or provincial law from disclosure to FERC or other governmental
authorities in the U.S., in order to implement this Exception Procedure or an equivalent
procedure. A Canadian Entity or a Mexican Entity shall not be required to subject itself to United
States federal or state laws not otherwise applicable to the entity in order to utilize this Exception
Procedure or an equivalent procedure.

2.0.

DEFINITIONS

For purposes of this Appendix, capitalized terms shall have the definitions set forth in
Appendix 2 to the Rules of Procedure. For ease of reference, the definitions of the following
terms that are used in this Appendix are also set forth below.
2.1
Acceptance of the Exception Request (or Acceptance): The determination that
an eligible Exception Request (i.e., an Exception Request permitted by section 4.1) contains all
the Required Information so that it can undergo substantive review.
2.2
Approval of the Exception Request (or Approval): The determination by
NERC that an Exception Request meets the criteria to receive the requested Exception.
2.3

BES: Bulk Electric System.

2.4
BES Definition: The NERC definition of the Bulk Electric System as set forth in
the NERC Glossary of Terms Used in Reliability Standards.
2.5
Canadian Entity: A Registered Entity that is organized under Canadian federal
or provincial law.
2.6
Classified National Security Information: Required Information that has been
determined to be protected from unauthorized disclosure pursuant to Executive Order No. 12958,

2

as amended, and/or the regulations of the NRC at 10 C.F.R. §95.35; or pursuant to any
comparable provision of Canadian or Mexican federal or provincial law.
2.7
Disapproval of the Exception Request (or Disapproval): The determination by
NERC that an Exception Request does not meet the criteria to receive the requested Exception.
2.8
Eligible Reviewer: A person who has the required security clearances or other
qualifications, or who otherwise meets the applicable criteria, to have access to Confidential
Information, Classified National Security Information, NRC Safeguards Information or Protected
FOIA Information, as applicable to the particular information to be reviewed.
2.9

Exception: Either an Inclusion Exception or an Exclusion Exception.

2.10

Exception Procedure: The procedure set forth in this Appendix.

2.11 Exception Request: A request made by a Submitting Entity in accordance with
this Appendix for an Exception.
2.12 Exception Request Form: The form adopted by each Regional Entity, in
accordance with a template provided by NERC, for use by Submitting Entities in submitting
Exception Requests; provided, that the Exception Request Form must include Section III.B as
adopted by NERC.
2.13 Exclusion Exception: A determination that an Element that falls within the BES
Definition should be excluded from the BES.
2.14

FERC: The United States Federal Energy Regulatory Commission.

2.15

FOIA: The U.S. Freedom of Information Act, 5 U.S.C. §552.

2.16 Inclusion Exception: A determination that an Element that falls outside the BES
Definition should be included in the BES.
2.17 Lead Entity: The entity that submits Exception Request information that is
common to a group of Submitting Entities that are submitting Exception Requests jointly.
2.18

Mexican Entity: A Registered Entity that is organized under Mexican law.

2.19

NRC: The United States Nuclear Regulatory Commission.

2.20 NRC Safeguards Information: Required Information that is subject to
restrictions on disclosure pursuant to 42 U.S.C. §2167 and the regulations of the NRC at 10
C.F.R. §73.21-73.23; or pursuant to comparable provisions of Canadian or Mexican federal or
provincial law.

3

2.21 Owner: The owner(s) of an Element or Elements that is or may be determined to
be part of the BES as a result of either the application of the BES Definition or an Exception, or
another entity, such as an operator, authorized to act on behalf of the owner of the Element or
Elements in the context of an Exception Request.
2.22 Protected FOIA Information: Required Information, held by a governmental
entity, that is subject to an exemption from disclosure under FOIA [5 U.S.C. §552(e)], under any
similar state or local statutory provision, or under any comparable provision of Canadian or
Mexican federal or provincial law, which would be lost were the Required Information to be
placed into the public domain.
2.23 Recommendation: The report to NERC containing the evaluation prepared in
accordance with section 5.2 concerning whether or to what extent an Exception Request should
be approved.
2.24 Rejection of the Exception Request (or Rejection): The determination that an
Exception Request is not an eligible Exception Request (i.e., an Exception Request permitted by
section 4.1) or does not contain all the Required Information in accordance with section 4.5 in
order to be reviewed for substance.
2.25 Required Information: Information required to be provided in an Exception
Request, as specified in section 4.0.
2.26 Scope of Responsibility: The registered functions of a PA, RC, TOP, TP or BA
and the geographical or electric region in which the PA, RC, TOP, TP or BA operates to perform
its registered functions, or with respect to a Regional Entity, its Regional Entity Region.
2.27 Section I Required Information: Required Information that is to be provided in
Section I of a Submitting Entity’s Exception Request.
2.28 Section II Required Information: Required Information that is to be provided
in Section II of a Submitting Entity’s Exception Request.
2.29 Section III Required Information: Required Information that is to be provided
in Section III of a Submitting Entity’s Exception Request.
2.30 Submitting Entity: The entity that submits an Exception Request in accordance
with section 4.0.
2.31
Appendix.

Technical Review Panel: A panel established pursuant to section 5.3 of this

4

3.0.

BASIS FOR APPROVAL OF AN EXCEPTION
3.1.

Grounds for an Exception
(a) Exclusion Exception

An entity may request and obtain Approval from NERC for an Exclusion
Exception on the grounds that the Element(s) for which the Exception Request is filed is
included within the BES based on application of the BES Definition but is not necessary for the
Reliable Operation of the interconnected bulk-power transmission system as evidenced by
Required Information provided pursuant to Detailed Information to Support an Exception Request
(Section III.B of the Exception Request Form).
(b) Inclusion Exception
An entity may request and obtain Approval from NERC for an Inclusion
Exception on the grounds that the Element(s) for which the Exception Request is filed is not
included within the BES based on application of the BES Definition but is necessary for the
Reliable Operation of the interconnected bulk-power transmission system as evidenced by
Required Information provided pursuant to Detailed Information to Support an Exception Request
(Section III.B of the Exception Request Form).
3.2.

Burden

The burden to provide a sufficient basis for Approval of an Exception Request in
accordance with the provisions of this Exception Procedure is on the Submitting Entity. It is the
responsibility of the Regional Entity, subject to oversight by NERC as provided in this Exception
Procedure, to evaluate the request and make a Recommendation to NERC regarding its
Approval. All evidence provided as part of an Exception Request or response will be considered
in determining whether an Exception Request shall be approved or disapproved.

4.0. FORM, CONTENTS, AND SUBMISSION OF AN EXCEPTION
REQUEST
4.1.

Eligible Submitting Entities

The Owner of an Element may submit an Exception Request for either an Inclusion
Exception or an Exclusion Exception regarding that Element. A Regional Entity, PA, RC, TOP,
TP, or BA that has (or will have upon inclusion in the BES) the Elements covered by an
Exception Request within its Scope of Responsibility may submit an Exception Request for the
inclusion in the BES of an Element or Elements owned by a Registered Entity, provided that
before doing so, (i) the Submitting Entity conferred with the Owner about the reasons for an
Exception, and (ii) could not reach agreement regarding the submission of such an Exception
Request. (If the Owner agrees with submitting an Exception Request, the Owner should be the
Submitting Entity.) Only a Regional Entity may submit an Exception Request for the inclusion in
the BES of an Element or Elements owned by an Owner that is not a Registered Entity. Only an

5

Owner or a Regional Entity may submit an Exception Request for the exclusion from the BES of
an Element.
When a Regional Entity requests an Exception, the Regional Entity shall be the
Submitting Entity and shall prepare and submit copies of its Exception Request (or portions
thereof) to all applicable entities in accordance to this section 4.0.
With respect to an Element that crosses a boundary between Regional Entities, (1) the
Submitting Entity will submit the Exception Request to both (or all) Regional Entities, which
will cooperate to process the Exception Request pursuant to section 5.1 below, or (2) the
Regional Entities must jointly submit an Exception Request to NERC (neither Regional Entity
shall be allowed to submit such Exception Request unilaterally).
4.2.

Separate Submissions for Each Exception Request

A separate Exception Request shall be submitted for each Element or set of connected
Elements for which the Submitting Entity seeks an Exception. The scope of an Exception
Request shall cover the terminal connections of the Element or set of Elements as identified in
the Exception Request. Where the Submitting Entity seeks Exceptions from the BES Definition
for multiple, similar Elements (either at the same location or at different locations within the
geographic boundaries of a Regional Entity) on the same basis, the Exception Requests for all
such Elements may be included in one Exception Request with all such Elements or sets of
connected Elements separately identified. A single Exception Request may not be submitted for
separate Elements within the geographic boundaries of more than one Regional Entity.
Multiple Submitting Entities may jointly file Exception Requests for similar Elements for
which they are requesting Exceptions on the same basis. In such a situation, the Submitting
Entities will submit a package comprised of a complete Exception Request Form for a Lead
Entity, and an Exception Request Form for each other Submitting Entity that (1) provides the
Submitting Entity’s differing individual information to the extent such is required (e.g., contact
information, identification, and location of Element(s), etc.), and (2) otherwise references the
pertinent portions of the complete Exception Request Form filed by the Lead Entity (e.g., status
under application of the BES Definition, basis for an Exception under section 3.1, etc.). For any
Exception Request filed by multiple Submitting Entities as provided in this section, the Lead
Entity shall be considered the “Submitting Entity” for purposes of the Regional Entity’s and
NERC’s notices and actions in accordance with the remainder of this Exception Procedure.
However, any Owner nonetheless may take any action otherwise appropriate for a Submitting
Entity (e.g., respond to a Recommendation, submit an appeal, etc.).
4.3.

Withdrawal of an Exception Request

A Submitting Entity may withdraw an Exception Request at any time prior to NERC
Approval or Disapproval of the Exception Request.

6

4.4.

Form and Format of Exception Request

An Exception Request shall consist of three sections, all of which must be submitted to
the applicable Regional Entity. If the Submitting Entity is not the Owner [i.e., is a Regional
Entity, PA, RC, TOP, TP, or BA that has (or will have upon inclusion of the Element in the BES)
the Elements covered by an Exception Request within its Scope of Responsibility], it shall at the
same time provide a copy of the Exception Request to the Owner (or if the Owner is unknown, to
the operator of the Element(s)) to which the Exception Request applies.
4.5.

Required Information to be Included in the Exception Request

4.5.1. Section I of an Exception Request shall contain the Required Information
specified in this section 4.5.1. At the same time the Submitting Entity submits the Exception
Request Form to the Regional Entity, the Submitting Entity shall submit a copy of Section I to
each PA, RC, TOP, TP, and BA that has (or will have upon inclusion in the BES) the Elements
covered by an Exception Request within its Scope of Responsibility. Failure to provide all
Section I Required Information may result in Rejection of the Exception Request as incomplete.
1.

Name and address of Submitting Entity.

2.

Submitting Entity NERC Compliance Registry ID (if yet assigned).

3.

Name of the Owner, if different than the Submitting Entity,

4.

Owner’s NERC Compliance Registry ID (if yet assigned).

5.

Exception Request submittal date.

6.

Whether the Exception Request is an original Exception Request or an amended
Exception Request; and if it is an amended Exception Request, the identification
number(s) of the original Exception Request and any previous amendments.

7.

Whether the Exception Request is being submitted in conjunction with Exception
Requests by other Submitting Entities. If so, the names of the other Submitting
Entities.

8.

Whether the Submitting Entity is filing a similar Exception Request(s) with one or
more other Regional Entities, and if yes, the name(s) of the other Regional
Entity(ies).

9.

The type(s) of Element(s) for which the Exception is being requested.

10.

Status, based on application of the BES Definition, of the Element(s) for which
the Exception is being requested.

7

4.5.2. Section II of an Exception Request shall contain the Required Information
specified in this section 4.5.2. At the same time the Submitting Entity submits the Exception
Request Form to the Regional Entity, the Submitting Entity shall submit a copy of Section II to
each PA, RC, TOP, TP, and BA that has (or will have upon inclusion of the Element(s) in the
BES) the Elements covered by an Exception Request within its Scope of Responsibility. Failure
to provide all Section II Required Information may result in Rejection of the Exception Request
as incomplete.
Section II Required Information will not be publicly posted or disclosed to third parties
except for persons involved in reviewing the Exception Request.
1.

Identification and location(s) of Element(s) for which the Exception is being
requested.

2.

Name, title, phone number, facsimile number, and E-mail address of the
Submitting Entity’s technical contact person for the Exception Request.

3.

Certification by the Submitting Entity (if other than Owner) that it conferred with
the Owner regarding the reason for the requested Exception, but could not reach
agreement regarding the submission of an Exception Request.

4.

To the extent known by the Submitting Entity, name, mailing address, phone
number, facsimile number, and E-mail address of the Owner’s technical contact
person for the Exception Request, if the Owner is different from the Submitting
Entity.

5.

Identification of PA, RC, TOP, TP, and BA that has (or will have upon inclusion
in the BES) the Elements covered by the Exception Request within its Scope of
Responsibility, and certification by the Submitting Entity that it has sent copies of
Sections I and II to each such entity.

6.

A statement of the basis on which the Submitting Entity contends the Exception
Request should be approved, and if the Submitting Entity is not the Owner, a
statement of the basis of the Submitting Entity’s reason for submitting the
Exception Request.

7.

A statement, signed and dated by an authorized representative of the Submitting
Entity’s senior management stating that the representative has read the Exception
Request on behalf of the Submitting Entity and that the Submitting Entity believes
Approval of the Exception Request is warranted.

4.5.3 Section III of an Exception Request shall contain the Detailed
Information to Support an Exception Request as specified on the Exception Request Form.
Failure to include all Section III Required Information may result in Rejection of the Exception
Request. The Submitting Entity may designate all or part of the Section III Required
Information as Confidential Information.

8

1.

If the Exception Request is supported, in whole or in part, by Classified National
Security Information, NRC Safeguards Information, and/or Protected FOIA
Information, Section III shall include a statement identifying which of these
categories each such item of information falls into and explaining why each such
item of information is Classified National Security Information, NRC Safeguards
Information, and/or Protected FOIA Information.

2.

If the Submitting Entity is prohibited by law from disclosing any Classified
National Security Information, NRC Safeguards Information and/or Protected
FOIA Information to any person who is not an Eligible Reviewer (such as, for
example, the restriction on access to Classified National Security Information
specified in section 4.1 of Executive Order No. 12958, as amended), Section III
shall identify the Classified National Security Information, NRC Safeguards
Information and/or Protected FOIA Information that is subject to such restrictions
on disclosure and shall identify the criteria which a person must meet in order to
be an Eligible Reviewer of the Classified National Security Information, NRC
Safeguards Information and/or Protected FOIA Information.

4.5.4 The Owner of the Element(s) to which the Exception Request applies, if
different than the Submitting Entity, may file a response to supplement, correct or disagree with
all or any part of an Exception Request. Any PA, RC, TOP, TP, and BA that has (or will have
upon inclusion of the Element(s) in the BES) the Elements covered by an Exception Request
within its Scope of Responsibility may also provide input to the Regional Entity regarding the
Exception Request. If in order to evaluate an Exception Request, the Owner, PA, RC, TOP, TP
or BA wishes to obtain any Required Information in Section III of the Exception Request, the
Owner, PA, RC, TOP, TP or BA may submit to the Regional Entity that received the Exception
Request a request stating its reason for wanting to review such information, and the Regional
Entity may provide such information to the Owner, PA, RC, TOP, TP or BA if the Regional
Entity believes such review may assist the Regional Entity’s review; if any of such Section III
Required Information has been designated Confidential Information, prior to being provided the
Confidential Information, the Owner, PA, RC, TOP, TP or BA shall execute a confidentiality
agreement in a form established by the Regional Entity. Any response provided pursuant to this
section 4.5.4 must be submitted to the Regional Entity with copies to the Submitting Entity and
the Owner, if different from the Submitting Entity, within forty-five (45) days after the date the
Exception Request Form was submitted to the Regional Entity.
4.6
Access to Confidential Information, Classified National Security
Information, NRC Safeguards Information, and Protected FOIA Information Included in
Required Information
4.6.1. Upon reasonable advance notice from a Regional Entity, and subject to
section 4.6.2, a Submitting Entity or Owner must provide the Regional Entity (a) with access to
Confidential Information, Classified National Security Information, NRC Safeguards
Information, and Protected FOIA Information included in the Exception Request, and (b) with

9

access for purposes of making a physical review and inspection of the Element or Elements for
which an Exception Request has been submitted.
4.6.2. If the Submitting Entity or Owner is prohibited by law from disclosing any
Confidential Information, Classified National Security Information, NRC Safeguards
Information, or Protected FOIA Information to any person who is not an Eligible Reviewer (such
as, for example, the restriction on access to Classified National Security Information specified in
section 4.1 of Executive Order No. 12958, as amended), then such Confidential Information,
Classified National Security Information, NRC Safeguards Information, or Protected FOIA
Information shall only be reviewed by a representative or representatives of the Regional Entity
which may include contractors, who are Eligible Reviewers.
4.6.3. The Regional Entity, as applicable, will work cooperatively with the
Submitting Entity and/or Owner to provide necessary levels of protection for information
identified in Section 1500 of the NERC Rules of Procedure and to access Protected FOIA
Information in a way that does not waive or extinguish the exemption of the Protected FOIA
Information from disclosure. If the Regional Entity shares any Confidential Information with a
third party it shall do so subject to restrictions in applicable law under appropriate confidentiality
agreements.

5.0 REVIEW, ACCEPTANCE OR REJECTION, AND
RECOMMENDATION REGARDING EXCEPTION REQUESTS
The Regional Entity’s evaluation of the Exception Request will consist of two stages:
(a)

During the first stage, the Regional Entity shall conduct an initial screening to
determine whether to accept or reject the Exception Request; and

(b)

During the second stage, the Regional Entity shall conduct a substantive review to
determine its Recommendation to NERC as to whether or not the Exception
Request should be approved.

If the Regional Entity determines at any time that for a specified period of time, the
Regional Entity will be unable to complete initial screenings of Exception Requests within the
time provided by section 5.1.3(a) and/or substantive reviews of Exception Requests within the
time provided in section 5.2.2, the Regional Entity, based on consultation with NERC, shall
establish an alternative time period objective and work plan for completing initial screenings and
substantive reviews of Exception Requests during the specified period of time. The alternative
time period and work plan shall be publicized by posting on the Regional Entity’s website.
When a Regional Entity is the Submitting Entity of an Exception Request, it nonetheless
shall process such Request in accordance with this section 5.0, with the following exceptions:
i.

There will be no initial screening, Acceptance, or Rejection, and therefore sections 5.1.3
through 5.1.6 will not apply;

10

ii.

No later than sixty (60) days after the submission of the Exception Request to the Owner
and other applicable entities, the Regional Entity shall commence its substantive review
of the Exception Request (and of any responses received from the Owner and other
applicable entities) in accordance with section 5.2 and shall complete such substantive
review within six (6) months; and

iii.

Before the Regional Entity issues a Recommendation to NERC to approve or disapprove
the Exception Request in whole or in part, the Technical Review Panel shall review the
proposed determination and issue an opinion with copies provided to the Owner and to
NERC, in accordance with section 5.3.
5.1.

Initial Screening of Exception Request for Acceptance or Rejection

5.1.1. Upon receipt of an Exception Request, the Regional Entity will assign a
unique identifier to the Exception Request, and will review the Exception Request to determine
that the Exception Request is from an eligible (in accordance with section 4.1) Submitting Entity
for an Exception from the application of the BES Definition and that all Required Information
has been provided. If the Exception Request indicates that the Submitting Entity has submitted a
similar Exception Request to one or more other Regional Entities, the Regional Entities shall
coordinate their actions undertaken pursuant to this section 5.0. If the Exception Request is for
an Element that crosses boundaries between or among Regional Entities, the Regional Entities
shall cooperatively determine a lead Regional Entity to assess the request in a single process
yielding a single Recommendation to NERC.
5.1.2. The unique identifier assigned to the Exception Request will be in the
form of XXXX-YYYY-NERCID-ExceptionZZZZZ, where “XXXX” is the year in which the
Exception Request is received by the Regional Entity (e.g., “2012”); “YYYY” is the acronym for
the Regional Entity within whose geographic boundaries the relevant Element or Elements are
located2; NERCID is the Submitting Entity’s NERC Compliance Registry ID (or an abbreviation
of its name if an ID is not yet assigned); and “ZZZZZ” is the sequential number of the Exception
Requests received by the Regional Entity in that year. If the Exception Request is amended or
resubmitted, “-AZ” will be added to the end of the identifier, where “Z” is the number of the
amendment to the Exception Request. If the Exception Request is for an Element that crosses
boundaries between or among Regional Entities, the YYYY identifier shall be that of the lead
Regional Entity assessing the request.
5.1.3. The Regional Entity will complete its initial screening of the Exception
Request Form and any Owner’s response submitted pursuant to section 4.5.4 no later than either
sixty (60) days after receiving the Exception Request or, if the Submitting Entity is not the
Owner, thirty (30) days after receiving any Owner’s response, whichever is later, unless (i) the
2

The acronyms to be used are: FRCC (Florida Reliability Coordinating Council); MRO (Midwest Reliability
Organization); NPCC (Northeast Power Coordinating Council); RFC (ReliabilityFirst Corporation); SERC (SERC
Reliability Corporation); SPP (Southwest Power Pool Regional Entity); TRE (Texas Reliability Entity); and WECC
(Western Electricity Coordinating Council), and NERC in cases where the Exception Request is submitted to
NERC.

11

Regional Entity has established an alternative time period objective and work plan for
completing initial screenings pursuant to this section 5.0 that provides for a different time
period(s) for completing initial screenings, or (ii) the Regional Entity issues a notice to the
Submitting Entity, and to the Owner if different, prior to the deadline date for completing the
initial screening, stating that the Regional Entity will not be able to complete the initial screening
by the deadline date and stating a revised deadline date.
5.1.4. If, based on its initial screening, the Regional Entity determines the
Exception Request is from an eligible (in accordance with section 4.1) Submitting Entity for an
Exception from the BES Definition, and that all Required Information has been provided, the
Regional Entity shall accept the Exception Request as complete and send a notice of such
Acceptance to the Submitting Entity, with a copy to the Owner, if different than the Submitting
Entity, and to NERC.
5.1.5. (a) If the Regional Entity determines, based on its review of the Exception
Request, that the Exception Request (i) is not from an eligible (in accordance with section 4.1)
Submitting Entity for an Exception from application of the BES Definition, and/or (ii) does not
contain all Required Information, the Regional Entity shall reject the Exception Request as
incomplete and send a notice of such Rejection to the Submitting Entity, with a copy to the
Owner, if different than the Submitting Entity, and to NERC. To the extent feasible, if an
Exception Request Form is missing Required Information, the Regional Entity shall not reject
the Exception Request until (1) it has contacted the Submitting Entity to request that the
Exception Request Form be supplemented with the missing Required Information, and (2) the
Submitting Entity has failed to submit such Required Information within thirty (30) days or such
additional period of time as the Regional Entity may allow at its discretion based on the
circumstances. Under appropriate confidentiality/security agreements, the Regional Entity shall
facilitate the access to data and information from other entities required by the Submitting Entity
to accurately supply the Detailed Information to Support an Exception Request (e.g.,
interconnection base case power flow studies) and/or by the Owner to accurately respond. When
a Submitting Entity submits supplemental Required Information in response to a request under
this section 5.1.5(a), the time for the Regional Entity to perform its initial screening will be
extended for fifteen (15) days after receipt of the supplemental Required Information.
(b) If the Regional Entity rejects the Exception Request in accordance with
section 5.1.5 (a), the Regional Entity’s notice shall explain the reason for the Rejection. The
Submitting Entity may, within thirty (30) days after receipt of the Rejection, appeal to NERC in
accordance with section 7.0 of this Exception Procedure to reverse the Rejection and to direct the
Regional Entity to proceed with a substantive review of the Exception Request.
5.1.6. The Regional Entity may either accept the Exception Request in its
entirety, reject the Exception Request in its entirety, or if the Exception Request is for more than
one Element, may accept it with respect to a subset of the Elements and reject it with respect to
the remainder based on the similarity of the evidence presented for the Exception Request.

12

5.2

Substantive Review of Exception Request for Approval or Disapproval

5.2.1 After Acceptance of an Exception Request, the Regional Entity shall
conduct a substantive review of all evidence provided as part of an Exception Request or
response to evaluate whether or to what extent the Exception Request should be approved. As
part of its substantive review, depending on the circumstances of the Exception Request, the
Regional Entity may request access to and review the Required Information, including any
Confidential Information, Classified National Security Information, NRC Safeguards
Information, and Protected FOIA Information that is necessary to support the Exception Request;
may conduct one or more physical inspections of the relevant Element(s) and its (their) context
and surrounding Elements and Facilities; may request additional information from the
Submitting Entity, Owner, or applicable PAs, RCs, BAs, TOPs and TPs; and may engage in
further discussions concerning possible revisions to the Exception Request.
5.2.2. At the outset of its substantive review of the Exception Request, the
Regional Entity shall develop a milestone schedule pursuant to which it plans to conduct the
substantive review, and shall send a copy of the milestone schedule to the Submitting Entity and
the Owner, if different, for information. The Regional Entity shall complete the substantive
review of the Exception Request within six months after Acceptance of the Exception Request or
within an alternative time period under section 5.0, at the conclusion of which the Regional
Entity shall issue a notice (in accordance with section 5.2.3) stating its Recommendation that the
Exception Request be approved or disapproved. The Regional Entity may extend the period of
substantive review for individual Exception Requests; the revised date by which the Regional
Entity will issue its Recommendation concerning the Exception Request shall be stated in a
notice issued by the Regional Entity.
5.2.3. Upon completion of its substantive review of the Exception Request, the
Regional Entity shall issue a Recommendation to NERC, with a copy to the Submitting Entity
and to the Owner if different than the Submitting Entity, including the Regional Entity’s
evaluation of whether and to what extent the Exception Request qualifies to be approved in its
entirety or be disapproved in its entirety, or if the Exception Request is for more than one
Element, to be approved with respect to a subset of the Elements and disapproved with respect to
the remainder of the Elements. The Recommendation shall set forth the basis on which the
Regional Entity arrived at its Recommendation. With the Recommendation, the Regional Entity
will also send NERC copies of the Exception Request Form and all other information considered
by the Regional Entity in arriving at its Recommendation.
5.2.4 The Regional Entity shall not recommend Disapproval of the Exception
Request in whole or in part without first submitting the Exception Request for review to a
Technical Review Panel and receiving its opinion, in accordance with section 5.3.
5.2.5 NERC shall develop, and post on its web site, a reporting program and
schedule pursuant to which Regional Entities will be required to submit to NERC periodic
reports on the numbers, status and timing of their initial screenings and substantive reviews of
Exception Requests.

13

5.3

Technical Review Panel

Each Regional Entity shall establish provisions for a Technical Review Panel consisting of not
less than three (3) individuals appointed by the Regional Entity senior executive (CEO,
President, General Manager, etc.). Panel members shall comply with Subsection 7 of Section 403
of the NERC Rules of Procedure, shall not have participated in the review of the Exception
Request, and shall have the required technical background to evaluate Exception Requests. When
the Regional Entity intends pursuant to section 5.2.2 to issue a Recommendation of Disapproval,
in whole or in part, the Technical Review Panel must first review the Regional Entity’s proposed
determinations and provide an opinion, a copy of which shall be provided to the Submitting
Entity (and Owner if different) in the event the Regional Entity decides to disapprove the
Exception Request. The Regional Entity will not be bound by the opinion of the Technical
Review Panel, but such evaluation shall become part of the record associated with the Exception
Request and shall be provided to NERC.

6.0 SUPPLEMENTATION OF AN EXCEPTION REQUEST PRIOR TO A
RECOMMENDATION
A Submitting Entity or Owner at any time prior to the Regional Entity issuing its
Recommendation may supplement a pending Exception Request that is under review by a
Regional Entity, either at the request of the Regional Entity or at the Submitting Entity’s or
Owner’s own initiative, for the purpose of providing additional or revised Required Information.
The Submitting Entity or Owner shall submit a written explanation of what Required
Information is being added or revised and the purpose of the supplementation. Supplementing a
pending Exception Request may, in the Regional Entity’s discretion, reset the time period for the
Regional Entity’s initial screening or substantive review, as applicable, of the Exception
Request.

7.0

APPEAL OF REJECTION OF AN EXCEPTION REQUEST

The Submitting Entity may submit to the NERC Director of Compliance Operations, with
a copy to the Regional Entity and Owner if different, information that demonstrates that the
insufficiencies in an Exception Request Form identified in the notice of Rejection by the
Regional Entity pursuant to section 5.1.5 are incorrect or otherwise do not warrant Rejection of
the Exception Request, and that the Exception Request should be accepted and proceed to
substantive review. A Submitting Entity’s submission to NERC under this section 7.0 shall be in
writing, shall provide the Exception Request which received the Rejection (using the identifier
assigned to the Exception Request pursuant to section 5.1.2), and shall set forth a description of
the errors that the Submitting Entity believes are in the notice of Rejection. The Submitting
Entity’s submission must demonstrate that it is eligible (in accordance with section 4.1) to
submit the Exception Request and that all Required Information for the Exception Request has
been provided. NERC will review the Submitting Entity’s submission and the reports submitted
by the Regional Entity or Regional Entities pursuant to section 5.1.5 with respect to the
Exception Request, and if NERC determines that the Submitting Entity is eligible (in accordance
with section 4.1) to submit the Exception Request, that all Required Information has been
provided, and that the Exception Request should proceed to substantive review, NERC shall,
14

within forty-five (45) days after receiving the submission, issue a decision directing the
Regional Entity to proceed to a substantive review of the Exception Request in accordance with
section 5.2. NERC will send a written notice to the Submitting Entity, the Owner if different, and
the Regional Entity stating that NERC either directs the Regional Entity to proceed to a
substantive review or that NERC does not direct such a review.

8.0

APPROVAL OR DISAPPROVAL OF AN EXCEPTION REQUEST

Following the date of the Regional Entity’s Recommendation to NERC, a Submitting
Entity or Owner, will have thirty (30) days to submit a comment in support of or opposition to
the Recommendation. The NERC President shall appoint a team of no less than (3) three persons
with the required technical background to evaluate Exception Requests to review the
Recommendation and accompanying materials provided by the Regional Entity pursuant to
section 5.2.3, the Technical Review Panel opinion (if any), and any comment submitted by the
Submitting Entity or Owner. The members of the review team shall have no financial,
contractual, employment or other interest in the Submitting Entity or Owner that would present a
conflict of interest and shall be free of any conflicts of interest in accordance with NERC
policies. This review shall be completed within ninety (90) days after NERC receives the
Recommendation. NERC may choose to ask the Regional Entity, Submitting Entity and Owner,
if different than the Submitting Entity, to appear at a NERC office for interviews or discussion
regarding any questions. In lieu of appearing in person at a NERC office, appearances may be,
upon the mutual agreement of NERC, the Regional Entity, the Submitting Entity and/or Owner,
conducted by a conference call, teleconferencing, or webinar. By the end of the ninety-day
review period, the team shall issue a proposed decision either to approve or to disapprove the
Exception Request. If the Exception Request concerns more than one Element, the review team’s
proposed decision may approve the Exception Request in its entirety, disapprove the Exception
Request in its entirety, or approve some portion of the Exception Request and disapprove the
remaining portion. The proposed decision shall be in writing, shall be based on the team’s
independent consideration of the full record, and state the basis for the decision. If the proposed
decision of the team was not unanimous, the dissenting team member may, if he or she wishes to
do so, issue a minority report stating the dissenting member’s reasons for disagreement with the
proposed decision. Within thirty (30) days after the date of the review team’s proposed decision,
the NERC President shall issue a final written decision on the Exception Request on behalf of
NERC. The final decision may adopt the proposed decision or modify the proposed decision,
and may reach a different conclusion than the proposed decision as to whether the Exception
Request is approved or disapproved. The final decision issued by the NERC President shall be
the decision of NERC with respect to Approval or Disapproval of the Exception Request.
NERC shall provide to the Submitting Entity and to the Owner, if different, copies of any
documents considered by the NERC review team in reaching its proposed decision, and any
additional documents considered by the NERC President in reaching the final decision, that were
not originally provided by, or have not previously been provided to, the Submitting Entity or
Owner.

15

Documentation used to substantiate the decision related to an Exception Request shall be
retained by NERC for a minimum of seven (7) years or as long as the Exception is in effect,
whichever is longer, unless a different retention period is otherwise identified

9.0 CHALLENGES TO APPROVAL OR DISAPPROVAL OF
EXCEPTION REQUESTS
A Submitting Entity or Owner aggrieved by NERC’s Approval or Disapproval of an
Exception Request or termination of an Exception may, within thirty (30) days following the
date of NERC’s decision, challenge such determination pursuant to Section 1703 of the NERC
Rules of Procedure. If neither a Submitting Entity nor Owner challenges, within such period,
NERC’s determination with respect to any Element to which the Exception Request or the
Exception applies, such determination shall become effective with respect to such Element on
the thirty-first day following the date of the NERC decision.

10.0 IMPLEMENTATION PERIOD FOR EXCEPTIONS
10.1

Inclusion Exceptions

In the case of an Element not included in the BES by application of the BES Definition but for
which an Inclusion Exception is approved, the Owner shall submit a proposed implementation
plan to the Regional Entity detailing the schedule for complying with any Reliability Standards
applicable to the newly included Element. The Regional Entity and Owner shall confer to agree
upon such schedule. If the Regional Entity and Owner are unable to agree on the implementation
plan, the Regional Entity shall notify the NERC Director of Compliance Operations of the
disagreement, and shall provide statements of the Regional Entity’s and the Owner’s positions,
and NERC shall specify a reasonable implementation schedule.
10.2

Denials of Exception Requests for Exclusion

(a)
In the case of a newly-constructed or installed Element which is included in the
BES by application of the BES Definition but for which an Exception Request for an Exclusion
Exception was submitted at least twelve (12) months before commercial operation of the
Element, but which Exception Request either is still pending or has been rejected or disapproved
at the time of commercial operation, the Owner shall submit a proposed implementation plan to
the Regional Entity detailing the schedule for complying with any Reliability Standards
applicable to the newly constructed or installed Element. The Regional Entity and Owner shall
confer to agree upon such schedule. If the Regional Entity and Owner are unable to agree on the
implementation plan, the Regional Entity shall notify the NERC Director of Compliance
Operations of the disagreement, and shall provide statements of the Regional Entity’s and the
Owner’s positions, and NERC shall specify a reasonable implementation schedule.
(b)
In the case of an Element which is included in the BES based on application of
the current BES Definition but was not included in the BES under the BES Definition in effect
immediately prior to the current BES Definition, and for which an Exception Request for an
Exclusion Exception was submitted no more than twelve (12) months after the current BES
16

Definition became effective, but which Exception Request either is still pending or has been
rejected or disapproved at the end of any applicable BES Definition implementation plan time
period, the Owner shall submit a proposed implementation plan to the Regional Entity detailing
the schedule for complying with any Reliability Standards applicable to the newly included
Element. The Regional Entity and Owner shall confer to agree upon such schedule. If the
Regional Entity and Owner are unable to agree on the implementation plan, the Regional Entity
shall notify the NERC Director of Compliance Operations of the disagreement, and shall provide
statements of the Regional Entity’s and the Owner’s positions, and NERC shall specify a
reasonable implementation schedule.

11.0 TERMINATION OF AN APPROVED EXCEPTION
11.1 An Exception Request typically will be approved without a specified date of
termination but will be subject to review to verify continuing justification for the Exception.
11.2 Submitting Entity(ies) shall notify the appropriate Regional Entity, with a copy to
NERC, within ninety (90) days after learning of any change of condition which would affect the
basis stated by NERC in its decision pursuant to section 8.0 approving the Exception Request.
NERC shall review such notification and determine whether to direct the Regional Entity to
perform a substantive review (pursuant to section 5.2) to verify continuing justification for the
Exception and to issue a Recommendation to NERC.
11.3 Submitting Entity(ies) shall certify3 periodically to the appropriate Regional
Entity that the basis for an Element being included or excluded in the BES through the Exception
remains valid and in connection with each certification, shall provide the Regional Entity with
any changes to Section I Required Information or Section II Required Information. The
certification shall be due on the first day of the first quarter thirty-six (36) months after the date
on which the Exception Request was approved and every thirty-six (36) months thereafter, as
long as the Exception remains in effect. If such certification is not provided, the Exception is
subject to termination ninety (90) days after the date the certification was due, and the Regional
Entity shall send the Submitting Entity and NERC written notice of such termination.
11.4 If the Regional Entity obtains information through means other than those
described in sections 11.2 and 11.3 that indicates an Exception may no longer be warranted, the
Regional Entity shall provide such information to NERC. NERC shall review the information
and determine whether to direct the Regional Entity to perform a substantive review (pursuant to
section 5.2) to verify continuing justification for the Exception and to issue a Recommendation
to NERC.
11.5 If the Regional Entity’s Recommendation following a substantive review pursuant
to section 11.2 or 11.4 is that the Exception shall be terminated, NERC shall (i) issue a written
notice to the Submitting Entity and Owner, if different, that the Exception is under review for
possible termination, (ii) allow the Submitting Entity and/or Owner, as applicable, thirty (30)
3

The certification shall consider the effect on the basis for the Exception of changes such as Load growth and
topological changes, as well as the effect on system limits and impacts as a result of the contingencies listed in Table
1 of each applicable NERC TPL Reliability Standard.

17

days from the date of the notice to submit comments or information to NERC to show that the
Exception continues to be justified and should remain in effect, and (iii) cause the
Recommendation to be reviewed in accordance with section 8.0 of this Appendix. If the
conclusion of the review is that the Exception should be terminated, NERC shall send a written
notice to the Submitting Entity and Owner, if different, stating that the Exception is terminated
and the reasons for the termination. When an Element will be included in the BES as a result of
the termination of an Exclusion Exception under this section, an implementation plan detailing
the schedule for complying with any Reliability Standards applicable to the newly included
Element will be developed in accordance with section 10.1 as if it were an Inclusion Exception.
11.6 Upon request by the Regional Entity, the Submitting Entity(ies) and/or Owner if
different shall provide within thirty (30) days the most recent versions of any Section III
Required Information so requested.

18

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 2A

REVISED RULES OF PROCEDURE, SECTIONS 100-1700
(INCLUDING PROPOSED NEW SECTIONS 509 AND 1703)
CLEAN VERSION

Proposed Revisions 1-9-2012
[Incorporates proposed revisions filed with FERC on
March 18, November 7 and November 29, 2011]

Rules of Procedure

Effective: January 10, 2012

Rules of Procedure Section 400 is subject to further revisions to
comply with directives in a FERC Order issued October 7, 2011
(137 FERC ¶ 61,028).

Rules of Procedure of the North American Electric Reliability Corporation

TABLE OF CONTENTS TABLE OF CONTENTS
SECTION 100 — APPLICABILITY OF RULES OF PROCEDURE.................................................... 1
SECTION 200 — DEFINITIONS OF TERMS ........................................................................................ 2
SECTION 300 — RELIABILITY STANDARDS DEVELOPMENT .................................................... 3
301.
302.
303.
304.
305.
306.
307.
308.
309.
310.
311.
312.
313.
314.
315.
316.
317.
318.
319.
320.
321.

General ........................................................................................................................................ 3
Essential Attributes for Technically Excellent Reliability Standards.......................................... 3
Relationship between Reliability Standards and Competition .................................................... 5
Essential Principles for the Development of Reliability Standards............................................. 6
Registered Ballot Body................................................................................................................ 6
Standards Committee................................................................................................................... 8
Standards Process Manager ......................................................................................................... 9
Steps in the Development of Reliability Standards ..................................................................... 9
Filing of Reliability Standards for Approval by Applicable Governmental Authorities............. 9
Annual Reliability Standards Development Plan ...................................................................... 11
Regional Entity Standards Development Procedures ................................................................ 11
Regional Reliability Standards .................................................................................................. 13
Other Regional Criteria, Guides, Procedures, Agreements, Etc................................................ 16
Conflicts with Statutes, Regulations, and Orders ...................................................................... 17
Revisions to NERC Reliability Standards Development Procedure ......................................... 17
Accreditation ............................................................................................................................. 17
Five-Year Review of Standards................................................................................................. 18
Coordination with the North American Energy Standards Board ............................................. 18
Archived Standards Information ............................................................................................... 18
Alternate Method for Adopting Violation Risk Factors ............................................................ 18
Special Rule to Address Certain Regulatory Directives............................................................ 18

SECTION 400 — COMPLIANCE ENFORCEMENT .......................................................................... 22
401.
402.
403.
404.
405.
406.
407.
408.
409.
410.
411.

Scope of the NERC Compliance Enforcement Program ........................................................... 22
NERC Oversight of the Regional Entity Compliance Enforcement Programs ......................... 25
Required Attributes of Regional Entity Compliance Enforcement Programs ........................... 29
NERC Monitoring of Compliance for Regional Entities or Bulk Power Owners, Operator, or
Users .......................................................................................................................................... 35
Monitoring of Reliability Standards and Other Requirements Applicable to NERC................ 36
Independent Audits of the NERC Compliance Monitoring and Enforcement Program ........... 36
Penalties, Sanctions, and Remedial Actions.............................................................................. 37
Review of NERC Decisions ...................................................................................................... 37
Appeals from Final Decisions of Regional Entities .................................................................. 39
Hold Harmless ........................................................................................................................... 40
Requests for Technical Feasibility Exceptions to NERC Critical Infrastructure Protection
Reliability Standards ................................................................................................................. 40

SECTION 500 — ORGANIZATION REGISTRATION AND CERTIFICATION ........................... 41
501.
502.
503.
504.
505.

Scope of the Organization Registration and Organization Certification Programs................... 41
Organization Registration and Organization Certification Program Requirements .................. 44
Regional Entity Implementation of Organization Registration and Organization Certification
Program Requirements .............................................................................................................. 46
Appeals ...................................................................................................................................... 47
Program Maintenance................................................................................................................ 48

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506.
507.
508.
509.

Independent Audit of NERC Organization Registration and Organization Certification
Program ..................................................................................................................................... 48
Provisions Relating to Joint Registration Organizations (JRO) ................................................ 48
Provisions Relating to Coordinated Functional Registration (CFR) Entities ............................ 49
Exceptions to the Definition of the Bulk Electric System..........................................................51

SECTION 600 — PERSONNEL CERTIFICATION ............................................................................ 52
601.
602.
603.
604.
605.
606.

Scope of Personnel Certification ............................................................................................... 52
Structure of ERO Personnel Certification Program................................................................... 52
Candidate Testing Mechanisms................................................................................................. 53
Public Information About the Personnel Certification Program ............................................... 54
Responsibilities to Applicants for Certification or Recertification ........................................... 54
Responsibilities to the Public and to Employers of Certified Practitioners............................... 55

SECTION 700 — RELIABILITY READINESS EVALUATION AND IMPROVEMENT AND
FORMATION OF SECTOR FORUMS.................................................................................................. 56
701
702.

Confidentiality Requirements for Readiness Evaluations and Evaluation Team Members ...... 56
Formation of Sector Forum ....................................................................................................... 56

SECTION 800 — RELIABILITY ASSESSMENT AND PERFORMANCE ANALYSIS.................. 57
801.
802.
803.
804.
805.
806.
807.
808.
809.
810.
811.

Objectives of the Reliability Assessment and Performance Analysis Program ........................ 57
Scope of the Reliability Assessment Program........................................................................... 57
Reliability Assessment Reports ................................................................................................. 58
Reliability Assessment Data and Information Requirements .................................................... 59
Reliability Assessment Process ................................................................................................. 60
Scope of the Reliability Performance and Analysis Program.................................................... 62
Analysis of Major Events .......................................................................................................... 62
Analysis of Off-Normal Events, Potential System Vulnerabilities, and System Performance . 63
Reliability Benchmarking.......................................................................................................... 63
Information Exchange and Issuance of NERC Advisories, Recommendations and Essential
Actions....................................................................................................................................... 64
Equipment Performance Data.................................................................................................... 65

SECTION 900 — TRAINING AND EDUCATION ............................................................................... 66
901.
902.

Scope of the Training and Education Program.......................................................................... 66
Continuing Education Program ................................................................................................. 66

SECTION 1000 — SITUATION AWARENESS AND INFRASTRUCTURE SECURITY............... 68
1001.
1002.
1003.

Situation Awareness .................................................................................................................. 68
Reliability Support Services ...................................................................................................... 68
Infrastructure Security Program ................................................................................................ 68

SECTION 1100 — ANNUAL NERC BUSINESS PLANS AND BUDGETS........................................ 71
1101.
1102.
1103.
1104.
1105.
1106.
1107.
1108.

Scope of Business Plans and Budgets ....................................................................................... 71
NERC Funding and Cost Allocation ......................................................................................... 71
NERC Budget Development ..................................................................................................... 71
Submittal of Regional Entity Budgets to NERC ....................................................................... 72
Submittal of NERC and Regional Entity Budgets to Governmental Authorities for Approval 72
NERC and Regional Entity Billing and Collections.................................................................. 73
Penalty Applications.................................................................................................................. 74
Special Assessments .................................................................................................................. 75

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SECTION 1200 — REGIONAL DELEGATION AGREEMENTS ..................................................... 76
1201.
1202.
1203.
1204.
1205.
1206.
1207.
1208.

Pro Forma Regional Delegation Agreement.............................................................................. 76
Regional Entity Essential Requirements ................................................................................... 76
Negotiation of Regional Delegation Agreements...................................................................... 76
Conformance to Rules and Terms of Regional Delegation Agreements................................... 76
Sub-delegation ........................................................................................................................... 76
Nonconformance to Rules or Terms of Regional Delegation Agreement................................. 76
Regional Entity Audits .............................................................................................................. 77
Process for Considering Registered Entity Requests to Transfer to Another Regional Entity
Audits ........................................................................................................................................ 77

SECTION 1300 — COMMITTEES ........................................................................................................ 80
1301.
1302.
1303.
1304.
1305.

Establishing Standing Committees ............................................................................................ 80
Committee Membership ............................................................................................................ 80
Procedures for Appointing Committee Members...................................................................... 80
Procedures for Conduct of Committee Business ....................................................................... 80
Committee Subgroups ............................................................................................................... 81

SECTION 1400 — AMENDMENTS TO THE NERC RULES OF PROCEDURE ............................ 82
1401.
1402.
1403.

Proposals for Amendment or Repeal of Rules of Procedure ..................................................... 82
Approval of Amendment or Repeal of Rules of Procedure....................................................... 82
Alternative Procedure for Violation Risk Factors ..................................................................... 82

SECTION 1500 — CONFIDENTIAL INFORMATION....................................................................... 83
1501.
1502.
1503.
1504.
1505.
1506.
1507.

Definitions ................................................................................................................................. 83
Protection of Confidential Information ..................................................................................... 83
Requests for Information ........................................................................................................... 84
Employees, Contractors and Agents.......................................................................................... 86
Provision of Information to FERC and Other Governmental Authorities................................. 86
Permitted Disclosures ................................................................................................................ 86
Remedies for Improper Disclosure............................................................................................ 86

SECTION 1600 — REQUESTS FOR DATA OR INFORMATION .................................................... 88
1601. Scope of a NERC or Regional Entity Request for Data or Information ........................................... 88
1602. Procedure for Authorizing a NERC Request for Data or Information.............................................. 88
1603. Owners, Operators, and Users to Comply......................................................................................... 89
1604. Requests by Regional Entity for Data or Information ...................................................................... 89
1605. Confidentiality .................................................................................................................................. 90
1606. Expedited Procedures for Requesting Time-Sensitive Data or Information..................................... 90
SECTION 1700 — CHALLENGES TO DETERMINATIONS............................................................92
1701. Scope of Authority............................................................................................................................92
1702 Challenges to Determinations by Planning Coordinators Under Reliability Standard PRC-023.....92
1703 Challenges to NERC Determinations of BES Exception Requests under Section 509....................94

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Rules of Procedure of the North American Electric Reliability Corporation

SECTION 100 — APPLICABILITY OF RULES OF PROCEDURE
NERC and NERC Members shall comply with these Rules of Procedure. Each Regional Entity
shall comply with these Rules of Procedure as applicable to functions delegated to the Regional
Entity by NERC or as required by an Applicable Governmental Authority or as otherwise
provided.
Each Bulk Power System owner, operator, and user shall comply with all Rules of Procedure of
NERC that are made applicable to such entities by approval pursuant to applicable legislation or
regulation, or pursuant to agreement.
Any entity that is unable to comply or that is not in compliance with a NERC Rule of Procedure
shall immediately notify NERC in writing, stating the Rule of Procedure of concern and the
reason for not being able to comply with the Rule of Procedure.
NERC shall evaluate each case and inform the entity of the results of the evaluation. If NERC
determines that a Rule of Procedure has been violated, or cannot practically be complied with,
NERC shall notify the Applicable Governmental Authorities and take such other actions as
NERC deems appropriate to address the situation.
NERC shall comply with each approved Reliability Standard that identifies NERC or the Electric
Reliability Organization as a responsible entity. Regional Entities shall comply with each
approved Reliability Standard that identifies Regional Entities as responsible entities. A
violation by NERC or a Regional Entity of such a Reliability Standard shall constitute a violation
of these Rules of Procedure.

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SECTION 200 — DEFINITIONS OF TERMS
Definitions of terms used in the NERC Rules of Procedure are set forth in Appendix 2,
Definitions Used in the Rules of Procedure.

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SECTION 300 — RELIABILITY STANDARDS DEVELOPMENT
301.

General
NERC shall develop and maintain Reliability Standards that apply to Bulk Power System
owners, operators, and users and that enable NERC and Regional Entities to measure the
reliability performance of Bulk Power System owners, operators, and users; and to hold
them accountable for Reliable Operation of the Bulk Power Systems. The Reliability
Standards shall be technically excellent, timely, just, reasonable, not unduly
discriminatory or preferential, in the public interest, and consistent with other applicable
standards of governmental authorities.

302.

Essential Attributes for Technically Excellent Reliability Standards
1.

Applicability — Each Reliability Standard shall clearly identify the functional
classes of entities responsible for complying with the Reliability Standard, with
any specific additions or exceptions noted. Such functional classes1 include:
Reliability Coordinators, Balancing Authorities, Transmission Operators,
Transmission Owners, Generator Operators, Generator Owners, Interchange
Authorities, Transmission Service Providers, market operators, Planning
Authorities, Transmission Planners, Resource Planners, Load-Serving Entities,
Purchasing-Selling Entities, and Distribution Providers. Each Reliability Standard
shall also identify the geographic applicability of the Reliability Standard, such as
the entire North American Bulk Power System, an Interconnection, or within a
Region. A Reliability Standard may also identify any limitations on the
applicability of the Reliability Standard based on electric Facility characteristics.

2.

Reliability Objectives — Each Reliability Standard shall have a clear statement
of purpose that shall describe how the Reliability Standard contributes to the
reliability of the Bulk Power System. The following general objectives for the
Bulk Power System provide a foundation for determining the specific objective(s)
of each Reliability Standard:
2.1

Reliability Planning and Operating Performance— Bulk Power
Systems shall be planned and operated in a coordinated manner to perform
reliably under normal and abnormal conditions.

2.2

Frequency and Voltage Performance— The frequency and voltage of
Bulk Power Systems shall be controlled within defined limits through the
balancing of Real and Reactive Power supply and demand.

1

These functional classes of entities are derived from NERC’s Reliability Functional Model. When a Reliability 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.

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2.3

Reliability Information — Information necessary for the planning and
operation of reliable Bulk Power Systems shall be made available to those
entities responsible for planning and operating Bulk Power Systems.

2.4

Emergency Preparation — Plans for emergency operation and system
restoration of Bulk Power Systems shall be developed, coordinated,
maintained, and implemented.

2.5

Communications and Control — Facilities for communication,
monitoring, and control shall be provided, used, and maintained for the
reliability of Bulk Power Systems.

2.6

Personnel — Personnel responsible for planning and operating Bulk
Power Systems shall be trained and qualified, and shall have the
responsibility and authority to implement actions.

2.7

Wide-Area View — The reliability of the Bulk Power Systems shall be
assessed, monitored, and maintained on a Wide-Area basis.

2.8

Security —Bulk Power Systems shall be protected from malicious
physical or cyber attacks.

3.

Performance Requirement or Outcome— Each Reliability Standard shall state
one or more performance Requirements, which if achieved by the applicable
entities, will provide for a reliable Bulk Power System, consistent with good
utility practices and the public interest. Each Requirement is not a “lowest
common denominator” compromise, but instead achieves an objective that is the
best approach for Bulk Power System reliability, taking account of the costs and
benefits of implementing the proposal.

4.

Measurability — Each performance Requirement shall be stated so as to be
objectively measurable by a third party with knowledge or expertise in the area
addressed by that Requirement. Each performance Requirement shall have one or
more associated measures used to objectively evaluate compliance with the
Requirement. If performance can be practically measured quantitatively, metrics
shall be provided to determine satisfactory performance.

5.

Technical Basis in Engineering and Operations— Each Reliability Standard
shall be based upon sound engineering and operating judgment, analysis, or
experience, as determined by expert practitioners in that particular field.

6.

Completeness — Reliability Standards shall be complete and self-contained. The
Reliability Standards shall not depend on external information to determine the
required level of performance.

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303.

7.

Consequences for Noncompliance — In combination with guidelines for
Penalties and sanctions, as well as other ERO and Regional Entity compliance
documents, the consequences of violating a Reliability Standard are clearly
presented to the entities responsible for complying with the Reliability Standards.

8.

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

9.

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

10.

Consistent Terminology — To the extent possible, Reliability Standards shall
use a set of standard terms and definitions that are approved through the NERC
Reliability Standards development process.

Relationship between Reliability Standards and Competition
To ensure Reliability Standards are developed with due consideration of impacts on
competition, to ensure Reliability Standards are not unduly discriminatory or preferential,
and recognizing that reliability is an essential requirement of a robust North American
economy, each Reliability Standard shall meet all of these market-related objectives:
1.

Competition — A Reliability Standard shall not give any market participant an
unfair competitive advantage.

2.

Market Structures — A Reliability Standard shall neither mandate nor prohibit
any specific market structure.

3.

Market Solutions — A Reliability Standard shall not preclude market solutions
to achieving compliance with that Reliability Standard.

4.

Commercially Sensitive Information — A Reliability Standard shall not require
the public disclosure of commercially sensitive information or other Confidential
Information. All market participants shall have equal opportunity to access
commercially non-sensitive information that is required for compliance with
Reliability Standards.

5.

Adequacy — NERC shall not set Reliability Standards defining an adequate
amount of, or requiring expansion of, Bulk Power System resources or delivery
capability.

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304.

Essential Principles for the Development of Reliability Standards
NERC shall develop Reliability Standards in accordance with the NERC Standard
Processes Manual, which is incorporated into these Rules of Procedure as Appendix 3A.
Appeals in connection with the development of a Reliability Standard shall also be
conducted in accordance with the NERC Standard Processes Manual. Any amendments
or revisions to the Standard Processes Manual shall be consistent with the following
essential principles:

305.

1.

Openness — Participation shall be open to all Persons who are directly and
materially affected by the reliability of the North American Bulk Power System.
There shall be no undue financial barriers to participation. Participation shall not
be conditional upon membership in NERC or any other organization, and shall
not be unreasonably restricted on the basis of technical qualifications or other
such requirements.

2.

Transparency — The process shall be transparent to the public.

3.

Consensus-building —The process shall build and document consensus for each
Reliability Standard, both with regard to the need and justification for the
Reliability Standard and the content of the Reliability Standard.

4.

Fair Balance of Interests — The process shall fairly balance interests of all
stakeholders and shall not be dominated by any single interest category.

5.

Due Process — Development of Reliability Standards shall provide reasonable
notice and opportunity for any Person with a direct and material interest to
express views on a proposed Reliability Standard and the basis for those views,
and to have that position considered in the development of the Reliability
Standards.

6.

Timeliness — Development of Reliability Standards shall be timely and
responsive to new and changing priorities for reliability of the Bulk Power
System.

Registered Ballot Body
NERC Reliability Standards shall be approved by a Registered Ballot Body prior to
submittal to the Board and then to Applicable Governmental Authorities for their
approval, where authorized by applicable legislation or agreement. This Section 305 sets
forth the rules pertaining to the composition of, and eligibility to participate in, the
Registered Ballot Body.

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Rules of Procedure of the North American Electric Reliability Corporation

1.

Eligibility to Vote on Reliability Standards — Any person or entity may join
the Registered Ballot Body to vote on Reliability Standards, whether or not such
person or entity is a Member of NERC.

2.

Inclusive Participation — The Segment qualification guidelines are inclusive;
i.e., any entity with a legitimate interest in the reliability of the Bulk Power
System that can meet any one of the eligibility criteria for a Segment is entitled to
belong to and vote in each Segment for which it qualifies, subject to limitations
defined in Sections 305.3 and 305.5.

3.

General Criteria for Registered Ballot Body Membership — The general
criteria for membership in the Segments are:
3.1

Multiple Segments — A corporation or other organization with integrated
operations or with affiliates that qualifies to belong to more than one
Segment (e.g., Transmission Owners and Load-Serving Entities) may join
once in each Segment for which it qualifies, provided that each Segment
constitutes a separate membership and the organization is represented in
each Segment by a different representative. Affiliated entities are
collectively limited to one membership in each Segment for which they
are qualified.

3.2

Withdrawing from a Segment or Changing Segments — After its
initial registration in a Segment, each registered participant may elect to
withdraw from a Segment or apply to change Segments at any time.

3.3

Review of Segment Criteria — The Board shall review the qualification
guidelines and rules for joining Segments at least every three years to
ensure that the process continues to be fair, open, balanced, and inclusive.
Public input will be solicited in the review of these guidelines.

4.

Proxies for Voting on Reliability Standards — Any registered participant may
designate an agent or proxy to vote on its behalf. There are no limits on how
many proxies an agent may hold. However, for the proxy to be valid, NERC must
have in its possession written documentation signed by the representative of the
registered participant that the voting right by proxy has been transferred from the
registered participant to the agent.

5.

Segments — The specific criteria for membership in each Registered Ballot Body
Segment are defined in the Standard Processes Manual in Appendix 3A.

6.

Review of Segment Entries — NERC shall review all applications for joining
the Registered Ballot Body, and shall make a determination of whether the
applicant’s self-selection of a Segment satisfies at least one of the guidelines to
belong to that Segment. The entity shall then become eligible to participate as a
voting member of that Segment. The Standards Committee shall resolve disputes

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Rules of Procedure of the North American Electric Reliability Corporation

regarding eligibility for membership in a Segment, with the applicant having the
right of appeal to the Board.
306.

Standards Committee
The Standards Committee shall provide oversight of the Reliability Standards
development process to ensure stakeholder interests are fairly represented. The Standards
Committee shall not under any circumstance change the substance of a draft or approved
Reliability Standard.
1.

Membership — The Standards Committee is a representative committee
comprising representatives of two members of each of the Segments in the
Registered Ballot Body.

2.

Elections — Standards Committee members are elected for staggered (one per
Segment per year) two-year terms by the respective Segments in accordance with
the Procedure for the Election of Members of the NERC Standards Committee,
which is incorporated into these Rules of Procedure as Appendix 3B. Segments
may use their own election procedure if such a procedure is ratified by two-thirds
of the members of a Segment and approved by the Board.

3.

Canadian Representation
3.1

Provision for Sufficient Canadian Representation — If any regular
election of Standards Committee members does not result in at least two
Canadian members on the Standards Committee, the Canadian nominees
who were not elected but who received the next highest percentage of
votes within their respective Segment(s) will be designated as additional
members of the Standards Committee, as needed to achieve a total of two
Canadian members.

3.2

Terms of Specially Designated Canadian Members — Each specially
designated Canadian member of the Standards Committee shall have a
term ending with the next annual election.

3.3

Segment Preference — If any Segment has an unfilled representative
position on the Standards Committee following the annual election, the
first preference is to assign each specially designated Canadian
representative to a Segment with an unfilled representative position for
which his or her organization qualifies.

3.4

Rights of Specially Designated Canadian Members — Any specially
designated Canadian members of the Standards Committee shall have the
same rights and obligations as all other members of the Standards
Committee.

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Rules of Procedure of the North American Electric Reliability Corporation

4.

307.

Open Meetings — All meetings of the Standards Committee shall be open and
publicly noticed on the NERC website.

Standards Process Manager
NERC shall assign a standards process manager to administer the development of
Reliability Standards. The standards process manager shall be responsible for ensuring
that the development and revision of Reliability Standards are in accordance with the
NERC Standard Processes Manual. The standards process manager shall work to
achieve the highest degree of integrity and consistency of quality and completeness of the
Reliability Standards. The standards process manager shall coordinate with any Regional
Entities that develop Regional Reliability Standards to ensure those Regional Reliability
Standards are effectively integrated with the NERC Reliability Standards.

308.

Steps in the Development of Reliability Standards
1.

Procedure — NERC shall develop Reliability Standards through the process set
forth in the NERC Standard Processes Manual (Appendix 3A). The procedure
includes a provision for approval of urgent action Reliability Standards that can
be completed within 60 days and emergency actions that may be further
expedited.

2.

Board Approval — Reliability Standards or revisions to Reliability Standards
approved by the ballot pool in accordance with the Standard Processes Manual
shall be submitted for approval by the Board. No Reliability Standard or revision
to a Reliability Standard shall be effective unless approved by the Board.

3.

Governmental Approval — After receiving Board approval, a Reliability
Standard or revision to a Reliability Standard shall be submitted to all Applicable
Governmental Authorities in accordance with Section 309. No Reliability
Standard or revision to a Reliability Standard shall be effective within a
geographic area over which an Applicable Governmental Authority has
jurisdiction unless approved by such Applicable Governmental Authority or is
otherwise made effective pursuant to the laws applicable to such Applicable
Governmental Authority.

309. Filing of Reliability Standards for Approval by Applicable Governmental
Authorities
1.

Filing of Reliability Standards for Approval — Where authorized by applicable
legislation or agreement, NERC shall file with the Applicable Governmental
Authorities each Reliability Standard, modification to a Reliability Standard, or
withdrawal of a Reliability Standard that is approved by the Board. Each filing
shall be in the format required by the Applicable Governmental Authority and

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shall include: a concise statement of the basis and purpose of the Reliability
Standard; the text of the Reliability Standard; the implementation plan for the
Reliability Standard; a demonstration that the Reliability Standard meets the
essential attributes of Reliability Standards as stated in Section 302; the drafting
team roster; the ballot pool and final ballot results; and a discussion of public
comments received during the development of the Reliability Standard and the
consideration of those comments.
2.

Remanded Reliability Standards and Directives to Develop Standards — If
an Applicable Governmental Authority remands a Reliability Standard to NERC
or directs NERC to develop a Reliability Standard, NERC shall within five (5)
business days notify all other Applicable Governmental Authorities, and shall
within thirty (30) calendar days report to all Applicable Governmental Authorities
a plan and timetable for modification or development of the Reliability Standard.
Reliability Standards that are remanded or directed by an Applicable
Governmental Authority shall be modified or developed using the Standard
Processes Manual. NERC shall, during the development of a modification for the
remanded Reliability Standard or directed Reliability Standard, consult with other
Applicable Governmental Authorities to coordinate any impacts of the proposed
Reliability Standards in those other jurisdictions. The expedited action procedure
may be applied if necessary to meet a timetable for action required by the
Applicable Governmental Authorities, respecting to the extent possible the
provisions in the Reliability Standards development process for reasonable notice
and opportunity for public comment, due process, openness, and a balance of
interest in developing Reliability Standards. If the Board of Trustees determines
that the process did not result in a Reliability Standard that addresses a specific
matter that is identified in a directive issued by an Applicable Governmental
Authority, then Rule 321 of these Rules of Procedure shall apply.

3.

Directives to Develop Reliability Standards under Extraordinary
Circumstances — An Applicable Governmental Authority may, on its own
initiative, determine that extraordinary circumstances exist requiring expedited
development of a Reliability Standard. In such a case, the Applicable
Governmental Authority may direct the development of a Reliability Standard
within a certain deadline. NERC staff shall prepare the Standards Authorization
Request and seek a stakeholder sponsor for the request. If NERC is unable to find
a sponsor for the proposed Reliability Standard, NERC will be designated as the
requestor. The proposed Reliability Standard will then proceed through the
Reliability Standards development process, using the expedited action procedures
described in the Standard Processes Manual as necessary to meet the specified
deadline. The timeline will be developed to respect, to the extent possible, the
provisions in the Reliability Standards development process for reasonable notice
and opportunity for public comment, due process, openness, and a balance of
interests in developing Reliability Standards. If the Board of Trustees determines
that the process did not result in a Reliability Standard that addresses a specific
matter that is identified in a directive issued by an Applicable Governmental

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Rules of Procedure of the North American Electric Reliability Corporation

Authority, then Rule 321 of these Rules of Procedure shall apply, with appropriate
modification of the timeline.
3.1

310.

Consistent with all Reliability Standards developed under the expedited
action process, each of the three possible follow-up actions as documented
in the Standard Processes Manual are to be completed through the
Reliability Standards development process and are subject to approval by
the Applicable Governmental Authorities in the U.S. and Canada.

Annual Reliability Standards Development Plan
NERC shall develop and provide an annual Reliability Standards Development Plan for
development of Reliability Standards to the Applicable Governmental Authorities. NERC
shall consider the comments and priorities of the Applicable Governmental Authorities in
developing and updating the annual Reliability Standards Development Plan. Each
annual Reliability Standards Development Plan shall include a progress report comparing
results achieved to the prior year’s Reliability Standards Development Plan.

311.

Regional Entity Standards Development Procedures
1.

NERC Approval of Regional Entity Reliability Standards Development
Procedure — To enable a Regional Entity to develop Regional Reliability
Standards that are to be recognized and made part of NERC Reliability Standards,
a Regional Entity may request NERC to approve a Regional Reliability Standards
development procedure.

2.

Public Notice and Comment on Regional Reliability Standards Development
Procedure — Upon receipt of such a request, NERC shall publicly notice and
request comment on the proposed Regional Reliability Standards development
procedure, allowing a minimum of 45 days for comment. The Regional Entity
shall have an opportunity to resolve any objections identified in the comments and
may choose to withdraw the request, revise the Regional Reliability Standards
development procedure and request another posting for comment, or submit the
Regional Reliability Standards development procedure, along with its
consideration of any objections received, for approval by NERC.

3.

Evaluation of Regional Reliability Standards Development Procedure —
NERC shall evaluate whether a Regional Reliability Standards development
procedure meets the criteria listed below and shall consider stakeholder
comments, any unresolved stakeholder objections, and the consideration of
comments provided by the Regional Entity, in making that determination. If
NERC determines the Regional Reliability Standards development procedure
meets these requirements, the Regional Reliability Standards development
procedure shall be submitted to the Board for approval. The Board shall consider
the recommended action, stakeholder comments, any unresolved stakeholder

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Rules of Procedure of the North American Electric Reliability Corporation

comments, and the Regional Entity consideration of comments in determining
whether to approve the Regional Reliability Standards development procedure.
3.1

Evaluation Criteria — The Regional Reliability Standards development
procedure shall be:
3.1.1

Open — The Regional Reliability Standards development
procedure shall provide that any person or entity who is directly
and materially affected by the reliability of the Bulk Power
Systems within the Regional Entity shall be able to participate in
the development and approval of Reliability Standards. There shall
be no undue financial barriers to participation. Participation shall
not be conditional upon membership in the Regional Entity, a
Regional Entity or any organization, and shall not be unreasonably
restricted on the basis of technical qualifications or other such
requirements.

3.1.2

Inclusive — The Regional Reliability Standards development
procedure shall provide that any Person with a direct and material
interest has a right to participate by expressing an opinion and its
basis, having that position considered, and appealing through an
established appeals process if adversely affected.

3.1.3

Balanced — The Regional Reliability Standards development
procedure shall have a balance of interests and shall not permit any
two interest categories to control the vote on a matter or any single
interest category to defeat a matter.

3.1.4

Due Process — The Regional Reliability Standards development
procedure shall provide for reasonable notice and opportunity for
public comment. At a minimum, the Regional Reliability
Standards development procedure shall include public notice of the
intent to develop a Regional Reliability Standard, a public
comment period on the proposed Regional Reliability Standard,
due consideration of those public comments, and a ballot of
interested stakeholders.

3.1.5

Transparent — All actions material to the development of
Regional Reliability Standards shall be transparent. All Regional
Reliability Standards development meetings shall be open and
publicly noticed on the Regional Entity’s website.

3.1.6

Accreditation of Regional Standards Development Procedure
— A Regional Entity’s Regional Reliability Standards
development procedure that is accredited by the American
National Standards Institute or the Standards Council of Canada

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shall be deemed to meet the criteria listed in this Section 311.3.1,
although such accreditation is not a prerequisite for approval by
NERC.
3.1.7

312.

Use of NERC Procedure — A Regional Entity may adopt the
NERC Standard Processes Manual as the Regional Reliability
Standards development procedure, in which case the Regional
Entity’s Regional Reliability Standards development procedure
shall be deemed to meet the criteria listed in this Section 311.3.1.

4.

Revisions of Regional Reliability Standards Development Procedures — Any
revision to a Regional Reliability Standards development procedure shall be
subject to the same approval requirements set forth in Sections 311.1 through
311.3.

5.

Duration of Regional Reliability Standards Development Procedures — The
Regional Reliability Standards development procedure shall remain in effect until
such time as it is replaced with a new version approved by NERC or it is
withdrawn by the Regional Entity. The Regional Entity may, at its discretion,
withdraw its Regional Reliability Standards development procedure at any time.

Regional Reliability Standards
1.

Basis for Regional Reliability Standards — Regional Entities may propose
Regional Reliability Standards that set more stringent reliability requirements
than the NERC Reliability Standard or cover matters not covered by an existing
NERC Reliability Standard. Such Regional Reliability Standards shall in all cases
be approved by NERC and made part of the NERC Reliability Standards and shall
be enforceable in accordance with the delegation agreement between NERC and
the Regional Entity or other instrument granting authority over enforcement to the
Regional Entity. No entities other than NERC and the Regional Entity shall be
permitted to develop Regional Reliability Standards that are enforceable under
statutory authority delegated to NERC and the Regional Entity.

2.

Regional Reliability Standards That are Directed by a NERC Reliability
Standard — Although it is the intent of NERC to promote uniform Reliability
Standards across North America, in some cases it may not be feasible to achieve a
reliability objective with a Reliability Standard that is uniformly applicable across
North America. In such cases, NERC may direct Regional Entities to develop
Regional Reliability Standards necessary to implement a NERC Reliability
Standard. Such Regional Reliability Standards that are developed pursuant to a
direction by NERC shall be made part of the NERC Reliability Standards.

3.

Procedure for Developing an Interconnection-wide Regional Standard — A
Regional Entity organized on an Interconnection-wide basis may propose a

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Regional Reliability Standard for approval as a NERC Reliability Standard to be
made mandatory for all applicable Bulk Power System owners, operators, and
users within that Interconnection.
3.1

Presumption of Validity — An Interconnection-wide Regional
Reliability Standard that is determined by NERC to be just, reasonable,
and not unduly discriminatory or preferential, and in the public interest,
and consistent with such other applicable standards of governmental
authorities, shall be adopted as a NERC Reliability Standard. NERC shall
rebuttably presume that a Regional Reliability Standard developed, in
accordance with a Regional Reliability Standards development process
approved by NERC, by a Regional Entity organized on an
Interconnection-wide basis, is just, reasonable, and not unduly
discriminatory or preferential, and in the public interest, and consistent
with such other applicable standards of governmental authorities.

3.2

Notice and Comment Procedure for Interconnection-wide Regional
Reliability Standard — NERC shall publicly notice and request
comment on the proposed Interconnection-wide Regional Reliability
Standard, allowing a minimum of 45 days for comment. NERC may
publicly notice and post for comment the proposed Regional Reliability
Standard concurrent with similar steps in the Regional Entity’s Regional
Reliability Standards development process. The Regional Entity shall have
an opportunity to resolve any objections identified in the comments and
may choose to comment on or withdraw the request, revise the proposed
Regional Reliability Standard and request another posting for comment, or
submit the proposed Regional Reliability Standard along with its
consideration of any objections received, for approval by NERC.

3.3

Approval of Interconnection-wide Regional Reliability Standard by
NERC — NERC shall evaluate and recommend whether a proposed
Interconnection-wide Regional Reliability Standard has been developed in
accordance with all applicable procedural requirements and whether the
Regional Entity has considered and resolved stakeholder objections that
could serve as a basis for rebutting the presumption of validity of the
Regional Reliability Standard. The Regional Entity, having been notified
of the results of the evaluation and recommendation concerning NERC
proposed Regional Reliability Standard, shall have the option of
presenting the proposed Regional Reliability Standard to the Board for
approval as a NERC Reliability Standard. The Board shall consider the
Regional Entity’s request, NERC’s recommendation for action on the
Regional Reliability Standard, any unresolved stakeholder comments, and
the Regional Entity’s consideration of comments, in determining whether
to approve the Regional Reliability Standard as a NERC Reliability
Standard.

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4.

3.4

Applicable Governmental Authority Approval — An Interconnectionwide Regional Reliability Standard that has been approved by the Board
shall be filed with the Applicable Governmental Authorities for approval,
where authorized by applicable legislation or agreement, and shall become
effective when approved by such Applicable Governmental Authorities or
on a date set by the Applicable Governmental Authorities.

3.5

Enforcement of Interconnection-wide Regional Reliability Standard
— An Interconnection-wide Regional Reliability Standard that has been
approved by the Board and by the Applicable Governmental Authorities or
is otherwise made effective within Canada as mandatory within a
particular Region shall be applicable and enforced as a NERC Reliability
Standard within the Region.

Procedure for Developing Non-Interconnection-Wide Regional Reliability
Standards — Regional Entities that are not organized on an Interconnection-wide
basis may propose Regional Reliability Standards to apply within their respective
Regions. Such Regional Reliability Standards may be developed through the
NERC Reliability Standards development procedure, or alternatively, through a
Regional Reliability Standards development procedure that has been approved by
NERC.
4.1

No Presumption of Validity — Regional Reliability Standards that are
not proposed to be applied on an Interconnection-wide basis are not
presumed to be valid but may be demonstrated by the proponent to be
valid.

4.2

Notice and Comment Procedure for Non-Interconnection-wide
Regional Reliability Standards — NERC shall publicly notice and
request comment on the proposed Regional Reliability Standard, allowing
a minimum of 45 days for comment. NERC may publicly notice and post
for comment the proposed Regional Reliability Standard concurrent with
similar steps in the Regional Entity’s Regional Reliability Standards
development process. The Regional Entity shall have an opportunity to
comment on or resolve any objections identified in the comments and may
choose to withdraw the request, revise the proposed Regional Reliability
Standard and request another posting for comment, or submit the proposed
Regional Reliability Standard along with its consideration of any
objections received, for approval by NERC.

4.3

NERC Approval of Non-Interconnection-wide Regional Reliability
Standards — NERC shall evaluate and recommend whether a proposed
non-Interconnection-wide Regional Reliability Standard has been
developed in accordance with all applicable procedural requirements and
whether the Regional Entity has considered and resolved stakeholder
objections. The Regional Entity, having been notified of the results of the

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evaluation and recommendation concerning proposed Regional Reliability
Standard, shall have the option of presenting the proposed Regional
Reliability Standard to the Board for approval as a NERC Reliability
Standard. The Board shall consider the Regional Entity’s request, the
recommendation for action on the Regional Reliability Standard, any
unresolved stakeholder comments, and the Regional Entity’s consideration
of comments, in determining whether to approve the Regional Reliability
Standard as a NERC Reliability Standard.

5.

313.

4.4

Applicable Governmental Authority Approval — A nonInterconnection-wide Regional Reliability Standard that has been
approved by the Board shall be filed with the Applicable Governmental
Authorities for approval, where authorized by applicable legislation or
agreement, and shall become effective when approved by such Applicable
Governmental Authorities or on a date set by the Applicable
Governmental Authorities.

4.5

Enforcement of Non-Interconnection-wide Regional Reliability
Standards — A non-Interconnection-wide Regional Reliability Standard
that has been approved by the Board and by the Applicable Governmental
Authorities or is otherwise made effective within Canada as mandatory
within a particular Region shall be applicable and enforced as a NERC
Reliability Standard within the Region.

Appeals — A Regional Entity shall have the right to appeal NERC’s decision not
to approve a proposed Regional Reliability Standard or Variance to the
Commission or other Applicable Governmental Authority.

Other Regional Criteria, Guides, Procedures, Agreements, Etc.
1.

Regional Criteria — Regional Entities may develop Regional Criteria that are
necessary to implement, to augment, or to comply with Reliability Standards, but
which are not Reliability Standards. Regional Criteria may also address issues not
within the scope of Reliability Standards, such as resource adequacy. Regional
Criteria may include specific acceptable operating or planning parameters, guides,
agreements, protocols or other documents used to enhance the reliability of the
Bulk Power System in the Region. These documents typically provide benefits by
promoting more consistent implementation of the NERC Reliability Standards
within the Region. These documents are not NERC Reliability Standards,
Regional Reliability Standards, or regional Variances, and therefore are not
enforceable under authority delegated by NERC pursuant to delegation
agreements and do not require NERC approval.

2.

Catalog of Regional Criteria — NERC shall maintain a current catalog of
Regional Criteria. Regional Entities shall provide a catalog listing of Regional

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Criteria to NERC and shall notify NERC of changes to the listing. Regional
Entities shall provide any listed document to NERC upon written request.
314.

Conflicts with Statutes, Regulations, and Orders
Notice of Potential Conflict — If a Bulk Power System owner, operator, or user
determines that a NERC or Regional Reliability Standard may conflict with a function,
rule, order, tariff, rate schedule, legislative requirement or agreement that has been
accepted, approved, or ordered by a governmental authority affecting that entity, the
entity shall expeditiously notify the governmental authority, NERC, and the relevant
Regional Entity of the conflict.

315.

1.

Determination of Conflict — NERC, upon request of the governmental
authority, may advise the governmental authority regarding the conflict and
propose a resolution of the conflict, including revision of the Reliability Standard
if appropriate.

2.

Regulatory Precedence — Unless otherwise ordered by a governmental
authority, the affected Bulk Power System owner, operator, or user shall continue
to follow the function, rule, order, tariff, rate schedule, legislative requirement, or
agreement accepted, approved, or ordered by the governmental authority until the
governmental authority finds that a conflict exists and orders a remedy and such
remedy is affected.

Revisions to NERC Reliability Standards Development Procedure
Any person or entity may submit a written request to modify NERC Standard Processes
Manual. Consideration of the request and development of the revision shall follow the
process defined in the NERC Standard Processes Manual. Upon approval by the Board,
the revision shall be submitted to the Applicable Governmental Authorities for approval.
Changes shall become effective only upon approval by the Applicable Governmental
Authorities or on a date designated by the Applicable Governmental Authorities or as
otherwise applicable in a particular jurisdiction.

316.

Accreditation
NERC shall seek continuing accreditation of the NERC Reliability Standards
development process by the American National Standards Institute and the Standards
Council of Canada.

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317.

Five-Year Review of Reliability Standards
NERC shall complete a review of each NERC Reliability Standard at least once every
five years from the effective date of the Reliability Standard or the latest revision to the
Reliability Standard, whichever is later. The review process shall be conducted in
accordance with the NERC Standard Processes Manual. The standards process manager
shall be responsible for administration of the five-year review of Reliability Standards.
As a result of this review, the NERC Reliability Standard shall be reaffirmed, revised, or
withdrawn. If the review indicates a need to revise or withdraw the Reliability Standard, a
request for revision or withdrawal shall be prepared, submitted and addressed in
accordance with the NERC Standard Processes Manual.

318.

Coordination with the North American Energy Standards Board
NERC shall, through a memorandum of understanding, maintain a close working
relationship with the North American Energy Standards Board and ISO/RTO Council to
ensure effective coordination of wholesale electric business practice standards and market
protocols with the NERC Reliability Standards.

319.

Archived Standards Information
NERC shall maintain a historical record of Reliability Standards information that is no
longer maintained on-line. For example, Reliability Standards that expired or were
replaced may be removed from the on-line system. Archived information shall be
retained indefinitely as practical, but in no case less than five years or one complete
Reliability Standards review cycle from the date on which the Reliability Standard was
no longer in effect. Archived records of Reliability Standards information shall be
available electronically within 30 days following the receipt by the standards process
manager of a written request.

320.

Alternate Method for Adopting Violation Risk Factors
In the event the Reliability Standards development process fails to produce Violation
Risk Factors for a particular Reliability Standard in a timely manner, the Board of
Trustees may adopt Violation Risk Factors for that Reliability Standard using the
procedures set out in Section 1400 of these Rules of Procedure.

321.

Special Rule to Address Certain Regulatory Directives
In circumstances where this Rule 321 applies, the Board of Trustees shall have the
authority to take one or more of the actions set out below. The Board of Trustees shall
have the authority to choose which one or more of the actions are appropriate to the
circumstances and need not take these actions in sequential steps.

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1.

The Standards Committee shall have the responsibility to ensure that standards
drafting teams address specific matters that are identified in directives issued by
Applicable Governmental Authorities. If the Board of Trustees is presented with a
proposed Reliability Standard that fails to address such directives, the Board of
Trustees has the authority to remand, with instructions (including establishing a
timetable for action), the proposed Reliability Standard to the Standards
Committee.

2.

Upon a written finding by the Board of Trustees that a ballot pool has failed to
approve a proposed Reliability Standard that contains a provision to address a
specific matter identified in a directive issued by an Applicable Governmental
Authority, the Board of Trustees has the authority to remand the proposed
Reliability Standard to the Standards Committee, with instructions to (i) convene
a public technical conference to discuss the issues surrounding the regulatory
directive, including whether or not the proposed Reliability Standard is just,
reasonable, not unduly discriminatory or preferential, in the public interest,
helpful to reliability, practical, technically sound, technically feasible, and costjustified; (ii) working with NERC staff, prepare a memorandum discussing the
issues, an analysis of the alternatives considered and other appropriate matters;
and (iii) re-ballot the proposed Reliability Standard one additional time, with such
adjustments in the schedule as are necessary to meet the deadline contained in
paragraph 2.1 of this Rule.
2.1

Such a re-ballot shall be completed within forty-five (45) days of the
remand. The Standards Committee memorandum shall be included in the
materials made available to the ballot pool in connection with the reballot.

2.2

In any such re-ballot, negative votes without comments related to the
proposal shall be counted for purposes of establishing a quorum, but only
affirmative votes and negative votes with comments related to the
proposal shall be counted for purposes of determining the number of votes
cast and whether the proposed Reliability Standard has been approved.

3.

If the re-balloted proposed Reliability Standard achieves at least an affirmative
two-thirds majority vote of the weighted Segment votes cast, with a quorum
established, then the proposed Reliability Standard shall be deemed approved by
the ballot pool and shall be considered by the Board of Trustees for approval.

4.

If the re-balloted proposed Reliability Standard fails to achieve at least an
affirmative two-thirds majority vote of the weighted Segment votes cast, but does
achieve at least a sixty percent affirmative majority of the weighted Segment
votes cast, with a quorum established, then the Board of Trustees has the authority
to consider the proposed Reliability Standard for approval under the following
procedures:
4.1

The Board of Trustees shall issue notice of its intent to consider the
proposed Reliability Standard and shall solicit written public comment

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particularly focused on the technical aspects of the provisions of the
proposed Reliability Standard that address the specific matter identified in
the regulatory directive, including whether or not the proposed Reliability
Standard is just, reasonable, not unduly discriminatory or preferential, in
the public interest, helpful to reliability, practical, technically sound,
technically feasible, and cost-justified.

A5.

4.2

The Board of Trustees may, in its discretion, convene a public technical
conference to receive additional input on the matter.

4.3

After considering the developmental record, the comments received
during balloting and the additional input received under paragraphs 4.1
and 4.2 of this Rule, the Board of Trustees has authority to act on the
proposed Reliability Standard.
4.3.1

If the Board of Trustees finds that the proposed Reliability
Standard is just, reasonable, not unduly discriminatory or
preferential, and in the public interest, considering (among other
things) whether it is helpful to reliability, practical, technically
sound, technically feasible, and cost-justified, then it has authority
to approve the proposed Reliability Standard and direct that it be
filed with Applicable Governmental Authorities with a request that
it be made effective.

4.3.2

If the Board of Trustees is unable to find that the proposed
Reliability Standard is just, reasonable, not unduly discriminatory
or preferential, and in the public interest, considering (among other
things) whether it is helpful to reliability, practical, technically
sound, technically feasible, and cost-justified, then it has authority
to treat the proposed Reliability Standard as a draft Reliability
Standard and direct that the draft Reliability Standard and
complete developmental record, including the additional input
received under paragraphs 4.1 and 4.2 of this Rule, be filed with
the Applicable Governmental Authorities as a compliance filing in
response to the order giving rise to the regulatory directive, along
with a recommendation that the Reliability Standard not be made
effective and an explanation of the basis for the recommendation.

Upon a written finding by the Board of Trustees that standard drafting team has
failed to develop, or a ballot pool has failed to approve, a proposed Reliability
Standard that contains a provision to address a specific matter identified in a
directive issued by an Applicable Governmental Authority, the Board of Trustees
has the authority to direct the Standards Committee (with the assistance of
stakeholders and NERC staff) to prepare a draft Reliability Standard that
addresses the regulatory directive, taking account of the entire developmental
record pertaining to the matter. If the Standards Committee fails to prepare such

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draft Reliability Standard, the Board of Trustees may direct NERC management
to prepare such draft Reliability Standard.

6.

5.1

The Board of Trustees may, in its discretion, convene a public technical
conference to receive input on the matter. The draft Reliability Standard
shall be posted for a 45-day public comment period.

5.2

If, after considering the entire developmental record (including the
comments received under paragraph 5.1 of this Rule), the Board of
Trustees finds that the draft Reliability Standard, with such modifications
as the Board of Trustees determines are appropriate in light of the
comments received, is just, reasonable, not unduly discriminatory or
preferential, and in the public interest, considering (among other things)
whether it is practical, technically sound, technically feasible, costjustified and serves the best interests of reliability of the Bulk Power
System, then the Board of Trustees has the authority to approve the draft
Reliability Standard and direct that the proposed Reliability Standard be
filed with Applicable Governmental Authorities with a request that the
proposed Reliability Standard be made effective.

5.3

If, after considering the entire developmental record (including the
comments received under paragraph 5.1 of this Rule), the Board of
Trustees is unable to find that the draft Reliability Standard, even with
modifications, is just, reasonable, not unduly discriminatory or
preferential, and in the public interest, considering (among other things)
whether it is practical, technically sound, technically feasible, costjustified and serves the best interests of reliability of the Bulk Power
System, then the Board of Trustees has the authority to direct that the
draft Reliability Standard and complete developmental record be filed as a
compliance filing in response to the regulatory directive with the
Applicable Governmental Authority issuing the regulatory directive, with
a recommendation that the draft Reliability Standard not be made
effective.

5.4

The filing of the Reliability Standard under either paragraph 5.2 or
paragraph 5.3 of this Rule shall include an explanation of the basis for the
decision by the Board of Trustees.

5.5

A Reliability Standard approved under paragraph 5 of this Rule shall not
be eligible for submission as an American National Standard.

NERC shall on or before March 31st of each year file a report with Applicable
Governmental Authorities on the status and timetable for addressing each
outstanding directive to address a specific matter received from an Applicable
Governmental Authority.

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SECTION 400 — COMPLIANCE ENFORCEMENT
401.

Scope of the NERC Compliance Monitoring and Enforcement Program
1.

Components of the NERC Compliance Monitoring and Enforcement
Program — NERC shall develop and implement a NERC Compliance
Monitoring and Enforcement Program to promote the reliability of the Bulk
Power System by enforcing compliance with approved Reliability Standards in
those regions of North American in which NERC and/or a Regional Entity
(pursuant to a delegation agreement with NERC that has been approved by the
Applicable Governmental Authority) has been given enforcement authority.
There are four distinct parts of the NERC Compliance Monitoring and
Enforcement Program: (1) NERC’s oversight of the Regional Entity Compliance
Monitoring and Enforcement Programs (Section 402), (2) the definition of the
required Regional Entity Compliance Monitoring and Enforcement Program
attributes (Section 403), (3) NERC’s monitoring of Regional Entity compliance
with Reliability Standards (Section 404), and (4) the monitoring of compliance
with Reliability Standards that are applicable to NERC (Sections 405–406).

2.

Who Must Comply — Where required by applicable legislation, regulation, rule
or agreement, all Bulk Power System owners, operators, and users, Regional
Entities, and NERC, are required to comply with all approved NERC Reliability
Standards at all times. Regional Reliability Standards and Variances approved by
NERC and the Applicable Governmental Authority shall be considered NERC
Reliability Standards and shall apply to all Bulk Power System owners, operators,
or users responsible for meeting those Reliability Standards within the Regional
Entity boundaries, whether or not the Bulk Power System owner, operator, or user
is a member of the Regional Entity.

3.

Data Access — All Bulk Power System owners, operators, and users shall
provide to NERC and the applicable Regional Entity such information as is
necessary to monitor compliance with the Reliability Standards. NERC and the
applicable Regional Entity will define the data retention and reporting
requirements in the Reliability Standards and compliance reporting procedures.

4.

Role of Regional Entities in the Compliance Monitoring and Enforcement
Program — Each Regional Entity that has been delegated authority through a
delegation agreement or other legal instrument approved by the Applicable
Governmental Authority shall, in accordance with the terms of the approved
delegation agreement, administer a Regional Entity Compliance Monitoring and
Enforcement program to meet the NERC Compliance Monitoring and
Enforcement Program goals and the requirements in this Section 400.

5.

Program Continuity — NERC will ensure continuity of compliance monitoring
and enforcement within the geographic boundaries of a Regional Entity in the
event that NERC does not have a delegation agreement, or the Regional Entity
withdraws from the agreement or does not operate its Compliance Monitoring and
Enforcement Program in accordance with the delegation agreement or other
applicable requirements.

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5.1

5.2

Should NERC not have a delegation agreement with a Regional Entity
covering a geographic area, or a Regional Entity withdraws from an
existing delegation agreement or the delegation agreement is otherwise
terminated, NERC will directly administer the Compliance Monitoring
and Enforcement Program applicable to owners, operators and users of the
Bulk Power System within that geographic area.
1.

This monitoring and enforcement will be accomplished by NERC
and Compliance Staff from another approved Regional Entity.

2.

If an existing delegation agreement with a Regional Entity is
terminating, the Regional Entity shall promptly provide to NERC
all relevant compliance information regarding Registered Entities,
contacts, prior compliance information and actions, Mitigation
Plans, and remedial actions for the period in which the Regional
Entity was responsible for administering the Compliance
Monitoring and Enforcement Program.

3.

NERC will levy and collect all Penalties directly and will utilize
any Penalty monies collected to offset the expenses of
administering the Compliance Monitoring and Enforcement
Program for the geographic area.

Should a Regional Entity seek to withdraw from its delegation agreement,
NERC will seek agreement from another Regional Entity to amend its
delegation agreement with NERC to extend that Regional Entity’s
boundaries for compliance monitoring and enforcement. In the event no
Regional Entity is willing to accept this responsibility, NERC will
administer the Compliance Monitoring and Enforcement Program within
the geographical boundaries of the Regional Entity seeking to withdraw
from the delegation agreement, in accordance with Section 401.5.1.

6.

Actively Monitored Requirements — NERC, with input from the Regional
entities, stakeholders, and regulators, shall annually select a subset of the NERC
Reliability Standards and Requirements to be actively monitored and audited in
the annual NERC Compliance Monitoring and Enforcement Program
Implementation Plan. Compliance is required with all NERC Reliability
Standards whether or not they are included in the subset of Reliability Standards
and Requirements designated to be actively monitored and audited in the annual
NERC Compliance Monitoring and Enforcement Program Implementation Plan.

7.

Penalties, Sanctions, and Remedial Actions — NERC and Regional Entities
will apply Penalties, sanctions, and remedial actions that bear a reasonable
relation to the seriousness of a violation and take into consideration timely
remedial efforts as defined in the NERC Sanction Guidelines, which is
incorporated into these rules as Appendix 4B.

8.

Multiple Enforcement Actions – A Registered Entity shall not be subject to an
enforcement action by NERC and a Regional Entity for the same violation.

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9.

Records — NERC shall maintain a record of each compliance submission,
including Self-Reported, Possible, Alleged, and Confirmed Violations of
approved Reliability Standards; associated Penalties, sanctions, remedial actions
and settlements; and the status of mitigation actions.

10.

Confidential Information — NERC will treat all Possible and Alleged
Violations of Reliability Standards and matters related to a Compliance
Monitoring and Enforcement Program process, including the status of any
Compliance Investigation or other Compliance Monitoring and Enforcement
Program process, as confidential in accordance with Section 1500.
The types of information that will be considered confidential and will not (subject
to statutory and regulatory requirements) be disclosed in any public information
reported by NERC are identified in Section 1500. Information that would
jeopardize Bulk Power System reliability, including information relating to a
Cyber Security Incident, will be identified and protected from public disclosure as
Critical Energy Infrastructure Information in accordance with Section 1500.
The Regional Entity and NERC shall give Bulk Power System owners, operators,
and users a reasonable opportunity to demonstrate that information concerning a
violation is confidential before such report is disclosed to the public.

11.

Public Posting — When the affected Bulk Power System owner, operator, or user
either agrees with a Possible or Alleged Violation(s) of a Reliability Standard(s)
or a report of a Compliance Audit or Compliance Investigation, or enters into a
settlement agreement concerning a Possible or Alleged Violation(s), or the time
for submitting an appeal is passed, or all appeals processes are complete, NERC
shall, subject to the confidentiality requirements of these Rules of Procedure,
publicly post each Confirmed Violation, Penalty or sanction, settlement
agreement, and final Compliance Audit or Compliance Investigation report, on its
website.
11.1

Each Bulk Power System owner, operator, or user may provide NERC
with a statement to accompany the Confirmed Violation or report to be
posted publicly. The statement must be on company letterhead and
include a signature, as well as the name and title of the person submitting
the information.

11.2

In accordance with Section 1500, information deemed by a Bulk Power
System owner, operator, or user, Regional Entity, or NERC as Critical
Energy Infrastructure Information (NERC Security Guidelines for the
Electricity Sector — Protecting Potentially Sensitive Information may be
used as a guide) or other Confidential Information shall be redacted in
accordance with Section 1500 and not be released publicly.

11.3

Subject to redaction of Critical Energy Infrastructure Information or other
Confidential Information, for each Confirmed Violation or settlement
relating to a Possible Violation or an Alleged Violation, the public posting

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Rules of Procedure of the North American Electric Reliability Corporation

shall include the name of any relevant entity, the nature, time period, and
circumstances of such Possible, Alleged or Confirmed Violation, any
Mitigation Plan to be implemented by the Registered Entity in connection
with the Confirmed Violation or settlement, and sufficient facts to assist
owners, operators and users of the Bulk Power System to evaluate whether
they have engaged in or are engaging in similar activities.
12.

402.

Violation Information Review — NERC Compliance Staff shall periodically
review and analyze all reports of Possible, Alleged and Confirmed Violations to
identify trends and other pertinent reliability issues.

NERC Oversight of the Regional Entity Compliance Monitoring and Enforcement
Programs
1.

NERC Monitoring Program — NERC shall have a program to monitor the
Compliance Monitoring and Enforcement Program of each Regional Entity that
has been delegated authority. The objective of this monitoring program shall be
to ensure that the Regional Entity carries out its Compliance Monitoring and
Enforcement Program in accordance with these Rules of Procedure and the terms
of the delegation agreement, and to ensure consistency and fairness of the
Regional Entity’s Compliance Monitoring and Enforcement Program. Oversight
and monitoring by NERC shall be accomplished through an annual Compliance
Monitoring and Enforcement Program review, program audits, and regular
evaluations of Regional Entity Compliance Monitoring and Enforcement Program
performance as described below.
1.1

NERC Review of Annual Regional Entity Compliance Monitoring
and Enforcement Program Implementation Plans — NERC shall
require each Regional Entity to submit for review and approval an annual
Regional Entity Compliance Monitoring and Enforcement Program
Implementation Plan. NERC shall review each annual Regional Entity
Compliance Monitoring and Enforcement Program Implementation Plan
and shall accept the plan if it meets NERC requirements and the
requirements of the delegation agreement.

1.2

Regional Entity Compliance Monitoring and Enforcement Program
Evaluation — NERC shall annually evaluate the goals, tools, and
procedures of each Regional Entity Compliance Monitoring and
Enforcement Program to determine the effectiveness of each Regional
Entity Compliance Monitoring and Enforcement Program, using criteria
developed by the NERC Compliance and Certification Committee.

1.3

Regional Entity Compliance Monitoring and Enforcement Program
Audit — At least once every five years, NERC shall conduct an audit to
evaluate how each Regional Entity Compliance Monitoring and
Enforcement Program implements the NERC Compliance Monitoring and
Enforcement Program. The evaluation shall be based on these Rules of
Procedure, including Appendix 4C, the delegation agreement, directives in
effect pursuant to the delegation agreement, approved annual Regional

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Entity Compliance Monitoring and Enforcement Program Implementation
Plans, required Compliance Monitoring and Enforcement Program
attributes, and the NERC Compliance Monitoring and Enforcement
Program procedures. These evaluations shall be provided to the
Applicable Governmental Authorities to demonstrate the effectiveness of
each Regional Entity. In addition, audits of Cross-Border Regional
Entities shall cover applicable requirements imposed on the Regional
Entity by statute, regulation, or order of, or agreement with, provincial
governmental and/or regulatory authorities for which NERC has auditing
responsibilities over the Regional Entity’s compliance with such
requirements within Canada or Mexico. Participation of a representative
of an Applicable Governmental Authority shall be subject to the
limitations of sections 3.1.6 and 8.0 of Appendix 4C of these Rules of
Procedure regarding disclosures of non-public compliance information
related to other jurisdictions. NERC shall maintain an audit procedure
containing the requirements, steps, and timelines to conduct an audit of
each Regional Entity Compliance Monitoring and Enforcement Program.
The current procedure is contained in the NERC Audit of Regional Entity
Compliance Programs, which is incorporated into these rules as Appendix
4A.
1.3.1. NERC shall establish a program to audit bulk power system
owners, operators, and users operating within a regional entity to
verify the findings of previous compliance audits conducted by the
regional entity to evaluate how well the regional entity compliance
enforcement program is meeting its delegated authority and
responsibility.
1.4

2.

Applicable Governmental Authorities will be allowed to participate as an
observer in any audit conducted by NERC of a Regional Entity’s
Compliance Monitoring and Enforcement Program. A representative of
the Regional Entity being audited will be allowed to participate in the
audit as an observer.

Consistency Among Regional Compliance Monitoring and Enforcement
Programs — To provide for a consistent Compliance Monitoring and
Enforcement Program for all Bulk Power System owners, operators, and users
required to comply with approved Reliability Standards, NERC shall maintain a
single, uniform Compliance Monitoring and Enforcement Program, which is
incorporated into these rules of procedure as Appendix 4C. Any differences in
Regional Entity Compliance Monitoring and Enforcement Program methods,
including determination of violations and Penalty assessment, shall be justified on
a case-by-case basis and fully documented in each Regional Entity delegation
agreement.
2.1

NERC shall ensure that each of the Regional Entity Compliance
Monitoring and Enforcement Programs meets these Rules of Procedure,
including Appendix 4C, and follows the terms of the delegation

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agreement and the approved annual Regional Entity Compliance
Monitoring and Enforcement Program Implementation Plan.
2.2

NERC shall maintain a single, uniform Compliance Monitoring and
Enforcement Program in Appendix 4C containing the procedures to
ensure the consistency and fairness of the processes used to determine
Regional Entity Compliance Monitoring and Enforcement Program
findings of compliance and noncompliance, and the application of
Penalties and sanctions.

2.3

NERC shall periodically conduct Regional Entity compliance manager
forums. These forums shall use the results of Regional Entity Compliance
Monitoring and Enforcement Program audits and findings of NERC
Compliance Staff to identify and refine Regional Entity Compliance
Monitoring and Enforcement Program differences into a set of best
practices over time.

3.

Information Collection and Reporting — NERC and the Regional Entities shall
implement data management procedures that address data reporting requirements,
data integrity, data retention, data security, and data confidentiality.

4.

Violation Disclosure — NERC shall disclose all Confirmed Violations and
maintain as confidential Possible Violations and Alleged Violations, according to
the reporting and disclosure process in Appendix 4C.

5.

Authority to Determine Noncompliance, Levy Penalties and Sanctions, and
Issue Remedial Action Directives — NERC and Regional Entity Compliance
Staff shall have the authority and responsibility to make initial determinations of
compliance or noncompliance, and where authorized by the Applicable
Governmental Authorities or where otherwise authorized, to determine Penalties
and sanctions for noncompliance with a Reliability Standard, and issue Remedial
Action Directives. Regional Entity boards or a compliance panel reporting
directly to the Regional Entity board will be vested with the authority for the
overall Regional Entity Compliance Monitoring and Enforcement Program and
have the authority to impose Penalties and sanctions on behalf of NERC, where
authorized by applicable legislation or agreement. Remedial Action Directives
may be issued by NERC or a Regional Entity that is aware of a Bulk Power
System owner, operator, or user that is about to engage in an act or practice that
would result in noncompliance with a Reliability Standard, where such Remedial
Action Directive is immediately necessary to protect the reliability of the Bulk
Power System from an imminent threat. If, after receiving such a Remedial
Action Directive, the Bulk Power System owner, operator, or user does not take
appropriate action to avert a violation of a Reliability Standard, NERC may
petition the Applicable Governmental Authority to issue a compliance order.

6.

Due Process — NERC shall establish and maintain a fair, independent, and
nondiscriminatory appeals process. The appeals process is set forth in Sections

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Rules of Procedure of the North American Electric Reliability Corporation

408-410. The process shall allow Bulk Power System owners, operators, and
users to appeal the Regional Entity’s findings of noncompliance and to appeal
Penalties, sanctions, and Remedial Action Directives that are levied by the
Regional Entity. Appeals beyond the NERC process will be heard by the
Applicable Governmental Authority.
The appeals process will also allow for appeals to NERC of any findings of
noncompliance issued by NERC to a Regional Entity for Reliability Standards
and Requirements where the Regional Entity is monitored for compliance to a
Reliability Standard. No monetary Penalties will be levied in these matters;
however sanctions, remedial actions, and directives to comply may be applied by
NERC.
7.

Conflict Disclosure — NERC shall disclose to the appropriate governmental
authorities any potential conflicts between a market rule and the enforcement of a
Regional Reliability Standard.

8.

Confidentiality — To maintain the integrity of the NERC Compliance
Monitoring and Enforcement Program, NERC and Regional Entity staff,
Compliance Audit team members, and committee members shall maintain the
confidentiality of information obtained and shared during compliance monitoring
and enforcement processes including Compliance Investigations, Compliance
Audits, Spot Checks, drafting of reports, appeals, and closed meetings.
8.1

NERC and the Regional Entity shall have in place appropriate codes of
conduct and confidentiality agreements for staff and other Compliance
Monitoring and Enforcement Program participants.

8.2

Individuals not bound by NERC or Regional Entity codes of conduct who
serve on compliance-related committees or Compliance Audit teams shall
sign a NERC confidentiality agreement prior to participating on the
committee or Compliance Audit team.

8.3

Information deemed by a Bulk Power System owner, operator, or user,
Regional Entity, or NERC as Critical Energy Infrastructure Information
shall not be distributed outside of a committee or team, nor released
publicly. Other information subject to confidentiality is identified in
Section 1500.

8.4

In the event that a staff, committee, or Compliance Audit team member
violates any of the confidentiality rules set forth above, the staff,
committee, or Compliance Audit team member and any member
organization with which the individual is associated may be subject to
appropriate action by the Regional Entity or NERC, including prohibiting
participation in future Compliance Monitoring and Enforcement Program
activities.

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Rules of Procedure of the North American Electric Reliability Corporation

9.

Auditor Training — NERC shall develop and provide training in auditing skills
to all people who participate in NERC and Regional Entity Compliance Audits.
Training for NERC and Regional Entity personnel and others who serve as
Compliance Audit team leaders shall be more comprehensive than training given
to industry subject matter experts and Regional Entity members. Training for
Regional Entity members may be delegated to the Regional Entity.

403. Required Attributes of Regional Entity Compliance Monitoring and Enforcement
Programs
Each Regional Entity Compliance Monitoring and Enforcement Program shall promote
excellence in the enforcement of Reliability Standards. To accomplish this goal, each
Regional Entity Compliance Monitoring and Enforcement Program shall (i) conform to
and comply with the NERC uniform Compliance Monitoring and Enforcement Program,
Appendix 4C to these Rules of Procedure, except to the extent of any deviations that are
stated in the Regional Entity’s delegation agreement, and (ii) meet all of the attributes set
forth in this Section 403.
Program Structure
1.

Independence — Each Regional Entity’s governance of its Compliance
Monitoring and Enforcement Program shall exhibit independence, meaning the
Compliance Monitoring and Enforcement Program shall be organized so that its
compliance monitoring and enforcement activities are carried out separately from
other activities of the Regional Entity. The Compliance Monitoring and
Enforcement Program shall not be unduly influenced by the Bulk Power System
owners, operators, and users being monitored or other Regional Entity activities
that are required to meet the Reliability Standards. Regional Entities must include
rules providing that no two industry sectors may control any decision and no
single segment may veto any matter related to compliance.

2.

Exercising Authority — Each Regional Entity Compliance Monitoring and
Enforcement Program shall exercise the responsibility and authority in carrying
out the delegated functions of the NERC Compliance Monitoring and
Enforcement Program in accordance with delegation agreements and Appendix
4C. These functions include but are not limited to: data gathering, data reporting,
Compliance Investigations, Compliance Audit activities, evaluating compliance
and noncompliance, imposing Penalties and sanctions, and approving and
tracking mitigation actions.

3.

Delegation of Authority — To maintain independence, fairness, and consistency
in the NERC Compliance Monitoring and Enforcement Program, a Regional
Entity shall not sub-delegate its Compliance Monitoring and Enforcement
Program duties to entities or persons other than the Regional Entity Compliance
Staff, unless (i) required by statute or regulation in the applicable jurisdiction, or
(ii) by agreement with express approval of NERC and of FERC or other
Applicable Governmental Authority, to another Regional Entity.

4.

Hearings of Contested Findings or Sanctions — The Regional Entity board or
compliance panel reporting directly to the Regional Entity board (with appropriate

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Rules of Procedure of the North American Electric Reliability Corporation

recusal procedures) will be vested with the authority for conducting compliance
hearings in which any Bulk Power System owner, operator, or user provided a
Notice of Alleged Violation may present facts and other information to contest a
Notice of Alleged Violation or any proposed Penalty, sanction, any Remedial
Action Directive, or any Mitigation Plan component. Compliance hearings shall
be conducted in accordance with the Hearing Procedures set forth in Attachment 2
to Appendix 4C. If a stakeholder body serves as the Hearing Body, no two
industry sectors may control any decision and no single segment may veto any
matter related to compliance after recusals.
Program Resources
5.

Regional Entity Compliance Staff — Each Regional Entity shall have sufficient
resources to meet delegated compliance monitoring and enforcement
responsibilities, including the necessary professional staff to manage and
implement the Regional Entity Compliance Monitoring and Enforcement
Program.

6.

Regional Entity Compliance Staff Independence — The Regional Entity
Compliance Staff shall be capable of and required to make all determinations of
compliance and noncompliance and determine Penalties, sanctions, and remedial
actions.
6.1

Regional Entity Compliance Staff shall not have a conflict of interest, real
or perceived, in the outcome of compliance monitoring and enforcement
processes, reports, or sanctions. The Regional Entity shall have in effect a
conflict of interest policy.

6.2

Regional Entity Compliance Staff shall have the authority and
responsibility to carry out compliance monitoring and enforcement
processes (with the input of industry subject matter experts), make
determinations of compliance or noncompliance, and levy Penalties and
sanctions without interference or undue influence from Regional Entity
members and their representative or other industry entities.

6.3

Regional Entity Compliance Staff may call upon independent technical
subject matter experts who have no conflict of interest in the outcome of
the compliance monitoring and enforcement process to provide technical
advice or recommendations in the determination of compliance or
noncompliance.

6.4

Regional Entity Compliance Staff shall abide by the confidentiality
requirements contained in Section 1500 and Appendix 4C of these Rules
of Procedure, the NERC delegation agreement and other confidentiality
agreements required by the NERC Compliance Monitoring and
Enforcement Program.

6.5

Contracting with independent consultants or others working for the
Regional Entity Compliance Monitoring and Enforcement Program shall
be permitted provided the individual has not received compensation from
a Bulk Power System owner, operator, or user being monitored for a

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Rules of Procedure of the North American Electric Reliability Corporation

period of at least the preceding six months and owns no financial interest
in any Bulk Power System owner, operator, or user being monitored for
compliance to the Reliability Standard, regardless of where the Bulk
Power System owner, operator, or user operates. Any such individuals for
the purpose of these Rules of Procedure shall be considered as augmenting
Regional Entity Compliance Staff.
7.

Use of Industry Subject Matter Experts and Regional Entity Members —
Industry experts and Regional Entity members may be called upon to provide
their technical expertise in Compliance Monitoring and Enforcement Program
activities.
7.1

The Regional Entity shall have procedures defining the allowable
involvement of industry subject matter experts and Regional Entity
members. The procedures shall address applicable antitrust laws and
conflicts of interest.

7.2

Industry subject matter experts and Regional Entity members shall have
no conflict of interest or financial interests in the outcome of their
activities.

7.3

Regional Entity members and industry subject matter experts, as part of
teams or Regional Entity committees, may provide input to the Regional
Entity Compliance Staff so long as the authority and responsibility for (i)
evaluating and determining compliance or noncompliance and (ii) levying
Penalties, sanctions, or remedial actions shall not be delegated to any
person or entity other than the Compliance Staff of the Regional Entity.
Industry subject matter experts, Regional Entity members, or Regional
Entity committees shall not make determinations of noncompliance or
levy Penalties, sanctions, or remedial actions. Any committee involved
shall be organized so that no two industry sectors may control any
decision and no single segment may veto any matter related to
compliance.

7.4

Industry subject matter experts and Regional Entity members shall sign a
confidentiality agreement appropriate for the activity being performed.

7.5

All industry subject matter experts and Regional Entity members
participating in Compliance Audits and Compliance Investigations shall
successfully complete auditor training provided by NERC or the Regional
Entity prior to performing these activities

Program Design
8.

Regional Entity Compliance Monitoring and Enforcement Program Content
— All approved Reliability Standards shall be included in the Regional Entity
Compliance Monitoring and Enforcement Program for all Bulk Power System
owners, operators, and users within the defined boundaries of the Regional Entity.

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Rules of Procedure of the North American Electric Reliability Corporation

Compliance to approved Regional Reliability Standards is applicable only within
the Region of the Regional Entity that submitted those particular Regional
Reliability Standards for approval. NERC will identify the minimum set of
Reliability Standards and Requirements to be actively monitored by the Regional
Entity in a given year.
9.

Antitrust Provisions — Each Regional Entity’s Compliance Monitoring and
Enforcement Program shall be structured and administered to abide by U.S.
antitrust law and Canadian competition law.

10.

Information Submittal — All Bulk Power System owners, operators, and users
within the Regional Entity responsible for complying with Reliability Standards
shall submit timely and accurate information when requested by the Regional
Entity or NERC. NERC and the Regional Entities shall preserve any mark of
confidentiality on information submitted pursuant to Section 1502.1.
10.1

Each Regional Entity has the authority to collect the necessary information
to determine compliance and shall develop processes for gathering data
from the Bulk Power System owners, operators, and users the Regional
Entity monitors.

10.2

The Regional Entity or NERC has the authority to request information
from Bulk Power System owners, operators, and users pursuant to Section
401.3 or this Section 403.10 without invoking a specific compliance
monitoring and enforcement process in Appendix 4C, for purposes of
determining whether to pursue one such process in a particular case and/or
validating in the enforcement phase of a matter the conclusions reached
through the compliance monitoring and enforcement process(es).

10.3

When required or requested, the Regional Entities shall report information
to NERC promptly and in accordance with Appendix 4C and other NERC
procedures.

10.4

Regional Entities shall notify NERC of all Possible, Alleged and
Confirmed Violations of NERC Reliability Standards by Registered
Entities over which the Regional Entity has compliance monitoring and
enforcement authority, in accordance with Appendix 4C.

10.5

A Bulk Power System owner, operator, or user found in noncompliance
with a Reliability Standard shall submit a Mitigation Plan with a timeline
addressing how the noncompliance will be corrected. The Regional Entity
Compliance Staff shall review and approve the Mitigation Plan in
accordance with Appendix 4C.

10.6

An officer of a Bulk Power System owner, operator, or user shall certify
as accurate all compliance data Self-Reported to the Regional Entity
Compliance Monitoring and Enforcement Program.

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Rules of Procedure of the North American Electric Reliability Corporation

10.7

11.

12.

Regional Entities shall develop and implement procedures to verify the
compliance information submitted by Bulk Power System owners,
operators, and users.

Compliance Audits of Bulk Power System Owners, Operators, and Users —
Each Regional Entity will maintain and implement a program of proactive
Compliance Audits of Bulk Power System owners, operators, and users
responsible for complying with Reliability Standards, in accordance with
Appendix 4C. A Compliance Audit is a process in which a detailed review of the
activities of a Bulk Power System owner, operator, or user is performed to
determine if that Bulk Power System owner, operator, or user is complying with
approved Reliability Standards.
11.1

For an entity registered as a Balancing Authority, Reliability Coordinator,
or Transmission Operator, the Compliance Audit will be performed at
least once every three years. For other Bulk Power System owners,
operators, and users on the NERC Compliance Registry, Compliance
Audits shall be performed on a schedule established by NERC.

11.2

Compliance Audits of Balancing Authorities, Reliability Coordinators,
and Transmission Operators will include a component at the audited
entity’s site. For other Bulk Power System owners, operators, and users
on the NERC Compliance Registry, the Compliance Audit may be either
an on-site Compliance Audit or based on review of documents, as
determined to be necessary and appropriate by NERC or Regional Entity
Compliance Staff.

11.3

Compliance Audits must include a detailed review of the activities of the
Bulk Power System owner, operator, or user to determine if the Bulk
Power System owner, operator, or user is complying with all approved
Reliability Standards identified for audit by NERC. The Compliance
Audit shall include a review of supporting documentation and evidence
used by the Bulk Power System owner, operator or user to demonstrate
compliance for an appropriate period prior to the Compliance Audit.

Confidentiality of Compliance Monitoring and Enforcement Processes — All
compliance monitoring and enforcement processes, and information obtained
from such processes, are to be non-public and treated as confidential in
accordance with Section 1500 and Appendix 4C of these Rules of Procedure,
unless NERC, the Regional Entity or FERC or another Applicable Governmental
Authority with jurisdiction determines a need to conduct a Compliance
Monitoring and Enforcement Program process on a public basis, provided, that
NERC and the Regional Entities shall publish (i) schedules of Compliance Audits
scheduled in each year, (ii) a public report of each Compliance Audit, and (iii)
Notices of Penalty and settlement agreements. Advance authorization from the
Applicable Governmental Authority is required to make public any compliance
monitoring and enforcement process or any information relating to a compliance

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Rules of Procedure of the North American Electric Reliability Corporation

monitoring and enforcement process, or to permit interventions when determining
whether to impose a Penalty. This prohibition on making public any compliance
monitoring and enforcement process does not prohibit NERC or a Regional Entity
from publicly disclosing (i) the initiation of or results from an analysis of a
significant system event under Section 807 or of off-normal events or system
performance under Section 808, or (ii) information of general applicability and
usefulness to owners, operators, and users of the Bulk Power System concerning
reliability and compliance matters, so long as specific allegations or conclusions
regarding Possible or Alleged Violations of Reliability Standards are not included
in such disclosures.
13.

Critical Energy Infrastructure Information — Information that would
jeopardize Bulk Power System reliability, including information relating to a
Cyber Security Incident will be identified and protected from public disclosure as
Critical Energy Infrastructure Information. In accordance with Section 1500,
information deemed by a Bulk Power System owner, operator, or user, Regional
Entity, or NERC as Critical Energy Infrastructure Information shall be redacted
according to NERC procedures and shall not be released publicly.

14.

Penalties, Sanctions, and Remedial Action Directives — Each Regional Entity
will apply all Penalties, sanctions, and Remedial Action Directives in accordance
with the approved Sanction Guidelines, Appendix 4B to these Rules of
Procedure. Any changes to the Sanction Guidelines to be used by any Regional
Entity must be approved by NERC and submitted to the Applicable Governmental
Authority for approval. All Confirmed Violations, Penalties, and sanctions will
be provided to NERC for review and filing with Applicable Governmental
Authorities as a Notice of Penalty, in accordance with Appendix 4C.

15.

Regional Entity Hearing Process — Each Regional Entity Compliance
Monitoring and Enforcement Program shall establish and maintain a fair,
independent, and nondiscriminatory process for hearing contested violations and
any Penalties or sanctions levied, in conformance with Attachment 2 to Appendix
4C to these Rules of Procedure and any deviations therefrom that are set forth in
the Regional Entity’s delegation agreement. The hearing process shall allow Bulk
Power System owners, operators, and users to contest findings of compliance
violations, any Penalties and sanctions that are proposed to be levied, proposed
Remedial Action Directives, and components of proposed Mitigation Plans. The
Regional Entity hearing process shall be conducted before the Regional Entity
board or a balanced committee established by and reporting to the Regional Entity
board as the final adjudicator, provided, that Canadian provincial regulators may
act as the final adjudicator in their respective jurisdictions. The Regional Entity
hearing process shall (i) include provisions for recusal of any members of the
Hearing Body with a potential conflict of interest, real or perceived, from all
compliance matters considered by the Hearing Body for which the potential
conflict of interest exists and (ii) provide that no two industry sectors may control
any decision and no single segment may veto any matter brought before the
Hearing Body after recusals.

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Rules of Procedure of the North American Electric Reliability Corporation

Each Regional Entity will notify NERC of all hearings and NERC may observe
any of the proceedings. Each Regional Entity will notify NERC of the outcome
of all hearings.
If a Bulk Power System owner, operator, or user has completed the Regional
Entity hearing process and desires to appeal the outcome of the hearing, the Bulk
Power System owner, operator, or user shall appeal to NERC in accordance with
Section 409 of these Rules of Procedure, except that a determination of violation
or Penalty that has been directly adjudicated by an Applicable Governmental
Authority shall be appealed with that Applicable Governmental Authority.
16.

404.

Annual Regional Entity Compliance Monitoring and Enforcement Program
Implementation Plan — Each Regional Entity shall annually develop and submit
to NERC for approval a Regional Entity Compliance Monitoring and
Enforcement Implementation Plan in accordance with Appendix 4C that
identifies the Reliability Standards and Requirements to be actively monitored
(both those required by NERC and any additional Reliability Standards the
Regional Entity proposes to monitor), and how each NERC and Regional Entity
identified Reliability Standard will be monitored, evaluated, reported, sanctioned,
and appealed. These Regional Implementation Plans will be submitted to NERC
on the schedule established by NERC, generally on or about November 1 of the
preceding year. In conjunction with the annual Regional Implementation Plan,
each Regional Entity must report to NERC regarding how it carried out its
delegated compliance monitoring and enforcement authority in the previous year,
the effectiveness of the Compliance Monitoring and Enforcement Program, and
changes expected to correct any deficiencies identified. Each Regional Entity will
provide its annual report on the schedule established by NERC, generally on or
about February 15 of the following year.

NERC Monitoring of Compliance for Regional Entities or Bulk Power Owners,
Operator, or Users
NERC shall monitor Regional Entity compliance with NERC Reliability Standards and,
if no there is no delegation agreement in effect with a Regional Entity for the geographic
area, shall monitor Bulk Power System owners, operators, and users for compliance with
NERC Reliability Standards. Industry subject matter experts may be used as appropriate
in Compliance Investigations, Compliance Audits, and other Compliance Monitoring and
Enforcement Program activities, subject to confidentiality, antitrust, and conflict of
interest provisions.
1.

NERC Obligations — NERC Compliance Staff shall monitor the compliance of
the Regional Entity with the Reliability Standards for which the Regional Entities
are responsible, in accordance with Appendix 4C. NERC shall actively monitor
in its annual Compliance Enforcement and Monitoring Program selected
Reliability Standards that apply to the Regional Entities. NERC shall evaluate
compliance and noncompliance with all of the Reliability Standards that apply to
the Regional Entities and shall impose sanctions, Penalties, or Remedial Action

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Rules of Procedure of the North American Electric Reliability Corporation

Directives when there is a finding of noncompliance. NERC shall post all
violations of Reliability Standards that apply to the Regional Entities as described
in the reporting and disclosure process in Appendix 4C.
In addition, NERC will directly monitor Bulk Power System owners, operators,
and users for compliance with NERC Reliability Standards in any geographic area
for which there is not a delegation agreement in effect with a Regional Entity, in
accordance with Appendix 4C. In such cases, NERC will serve as the
Compliance Enforcement Authority described in Appendix 4C. Compliance
matters contested by Bulk Power System owners, operators, and users in such an
event will be heard by the NERC Compliance and Certification Committee.

405.

2.

Compliance Audit of the Regional Entity — NERC shall perform a Compliance
Audit of each Regional Entity responsible for complying with Reliability
Standards at least once every three years. NERC shall make an evaluation of
compliance based on the information obtained through the Compliance Audit.
After due process is complete, the final Compliance Audit report shall be made
public in accordance with the reporting and disclosure process in Appendix 4C.

3.

Appeals Process —Any Regional Entity or Bulk Power System owner, operator
or user found by NERC, as opposed to a Regional Entity, to be in noncompliance
with a Reliability Standard may appeal the findings of noncompliance with
Reliability Standards and any sanctions or Remedial Action Directives that are
issued by, or Mitigation Plan components imposed by, NERC, pursuant to the
processes described in Sections 408 through 410.

Monitoring of Reliability Standards and Other Requirements Applicable to NERC
The NERC Compliance and Certification Committee shall establish and implement a
process to monitor NERC’s compliance with the Reliability Standards that apply to
NERC. The process shall use independent monitors with no conflict of interest, real or
perceived, in the outcomes of the process. All violations shall be made public according
to the reporting and disclosure process in Appendix 4C. The Compliance and
Certification Committee will also establish a procedure for monitoring NERC’s
compliance with its Rules of Procedure for the Standards Development, Compliance
Monitoring and Enforcement, and Organization Registration and Certification Programs.
Such procedures shall not be used to circumvent the appeals processes established for
those programs.

406.

Independent Audits of the NERC Compliance Monitoring and Enforcement
Program
NERC shall provide for an independent audit of its Compliance Monitoring and
Enforcement Program at least once every three years, or more frequently as determined
by the Board. The audit shall be conducted by independent expert auditors as selected by
the Board. The independent audit shall meet the following minimum requirements and
any other requirements established by the NERC Board.

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Rules of Procedure of the North American Electric Reliability Corporation

407.

408.

1.

Effectiveness — The audit shall evaluate the success and effectiveness of the
NERC Compliance Monitoring and Enforcement Program in achieving its
mission.

2.

Relationship — The audit shall evaluate the relationship between NERC and the
Regional Entity Compliance Monitoring and Enforcement Programs and the
effectiveness of the programs in ensuring reliability.

3.

Final Report Posting — The final report shall be posted by NERC for public
viewing in accordance with Appendix 4C.

4.

Response to Recommendations — If the audit report includes recommendations
to improve the NERC Compliance Monitoring and Enforcement Program, the
administrators of the NERC Compliance Monitoring and Enforcement Program
shall provide a written response and plan to the Board within 30 days of the
release of the final audit report.

Penalties, Sanctions, and Remedial Actions
1.

NERC Review of Regional Entity Penalties and Sanctions — NERC shall
review all Penalties, sanctions, and remedial actions imposed by each Regional
Entity for violations of Reliability Standards to determine if the Regional Entity’s
determination is supported by a sufficient record compiled by the Regional Entity,
is consistent with the Sanction Guidelines incorporated into these Rules of
Procedure as Appendix 4B and with other directives, guidance and directions
issued by NERC pursuant to the delegation agreement, and is consistent with
Penalties, sanctions and remedial actions imposed by the Regional Entity and by
other Regional Entities for violations involving the same or similar facts and
circumstances.

2.

Developing Penalties and Sanctions — The Regional Entity Compliance Staff
shall use the Sanction Guidelines, which are incorporated into these Rules of
Procedure as Appendix 4B, to develop an appropriate Penalty, sanction, or
remedial action for a violation, and shall notify NERC of the Penalty or sanction.

3.

Effective Date of Penalty — Where authorized by applicable legislation or
agreement, no Penalty imposed for a violation of a Reliability Standard shall take
effect until the thirty-first day after NERC files, with the Applicable
Governmental Authority, a “Notice of Penalty” and the record of the proceedings
in which the violation and Penalty were determined, or such other date as ordered
by the Applicable Governmental Authority.

Review of NERC Decisions
1.

Scope of Review — A Registered Entity or a Regional Entity wishing to
challenge a finding of noncompliance and the imposition of a Penalty for a
compliance measure directly administered by NERC, or a Regional Entity
wishing to challenge a Regional Entity Compliance Monitoring and Enforcement
Program audit finding, may do so by filing a notice of the challenge with NERC’s

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Rules of Procedure of the North American Electric Reliability Corporation

Director of Compliance no later than 21 days after issuance of the notice of
finding of violation or audit finding. Appeals by Registered Entities of decisions
of Regional Entity Hearing Bodies shall be pursuant to Section 409 .
2.

Contents of Notice — The notice of challenge shall include the full text of the
decision that is being challenged, a concise statement of the error or errors
contained in the decision, a clear statement of the relief being sought, and
argument in sufficient detail to justify such relief.

3.

Response by NERC Compliance Monitoring and Enforcement Program —
Within 21 days after receiving a copy of the notice of challenge, the NERC
Director of Compliance may file with the Hearing Panel a response to the issues
raised in the notice, with a copy to the Regional Entity.

4.

Hearing by Compliance and Certification Committee — The NERC
Compliance and Certification Committee shall provide representatives of the
Regional Entity or Registered Entity, and the NERC Compliance Monitoring and
Enforcement Program an opportunity to be heard and shall decide the matter
based upon the filings and presentations made, with a written explanation of its
decision.

5.

Appeal — The Regional Entity, or Registered Entity may appeal the decision of
the Compliance and Certification Committee by filing a notice of appeal with
NERC’s Director of Compliance no later than 21 days after issuance of the
written decision by the Compliance and Certification Committee. The notice of
appeal shall include the full text of the written decision of the Compliance and
Certification Committee that is being appealed, a concise statement of the error or
errors contained in the decision, a clear statement of the relief being sought, and
argument in sufficient detail to justify such relief. No factual material shall be
presented in the appeal that was not presented to the Compliance and Certification
Committee.

6.

Response by NERC Compliance Monitoring and Enforcement Program —
Within 21 days after receiving a copy of the notice of appeal, the NERC
Compliance Monitoring and Enforcement Program staff may file its response to
the issues raised in the notice of appeal, with a copy to the entity filing the notice.

7.

Reply — The entity filing the appeal may file a reply within 7 days.

8.

Decision — The Compliance Committee of the NERC Board of Trustees shall
decide the appeal, in writing, based upon the notice of appeal, the record, the
response, and any reply. At its discretion, the Compliance Committee may invite
representatives of the Regional Entity or Registered Entity, and the NERC
Compliance Monitoring and Enforcement Program to appear before the
Compliance Committee. Decisions of the Compliance Committee shall be final,
except for further appeal to the Applicable Governmental Authority.

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409.

9.

Impartiality — No member of the Compliance and Certification Committee or
the Board of Trustees Compliance Committee having an actual or perceived
conflict of interest in the matter may participate in any aspect of the challenge or
appeal except as a party or witness.

10.

Expenses — Each party in the challenge and appeals processes shall pay its own
expenses for each step in the process.

11.

Non-Public Proceedings — All challenges and appeals shall be closed to the
public to protect Confidential Information.

Appeals from Final Decisions of Regional Entities
1.

Time for Appeal — An owner, operator or user of the Bulk Power System
wishing to appeal from a final decision of a Regional Entity that finds a violation
of a Reliability Standard or imposes a Penalty for violation of a Reliability
Standard shall file its notice of appeal with NERC’s Director of Compliance, with
a copy to the Regional Entity, no later than 21 days after issuance of the final
decision of the Regional Entity Hearing Body. The same appeal procedures will
apply regardless of whether the matter first arose in a Compliance Investigation,
Compliance Audit or Self-Report, other compliance monitoring and enforcement
process, or in a reliability readiness evaluation.

2.

Contents — The notice of appeal shall include the full text of the final decision
of the Regional Entity Hearing Body that is being appealed, a concise statement
of the error or errors contained in the final decision, a clear statement of the relief
being sought, and argument in sufficient detail to justify such relief. No factual
material shall be presented in the appeal that was not first presented during the
compliance hearing before the Regional Entity Hearing Body.

3.

Response by Regional Entity — Within 21 days after receiving a copy of the
notice of appeal, the Regional Entity shall file the entire record of the matter with
NERC’s Director of Compliance, with a copy to the Registered Entity filing the
notice, together with its response to the issues raised in the notice of appeal.

4.

Reply — The Registered Entity filing the appeal may file a reply to the Regional
Entity within 7 days.

5.

Decision — The Compliance Committee of the NERC Board of Trustees shall
decide the appeal, in writing, based upon the notice of appeal, the record of the
matter from the Regional Entity, the response, and any reply filed with NERC. At
its discretion, the Compliance Committee may invite representatives of the
Registered Entity making the appeal and the Regional Entity to appear before the
Committee. Decisions of the Compliance Committee shall be final, except for
further appeal to the Applicable Governmental Authority.

6.

Expenses — Each party in the appeals process shall pay its own expenses for
each step in the process.

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7.
410.

Non-Public Proceedings — All appeals shall be closed to the public to protect
Confidential Information.

Hold Harmless
A condition of invoking the challenge or appeals processes under Section 408 or 409 is
that the entity requesting the challenge or appeal agrees that neither NERC (defined to
include its Members, Board of Trustees, committees, subcommittees, staff and industry
subject matter experts), any person assisting in the challenge or appeals processes, nor
any company employing a person assisting in the challenge or appeals processes, shall be
liable, and they shall be held harmless against the consequences of or any action or
inaction or of any agreement reached in resolution of the dispute or any failure to reach
agreement as a result of the challenge or appeals proceeding. This “hold harmless”
clause does not extend to matters constituting gross negligence, intentional misconduct,
or a breach of confidentiality.

411. Requests for Technical Feasibility Exceptions to NERC Critical Infrastructure
Protection Reliability Standards
A Registered Entity that is subject to an Applicable Requirement of a NERC Critical
Infrastructure Protection Standard for which Technical Feasibility Exceptions are
permitted, may request a Technical Feasibility Exception to the Requirement, and the
request will be reviewed, approved or disapproved, and if approved, implemented, in
accordance with the NERC Procedure for Requesting and Receiving Technical
Feasibility Exceptions to NERC Critical Infrastructure Protection Standard, Appendix
4D to these Rules of Procedure.

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Rules of Procedure of the North American Electric Reliability Corporation

SECTION 500 — ORGANIZATION REGISTRATION AND
CERTIFICATION
501.

Scope of the Organization Registration and Organization Certification Programs
The purpose of the Organization Registration Program is to clearly identify those entities
that are responsible for compliance with the FERC approved Reliability Standards.
Organizations that are registered are included on the NERC Compliance Registry (NCR)
and are responsible for knowing the content of and for complying with all applicable
Reliability Standards. Registered Entities are not and do not become Members of NERC
or a Regional Entity, by virtue of being listed on the NCR. Membership in NERC is
governed by Article II of NERC’s Bylaws; membership in a Regional Entity or regional
reliability organization is governed by that entity’s bylaws or rules.
The purpose of the Organization Certification Program is to ensure that the new entity
(i.e., applicant to be an RC, BA, or TOP that is not already performing the function for
which it is applying to be certified as) has the tools, processes, training, and procedures to
demonstrate their ability to meet the Requirements/sub-Requirements of all of the
Reliability Standards applicable to the function(s) for which it is applying thereby
demonstrating the ability to become certified and then operational.
Organization Registration and Organization Certification may be delegated to Regional
Entities in accordance with the procedures in this Section 500; the NERC Organization
Registration and Organization Certification Manual, which is incorporated into these
Rules of Procedure as Appendix 5A; and, approved Regional Entity delegation
agreements or other applicable agreements.
1.

NERC Compliance Registry — NERC shall establish and maintain the NCR of
the Bulk Power System owners, operators, and users that are subject to approved
Reliability Standards.
1.1

(a) The NCR shall set forth the identity and functions performed for each
organization responsible for meeting Requirements/sub-Requirements of
the Reliability Standards. Bulk Power System owners, operators, and
users (i) shall provide to NERC and the applicable Regional Entity
information necessary to complete the Registration, and (ii) shall provide
NERC and the applicable Regional Entity with timely updates to
information concerning the Registered Entity’s ownership, operations,
contact information, and other information that may affect the Registered
Entity’s Registration status or other information recorded in the
Compliance Registry.
(b) A generation or transmission cooperative, a joint-action agency or
another organization may register as a Joint Registration Organization
(JRO), in lieu of each of the JRO’s members or related entities being
registered individually for one or more functions. Refer to Section 507.

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(c) Multiple entities may each register using a Coordinated Functional
Registration (CFR) for one or more Reliability Standard(s) and/or for one
or more Requirements/sub-Requirements within particular Reliability
Standard(s) applicable to a specific function pursuant to a written
agreement for the division of compliance responsibility. Refer to Section
508.
1.2

In the development of the NCR, NERC and the Regional Entities shall
determine which organizations should be placed on the NCR based on the
criteria provided in the NERC Statement of Compliance Registry Criteria
which is incorporated into these Rules of Procedure as Appendix 5B.

1.3

NERC and the Regional Entities shall use the following rules for
establishing and maintaining the NCR based on the Registration criteria as
set forth in Appendix 5B Statement of Compliance Registry Criteria:
1.3.1

NERC shall notify each organization that it is on the NCR. The
Registered Entity is responsible for compliance with all the
Reliability Standards applicable to the functions for which it is
registered from the time it receives the Registration notification
from NERC.

1.3.2

Any organization receiving such a notice may challenge its
placement on the NCR according to the process in Appendix 5A
Organization Registration and Organization Certification Manual,
Section V.

1.3.3

The Compliance Committee of the Board of Trustees shall
promptly issue a written decision on the challenge, including the
reasons for the decision.

1.3.4

The decision of the Compliance Committee of the Board of
Trustees shall be final unless, within 21 days of the date of the
Compliance Committee of the Board of Trustees decision, the
organization appeals the decision to the Applicable Governmental
Authority.

1.3.5

Each Registered Entity identified on the NCR shall notify its
corresponding Regional Entity(s) of any corrections, revisions,
deletions, changes in ownership, corporate structure, or similar
matters that affect the Registered Entity’s responsibilities with
respect to the Reliability Standards. Failure to notify will not
relieve the Registered Entity from any responsibility to comply
with the Reliability Standards or shield it from any Penalties or
sanctions associated with failing to comply with the Reliability
Standards applicable to its associated Registration.

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1.4

1.5

2.

For all geographical or electrical areas of the Bulk Power System, the
Registration process shall ensure that (1) no areas are lacking any entities
to perform the duties and tasks identified in and required by the Reliability
Standards to the fullest extent practical, and (2) there is no unnecessary
duplication of such coverage or of required oversight of such coverage. In
particular the process shall:
1.4.1

Ensure that all areas are under the oversight of one and only one
Reliability Coordinator.

1.4.2

Ensure that all Balancing Authorities and Transmission Operator
entities2 are under the responsibility of one and only one
Reliability Coordinator.

1.4.3

Ensure that all transmission Facilities of the Bulk Power System
are the responsibility and under the control of one and only one
Transmission Planner, Planning Authority, and Transmission
Operator.

1.4.4

Ensure that all Loads and generators are under the responsibility
and control of one and only one Balancing Authority.

NERC shall maintain the NCR of organizations responsible for meeting
the Requirements/sub-Requirements of the Reliability Standards currently
in effect on its website and shall update the NCR monthly.

Entity Certification — NERC shall provide for Certification of all entities with
primary reliability responsibilities requiring Certification. This includes those
entities that satisfy the criteria established in the NERC provisional Certification
process. The NERC programs shall:
2.1

Evaluate and certify the competency of entities performing reliability
functions. The entities presently expected to be certified include
Reliability Coordinators, Transmission Operators, and Balancing
Authorities.

2.2

Evaluate and certify each applicant’s ability to meet the requirements for
Certification.

2.3

Maintain process documentation.

2.4

Maintain records of currently certified entities.

2

Some organizations perform the listed functions (e.g., Balancing Authority, Transmission Operator) over areas that transcend
the Footprints of more than one Reliability Coordinator. Such organizations will have multiple Registrations, with each such
Registration corresponding to that portion of the organization’s overall area that is within the Footprint of a particular Reliability
Coordinator.

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2.5
3.

502.

Issue a Certification document to the applicant that successfully
demonstrates its competency to perform the evaluated functions.

Delegation and Oversight
3.1

NERC may delegate responsibilities for Organization Registration and
Organization Certification to Regional Entities in accordance with
requirements established by NERC. Delegation will be via the delegation
agreement between NERC and the Regional Entity or other applicable
agreement. The Regional Entity shall administer Organization
Registration and Organization Certification Programs in accordance with
such delegations to meet NERC’s programs goals and requirements
subject to NERC oversight.

3.2

NERC shall develop and maintain a plan to ensure the continuity of
Organization Registration and Organization Certification within the
geographic or electrical boundaries of a Regional Entity in the event that
no entity is functioning as a Regional Entity for that Region, or the
Regional Entity withdraws as a Regional Entity, or does not operate its
Organization Registration and Organization Certification Programs in
accordance with delegation agreements.

3.3

NERC shall develop and maintain a program to monitor and oversee the
NERC Organization Registration and Organization Certification Programs
activities that are delegated to each Regional Entity through a delegation
agreement or other applicable agreement.
3.3.1

This program shall monitor whether the Regional Entity carries out
those delegated activities in accordance with NERC requirements,
and whether there is consistency, fairness of administration, and
comparability.

3.3.2

Monitoring and oversight shall be accomplished through direct
participation in the Organization Registration and Organization
Certification Programs with periodic reviews of documents and
records of both programs.

Organization Registration and Organization Certification Program Requirements
1.

NERC shall maintain the Organization Registration and Organization
Certification Programs.
1.1

The roles and authority of Regional Entities in the programs are delegated
from NERC pursuant to the Rules of Procedure through regional
delegation agreements or other applicable agreements.

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2.

1.2

Processes for the programs shall be administered by NERC and the
Regional Entities. Materials that each Regional Entity uses are subject to
review and approval by NERC.

1.3

The appeals process for the Organization Registration and Organization
Certification Programs are identified in Appendix 5A Organization
Registration and Organization Certification Manual, Sections V and VI,
respectively.

1.4

The Certification Team membership is identified in Appendix 5A
Organization Registration and Organization Certification Manual,
Section IV.8.d.

To ensure consistency and fairness of the Organization Registration and
Organization Certification Programs, NERC shall develop procedures to be used
by all Regional Entities and NERC in accordance with the following criteria:
2.1

NERC and the Regional Entities shall have data management processes
and procedures that provide for confidentiality, integrity, and retention of
data and information collected.

2.2

Documentation used to substantiate the conclusions of the Regional
Entity/ NERC related to Registration and/or Certification must be retained
by the Regional Entity for (6) six years, unless a different retention period
is otherwise identified, for the purposes of future audits of these programs.

2.3

To maintain the integrity of the NERC Organization Registration and
Organization Certification Programs, NERC, Regional Entities,
Certification Team members, program audit team members (Section 506),
and committee members shall maintain the confidentiality of information
provided by an applicant or entities.
2.2.1

NERC and the Regional Entities shall have appropriate codes of
conduct and confidentiality agreements for staff, Certification
Team, Certification related committees, and Certification program
audit team members.

2.2.2

NERC, Regional Entities, Certification Team members, program
audit team members and committee members shall maintain the
confidentiality of any Registration or Certification-related
discussions or documents designated as confidential (see Section
1500 for types of Confidential Information).

2.2.3

NERC, Regional Entities, Certification Team members, program
audit team members and committee members shall treat as
confidential the individual comments expressed during
evaluations, program audits and report-drafting sessions.

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2.4

2.2.4

Copies of notes, draft reports, and other interim documents
developed or used during an entity Certification evaluation or
program audit shall be destroyed after the public posting of a final,
uncontested report.

2.2.5

Information deemed by an applicant, entity, a Regional Entity, or
NERC as confidential, including Critical Energy Infrastructure
Information, shall not be released publicly or distributed outside of
a committee or team.

2.2.6

In the event that an individual violates any of the confidentiality
rules set forth above, that individual and any member organization
with which the individual is associated will be subject to
immediate dismissal from the audit team and may be prohibited
from future participation in Compliance Monitoring and
Enforcement Program activities by the Regional Entity or NERC.

2.2.7

NERC shall develop and provide training in auditing skills to all
individuals prior to their participation in Certification evaluations.
Training for Certification Team leaders shall be more
comprehensive than the training given to industry subject matter
experts and Regional Entity members. Training for Regional
Entity members may be delegated to the Regional Entity.

An applicant that is determined to be competent to perform a function
after completing all Certification requirements shall be deemed certified
by NERC to perform that function for which it has demonstrated full
competency.
2.4.1

503.

All NERC certified entities shall be included on the NCR.

Regional Entity Implementation of Organization Registration and Organization
Certification Program Requirements
1.

Delegation — Recognizing the Regional Entity’s knowledge of and experience
with their members, NERC may delegate responsibility for Organization
Registration and Organization Certification to the Regional Entity through a
delegation agreement.

2.

Registration — The following Organization Registration activities shall be
managed by the Regional Entity per the NERC Organization Registration and
Organization Certification Manual, which is incorporated into the Rules of
Procedure as Appendix 5A Organization Registration and Organization
Certification Manual:
2.1

Regional Entities shall verify that all Reliability Coordinators, Balancing
Authorities, and Transmission Operators meet the Registration
requirements of Section 501(1.4).

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3.

504.

Certification — The following Organization Certification activities shall be
managed by the Regional Entity in accordance with an approved delegation
agreement or another applicable agreement:
3.1

An entity seeking Certification to perform one of the functions requiring
Certification shall contact the Regional Entity for the Region(s) in which it
plans to operate to apply for Certification.

3.2

An entity seeking Certification and other affected entities shall provide all
information and data requested by NERC or the Regional Entity to
conduct the Certification process.

3.3

Regional Entities shall notify NERC of all Certification applicants.

3.4

NERC and/or the Regional Entity shall evaluate the competency of entities
requiring Certification to meet the NERC Certification requirements.

3.5

NERC or the Regional Entity shall establish Certification procedures to
include evaluation processes, schedules and deadlines, expectations of the
applicants and all entities participating in the evaluation and Certification
processes, and requirements for Certification Team members.
3.5.1

The NERC / Regional Entity Certification procedures will include
provisions for on-site visits to the applicant’s facilities to review
the data collected through questionnaires, interviewing the
operations and management personnel, inspecting the facilities and
equipment (including requesting a demonstration of all tools
identified in the Certification process), reviewing all necessary
documents and data (including all agreements, processes, and
procedures identified in the Certification process), reviewing
Certification documents and projected system operator work
schedules, and reviewing any additional documentation needed to
support the completed questionnaire or inquiries arising during the
site visit.

3.5.2

The NERC/ Regional Entity Certification procedures will provide
for preparation of a written report by the Certification Team,
detailing any deficiencies that must be resolved prior to granting
Certification, along with any other recommendations for
consideration by the applicant, the Regional Entity, or NERC.

Appeals
1.

NERC shall maintain an appeals process to resolve any disputes related to
Registration or Certification activities per the Organization Registration and
Organization Certification Manual, which is incorporated in these Rules of
Procedure as Appendix 5A.

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2.

505.

The Regional Entity Certification appeals process shall culminate with the
Regional Entity board or a committee established by and reporting to the Regional
Entity board as the final adjudicator, provided that where applicable, Canadian
provincial governmental authorities may act as the final adjudicator in their
jurisdictions. NERC shall be notified of all appeals and may observe any
proceedings (Appendix 5A Organization Registration and Organization
Certification Manual).

Program Maintenance
NERC shall maintain its program materials, including such manuals or other documents
as it deems necessary, of the governing policies and procedures of the Organization
Registration and Organization Certification Programs.

506.

507.

Independent Audit of NERC Organization Registration and Organization
Certification Program
1.

NERC, through the Compliance and Certification Committee, shall provide for an
independent audit of its Organization Registration and Organization Certification
Programs at least once every three years, or more frequently, as determined by the
Board. The audit shall be conducted by independent expert auditors as selected
by the Board.

2.

The audit shall evaluate the success, effectiveness and consistency of the NERC
Organization Registration and Organization Certification Programs.

3.

The final report shall be posted by NERC for public viewing.

4.

If the audit report includes recommendations to improve the program, the
administrators of the program shall provide a written response to the Board within
30 days of the final report, detailing the disposition of each and every
recommendation, including an explanation of the reasons for rejecting a
recommendation and an implementation plan for the recommendations accepted.

Provisions Relating to Joint Registration Organizations (JRO)
1.

In addition to registering as the entity responsible for all functions that it performs
itself, an entity may register as a JRO on behalf of one or more of its members or
related entities for one or more functions for which such members or related
entities would otherwise be required to register and, thereby, accept on behalf of
such members or related entities all compliance responsibility for that function or
those functions including all reporting requirements. Any entity seeking to
register as a JRO must submit a written agreement with its members or related
entities for all Requirements/sub-Requirements for the function(s) for which the
entity is registering for and takes responsibility for, which would otherwise be the
responsibility of one or more of its members or related entities. Neither NERC nor

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the Regional Entity shall be parties to any such agreement, nor shall NERC or the
Regional Entity have responsibility for reviewing or approving any such
agreement, other than to verify that the agreement provides for an allocation or
assignment of responsibilities consistent with the JRO Registration.

508.

2.

The JRO Registration data must include the same Registration information as a
normal compliance Registration entry. The JRO is responsible for providing all of
the information and data, including submitting reports, as needed by the Regional
Entity for performing assessments of compliance.

3.

The Regional Entity shall notify NERC of each JRO that the Regional Entity
accepts. The notification will identify the point of contact and the functions(s)
being registered for on behalf of its members or related entities.

4.

For purposes of Compliance Audits, the Regional Entity shall keep a list of all
JROs. This document shall contain a list of each JRO’s members or related
entities and the function(s) for which the JRO is registered for that member(s) or
related entity(s). It is the responsibility of the JRO to provide the Regional Entity
with this information as well as the applicable JRO agreement(s).

5.

The Regional Entity may request clarification of any list submitted to it that
identifies the members of the JRO and may request such additional information as
the Regional Entity deems appropriate.

6.

The Regional Entity’s acceptance of a JRO shall be a representation by the
Regional Entity to NERC that the Regional Entity has concluded the JRO will
meet the Registration requirements of Section 501(1.4).

7.

NERC shall maintain, and post on its website, a JRO registry listing all JRO
Registrations that have been reviewed and accepted by the Regional Entity. The
posting shall identify the JRO entity taking compliance responsibilities for itself
and its members.

8.

The JRO shall inform the Regional Entity of any changes to an existing JRO. The
Regional Entity shall promptly notify NERC of each such revision.

9.

Nothing in Section 507 shall preclude a member of a JRO, a related entity, or any
other entity from registering on its own behalf and undertaking full compliance
responsibility including reporting Requirements for the Reliability Standards
applicable to the function(s) for which the member or other entity is registering.
A JRO member or related entity that registers as responsible for any Reliability
Standard or Requirement/sub-Requirement of a Reliability Standard shall inform
the JRO of its Registration.

Provisions Relating to Coordinated Functional Registration (CFR) Entities
1.

In addition to registering as an entity responsible for all functions that it performs
itself, multiple entities may each register using a CFR for one or more Reliability

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Rules of Procedure of the North American Electric Reliability Corporation

Standard(s) and/or for one or more Requirements/sub-Requirements within
particular Reliability Standard(s) applicable to a specific function. The CFR
submission must include a written agreement that governs itself and clearly
specifies the entities’ respective compliance responsibilities. The Registration of
the CFR is the complete Registration for each entity. Additionally, each entity
shall take full compliance responsibility for those Reliability Standards and/or
Requirements/sub-Requirements it has registered for in the CFR. Neither NERC
nor the Regional Entity shall be parties to any such agreement, nor shall NERC or
the Regional Entity have responsibility for reviewing or approving any such
agreement, other than to verify that the agreement provides for an allocation or
assignment of responsibilities consistent with the CFR.
2.

Each CFR or each individual entity within a CFR must identify a point of contact
that is responsible for providing information and data, including submitting
reports as needed by the Regional Entity related to the CFR Registration.

3.

The Regional Entity shall notify NERC of each CFR that the Regional Entity
accepts.

4.

NERC or the Regional Entity may request clarification of any list submitted to it
that identifies the compliance responsibilities of the CFR and may request such
additional information as NERC or the Regional Entity deems appropriate.

5.

The Regional Entity’s acceptance of that CFR shall be a representation by the
Regional Entity to NERC that the Regional Entity has concluded the CFR will
meet the Registration requirements of Section 501(1.4).

6.

NERC shall maintain, and post on its website, a CFR registry listing all CFR
Registrations that have been accepted by NERC or by a Regional Entity. The
posting shall clearly list all the Reliability Standards or Requirements/subRequirements thereof for which each entity of the CFR is responsible for under
the CFR.

7.

The point of contact shall inform the Regional Entity of any changes to an
existing CFR. The Regional Entity shall promptly notify NERC of each such
revision.

8.

In the event of a violation of a Reliability Standard or of a Requirement/subRequirement of a Reliability Standard for which an entity of a CFR is registered,
that entity shall be identified in the Notice of Alleged Violation and shall be
assessed the sanction or Penalty in accordance with the NERC Sanctions
Guidelines. In the event a Regional Entity is not able to determine which
entity(ies) is responsible for a particular Reliability Standard, or
Requirements/sub-Requirements thereof that has been violated, the Regional
Entity shall investigate the noncompliance in accordance with the NERC Rules of
Procedure Section 400, Compliance Enforcement, to determine the entity(ies) to
which the Regional Entity shall to issue the sanction or Penalty for the violation.

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9.

509.

Nothing in Section 508 shall preclude an entity registered in a CFR, or any other
entity from registering on its own behalf and undertaking full compliance
responsibility including reporting Requirements for the Reliability Standards
applicable to the function(s) for which the entity is registering. An entity
registered in a CFR that registers as responsible for any Reliability Standard or
Requirement/sub-Requirement of a Reliability Standard shall inform the point of
contact of its Registration.

Exceptions to the Definition of the Bulk Electric System
An Element is considered to be (or not be) part of the Bulk Electric System by applying
the BES Definition to the Element (including the inclusions and exclusions set forth
therein). Appendix 5C sets forth the procedures by which (i) an entity may request a
determination that an Element that falls within the definition of the Bulk Electric System
should be exempted from being considered a part of the Bulk Electric System, or (ii) an
entity may request that an Element that falls outside of the definition of the Bulk Electric
System should be considered part of the Bulk Electric System.

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SECTION 600 — PERSONNEL CERTIFICATION
601.

Scope of Personnel Certification
Maintaining the reliability of the Bulk Electric System through implementation of the
Reliability Standards requires skilled, trained and qualified system operators. The
System Operator Certification Program provides the mechanism to ensure system
operators are provided the education and training necessary to obtain the essential
knowledge and skills and are therefore qualified to operate the Bulk Electric System.
NERC, as the ERO, will ensure skilled, trained, and qualified system operators through
the System Operator Certification Program.
NERC shall develop and maintain a personnel Certification program to evaluate
individuals and to issue Credentials to individuals who demonstrate the required level of
competence. A current version of such a program is the System Operator Certification
Program Manual, which is incorporated into these Rules of Procedure as Appendix 6.

602.

Structure of ERO Personnel Certification Program
1.

The NERC personnel Certification program shall be international in scope.

2.

The personnel Certification program shall have a governing body that (1) is able
to independently exercise decision-making for all matters pertaining to
Certification, (2) includes individuals from the discipline being certified and
whose composition addresses the needs of the users of the program (e.g.,
employers, regulators, etc.), and (3) has representation for each specialty or level
within a discipline.

3.

NERC shall maintain a nominating process for membership in the governing
body. Nominations shall be open to all interested parties and self-nominations
shall be accepted. The NERC Board of Trustees shall appoint members to the
governing body from among those nominated. The members of the governing
body shall serve at the pleasure of the Board.

4.

The personnel Certification program governing body shall have control over the
matters related to the personnel Certification and re-Certification programs listed
below, without being subject to approval by any other body.
4.1

Policies and procedures, including eligibility requirements and application
processing.

4.2

Requirements for personnel Certification, maintaining Certification, and
re-Certification.

4.3

Examination content, development, and administration.

4.4

Examination cut score.

4.5

Grievance and disciplinary processes.

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603.

4.6

Governing body and subgroup(s)’ meeting rules including agenda,
frequency, and related procedures.

4.7

Subgroup(s) appointments and work assignments.

4.8

Publications about personnel Certification and re-Certification.

4.9

Setting fees for application, and all other services provided as a part of the
personnel Certification and re-Certification activities.

4.10

Program funding, spending, and budget authority. Financial matters
related to the operation of the program shall be segregated from other
NERC activities.

5.

The personnel Certification program shall utilize written procedures for the
selection of members of the governing body that prohibit the governing body
from selecting a majority of its successors.

6.

The personnel Certification program shall be separate from the accreditation and
education functions of NERC in related disciplines.

7.

No member of the personnel Certification program governing body or staff
member working with the personnel Certification program governing body shall
have or exercise any authority or responsibility for compliance matters related to
Reliability Standards concerning personnel Certification.

Candidate Testing Mechanisms
1.

The personnel Certification program shall utilize reliable testing mechanisms to
evaluate individual competence in a manner that is objective, fair to all
candidates, job-related, and based on the knowledge and skill needed to function
in the discipline.

2.

The personnel Certification program shall implement a formal policy of periodic
review of the testing mechanisms to ensure ongoing relevance of the mechanisms
to knowledge and skill needed in the discipline.

3.

The personnel Certification program shall utilize policies and procedures to
ensure that all test administration and development materials are secure and
demonstrate that these policies and procedures are consistently implemented.

4.

The personnel Certification program shall establish pass/fail levels that protect the
public with a method that is based on competence and generally accepted in the
psychometric community as being fair and reasonable.

5.

The personnel Certification program shall conduct ongoing studies to substantiate
the reliability and validity of the testing mechanisms.

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604.

605.

6.

The personnel Certification program shall utilize policies and procedures that
govern how long examination records are kept in their original format.

7.

The personnel Certification program shall demonstrate that different forms of the
testing mechanisms assess equivalent content and that candidates are not
penalized for taking forms of varying difficulty.

Public Information About the Personnel Certification Program
1.

The personnel Certification program shall provide for publishing and availability
of general descriptive material on the procedures used in examination
construction and validation; all eligibility requirements and determination; fees;
and examination administration documents, including: reporting of results, reCertification requirements, and disciplinary and grievance procedures.

2.

The personnel Certification program shall publish and make available a
comprehensive summary or outline of the information, knowledge, or functions
covered by the examination.

3.

The personnel Certification program shall publish and make available at least
annually a summary of Certification activities for the program, including at least
the following information: number of examinations delivered, the number passed,
the number failed, and the number certified.

Responsibilities to Applicants for Certification or Re-Certification
The personnel Certification program:
1.

Shall not discriminate among applicants as to age, gender, race, religion, national
origin, disability, or marital status and shall include a statement of nondiscrimination in announcements of the program.

2.

Shall comply with all requirements of applicable federal and state/provincial laws
with respect to all Certification and re-Certification activities, and shall require
compliance of all contractors and/or providers of services.

3.

Shall make available to all applicants copies of formalized procedures for
application for, and attainment of, personnel Certification and re-Certification and
shall uniformly follow and enforce such procedures for all applicants.

4.

Shall implement a formal policy for the periodic review of eligibility criteria and
application procedures to ensure that they are fair and equitable.

5.

Shall provide competently proctored examination sites.

6.

Shall uniformly report examination results to applicants in a timely manner.

7.

Shall give applicants failing the examination information on general content areas
of deficiency.

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606.

8.

Shall implement policies and procedures providing due process for applicants
questioning eligibility determination, examination results, and Certification status,
and shall publish this information. A current version of such a procedure is the
NERC System Operator Certification Dispute Resolution Process, which is
incorporated into these Rules of Procedure as part of Appendix 6.

9.

Shall develop and maintain a program manual containing the processes and
procedures for applicants for Certification and re-Certification.

Responsibilities to the Public and to Employers of Certified Practitioners
The personnel Certification program:
1.

Shall demonstrate that the testing mechanisms adequately measure the knowledge
and skill required for entry, maintenance, and/or advancement in the profession
for each position to be certified.

2.

Shall award Certification and re-Certification only after the skill and knowledge
of the individual have been evaluated and determined to be acceptable.

3.

Shall periodically publish or maintain, in an electronic format, a current list of
those persons certified in the programs and have polices and procedures that
delineate what information about a Credential holder may be made public and
under what circumstances.

4.

Shall have formal policies and procedures for discipline of a Credential holder,
including the revocation of the certificate, for conduct deemed harmful to the
public or inappropriate to the discipline (e.g., incompetence, unethical behavior,
physical or mental impairment affecting performance). These procedures shall
incorporate due process. The current procedure is the NERC Certified System
Operator Credential Disciplinary Action Procedure, which is incorporated into
these Rules of Procedure as part of Appendix 6.

5.

Shall demonstrate that any title or Credential awarded accurately reflects or
applies to the practitioner’s daily occupational or professional duties and is not
confusing to employers, consumers, regulators, related professions, and/or other
interested parties.

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SECTION 700 — RELIABILITY READINESS EVALUATION AND
IMPROVEMENT AND FORMATION OF
SECTOR FORUMS
701.

702.

Confidentiality Requirements for Readiness Evaluations and Evaluation Team
Members
1.

All information made available or created during the course of any reliability
readiness evaluation including, but not limited to, data, Documents, observations
and notes, shall be maintained as confidential by all evaluation team members, in
accordance with the requirements of Section 1500.

2.

Evaluation team members are obligated to destroy all confidential evaluation
notes following the posting of the final report of the reliability readiness
evaluation.

3.

NERC will retain reliability readiness evaluation-related documentation, notes,
and materials for a period of time as defined by NERC.

4.

These confidentiality requirements shall survive the termination of the NERC
Reliability Readiness Evaluation and Improvement Program.

Formation of Sector Forum
1.

NERC will form a sector forum at the request of any five members of NERC that
share a common interest in the safety and reliability of the Bulk Power System.
The members of sector forum may invite such others of the members of NERC to
join the sector forum as the sector forum deems appropriate.

2.

The request to form a sector forum must include a proposed charter for the sector
forum. The Board must approve the charter.

3.

NERC will provide notification of the formation of a sector forum to its
membership roster. Notices and agendas of meetings shall be posted on NERC’s
website.

4.

A sector forum may make recommendations to any of the NERC committees and
may submit a Standards Authorization Request to the NERC Reliability Standards
Development Procedure.

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SECTION 800 — RELIABILITY ASSESSMENT AND
PERFORMANCE ANALYSIS
801.

Objectives of the Reliability Assessment and Performance Analysis Program
The objectives of the NERC Reliability Assessment and Performance Analysis Program
are to: (1) conduct, and report the results of, an independent assessment of the overall
reliability and adequacy of the interconnected North American Bulk Power Systems, both
as existing and as planned; (2) analyze off-normal events on the Bulk Power System; (3)
identify the root causes of events that may be precursors of potentially more serious
events; (4) assess past reliability performance for lessons learned; (5) disseminate
findings and lessons learned to the electric industry to improve reliability performance;
and (6) develop reliability performance benchmarks. The final reliability assessment
reports shall be approved by the Board for publication to the electric industry and the
general public.

802.

Scope of the Reliability Assessment Program
1.

2.

The scope of the Reliability Assessment Program shall include:
1.1

Review, assess, and report on the overall electric generation and
transmission reliability (adequacy and operating reliability) of the
interconnected Bulk Power Systems, both existing and as planned.

1.2

Assess and report on the key issues, risks, and uncertainties that affect or
have the potential to affect the reliability of existing and future electric
supply and transmission.

1.3

Review, analyze, and report on Regional Entity self-assessments of
electric supply and bulk power transmission reliability, including
reliability issues of specific regional concern.

1.4

Identify, analyze, and project trends in electric customer demand, supply,
and transmission and their impacts on Bulk Power System reliability.

1.5

Investigate, assess, and report on the potential impacts of new and
evolving electricity market practices, new or proposed regulatory
procedures, and new or proposed legislation (e.g. environmental
requirements) on the adequacy and operating reliability of the Bulk Power
Systems.

The Reliability Assessment Program shall be performed in a manner consistent
with the Reliability Standards of NERC including but not limited to those that
specify reliability assessment Requirements.

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803.

Reliability Assessment Reports
The number and type of periodic assessments that are to be conducted shall be at the
discretion of NERC. The results of the reliability assessments shall be documented in
three reports: the long-term and the annual seasonal (summer) and the annual seasonal
(winter) assessment reports. NERC shall also conduct special reliability assessments
from time to time as circumstances warrant. The reliability assessment reports shall be
reviewed and approved for publication by the Board. The three regular reports are
described below.
1.

Long-Term Reliability Assessment Report — The annual long-term report shall
cover a ten-year planning horizon. The planning horizon of the long-term
reliability assessment report shall be subject to change at the discretion of NERC.
Detailed generation and transmission adequacy assessments shall be conducted
for the first five years of the review period. For the second five years of the
review period, the assessment shall focus on the identification, analysis, and
projection of trends in peak demand, electric supply, and transmission adequacy,
as well as other industry trends and developments that may impact future electric
system reliability. Reliability issues of concern and their potential impacts shall
be presented along with any mitigation plans or alternatives. The long-term
reliability assessment reports will generally be published in the fall (September)
of each year. NERC will also publish electricity supply and demand data
associated with the long-term reliability assessment report.

2.

Summer Assessment Report — The annual summer seasonal assessment report
typically shall cover the four-month (June–September) summer period. It shall
provide an overall perspective on the adequacy of the generation resources and
the transmission systems necessary to meet projected summer peak demands. It
shall also identify reliability issues of interest and regional and subregional areas
of concern in meeting projected customer demands and may include possible
mitigation alternatives. The report will generally be published in mid-May for the
upcoming summer period.

3.

Winter Assessment Report — The annual winter seasonal assessment report
shall cover the three-month (December–February) winter period. The report shall
provide an overall perspective on the adequacy of the generation resources and
the transmission systems necessary to meet projected winter peak demands.
Similar to the summer assessment, the winter assessment shall identify reliability
issues of interest and regional and subregional areas of concern in meeting
projected customer demands and may also include possible mitigation
alternatives. The winter assessment report will generally be published in midNovember for the upcoming winter period.

4.

Special Reliability Assessment Reports — In addition to the long-term and
seasonal reliability assessment reports, NERC shall also conduct special reliability
assessments on a regional, interregional, and Interconnection basis as conditions
warrant, or as requested by the Board or governmental authorities. The teams of
reliability and technical experts also may initiate special assessments of key

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reliability issues and their impacts on the reliability of a regions, subregions, or
Interconnection (or a portion thereof). Such special reliability assessments may
include, among other things, operational reliability assessments, evaluations of
emergency response preparedness, adequacy of fuel supply, hydro conditions,
reliability impacts of new or proposed environmental rules and regulations, and
reliability impacts of new or proposed legislation that affects or has the potential
to affect the reliability of the interconnected Bulk Power Systems in North
America.
804.

Reliability Assessment Data and Information Requirements
To carry out the reviews and assessments of the overall reliability of the interconnected
Bulk Power Systems, the Regional Entities and other entities shall provide sufficient data
and other information requested by NERC in support of the annual long-term and
seasonal assessments and any special reliability assessments.
Some of the data provided for these reviews and assessment may be considered
confidential from a competitive marketing perspective, a Critical Energy Infrastructure
Information perspective, or for other purposes. Such data shall be treated in accordance
with the provisions of Section 1500 – Confidential Information.
While the major sources of data and information for this program are the Regional
Entities, a team of reliability and technical experts is responsible for developing and
formulating its own independent conclusions about the near-term and long-term
reliability of the Bulk Power Systems.
In connection with the reliability assessment reports, requests shall be submitted to each
of the Regional Entities for required reliability assessment data and other information,
and for each Regional Entity’s self-assessment report. The timing of the requests will be
governed by the schedule for the preparation of the assessment reports.
The Regional Entity self-assessments are to be conducted in compliance with NERC
Reliability Standards and the respective regional planning criteria. The team(s) of
reliability and technical experts shall also conduct interviews with the Regional Entities
as needed. The summary of the Regional Entity self-assessments that are to be included
in the assessment reports shall follow the general outline identified in NERC’s request.
This outline may change from time to time as key reliability issues change.
In general, the Regional Entity reliability self-assessments shall address, among other
areas, the following topics: demand and Net Energy for Load; assessment of projected
resource adequacy; any transmission constraints that may impact bulk transmission
adequacy and plans to alleviate those constraints; any unusual operating conditions that
could impact reliability for the assessment period; fuel supply adequacy; the
deliverability of generation (both internal and external) to Load; and any other reliability
issues in the Region and their potential impacts on the reliability of the Bulk Power
Systems.

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805. Reliability Assessment Process
Based on their expertise, the review of the collected data, the review of the Regional
Entity self-assessment reports, and interviews with the Regional Entities, as appropriate,
the teams of reliability and technical experts shall perform an independent review and
assessment of the generation and transmission adequacy of each Region’s existing and
planned Bulk Power System. The results of the review teams shall form the basis of
NERC’s long-term and seasonal reliability assessment reports. The review and
assessment process is briefly summarized below.
1.

Resource Adequacy Assessment — The teams shall evaluate the regional
demand and resource capacity data for completeness in the context of the overall
resource capacity needs of the Region. The team shall independently evaluate the
ability of the Regional Entity members to serve their obligations given the
demand growth projections, the amount of existing and planned capacity,
including committed and uncommitted capacity, contracted capacity, or capacity
outside of the Region. If the Region relies on capacity from outside of the Region
to meet its resource objectives, the ability to deliver that capacity shall be factored
into the assessment. The demand and resource capacity information shall be
compared to the resource adequacy requirements of the Regional Entity for the
year(s) or season(s) being assessed. The assessment shall determine if the
resource information submitted represents a reasonable and attainable plan for the
Regional Entity and its members. For cases of inadequate capacity or reserve
margin, the Regional Entity will be requested to analyze and explain any resource
capacity inadequacies and its plans to mitigate the reliability impact of the
potential inadequacies. The analysis may be expanded to include surrounding
areas. If the expanded analysis indicates further inadequacies, then an
interregional problem may exist and will be explored with the applicable Regions.
The results of these analyses shall be described in the assessment report.

2.

Transmission Adequacy and Operating Reliability Assessment — The teams
shall evaluate transmission system information that relates to the adequacy and
operating reliability of the regional transmission system. That information shall
include: regional planning study reports, interregional planning study reports,
and/or regional operational study reports. If additional information is required,
another data request shall be sent to the Regional Entity. The assessment shall
provide a judgment on the ability of the regional transmission system to operate
reliably under the expected range of operating conditions over the assessment
period as required by NERC Reliability Standards. If sub-areas of the regional
system are especially critical to the Reliable Operation of the regional bulk
transmission system, these Facilities or sub-areas shall be reviewed and addressed
in the assessment. Any areas of concern related to the adequacy or operating
reliability of the system shall be identified and reported in the assessment.

3.

Seasonal Operating Reliability Assessment — The team(s) shall evaluate the
overall operating reliability of the regional bulk transmission systems. In areas
with potential resource adequacy or system operating reliability problems,
operational readiness of the affected Regional Entities for the upcoming season

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shall be reviewed and analyzed. The assessment may consider unusual but
possible operating scenarios and how the system is expected to perform.
Operating reliability shall take into account a wide range of activities, all of which
should reinforce the Regional Entity’s ability to deal with the situations that might
occur during the upcoming season. Typical activities in the assessment may
include: facility modifications and additions, new or modified operating
procedures, emergency procedures enhancement, and planning and operating
studies. The teams shall report the overall seasonal operating reliability of the
regional transmission systems in the annual summer and winter assessment
reports.
4.

Reporting of Reliability Assessment Results — The teams of reliability and
technical experts shall provide an independent assessment of the reliability of the
Regional Entities and the North American interconnected Bulk Power System for
the period of the assessment. While the Regional Entities are relied upon to
provide the information to perform such assessments, the review team is not
required to accept the conclusions provided by the Regional Entities. Instead, the
review team is expected, based on their expertise, to reach their own independent
conclusions about the status of the adequacy of the generation and bulk power
transmission systems of North America.
The review team also shall strive to achieve consensus in their assessments. The
assessments that are made are based on the best information available at the time.
However, since judgment is applied to this information, legitimate differences of
opinion can develop. Despite these differences, the review team shall work to
achieve consensus on their findings.
In addition to providing long-term and seasonal assessments in connection with
the Reliability Assessment Program, the review team of experts shall also be
responsible for recommending new and revised Reliability Standards related to
the reliability assessments and the reliability of the Bulk Power Systems. These
proposals for new or revised Reliability Standards shall be entered into NERC’s
Reliability Standards development process.
Upon completion of the assessment, the team shall share the results with the
Regional Entities. The Regional Entities shall be given the opportunity to review
and comment on the conclusions in the assessment and to provide additional
information as appropriate. The reliability assessments and their conclusions are
the responsibility of NERC’s technical review team and NERC.
The preparation and approval of NERC’s reliability assessment reports shall
follow a prescribed schedule including review, comment, and possible approval
by appropriate NERC committees. The long-term and seasonal (summer and
winter) reliability assessment reports shall be further reviewed for approval by the
Board for publication to the electric industry.

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806. Scope of the Reliability Performance and Analysis Program
The components of the program will include analysis of large-scale outages,
disturbances, and near misses to determine root causes and lessons learned; identification
and continuous monitoring of performance indices to detect emerging trends and signs of
a decline in reliability performance; and communications of performance results, trends,
recommendations, and initiatives to those responsible to take actions; followed with
confirmation of actions to correct any deficiencies identified. Within NERC, the
reliability performance program will provide performance results to the Reliability
Standards Development and Compliance Monitoring and Enforcement Programs to make
the necessary adjustments to preserve reliability based on a risk-based approach.
807.

Analysis of Major Events
Responding to major blackouts and other system disturbances or emergencies can be
divided into four phases: situational assessment and communications; situation tracking
and communications; data collection, investigation, analysis, and reporting; and followup on recommendations.
a. NERC’s role following a blackout or other major Bulk Power System disturbance
or emergency is to provide leadership, coordination, technical expertise, and
assistance to the industry in responding to the event. Working closely with the
Regional Entities and Reliability Coordinators, NERC will coordinate and
facilitate efforts among industry participants, and with state, federal, and
provincial governments in the United States and Canada to support the industry’s
response.
b. When responding to any event where physical or cyber security is suspected as a
cause or contributing factor to an event, NERC will immediately notify
appropriate government agencies and coordinate its activities with them.
c. Each user, owner, and operator of the Bulk Power System shall provide NERC
and the applicable Regional Entities with such information as is necessary to
enable NERC and the applicable Regional Entities to carry out their
responsibilities under this section.
d. During the conduct of some NERC analyses, assistance may be needed from
government agencies. This assistance could include: authority to require data
reporting from affected or involved parties; communications with other agencies
of government; investigations related to possible criminal or terrorist involvement
in the event; resources for initial data gathering immediately after the event;
authority to call meetings of affected or involved parties; and technical and
analytical resources for studies.
e. NERC shall work with other participants to establish a clear delineation of roles,
responsibilities, and coordination requirements among industry and government
for the investigation and reporting of findings, conclusions, and recommendations
related to major blackouts, disturbances, or other emergencies affecting the Bulk
Power System with the objective of avoiding, to the extent possible, multiple

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investigations of the same event. If the event is confined to a single Regional
Entity, NERC representatives will participate as members of the Regional Entity
analysis team.
f. NERC and applicable entity(s) shall apply the NERC Blackout and Disturbance
Response Procedures, which are incorporated into these Rules of Procedure as
Appendix 8. These procedures provide a framework to guide NERC’s response
to events that may have multiregional, national, or international implications.
Experienced industry leadership shall be applied to tailor the response to the
specific circumstances of the event. In accordance with that procedure, the NERC
president will determine whether the event warrants analysis at the NERC-level.
A Regional Entity may request that NERC elevate any analysis to a NERC level.
g. NERC will screen and analyze the findings and recommendations from the
analysis, and those with generic applicability will be disseminated to the industry
in accordance with Section 810.
808.

809.

Analysis of Off-Normal Events, Potential System Vulnerabilities, and System
Performance
1.

NERC and Regional Entities shall analyze system and equipment performance
events that do not rise to the level of a major blackout, disturbance, or system
emergency, as described in Section 807. NERC and Regional Entities shall also
analyze potential vulnerabilities in the Bulk Power System brought to their
attention by government agencies. The purpose of these analyses is to identify the
root causes of events that may be precursors of potentially more serious events or
that have the potential to cause more serious events, to assess past reliability
performance for lessons learned, and to develop reliability performance
benchmarks and trends.

2.

NERC and Regional Entities will screen and analyze events and potential
vulnerabilities for significance, and information from those with generic
applicability will be disseminated to the industry in accordance with Section 810.

3.

Each user, owner, and operator, of the Bulk Power System shall provide NERC
and the applicable Regional Entities with such information as is necessary to
enable NERC and the applicable Regional Entities to carry out their
responsibilities under this section.

Reliability Benchmarking
NERC shall identify and track key reliability indicators as a means of benchmarking
reliability performance and measuring reliability improvements. This program will
include assessing available metrics, developing guidelines for acceptable metrics,
maintaining a performance metrics “dashboard” on the NERC website, and developing
appropriate reliability performance benchmarks.

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810.

Information Exchange and Issuance of NERC Advisories, Recommendations and
Essential Actions
1.

Members of NERC and Bulk Power System owners, operators, and users shall
provide NERC with detailed and timely operating experience information and
data.

2.

In the normal course of operations, NERC disseminates the results of its events
analysis findings, lessons learned and other analysis and information gathering to
the industry. These findings, lessons learned and other information will be used
to guide the Reliability Assessment Program.

3.

When NERC determines it is necessary to place the industry or segments of the
industry on formal notice of its findings, analyses, and recommendations, NERC
will provide such notification in the form of specific operations or equipment
Advisories, Recommendations or Essential Actions:
3.1

Level 1 (Advisories) – purely informational, intended to advise certain
segments of the owners, operators and users of the Bulk Power System of
findings and lessons learned;

3.2

Level 2 (Recommendations) – specific actions that NERC is
recommending be considered on a particular topic by certain segments of
owners, operators, and users of the Bulk Power System according to each
entity’s facts and circumstances;

3.3

Level 3 (Essential Actions) – specific actions that NERC has determined
are essential for certain segments of owners, operators, or users of the
Bulk Power System to take to ensure the reliability of the Bulk Power
System. Such Essential Actions require NERC Board approval before
issuance.

4.

The Bulk Power System owners, operators, and users to which Level 2
(Recommendations) and Level 3 (Essential Actions) notifications apply are to
evaluate and take appropriate action on such issuances by NERC. Such Bulk
Power System owners, operators, and users shall also provide reports of actions
taken and timely updates on progress towards resolving the issues raised in the
Recommendations and Essential Actions in accordance with the reporting date(s)
specified by NERC.

5.

NERC will advise the Commission and other Applicable Governmental
Authorities of its intent to issue all Level 1 (Advisories), Level 2
(Recommendations), and Level 3 (Essential Actions) at least five (5) business
days prior to issuance, unless extraordinary circumstances exist that warrant
issuance less than five (5) business days after such advice. NERC will file a
report with the Commission and other Applicable Governmental Authorities no
later than thirty (30) days following the date by which NERC has requested the
Bulk Power System owners, operators, and users to which a Level 2

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(Recommendation) or Level 3 (Essential Action) issuance applies to provide
reports of actions taken in response to the notification. NERC’s report to the
Commission and other Applicable Governmental Authorities will describe the
actions taken by the relevant owners, operators, and users of the Bulk Power
System and the success of such actions taken in correcting any vulnerability or
deficiency that was the subject of the notification, with appropriate protection for
Confidential Information or Critical Energy Infrastructure Information.
811.

Equipment Performance Data
Through its Generating Availability Data System (GADS), NERC shall collect operating
information about the performance of electric generating equipment; provide assistance
to those researching information on power plant outages stored in its database; and
support equipment reliability as well as availability analyses and other decision-making
processes developed by GADS subscribers. GADS data is also used in conducting
assessments of generation resource adequacy.

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SECTION 900 — TRAINING AND EDUCATION
901.

Scope of the Training and Education Program
Maintaining the reliability of the Bulk Electric System through implementation of the
Reliability Standards requires informed and trained personnel. The training and
education program will provide the education and training necessary for Bulk Power
System personnel and regulators to obtain the essential knowledge necessary to
understand and operate the Bulk Electric System.
NERC shall develop and maintain training and education programs for the purpose of
establishing training requirements, developing materials, and developing training
activities. The target audience of the training and education programs shall be Bulk
Power System operating personnel including system operations personnel, operations
support personnel (engineering and information technology), supervisors and managers,
training personnel, and other personnel directly responsible for complying with NERC
Reliability Standards who, through their actions or inactions, may impact the real-time, or
day-ahead reliability of the Bulk Power System.
NERC shall also develop and provide appropriate training and education for industry
participants and regulators affected by new or changed Reliability Standards or
compliance Requirements.
To accomplish those objectives:

902.

1.

NERC shall periodically conduct job task analyses for targeted Bulk Power
System personnel to ensure that the training program content is properly aligned
to the job tasks performed by those personnel.

2.

NERC shall develop and maintain personnel training program curriculum
requirements based on valid job-task analysis.

3.

NERC shall periodically conduct performance surveys to determine the
effectiveness of the training program and identify areas for further training
development and improvement.

4.

NERC shall develop training and education materials and activities to assist Bulk
Power System entities implementing new or revised Reliability Standard
Requirements or other NERC-related changes.

5.

NERC shall develop and provide training to people who participate in NERC and
Regional Entity evaluations, audits, and investigations for the Compliance
Monitoring and Enforcement Program, Organization Certification Program, and
the continuing education program.

Continuing Education Program
NERC shall develop and maintain a continuing education program to foster the
improvement of training and to promote quality in the training programs used by and

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implemented by Bulk Power System entities. The program shall approve or accredit
those activities and entities meeting NERC continuing education requirements.
1.

NERC shall develop and implement continuing education program requirements
that promote excellence in training programs and advance improved performance
for Bulk Power System personnel identified in Section 901.

2.

NERC shall develop and maintain a process to approve or accredit continuing
education Providers and activities seeking approval or accreditation and meeting
NERC-approved continuing education requirements.

3.

NERC shall perform periodic audits on continuing education Providers and
training activities to ensure that the approved or accredited Providers and training
activities satisfy NERC continuing education requirements.

4.

NERC shall develop and maintain an appeals process for disputed application
reviews, interpretations of guidelines and standards, probation or suspension of
NERC-approved Provider status, or Continuing Education Hour disputes.

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SECTION 1000 — SITUATION AWARENESS AND
INFRASTRUCTURE SECURITY
1001. Situation Awareness
NERC shall through the use of Reliability Coordinators and available tools, monitor
present conditions on the Bulk Power System and provide leadership coordination,
technical expertise, and assistance to the industry in responding to events as necessary.
To accomplish these goals, NERC will:
1.

Maintain real-time situation awareness of conditions on the Bulk Power System;

2.

Notify the industry of significant Bulk Power System events that have occurred in
one area, and which have the potential to impact reliability in other areas;

3.

Maintain and strengthen high-level communication, coordination, and cooperation
with governments and government agencies regarding real-time conditions; and

4.

Enable the Reliable Operation of interconnected Bulk Power Systems by
facilitating information exchange and coordination among reliability service
organizations.

1002. Reliability Support Services
NERC will provide tools and other support services for the benefit of Reliability
Coordinators and other system operators, including the Area Control Error (ACE) and
Frequency Monitoring System, NERC Hotline, Real-time Flows, System Data Exchange
(SDX), Reliability Coordinator Information System (RCIS), Transmission Services
Information Network (TSIN), Interchange Distribution Calculator (IDC), Interregional
Security Network (ISN), and Central Repository for Security Events (CRC). To
accomplish this goal, NERC will:
1.

Maintain the reliability and effectiveness of all mission-critical operating
reliability support systems and services;

2.

Continue to support maintenance of a transmission provider curtailment report on
the CRC site in response to Federal Energy Regulatory Commission Order 605;

3.

Investigate and analyze the use of high-speed real-time system measurements,
including phasors, in predicting the behavior and performance of the Eastern
Interconnection; and

4.

Facilitate real-time voice and data exchange services among Reliability
Coordinators (e.g., Hotline, Interregional Security Network, NERCnet, System
Data Exchange, etc.).

1003. Infrastructure Security Program
NERC shall coordinate electric industry activities to promote Critical Infrastructure
protection of the Bulk Power System in North America by taking a leadership role in
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Critical Infrastructure protection of the electricity sector so as to reduce vulnerability and
improve mitigation and protection of the electricity sector’s Critical Infrastructure. To
accomplish these goals, NERC shall perform the following functions.
1.

2.

Electric Sector Information Sharing and Analysis Center (ESISAC)
1.1

NERC shall serve as the electricity sector’s sector coordinator and operate
its Information Sharing and Analysis Center to gather information and
communicate security-related threats and incidents within the sector, with
United States and Canadian government agencies, and with other Critical
Infrastructure sectors.

1.2

NERC shall improve the capability of the ESISAC to analyze security
threats and incident information and provide situational assessments for
the electricity sector and governments.

1.3

NERC shall work closely with the United States Department of Homeland
Security, Department of Energy, Natural Resources Canada, and Public
Safety and Emergency Preparedness Canada.

1.4

NERC shall strengthen and expand these functions and working
relationships with the electricity sector, other Critical Infrastructure
industries, governments, and government agencies throughout North
America to ensure the protection of the infrastructure of the Bulk Power
System.

1.5

NERC shall fill the role of the Electricity Sector Coordinating Council and
coordinate with the Government Coordinating Council.

1.6

NERC shall coordinate with other Critical Infrastructure sectors through
active participation with the other Sector Coordinating Councils, the other
ISACs, and the National Infrastructure Advisory Committee.

1.7

NERC shall encourage and participate in coordinated Critical
Infrastructure protection exercises, including interdependencies with other
Critical Infrastructure sectors.

Security Planning
2.1

NERC shall take a risk management approach to Critical Infrastructure
protection, considering probability and severity, and recognizing that
mitigation and recovery can be practical alternatives to prevention.

2.2

NERC shall keep abreast of the changing threat environment through
collaboration with government agencies.

2.3

NERC shall develop criteria to identify critical physical assets and Critical
Cyber Assets, assess security threats, identify risk assessment

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methodologies, and assess effectiveness of physical and cyber protection
measures.
2.4

NERC shall enhance and maintain the Bulk Power System critical spare
transformer program, encourage increased participation by asset owners,
and continue to assess the need to expand this program to include other
critical Bulk Power System equipment.

2.5

NERC shall support implementation of the Critical Infrastructure
Protection Standards through education and outreach.

2.6

NERC shall review and improve existing security guidelines, develop new
security guidelines to meet the needs of the electricity sector, and consider
whether any guidelines should be developed into Reliability Standards.

2.7

NERC shall conduct education and outreach initiatives to increase
awareness and respond to the needs of the electricity sector.

2.8

NERC shall strengthen relationships with federal, state, and provincial
government agencies on Critical Infrastructure protection matters.

2.9

NERC shall maintain and improve mechanisms for the sharing of sensitive
or classified information with federal, state, and provincial government
agencies on Critical Infrastructure protection matters; work with DOE and
DHS to implement the National Infrastructure Protection Plan, as
applicable to the electricity sector; and coordinate this work with PSEPC.

2.10

NERC shall improve methods to better assess the impact of a possible
physical attack on the Bulk Power System and means to deter, mitigate,
and respond following an attack.

2.11

NERC shall assess the results of vulnerability assessments and enhance
the security of system control and data acquisition (SCADA) and process
control systems by developing methods to detect an emerging cyber attack
and the means to mitigate impacts on the Bulk Power Systems.

2.12

NERC shall work with the National SCADA Test Bed and the Process
Control Systems Forum to accelerate the development of technology that
will enhance the security, safety, and reliability of process control and
SCADA systems.

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SECTION 1100 — ANNUAL NERC BUSINESS PLANS AND
BUDGETS
1101. Scope of Business Plans and Budgets
The Board shall determine the content of the budgets to be submitted to the Applicable
Governmental Authorities with consultation from the members of the Member
Representatives Committee, Regional Entities, and others in accordance with the Bylaws.
The Board shall identify any activities outside the scope of NERC’s statutory reliability
functions, if any, and the appropriate funding mechanisms for those activities.
1102. NERC Funding and Cost Allocation
1.

In order that NERC’s costs shall be fairly allocated among Interconnections and
among Regional Entities, the NERC funding mechanism for all statutory
functions shall be based on Net Energy for Load (NEL).

2.

NERC’s costs shall be allocated so that all Load (or, in the case of costs for an
Interconnection or Regional Entity, all Load within that Interconnection or
Regional Entity) bears an equitable share of such costs based on NEL.

3.

Costs shall be equitably allocated between countries or Regional Entities thereof
for which NERC has been designated or recognized as the Electric Reliability
Organization.

4.

Costs incurred to accomplish the statutory functions for one Interconnection,
Regional Entity, or group of entities will be directly assigned to that
Interconnection, Regional Entity, or group of entities provided that such costs are
allocated equitably to end-users based on Net Energy for Load.

1103. NERC Budget Development
1.

The NERC annual budget process shall be scheduled and conducted for each
calendar year so as to allow a sufficient amount of time for NERC to receive
Member inputs, develop the budget, and receive Board and, where authorized by
applicable legislation or agreement, Applicable Governmental Authority approval
of the NERC budget for the following fiscal year, including timely submission of
the proposed budget to FERC for approval in accordance with FERC regulations.

2.

The NERC budget submittal to Applicable Governmental Authorities shall
include provisions for all ERO functions, all Regional Entity delegated functions
as specified in delegation agreements and reasonable reserves and contingencies.

3.

The NERC annual budget submittal to Applicable Governmental Authorities shall
include description and explanation of NERC’s proposed ERO program activities
for the year; budget component justification based on statutory or other
authorities; explanation of how each budgeted activity lends itself to the
accomplishment of the statutory or other authorities; sufficiency of resources

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provided for in the budget to carry out the ERO program responsibilities;
explanation of the calculations and budget estimates; identification and
explanation of changes in budget components from the previous year’s budget;
information on staffing and organization charts; and such other information as is
required by FERC and other Applicable Governmental Authorities having
authority to approve the proposed budget.
4.

NERC shall develop, in consultation with the Regional Entities, a reasonable and
consistent system of accounts, to allow a meaningful comparison of actual results
at the NERC and Regional Entity level by the Applicable Governmental
Authorities.

1104. Submittal of Regional Entity Budgets to NERC
1.

Each Regional Entity shall submit its proposed annual budget for carrying out its
delegated authority functions as well as all other activities and funding to NERC
in accordance with a schedule developed by NERC and the Regional Entities,
which shall provide for the Regional Entity to submit its final budget that has
been approved by its board of directors or other governing body no later than July
1 of the prior year, in order to provide sufficient time for NERC’s review and
comment on the proposed budget and approval of the Regional Entity budget by
the NERC Board of Trustees in time for the NERC and Regional Entity budgets
to be submitted to FERC and other Applicable Governmental Authorities for
approval in accordance with their regulations. The Regional Entity’s budget shall
include supporting materials in accordance with the budget and reporting format
developed by NERC and the Regional Entities, including the Regional Entity’s
complete business plan and organization chart, explaining the proposed collection
of all dues, fees, and charges and the proposed expenditure of funds collected in
sufficient detail to justify the requested funding collection and budget
expenditures.

2.

NERC shall review and approve each Regional Entity’s budget for meeting the
requirements of its delegated authority. Concurrent with approving the NERC
budget, NERC shall review and approve, or reject, each Regional Entity budget
for filing.

3.

NERC shall also have the right to review from time to time, in reasonable
intervals but no less frequently than every three years, the financial books and
records of each Regional Entity having delegated authority in order to ensure that
the documentation fairly represents in all material aspects appropriate funding of
delegated functions.

1105. Submittal of NERC and Regional Entity Budgets to Governmental Authorities for
Approval
1.

NERC shall file for approval by the Applicable Governmental Authorities at least
130 days in advance of the start of each fiscal year. The filing shall include: (1)
the complete NERC and Regional Entity budgets including the business plans and
organizational charts approved by the Board, (2) NERC’s annual funding
requirement (including Regional Entity costs for delegated functions), and (3) the

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mechanism for assessing charges to recover that annual funding requirement,
together with supporting materials in sufficient detail to support the requested
funding requirement.
2.

NERC shall seek approval from each Applicable Governmental Authority
requiring such approval for the funding requirements necessary to perform ERO
activities within their jurisdictions.

1106. NERC and Regional Entity Billing and Collections
1.

NERC shall request the Regional Entities to identify all Load-Serving Entities3
within each Regional Entity and the NEL assigned to each Load-Serving Entity,
and the Regional Entities shall supply the requested information. The assignment
of a funding requirement to an entity shall not be the basis for determining that
the entity must be registered in the Compliance Registry.

2.

NERC shall accumulate the NEL by Load-Serving Entities for each Applicable
Governmental Authority and submit the proportional share of NERC funding
requirements to each Applicable Governmental Authority for approval together
with supporting materials in sufficient detail to support the requested funding
requirement.

3.

NEL reported by Balancing Authorities within a Region shall be used to
rationalize and validate amounts allocated for collection through Regional Entity
processes.

4.

The billing and collection processes shall provide:

5.

4.1

A clear validation of billing and application of payments.

4.2

A minimum of data requests to those being billed.

4.3

Adequate controls to ensure integrity in the billing determinants including
identification of entities responsible for funding NERC’s activities.

4.4

Consistent billing and collection terms.

NERC will bill and collect all budget requirements approved by Applicable
Governmental Authorities (including the funds required to support those functions
assigned to the Regional Entities through the delegation agreements) directly from
the Load-Serving Entities or their designees or as directed by particular
Applicable Governmental Authorities, except where the Regional Entity is
required to collect the budget requirements for NERC, in which case the Regional
Entity will collect directly from the Load-Serving Entities or as otherwise

3

A Regional Entity may allocate funding obligations using an alternative method approved by NERC and by FERC and other
Applicable Governmental Authorities, as provided for in the regional delegation agreement.

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provided by agreement and submit funds to NERC. Alternatively, a load-serving
entity may pay its allocated ERO costs through a Regional Entity managed
collection mechanism.
6.

NERC shall set a minimum threshold limit on the billing of small LSEs to
minimize the administrative burden of collection.

7.

NERC shall pursue any non-payments and shall request assistance from
Applicable Governmental Authorities as necessary to secure collection.

8.

In the case where a Regional Entity performs the collection for ERO, the Regional
Entity will not be responsible for non-payment in the event that a user, owner or
operator of the Bulk Power System does not pay its share of dues, fees and
charges in a timely manner, provided that such a Regional Entity shall use
reasonably diligent efforts to collect dues, fees, and other charges from all entities
obligated to pay them. However, any revenues not paid shall be recovered from
others within the same Region to avoid cross-subsidization between Regions.

9.

Both NERC and the Regional Entities also may bill members or others for
functions and services not within statutory requirements or otherwise authorized
by the Applicable Governmental Authorities. Costs and revenues associated with
these functions and services shall be separately identified and not commingled
with billings associated with the funding of NERC or of the Regional Entities for
delegated activities.

1107. Penalty Applications
1.

Where NERC or a Regional Entity initiates a compliance monitoring and
enforcement process that leads to imposition of a Penalty, the entity that initiated
the process shall receive any Penalty monies imposed and collected as a result of
that process, unless a different disposition of the Penalty monies is provided for in
the delegation agreement, or in a contract or a disposition of the violation that is
approved by NERC and FERC.

2.

All funds from financial Penalties assessed in the United States received by the
entity initiating the compliance monitoring and enforcement process shall be
applied as a general offset to the entity’s budget requirements for the subsequent
fiscal year, if received by July 1, or for the second subsequent fiscal year, if
received on or after July 1. Funds from financial Penalties shall not be directly
applied to any program maintained by the entity conducting the compliance
monitoring and enforcement process. Funds from financial Penalties assessed
against a Canadian entity shall be applied as specified by legislation or agreement.

3.

In the event that a compliance monitoring and enforcement process is conducted
jointly by NERC and a Regional Entity, the Regional Entity shall receive the
Penalty monies and offset the Regional Entity’s budget requirements for the
subsequent fiscal year.

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4.

Exceptions or alternatives to the foregoing provisions will be allowed if approved
by NERC and by FERC or any other Applicable Governmental Authority.

1108. Special Assessments
On a demonstration of unforeseen and extraordinary circumstances requiring additional
funds prior to the next funding cycle, NERC shall file with the Applicable Governmental
Authorities, where authorized by applicable legislation or agreement, for authorization
for an amended or supplemental budget for NERC or a Regional Entity and, if necessary
under the amended or supplemental budget, to collect a special or additional assessment
for statutory functions of NERC or the Regional Entity. Such filing shall include
supporting materials to justify the requested funding, including any departure from the
approved funding formula or method.

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SECTION 1200 — REGIONAL DELEGATION AGREEMENTS
1201. Pro Forma Regional Delegation Agreement
NERC shall develop and maintain a pro forma Regional Entity delegation agreement,
which shall serve as the basis for negotiation of consistent agreements for the delegation
of ERO functions to Regional Entities.
1202. Regional Entity Essential Requirements
NERC shall establish the essential requirements for an entity to become qualified and
maintain good standing as a Regional Entity.
1203. Negotiation of Regional Delegation Agreements
NERC shall, for all areas of North America that have provided NERC with the
appropriate authority, negotiate regional delegation agreements for the purpose of
ensuring all areas of the North American Bulk Power Systems are within a Regional
Entity Region. In the event NERC is unable to reach agreement with Regional Entities
for all areas, NERC shall provide alternative means and resources for implementing
NERC functions within those areas. No delegation agreement shall take effect until it has
been approved by the Applicable Governmental Authority.
1204. Conformance to Rules and Terms of Regional Delegation Agreements
NERC and each Regional Entity shall comply with all applicable ERO Rules of
Procedure and the obligations stated in the regional delegation agreement.
1205. Sub-delegation
The Regional Entity shall not sub-delegate any responsibilities and authorities delegated
to it by its regional delegation agreement with NERC except with the approval of NERC
and FERC and other Applicable Governmental Authorities. Responsibilities and
authorities may only be sub-delegated to another Regional Entity. Regional Entities may
share resources with one another so long as such arrangements do not result in crosssubsidization or in any sub-delegation of authorities.
1206. Nonconformance to Rules or Terms of Regional Delegation Agreement
If a Regional Entity is unable to comply or is not in compliance with an ERO Rule of
Procedure or the terms of the regional delegation agreement, the Regional Entity shall
immediately notify NERC in writing, describing the area of nonconformance and the
reason for not being able to conform to the Rule of Procedure. NERC shall evaluate each
case and inform the affected Regional Entity of the results of the evaluation. If NERC
determines that a Rule of Procedure or term of the regional delegation agreement has
been violated by a Regional Entity or cannot practically be implemented by a Regional
Entity, NERC shall notify the Applicable Governmental Authorities and take any actions
necessary to address the situation.

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1207. Regional Entity Audits
Approximately every five years and more frequently if necessary for cause, NERC shall
audit each Regional Entity to verify that the Regional Entity continues to comply with
NERC Rules of Procedure and the obligations of NERC delegation agreement. Audits of
Regional Entities shall be conducted, to the extent practical, based on professional
auditing standards recognized in the U.S., including Generally Accepted Auditing
Standards, Generally Accepted Government Auditing Standards, and standards
sanctioned by the Institute of Internal Auditors, and if applicable to the coverage of the
audit, may be based on Canadian or other international standards. The audits required by
this Section 1207 shall not duplicate the audits of Regional Entity Compliance
Monitoring and Enforcement Programs provided for in Appendix 4A, Audit of Regional
Compliance Programs, to these Rules of Procedure.
1208. Process for Considering Registered Entity Requests to Transfer to Another
Regional Entity
1.

A Registered Entity that is registered in the Region of one Regional Entity and
believes its registration should be transferred to a different Regional Entity may
submit a written request to both Regional Entities requesting that they process the
proposed transfer in accordance with this section. The Registered Entity’s written
request shall set forth the reasons the Registered Entity believes justify the
proposed transfer and shall describe any impacts of the proposed transfer on other
Bulk Power System owners, operators, and users.

2.

After receiving the Registered Entity’s written request, the two Regional Entities
shall consult with each other as to whether they agree or disagree that the
requested transfer is appropriate. The Regional Entities may also consult with
affected Reliability Coordinators, Balancing Authorities and Transmission
Operators as appropriate. Each Regional Entity shall post the request on its
website for public comment period of 21 days. In evaluating the proposed
transfer, the Regional Entities shall consider the location of the Registered
Entity’s Bulk Power System facilities in relation to the geographic and electrical
boundaries of the respective Regions; the impacts of the proposed transfer on
other Bulk Power System owners, operators; and users, the impacts of the
proposed transfer on the current and future staffing, resources, budgets and
assessments to other Load-Serving Entities of each Regional Entity, including the
sufficiency of the proposed transferee Regional Entity’s staffing and resources to
perform compliance monitoring and enforcement activities with respect to the
Registered Entity; the Registered Entity’s compliance history with its current
Regional Entity; and the manner in which pending compliance monitoring and
enforcement matters concerning the Registered Entity would be transitioned from
the current Regional Entity to the transferee Regional Entity; along with any other
reasons for the proposed transfer stated by the Registered Entity and any other
reasons either Regional Entity considers relevant. The Regional Entities may

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request that the Registered Entity provide additional data and information
concerning the proposed transfer for the Regional Entities’ use in their evaluation.
The Registered Entity’s current Regional Entity shall notify the Registered Entity
in writing as to whether (i) the two Regional Entities agree that the requested
transfer is appropriate, (ii) the two Regional Entities agree that the requested
transfer is not appropriate and should not be processed further, or (iii) the two
Regional Entities disagree as to whether the proposed transfer is appropriate.
3.

If the two Regional Entities agree that the requested transfer is appropriate, they
shall submit a joint written request to NERC requesting that the proposed transfer
be approved and that the delegation agreement between NERC and each of the
Regional Entities be amended accordingly. The Regional Entities’ joint written
submission to NERC shall describe the reasons for the proposed transfer; the
location of the Registered Entity’s Bulk Power System Facilities in relation to the
geographic and electrical boundaries of the respective Regions; the impacts of the
proposed transfer on other Bulk Power System owners, operators, and users; the
impacts of the proposed transfer on the current and future staffing, resources,
budgets and assessments of each Regional Entity, including the sufficiency of the
proposed transferee Regional Entity’s staffing and resources to perform
compliance monitoring and enforcement activities with respect to the Registered
Entity; the Registered Entity’s compliance history with its current Regional
Entity; and the manner in which pending compliance monitoring and enforcement
matters concerning the Registered Entity will be transitioned from the current
Regional Entity to the transferee Regional Entity. The NERC Board of Trustees
shall consider the proposed transfer based on the submissions of the Regional
Entities and any other information the Board considers relevant, and shall approve
or disapprove the proposed transfer and the related delegation agreement
amendments. The NERC Board may request that the Regional Entities provide
additional information, or obtain additional information from the Registered
Entity, for the use of the NERC Board in making its decision. If the NERC Board
approves the proposed transfer, NERC shall file the related delegation agreements
with FERC for approval.

4.

If the two Regional Entities do not agree with each other that the proposed
transfer is appropriate, the Regional Entity supporting the proposed transfer shall,
if requested by the Registered Entity, submit a written request to NERC to
approve the transfer and the related delegation agreement amendments. The
Regional Entity’s written request shall include the information specified in
Section 1208.3. The Regional Entity that does not believe the proposed transfer is
appropriate will be allowed to submit a written statement to NERC explaining
why the Regional Entity believes the transfer is not appropriate and should not be
approved. The NERC Board of Trustees shall consider the proposed transfer
based on the submissions of the Regional Entities and any other information the
Board considers relevant, and shall approve or disapprove the proposed transfer
and the related delegation agreement amendments. The NERC Board may request
that the Regional Entities provide additional information, or obtain additional

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information from the Registered Entity, for the use of the NERC Board in making
its decision. If the NERC Board approves the proposed transfer, NERC shall file
the related delegation agreements with FERC for approval.
5.

Prior to action by the NERC Board of Trustees on a proposed transfer of
registration under Section 1208.3 or 1208.4, NERC shall post information
concerning the proposed transfer, including the submissions from the Regional
Entities, on its website for at least twenty-one (21) days for the purpose of
receiving public comment.

6.

If the NERC Board of Trustees disapproves a proposed transfer presented to it
pursuant to either Section 1208.3 or 1208.4, the Regional Entity or Regional
Entities that believe the transfer is appropriate may, if requested to do so by the
Registered Entity, file a petition with FERC pursuant to 18 C.F.R. section 39.8(f)
and (g) requesting that FERC order amendments to the delegation agreements of
the two Regional Entities to effectuate the proposed transfer.

7.

No transfer of a Registered Entity from one Regional Entity to another Regional
Entity shall be effective (i) unless approved by FERC, and (ii) any earlier than the
first day of January of the second calendar year following approval by FERC,
unless an earlier effective date is agreed to by both Regional Entities and NERC
and approved by FERC.

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SECTION 1300 — COMMITTEES
1301. Establishing Standing Committees
The Board may from time to time create standing committees. In doing so, the Board
shall approve the charter of each committee and assign specific authority to each
committee necessary to conduct business within that charter. Each standing committee
shall work within its Board-approved charter and shall be accountable to the Board for
performance of its Board-assigned responsibilities. A NERC standing committee may
not delegate its assigned work to a member forum, but, in its deliberations, may request
the opinions of and consider the recommendations of a member forum.
1302. Committee Membership
Each committee shall have a defined membership composition that is explained in its
charter. Committee membership may be unique to each committee, and can provide for
balanced decision-making by providing for representatives from each Sector or, where
Sector representation will not bring together the necessary diversity of opinions, technical
knowledge and experience in a particular subject area, by bringing together a wide
diversity of opinions from industry experts with outstanding technical knowledge and
experience in a particular subject area. Committee membership shall also provide the
opportunity for an equitable number of members from the United States and Canada,
based approximately on proportionate Net Energy for Load. All committees and other
subgroups (except for those organized on other than a Sector basis because Sector
representation will not bring together the necessary diversity of opinions, technical
knowledge and experience in a particular subject area) must ensure that no two
stakeholder Sectors are able to control the vote on any matter, and no single Sector is able
to defeat a matter. With regard to committees and subgroups pertaining to development
of, interpretation of, or compliance with Reliability Standards, NERC shall provide a
reasonable opportunity for membership from Sectors desiring to participate. Committees
and subgroups organized on other than a Sector basis shall be reported to the NERC
Board and the Member Representatives Committee, along with the reasons for
constituting the committee or subgroup in the manner chosen. In such cases and subject
to reasonable restrictions necessary to accomplish the mission of such committee or
subgroup, NERC shall provide a reasonable opportunity for additional participation, as
members or official observers, for Sectors not represented on the committee or subgroup.
1303. Procedures for Appointing Committee Members
Committee members shall be nominated and selected in a manner that is open, inclusive,
and fair. Unless otherwise stated in these Rules of Procedure or approved by the Board,
all committee member appointments shall be approved by the board, and committee
officers shall be appointed by the Chairman of the Board.
1304. Procedures for Conduct of Committee Business
1.

Notice to the public of the dates, places, and times of meetings of all committees,
and all nonconfidential material provided to committee members, shall be posted

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on NERC’s website at approximately the same time that notice is given to
committee members. Meetings of all standing committees shall be open to the
public, subject to reasonable limitations due to the availability and size of meeting
facilities; provided that the meeting may be held in or adjourn to closed session to
discuss matters of a confidential nature, including but not limited to personnel
matters, compliance enforcement matters, litigation, or commercially sensitive or
Critical Energy Infrastructure Information of any entity.
2.

NERC shall maintain a set of procedures, approved by the Board, to guide the
conduct of business by standing committees.

1305. Committee Subgroups
Standing committees may appoint subgroups using the same principles as in Section
1302.

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SECTION 1400 — AMENDMENTS TO THE NERC RULES OF
PROCEDURE
1401. Proposals for Amendment or Repeal of Rules of Procedure
In accordance with the Bylaws of NERC, requests to amend or repeal the Rules of
Procedure may be submitted by (1) any ten Members of NERC, which number shall
include Members from at least three membership Sectors, (2) the Member
Representatives Committee, (3) a standing committee of NERC to whose function and
purpose the Rule of Procedure pertains, or (4) an officer of the ERO.
1402. Approval of Amendment or Repeal of Rules of Procedure
Amendment to or repeal of Rules of Procedure shall be approved by the Board after
public notice and opportunity for comment in accordance with the Bylaws of NERC. In
approving changes to the Rules of Procedure, the Board shall consider the inputs of the
Member Representatives Committee, other ERO committees affected by the particular
changes to the Rules of Procedure, and other stakeholders as appropriate. After Board
approval, the amendment or repeal shall be submitted to the Applicable Governmental
Authorities for approval, where authorized by legislation or agreement. No amendment
to or repeal of the Rules of Procedure shall be effective until it has been approved by the
Applicable Governmental Authorities.
1403. Alternative Procedure for Violation Risk Factors
In the event the Reliability Standards development process fails to produce Violation
Risk Factors for a particular Reliability Standard in a timely manner, the Board of
Trustees may adopt Violation Risk Factors for that standard after notice and opportunity
for comment. In adopting Violation Risk Factors, the Board shall consider the inputs of
the Member Representatives Committee and affected stakeholders.

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SECTION 1500 — CONFIDENTIAL INFORMATION
1501. Definitions
1.

Confidential Information means (i) Confidential Business and Market
Information; (ii) Critical Energy Infrastructure Information; (iii) personnel
information that identifies or could be used to identify a specific individual, or
reveals personnel, financial, medical, or other personal information; (iv) work
papers, including any records produced for or created in the course of an
evaluation or audit; (v) investigative files, including any records produced for or
created in the course of an investigation; or (vi) Cyber Security Incident
Information; provided, that public information developed or acquired by an entity
shall be excluded from this definition.

2.

Confidential Business and Market Information means any information that
pertains to the interests of any entity, that was developed or acquired by that
entity, and that is proprietary or competitively sensitive.

3.

Critical Energy Infrastructure Information means specific engineering,
vulnerability, or detailed design information about proposed or existing Critical
Infrastructure that (i) relates details about the production, generation,
transportation, transmission, or distribution of energy; (ii) could be useful to a
person in planning an attack on Critical Infrastructure; and (iii) does not simply
give the location of the Critical Infrastructure.

4.

Critical Infrastructure means existing and proposed systems and assets, whether
physical or virtual, the incapacity or destruction of which would negatively affect
security, economic security, public health or safety, or any combination of those
matters.

5.

Cyber Security Incident Information means any information related to,
describing, or which could be used to plan or cause a Cyber Security Incident.

1502. Protection of Confidential Information
1.

Identification of Confidential Information — An owner, operator, or user of
the Bulk Power System and any other party (the “Submitting Entity”) shall mark
as confidential any information that it submits to NERC or a Regional Entity (the
“Receiving Entity”) that it reasonably believes contains Confidential Information
as defined by these Rules of Procedure, indicating the category or categories
defined in Section 1501 in which the information falls. If the information is
subject to a prohibition on public disclosure in the Commission-approved rules of
a regional transmission organization or independent system operator or a similar
prohibition in applicable federal, state, or provincial laws, the Submitting Entity
shall so indicate and provide supporting references and details.

2.

Confidentiality — Except as provided herein, a Receiving Entity shall keep in
confidence and not copy, disclose, or distribute any Confidential Information or

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any part thereof without the permission of the Submitting Entity, except as
otherwise legally required.
3.

Information no longer Confidential – If a Submitting Entity concludes that
information for which it had sought confidential treatment no longer qualifies for
that treatment, the Submitting Entity shall promptly so notify NERC or the
relevant Regional Entity.

1503. Requests for Information
1.

Limitation — A Receiving Entity shall make information available only to one
with a demonstrated need for access to the information from the Receiving Entity.

2.

Form of Request — A person with such a need may request access to
information by using the following procedure:
2.1

The request must be in writing and clearly marked “Request for
Information.”

2.2

The request must identify the individual or entity that will use the
information, explain the requester’s need for access to the information,
explain how the requester will use the information in furtherance of that
need, and state whether the information is publicly available or available
from another source or through another means. If the requester seeks
access to information that is subject to a prohibition on public disclosure
in the Commission-approved rules of a regional transmission organization
or independent system operator or a similar prohibition in applicable
federal, state, or provincial laws, the requester shall describe how it
qualifies to receive such information.

2.3

The request must stipulate that, if the requester does not seek public
disclosure, the requester will maintain as confidential any information
received for which a Submitting Party has made a claim of confidentiality
in accordance with NERC’s rules. As a condition to gaining access to such
information, a requester shall execute a non-disclosure agreement in a
form approved by NERC’s Board of Trustees.

3.

Notice and Opportunity for Comment — Prior to any decision to disclose
information marked as confidential, the Receiving Entity shall provide written
notice to the Submitting Entity and an opportunity for the Submitting Entity to
either waive objection to disclosure or provide comments as to why the
Confidential Information should not be disclosed. Failure to provide such
comments or otherwise respond is not deemed waiver of the claim of
confidentiality.

4.

Determination by ERO or Regional Entity — Based on the information
provided by the requester under Rule 1503.2, any comments provided by the
Submitting Entity, and any other relevant available information, the chief

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executive officer or his or her designee of the Receiving Entity shall determine
whether to disclose such information.
5.

Appeal — A person whose request for information is denied in whole or part may
appeal that determination to the President of NERC (or the President’s designee)
within 30 days of the determination. Appeals filed pursuant to this Section must
be in writing, addressed to the President of NERC (or the President’s designee),
and clearly marked “Appeal of Information Request Denial.”
NERC will provide written notice of such appeal to the Submitting Entity and an
opportunity for the Submitting Entity to either waive objection to disclosure or
provide comments as to why the Confidential Information should not be
disclosed; provided that any such comments must be received within 30 days of
the notice and any failure to provide such comments or otherwise respond is not
deemed a waiver of the claim of confidentiality.
The President of NERC (or the President’s designee) will make a determination
with respect to any appeal within 30 days. In unusual circumstances, this time
limit may be extended by the President of NERC (or the President’s designee),
who will send written notice to the requester setting forth the reasons for the
extension and the date on which a determination on the appeal is expected.

6.

Disclosure of Information — In the event the Receiving Entity, after following
the procedures herein, determines to disclose information designated as
Confidential Information, it shall provide the Submitting Entity no fewer than 21
days’ written notice prior to releasing the Confidential Information in order to
enable such Submitting Entity to (a) seek an appropriate protective order or other
remedy, (b) consult with the Receiving Entity with respect to taking steps to resist
or narrow the scope of such request or legal process, or (c) waive compliance, in
whole or in part, with the terms of this Section. Should a Receiving Entity be
required to disclose Confidential Information, or should the Submitting Entity
waive objection to disclosure, the Receiving Entity shall furnish only that portion
of the Confidential Information which the Receiving Entity’s counsel advises is
legally required.

7.

Posting of Determinations on Requests for Disclosure of Confidential
Information — Upon making its determination on a request for disclosure of
Confidential Information, NERC or the Regional Entity, as applicable, shall (i)
notify the requester that the request for disclosure is granted or denied, (ii)
publicly post any determination to deny the request to disclose Confidential
Information, including in such posting an explanation of the reasons for the denial
(but without in such explanation disclosing the Confidential Information), and
(iii) publicly post any determination that information claimed by the Submitting
Entity to be Confidential Information is not Confidential Information (but without
in such posting disclosing any information that has been determined to be
Confidential Information).

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1504. Employees, Contractors and Agents
A Receiving Entity shall ensure that its officers, trustees, directors, employees,
subcontractors and subcontractors’ employees, and agents to whom Confidential
Information is exposed are under obligations of confidentiality that are at least as
restrictive as those contained herein.
1505. Provision of Information to FERC and Other Governmental Authorities
1.

Request — A request from FERC for reliability information with respect to
owners, operators, and users of the Bulk Power System within the United States is
authorized by Section 215 of the Federal Power Act. Other Applicable
Governmental Authorities may have similar authorizing legislation that grants a
right of access to such information. Unless otherwise directed by FERC or its
staff or the other Applicable Governmental Authority requesting the information,
upon receiving such a request, a Receiving Entity shall provide contemporaneous
notice to the applicable Submitting Entity. In its response to such a request, a
Receiving Entity shall preserve any mark of confidentiality and shall notify FERC
or other Applicable Governmental Authorities that the Submitting Entity has
marked the information as confidential.

2.

Continued Confidentiality — Each Receiving Entity shall continue to treat as
confidential all Confidential Information that it has submitted to NERC or to
FERC or another Applicable Governmental Authority, until such time as FERC or
the other Applicable Governmental Authority authorizes disclosure of such
information.

1506. Permitted Disclosures
1.

Confirmed Violations — Nothing in this Section 1500 shall prohibit the
disclosure of a violation at the point when the matter is filed with an Applicable
Governmental Authority as a Notice of Penalty, the “violator” admits to the
violation, or the alleged violator and NERC or the Regional Entity reach a
settlement regarding the violation.

2.

Compliance Information — NERC and the Regional Entities are authorized to
exchange Confidential Information related to evaluations, Compliance Audits,
and Compliance Investigations in furtherance of the Compliance Monitoring and
Enforcement Program, on condition they continue to maintain the confidentiality
of such information.

1507. Remedies for Improper Disclosure
Any person engaged in NERC or Regional Entity activity under Section 215 of the
Federal Power Act or the equivalent laws of other Applicable Governmental Authorities
who improperly discloses information determined to be confidential may lose access to
Confidential Information on a temporary or permanent basis and may be subject to
adverse personnel action, including suspension or termination. Nothing in Section 1500

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precludes an entity whose information was improperly disclosed from seeking a remedy
in an appropriate court.

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SECTION 1600 — REQUESTS FOR DATA OR INFORMATION
1601. Scope of a NERC or Regional Entity Request for Data or Information
Within the United States, NERC and Regional Entities may request data or information
that is necessary to meet their obligations under Section 215 of the Federal Power Act, as
authorized by Section 39.2(d) of the Commission’s regulations, 18 C.F.R. § 39.2(d). In
other jurisdictions NERC and Regional Entities may request comparable data or
information, using such authority as may exist pursuant to these Rules of Procedure and
as may be granted by Applicable Governmental Authorities in those other jurisdictions.
The provisions of Section 1600 shall not apply to Requirements contained in any
Reliability Standard to provide data or information; the Requirements in the Reliability
Standards govern. The provisions of Section 1600 shall also not apply to data or
information requested in connection with a compliance or enforcement action under
Section 215 of the Federal Power Act, Section 400 of these Rules of Procedure, or any
procedures adopted pursuant to those authorities, in which case the Rules of Procedure
applicable to the production of data or information for compliance and enforcement
actions shall apply.
1602. Procedure for Authorizing a NERC Request for Data or Information
1. NERC shall provide a proposed request for data or information or a proposed
modification to a previously-authorized request, including the information specified
in Section 1602.2.1 or 1602.2.2 as applicable, to the Commission’s Office of Electric
Reliability at least twenty-one (21) days prior to initially posting the request or
modification for public comment. Submission of the proposed request or
modification to the Office of Electric Reliability is for the information of the
Commission. NERC is not required to receive any approval from the Commission
prior to posting the proposed request or modification for public comment in
accordance with Section 1602.2 or issuing the request or modification to Reporting
Entities following approval by the Board of Trustees.
2. NERC shall post a proposed request for data or information or a proposed
modification to a previously authorized request for data or information for a forty-five
(45) day public comment period.
2.1. A proposed request for data or information shall contain, at a minimum, the
following information: (i) a description of the data or information to be
requested, how the data or information will be used, and how the availability of
the data or information is necessary for NERC to meet its obligations under
applicable laws and agreements; (ii) a description of how the data or information
will be collected and validated; (iii) a description of the entities (by functional
class and jurisdiction) that will be required to provide the data or information
(“Reporting Entities”); (iv) the schedule or due date for the data or information;
(v) a description of any restrictions on disseminating the data or information
(e.g., “Confidential Information,” “Critical Energy Infrastructure Information,”

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“aggregating” or “identity masking”); and (vi) an estimate of the relative burden
imposed on the Reporting Entities to accommodate the data or information
request.
2.2. A proposed modification to a previously authorized request for data or
information shall explain (i) the nature of the modifications; (ii) an estimate of
the burden imposed on the Reporting Entities to accommodate the modified data
or information request, and (iii) any other items from Section 1602.2.1 that
require updating as a result of the modifications.
3. After the close of the comment period, NERC shall make such revisions to the
proposed request for data or information as are appropriate in light of the comments.
NERC shall submit the proposed request for data or information, as revised, along
with the comments received, NERC’s evaluation of the comments and
recommendations, to the Board of Trustees.
4. In acting on the proposed request for data or information, the Board of Trustees may
authorize NERC to issue it, modify it, or remand it for further consideration.
5. NERC may make minor changes to an authorized request for data or information
without Board approval. However, if a Reporting Entity objects to NERC in writing
to such changes within 21 days of issuance of the modified request, such changes
shall require Board approval before they are implemented.
6. Authorization of a request for data or information shall be final unless, within thirty
(30) days of the decision by the Board of Trustees, an affected party appeals the
authorization under this Section 1600 to the Applicable Governmental Authority.
1603. Owners, Operators, and Users to Comply
Owners, operators, and users of the Bulk Power System registered on the NERC
Compliance Registry shall comply with authorized requests for data and information. In
the event a Reporting Entity within the United States fails to comply with an authorized
request for data or information under Section 1600, NERC may request the Commission
to exercise its enforcement authority to require the Reporting Entity to comply with the
request for data or information and for other appropriate enforcement action by the
Commission. NERC will make any request for the Commission to enforce a request for
data or information through a non-public submission to the Commission’s enforcement
staff.
1604. Requests by Regional Entity for Data or Information
1. A Regional Entity may request that NERC seek authorization for a request for data or
information to be applicable within the Region of the Regional Entity, either as a
freestanding request or as part of a proposed NERC request for data or information.
Any such request must be consistent with this Section 1600.

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2. A Regional Entity may also develop its own procedures for requesting data or
information, but any such procedures must include at least the same procedural
elements as are included in this Section 1600. Any such Regional Entity procedures
or changes to such procedures shall be submitted to NERC for approval. Upon
approving such procedures or changes thereto, NERC shall file the proposed
procedures or proposed changes for approval by the Commission and any other
Applicable Governmental Authorities applicable to the Regional Entity. The
Regional Entity procedures or changes to such procedures shall not be effective in a
jurisdiction until approved by, and in accordance with any revisions directed by, the
Commission or other Applicable Governmental Authority.
1605. Confidentiality
If the approved data or information request includes a statement under Section
1602.1.1(v) that the requested data or information will be held confidential or treated as
Critical Energy Infrastructure Information, then the applicable provisions of Section 1500
will apply without further action by a Submitting Entity. A Submitting Entity may
designate any other data or information as Confidential Information pursuant to the
provisions of Section 1500, and NERC or the Regional Entity shall treat that data or
information in accordance with Section 1500. NERC or a Regional Entity may utilize
additional protective procedures for handling particular requests for data or information
as may be necessary under the circumstances.
1606. Expedited Procedures for Requesting Time-Sensitive Data or Information
1. In the event NERC or a Regional Entity must obtain data or information by a date or
within a time period that does not permit adherence to the time periods specified in
Section 1602, the procedures specified in Section 1606 may be used to obtain the data
or information. Without limiting the circumstances in which the procedures in
Section 1606 may be used, such circumstances include situations in which it is
necessary to obtain the data or information (in order to evaluate a threat to the
reliability or security of the Bulk Power System, or to comply with a directive in an
order issued by the Commission or by another Applicable Governmental Authority)
within a shorter time period than possible under Section 1602. The procedures
specified in Section 1606 may only be used if authorized by the NERC Board of
Trustees prior to activation of such procedures.
2. Prior to posting a proposed request for data or information, or a modification to a
previously-authorized request, for public comment under Section 1606, NERC shall
provide the proposed request or modification, including the information specified in
paragraph 1602.2.1 or 1602.2.2 as applicable, to the Commission’s Office of Electric
Reliability. The submission to the Commission’s Office of Electric Reliability shall
also include an explanation of why it is necessary to use the expedited procedures of
Section 1606 to obtain the data or information. The submission shall be made to the
Commission’s Office of Electric Reliability as far in advance, up to twenty-one (21)
days, of the posting of the proposed request or modification for public comments as is

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reasonably possible under the circumstances, but in no event less than two (2) days in
advance of the public posting of the proposed request or modification.
3. NERC shall post the proposed request for data or information or proposed
modification to a previously-authorized request for data or information for a public
comment period that is reasonable in duration given the circumstances, but in no
event shorter than five (5) days. The proposed request for data or information or
proposed modification to a previously-authorized request for data or information shall
include the information specified in Section 1602.2.1 or 1602.2.2, as applicable, and
shall also include an explanation of why it is necessary to use the expedited
procedures of Section 1606 to obtain the data or information.
4. The provisions of Sections 1602.3, 1602.4, 1602.5 and 1602.6 shall be applicable to a
request for data or information or modification to a previously-authorized request for
data or information developed and issued pursuant to Section 1606, except that (a) if
NERC makes minor changes to an authorized request for data or information without
Board approval, such changes shall require Board approval if a Reporting Entity
objects to NERC in writing to such changes within five (5) days of issuance of the
modified request; and (b) authorization of the request for data or information shall be
final unless an affected party appeals the authorization of the request by the Board of
Trustees to the Applicable Governmental Authority within five (5) days following the
decision of the Board of Trustees authorizing the request, which decision shall be
promptly posted on NERC’s website.

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SECTION 1700 — CHALLENGES TO DETERMINATIONS
1701. Scope of Authority
Section 1702 sets forth the procedures to be followed for Registered Entities to challenge
determinations made by Planning Coordinators under Reliability Standard PRC-023.
Section 1703 sets forth the procedures to be followed when a Submitting Entity or Owner
wishes to challenge a determination by NERC to approve or to disapprove an Exception
Request or to terminate an Exception under Section 509.
1702. Challenges to Determinations by Planning Coordinators Under Reliability Standard
PRC-023
1.

This Section 1702 establishes the procedures to be followed when a Registered
Entity wishes to challenge a determination by a Planning Coordinator of the sub200 kV circuits in its Planning Coordinator area for which Transmission Owners,
Generator Owners, and Distribution Providers (defined as “Registered Entities”
for purposes of this Section 1702) must comply with the requirements of
Reliability Standard PRC-023.

2.

Planning Coordinator Procedures

3.

2.1

Each Planning Coordinator shall establish a procedure for a Registered
Entity to submit a written request for an explanation of a determination
made by the Planning Coordinator under PRC-023.

2.2

A Registered Entity shall follow the procedure established by the Planning
Coordinator for submitting the request for explanation and must submit
any such request within 60 days of receiving the determination under
PRC-023 from the Planning Coordinator.

2.3

Within 30 days of receiving a written request from a Registered Entity, the
Planning Coordinator shall provide the Registered Entity with a written
explanation of the basis for its determination under PRC-023, unless the
Planning Coordinator provided a written explanation of the basis for its
determination when it initially informed the Registered Entity of its
determination.

A Registered Entity may challenge the determination of the Planning Coordinator
by filing with the appropriate Regional Entity, with a copy to the Planning
Coordinator, within 60 days of receiving the written explanation from the
Planning Coordinator. The challenge shall include the following: (a) an
explanation of the technical reasons for its disagreement with the Planning
Coordinator’s determination, along with any supporting documentation, and (b) a
copy of the Planning Coordinator’s written explanation. Within 30 days of
receipt of a challenge, the Planning Coordinator may file a response to the
Regional Entity, with a copy to the Registered Entity.

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4.

The filing of a challenge in good faith shall toll the time period for compliance
with PRC-023 with respect to the subject facility until such time as the challenge
is withdrawn, settled or resolved.

5.

The Regional Entity shall issue its written decision setting forth the basis of its
determination within 90 days after it receives the challenge and send copies of the
decision to the Registered Entity and the Planning Coordinator. The Regional
Entity may convene a meeting of the involved entities and may request additional
information. The Regional Entity shall affirm the determination of the Planning
Coordinator if it is supported by substantial evidence.

6.

A Planning Coordinator or Registered Entity affected by the decision of the
Regional Entity may, within 30 days of the decision, file an appeal with NERC,
with copies to the Regional Entity and the Planning Coordinator or Registered
Entity. The appeal shall state the basis of the objection to the decision of the
Regional Entity and shall include the Regional Entity decision, the written
explanation of the Planning Coordinator’s determination under PRC-023, and the
documents and reasoning filed by the Registered Entity with the Regional Entity
in support of its objection. The Regional Entity, Planning Coordinator or
Registered Entity may file a response to the appeal within 30 days of the appeal.

7.

The NERC Board of Trustees shall appoint a panel to decide appeals from Region
Entity decisions under Section 1702.5. The panel, which may contain alternates,
shall consist of at least three appointees, one of whom must be a member of the
NERC staff, who are knowledgeable about PRC-023 and transmission planning
and do not have a direct financial or business interest in the outcome of the
appeal. The panel shall decide the appeal within 90 days of receiving the appeal
from the decision of the Regional Entity and shall affirm the determination of the
Planning Coordinator if it is supported by substantial evidence.

8.

The Planning Coordinator or Registered Entity affected by the decision of the
panel may request that the NERC Board of Trustees review the decision by filing
its request for review and a statement of reasons with NERC’s Chief Reliability
Officer within 30 days of the panel decision. The Board of Trustees may, in its
discretion, decline to review the decision of the panel, in which case the decision
of the panel shall be the final NERC decision. Within 90 days of the request for
review under this Section 1702.8, the NERC Board of Trustees may either (a)
issue a decision on the merits, which shall be the final NERC decision, or (b)
issue a notice declining to review the decision of the panel, in which case the
decision of the panel shall be the final NERC decision. If no written decision or
notice declining review is issued within 90 calendar days, the appeal shall be
deemed to have been denied by the NERC Board of Trustees and this will have
the same effect as a notice declining review.

9.

The Registered Entity or Planning may appeal the final NERC decision to the
applicable governmental authority within 30 days of receipt of the Board of

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Trustees’ final decision or notice declining review, or expiration of the 90-day
review period without any action by NERC.
10.

The Planning Coordinator and Registered Entity are encouraged, but not required,
to meet to resolve any dispute, including use of mutually agreed to alternative
dispute resolution procedures, at any time during the course of the matter. In the
event resolution occurs after the filing of a challenge, the Registered Entity and
Planning Coordinator shall jointly provide to the applicable Regional Entity a
written acknowledgement of withdrawal of the challenge or appeal, including a
statement that all outstanding issues have been resolved.

1703. Challenges to NERC Determinations of BES Exception Requests Under Section 509
1.

This Section 1703 establishes the procedures to be followed when a Submitting
Entity or Owner wishes to challenge a determination by NERC to approve or to
disapprove an Exception Request or to terminate an Exception under Section 509.

2.

A Submitting Entity (or Owner if different) aggrieved by the decision of NERC to
approve or disapprove an Exception Request or to terminate an Exception with
respect to any Element may, within 30 days following the date of the decision, file
a written challenge to the decision with the NERC director of compliance
operations, with copies to the Regional Entity and the Submitting Entity or Owner
if different. The written challenge shall state the basis of the objection to the
decision of NERC. The Regional Entity and the Submitting Entity or Owner if
different may file a response to the challenge within 30 days following the date
the challenge is filed with NERC.

3.

The challenge shall be decided by the Board of Trustees Compliance Committee.
Within 90 days of the date of submission of the challenge, the Board of Trustees
Compliance Committee shall issue its decision on the challenge. The decision of
the Board of Trustees Compliance Committee shall be the final NERC decision;
provided, that the Board of Trustees Compliance Committee may extend the
deadline date for its decision to a date more than 90 days following submission of
the challenge, by issuing a notice to the Submitting Entity, the Owner (if
different) and the Regional Entity stating the revised deadline date and the reason
for the extension.

4.

The Submitting Entity, or Owner if different, may appeal the final NERC decision
to, or seek review of the final NERC decision by, the Applicable Governmental
Authority(ies), in accordance with the legal authority and rules and procedures of
the Applicable Governmental Authority(ies). Any such appeal shall be filed
within thirty (30) days following the date of the decision of the Board of Trustees
Compliance Committee, or within such other time period as is provided for in the
legal authority, rules or procedures of the Applicable Governmental Authority.

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PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 2B

REVISED RULES OF PROCEDURE, SECTIONS 100-1700
(INCLUDING PROPOSED NEW SECTIONS 509 AND 1703)
REDLINED VERSION

Proposed Revisions 1-9-2012
[Incorporates proposed revisions filed with FERC on
March 18, November 7 and November 29, 2011]

Rules of Procedure

Effective: January 10, 2012

Rules of Procedure Section 400 is subject to further revisions to
comply with directives in a FERC Order issued October 7, 2011
(137 FERC ¶ 61,028).

Rules of Procedure of the North American Electric Reliability Corporation

TABLE OF CONTENTS TABLE OF CONTENTS
SECTION 100 — APPLICABILITY OF RULES OF PROCEDURE.................................................... 1
SECTION 200 — DEFINITIONS OF TERMS ........................................................................................ 2
SECTION 300 — RELIABILITY STANDARDS DEVELOPMENT .................................................... 3
301.
302.
303.
304.
305.
306.
307.
308.
309.
310.
311.
312.
313.
314.
315.
316.
317.
318.
319.
320.
321.

General ........................................................................................................................................ 3
Essential Attributes for Technically Excellent Reliability Standards.......................................... 3
Relationship between Reliability Standards and Competition .................................................... 5
Essential Principles for the Development of Reliability Standards............................................. 6
Registered Ballot Body................................................................................................................ 6
Standards Committee................................................................................................................... 8
Standards Process Manager ......................................................................................................... 9
Steps in the Development of Reliability Standards ..................................................................... 9
Filing of Reliability Standards for Approval by Applicable Governmental Authorities............. 9
Annual Reliability Standards Development Plan ...................................................................... 11
Regional Entity Standards Development Procedures ................................................................ 11
Regional Reliability Standards .................................................................................................. 13
Other Regional Criteria, Guides, Procedures, Agreements, Etc................................................ 16
Conflicts with Statutes, Regulations, and Orders ...................................................................... 17
Revisions to NERC Reliability Standards Development Procedure ......................................... 17
Accreditation ............................................................................................................................. 17
Five-Year Review of Standards................................................................................................. 18
Coordination with the North American Energy Standards Board ............................................. 18
Archived Standards Information ............................................................................................... 18
Alternate Method for Adopting Violation Risk Factors ............................................................ 18
Special Rule to Address Certain Regulatory Directives............................................................ 18

SECTION 400 — COMPLIANCE ENFORCEMENT .......................................................................... 22
401.
402.
403.
404.
405.
406.
407.
408.
409.
410.
411.

Scope of the NERC Compliance Enforcement Program ........................................................... 22
NERC Oversight of the Regional Entity Compliance Enforcement Programs ......................... 25
Required Attributes of Regional Entity Compliance Enforcement Programs ........................... 29
NERC Monitoring of Compliance for Regional Entities or Bulk Power Owners, Operator, or
Users .......................................................................................................................................... 35
Monitoring of Reliability Standards and Other Requirements Applicable to NERC................ 36
Independent Audits of the NERC Compliance Monitoring and Enforcement Program ........... 36
Penalties, Sanctions, and Remedial Actions.............................................................................. 37
Review of NERC Decisions ...................................................................................................... 37
Appeals from Final Decisions of Regional Entities .................................................................. 39
Hold Harmless ........................................................................................................................... 40
Requests for Technical Feasibility Exceptions to NERC Critical Infrastructure Protection
Reliability Standards ................................................................................................................. 40

SECTION 500 — ORGANIZATION REGISTRATION AND CERTIFICATION ........................... 41
501.
502.
503.
504.
505.

Scope of the Organization Registration and Organization Certification Programs................... 41
Organization Registration and Organization Certification Program Requirements .................. 44
Regional Entity Implementation of Organization Registration and Organization Certification
Program Requirements .............................................................................................................. 46
Appeals ...................................................................................................................................... 47
Program Maintenance................................................................................................................ 48

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Rules of Procedure of the North American Electric Reliability Corporation

506.
507.
508.
509.

Independent Audit of NERC Organization Registration and Organization Certification
Program ..................................................................................................................................... 48
Provisions Relating to Joint Registration Organizations (JRO) ................................................ 48
Provisions Relating to Coordinated Functional Registration (CFR) Entities ............................ 49
Exceptions to the Definition of the Bulk Electric System..........................................................51

SECTION 600 — PERSONNEL CERTIFICATION ............................................................................ 52
601.
602.
603.
604.
605.
606.

Scope of Personnel Certification ............................................................................................... 52
Structure of ERO Personnel Certification Program................................................................... 52
Candidate Testing Mechanisms................................................................................................. 53
Public Information About the Personnel Certification Program ............................................... 54
Responsibilities to Applicants for Certification or Recertification ........................................... 54
Responsibilities to the Public and to Employers of Certified Practitioners............................... 55

SECTION 700 — RELIABILITY READINESS EVALUATION AND IMPROVEMENT AND
FORMATION OF SECTOR FORUMS.................................................................................................. 56
701
702.

Confidentiality Requirements for Readiness Evaluations and Evaluation Team Members ...... 56
Formation of Sector Forum ....................................................................................................... 56

SECTION 800 — RELIABILITY ASSESSMENT AND PERFORMANCE ANALYSIS.................. 57
801.
802.
803.
804.
805.
806.
807.
808.
809.
810.
811.

Objectives of the Reliability Assessment and Performance Analysis Program ........................ 57
Scope of the Reliability Assessment Program........................................................................... 57
Reliability Assessment Reports ................................................................................................. 58
Reliability Assessment Data and Information Requirements .................................................... 59
Reliability Assessment Process ................................................................................................. 60
Scope of the Reliability Performance and Analysis Program.................................................... 62
Analysis of Major Events .......................................................................................................... 62
Analysis of Off-Normal Events, Potential System Vulnerabilities, and System Performance . 63
Reliability Benchmarking.......................................................................................................... 63
Information Exchange and Issuance of NERC Advisories, Recommendations and Essential
Actions....................................................................................................................................... 64
Equipment Performance Data.................................................................................................... 65

SECTION 900 — TRAINING AND EDUCATION ............................................................................... 66
901.
902.

Scope of the Training and Education Program.......................................................................... 66
Continuing Education Program ................................................................................................. 66

SECTION 1000 — SITUATION AWARENESS AND INFRASTRUCTURE SECURITY............... 68
1001.
1002.
1003.

Situation Awareness .................................................................................................................. 68
Reliability Support Services ...................................................................................................... 68
Infrastructure Security Program ................................................................................................ 68

SECTION 1100 — ANNUAL NERC BUSINESS PLANS AND BUDGETS........................................ 71
1101.
1102.
1103.
1104.
1105.
1106.
1107.
1108.

Scope of Business Plans and Budgets ....................................................................................... 71
NERC Funding and Cost Allocation ......................................................................................... 71
NERC Budget Development ..................................................................................................... 71
Submittal of Regional Entity Budgets to NERC ....................................................................... 72
Submittal of NERC and Regional Entity Budgets to Governmental Authorities for Approval 72
NERC and Regional Entity Billing and Collections.................................................................. 73
Penalty Applications.................................................................................................................. 74
Special Assessments .................................................................................................................. 75

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Rules of Procedure of the North American Electric Reliability Corporation

SECTION 1200 — REGIONAL DELEGATION AGREEMENTS ..................................................... 76
1201.
1202.
1203.
1204.
1205.
1206.
1207.
1208.

Pro Forma Regional Delegation Agreement.............................................................................. 76
Regional Entity Essential Requirements ................................................................................... 76
Negotiation of Regional Delegation Agreements...................................................................... 76
Conformance to Rules and Terms of Regional Delegation Agreements................................... 76
Sub-delegation ........................................................................................................................... 76
Nonconformance to Rules or Terms of Regional Delegation Agreement................................. 76
Regional Entity Audits .............................................................................................................. 77
Process for Considering Registered Entity Requests to Transfer to Another Regional Entity
Audits ........................................................................................................................................ 77

SECTION 1300 — COMMITTEES ........................................................................................................ 80
1301.
1302.
1303.
1304.
1305.

Establishing Standing Committees ............................................................................................ 80
Committee Membership ............................................................................................................ 80
Procedures for Appointing Committee Members...................................................................... 80
Procedures for Conduct of Committee Business ....................................................................... 80
Committee Subgroups ............................................................................................................... 81

SECTION 1400 — AMENDMENTS TO THE NERC RULES OF PROCEDURE ............................ 82
1401.
1402.
1403.

Proposals for Amendment or Repeal of Rules of Procedure ..................................................... 82
Approval of Amendment or Repeal of Rules of Procedure....................................................... 82
Alternative Procedure for Violation Risk Factors ..................................................................... 82

SECTION 1500 — CONFIDENTIAL INFORMATION....................................................................... 83
1501.
1502.
1503.
1504.
1505.
1506.
1507.

Definitions ................................................................................................................................. 83
Protection of Confidential Information ..................................................................................... 83
Requests for Information ........................................................................................................... 84
Employees, Contractors and Agents.......................................................................................... 86
Provision of Information to FERC and Other Governmental Authorities................................. 86
Permitted Disclosures ................................................................................................................ 86
Remedies for Improper Disclosure............................................................................................ 86

SECTION 1600 — REQUESTS FOR DATA OR INFORMATION .................................................... 88
1601. Scope of a NERC or Regional Entity Request for Data or Information ........................................... 88
1602. Procedure for Authorizing a NERC Request for Data or Information.............................................. 88
1603. Owners, Operators, and Users to Comply......................................................................................... 89
1604. Requests by Regional Entity for Data or Information ...................................................................... 89
1605. Confidentiality .................................................................................................................................. 90
1606. Expedited Procedures for Requesting Time-Sensitive Data or Information..................................... 90
SECTION 1700 — CHALLENGES TO DETERMINATIONS............................................................92
1701. Scope of Authority............................................................................................................................92
1702 Challenges to Determinations by Planning Coordinators Under Reliability Standard PRC-023.....92
1703 Challenges to NERC Determinations of BES Exception Requests under Section 509....................94

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Rules of Procedure of the North American Electric Reliability Corporation

SECTION 100 — APPLICABILITY OF RULES OF PROCEDURE
NERC and NERC Members shall comply with these Rules of Procedure. Each Regional Entity
shall comply with these Rules of Procedure as applicable to functions delegated to the Regional
Entity by NERC or as required by an Applicable Governmental Authority or as otherwise
provided.
Each Bulk Power System owner, operator, and user shall comply with all Rules of Procedure of
NERC that are made applicable to such entities by approval pursuant to applicable legislation or
regulation, or pursuant to agreement.
Any entity that is unable to comply or that is not in compliance with a NERC Rule of Procedure
shall immediately notify NERC in writing, stating the Rule of Procedure of concern and the
reason for not being able to comply with the Rule of Procedure.
NERC shall evaluate each case and inform the entity of the results of the evaluation. If NERC
determines that a Rule of Procedure has been violated, or cannot practically be complied with,
NERC shall notify the Applicable Governmental Authorities and take such other actions as
NERC deems appropriate to address the situation.
NERC shall comply with each approved Reliability Standard that identifies NERC or the Electric
Reliability Organization as a responsible entity. Regional Entities shall comply with each
approved Reliability Standard that identifies Regional Entities as responsible entities. A
violation by NERC or a Regional Entity of such a Reliability Standard shall constitute a violation
of these Rules of Procedure.

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Rules of Procedure of the North American Electric Reliability Corporation

SECTION 200 — DEFINITIONS OF TERMS
Definitions of terms used in the NERC Rules of Procedure are set forth in Appendix 2,
Definitions Used in the Rules of Procedure.

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Rules of Procedure of the North American Electric Reliability Corporation

SECTION 300 — RELIABILITY STANDARDS DEVELOPMENT
301.

General
NERC shall develop and maintain Reliability Standards that apply to Bulk Power System
owners, operators, and users and that enable NERC and Regional Entities to measure the
reliability performance of Bulk Power System owners, operators, and users; and to hold
them accountable for Reliable Operation of the Bulk Power Systems. The Reliability
Standards shall be technically excellent, timely, just, reasonable, not unduly
discriminatory or preferential, in the public interest, and consistent with other applicable
standards of governmental authorities.

302.

Essential Attributes for Technically Excellent Reliability Standards
1.

Applicability — Each Reliability Standard shall clearly identify the functional
classes of entities responsible for complying with the Reliability Standard, with
any specific additions or exceptions noted. Such functional classes1 include:
Reliability Coordinators, Balancing Authorities, Transmission Operators,
Transmission Owners, Generator Operators, Generator Owners, Interchange
Authorities, Transmission Service Providers, market operators, Planning
Authorities, Transmission Planners, Resource Planners, Load-Serving Entities,
Purchasing-Selling Entities, and Distribution Providers. Each Reliability Standard
shall also identify the geographic applicability of the Reliability Standard, such as
the entire North American Bulk Power System, an Interconnection, or within a
Region. A Reliability Standard may also identify any limitations on the
applicability of the Reliability Standard based on electric Facility characteristics.

2.

Reliability Objectives — Each Reliability Standard shall have a clear statement
of purpose that shall describe how the Reliability Standard contributes to the
reliability of the Bulk Power System. The following general objectives for the
Bulk Power System provide a foundation for determining the specific objective(s)
of each Reliability Standard:
2.1

Reliability Planning and Operating Performance— Bulk Power
Systems shall be planned and operated in a coordinated manner to perform
reliably under normal and abnormal conditions.

2.2

Frequency and Voltage Performance— The frequency and voltage of
Bulk Power Systems shall be controlled within defined limits through the

1

These functional classes of entities are derived from NERC’s Reliability Functional Model. When a Reliability 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.

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Rules of Procedure of the North American Electric Reliability Corporation

balancing of Real and Reactive Power real and reactive power supply and
demand.
2.3

Reliability Information — Information necessary for the planning and
operation of reliable Bulk Power Systems shall be made available to those
entities responsible for planning and operating Bulk Power Systems.

2.4

Emergency Preparation — Plans for emergency operation and system
restoration of Bulk Power Systems shall be developed, coordinated,
maintained, and implemented.

2.5

Communications and Control — Facilities for communication,
monitoring, and control shall be provided, used, and maintained for the
reliability of Bulk Power Systems.

2.6

Personnel — Personnel responsible for planning and operating Bulk
Power Systems shall be trained and qualified, and shall have the
responsibility and authority to implement actions.

2.7

Wide-Area View — The reliability of the Bulk Power Systems shall be
assessed, monitored, and maintained on a Wide-Area basis.

2.8

Security —Bulk Power Systems shall be protected from malicious
physical or cyber attacks.

3.

Performance Requirement or Outcome— Each Reliability Standard shall state
one or more performance Requirements, which if achieved by the applicable
entities, will provide for a reliable Bulk Power System, consistent with good
utility practices and the public interest. Each Requirement is not a “lowest
common denominator” compromise, but instead achieves an objective that is the
best approach for Bulk Power System reliability, taking account of the costs and
benefits of implementing the proposal.

4.

Measurability — Each performance Requirement shall be stated so as to be
objectively measurable by a third party with knowledge or expertise in the area
addressed by that Requirement. Each performance Requirement shall have one or
more associated measures used to objectively evaluate compliance with the
Requirement. If performance can be practically measured quantitatively, metrics
shall be provided to determine satisfactory performance.

5.

Technical Basis in Engineering and Operations— Each Reliability Standard
shall be based upon sound engineering and operating judgment, analysis, or
experience, as determined by expert practitioners in that particular field.

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Rules of Procedure of the North American Electric Reliability Corporation

303.

6.

Completeness — Reliability Standards shall be complete and self-contained. The
Reliability Standards shall not depend on external information to determine the
required level of performance.

7.

Consequences for Noncompliance — In combination with guidelines for
Penalties and sanctions, as well as other ERO and Regional Entity compliance
documents, the consequences of violating a Reliability Standard are clearly
presented to the entities responsible for complying with the Reliability Standards.

8.

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

9.

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

10.

Consistent Terminology — To the extent possible, Reliability Standards shall
use a set of standard terms and definitions that are approved through the NERC
Reliability Standards development process.

Relationship between Reliability Standards and Competition
To ensure Reliability Standards are developed with due consideration of impacts on
competition, to ensure Reliability Standards are not unduly discriminatory or preferential,
and recognizing that reliability is an essential requirement of a robust North American
economy, each Reliability Standard shall meet all of these market-related objectives:
1.

Competition — A Reliability Standard shall not give any market participant an
unfair competitive advantage.

2.

Market Structures — A Reliability Standard shall neither mandate nor prohibit
any specific market structure.

3.

Market Solutions — A Reliability Standard shall not preclude market solutions
to achieving compliance with that Reliability Standard.

4.

Commercially Sensitive Information — A Reliability Standard shall not require
the public disclosure of commercially sensitive information or other Confidential
Information. All market participants shall have equal opportunity to access
commercially non-sensitive information that is required for compliance with
Reliability Standards.

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Rules of Procedure of the North American Electric Reliability Corporation

5.

304.

Adequacy — NERC shall not set Reliability Standards defining an adequate
amount of, or requiring expansion of, Bulk Power System resources or delivery
capability.

Essential Principles for the Development of Reliability Standards
NERC shall develop Reliability Standards in accordance with the NERC Standard
Processes Manual, which is incorporated into these Rules of Procedure as Appendix 3A.
Appeals in connection with the development of a Reliability Standard shall also be
conducted in accordance with the NERC Standard Processes Manual. Any amendments
or revisions to the Standard Processes Manual shall be consistent with the following
essential principles:

305.

1.

Openness — Participation shall be open to all Persons who are directly and
materially affected by the reliability of the North American Bulk Power System.
There shall be no undue financial barriers to participation. Participation shall not
be conditional upon membership in NERC or any other organization, and shall
not be unreasonably restricted on the basis of technical qualifications or other
such requirements.

2.

Transparency — The process shall be transparent to the public.

3.

Consensus-building —The process shall build and document consensus for each
Reliability Standard, both with regard to the need and justification for the
Reliability Standard and the content of the Reliability Standard.

4.

Fair Balance of Interests — The process shall fairly balance interests of all
stakeholders and shall not be dominated by any single interest category.

5.

Due Process — Development of Reliability Standards shall provide reasonable
notice and opportunity for any Person with a direct and material interest to
express views on a proposed Reliability Standard and the basis for those views,
and to have that position considered in the development of the Reliability
Standards.

6.

Timeliness — Development of Reliability Standards shall be timely and
responsive to new and changing priorities for reliability of the Bulk Power
System.

Registered Ballot Body
NERC Reliability Standards shall be approved by a Registered Ballot Body prior to
submittal to the Board and then to Applicable Governmental Authorities for their
approval, where authorized by applicable legislation or agreement. This Section 305 sets

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Rules of Procedure of the North American Electric Reliability Corporation

forth the rules pertaining to the composition of, and eligibility to participate in, the
Registered Ballot Body.
1.

Eligibility to Vote on Reliability Standards — Any person or entity may join
the Registered Ballot Body to vote on Reliability Standards, whether or not such
person or entity is a Member of NERC.

2.

Inclusive Participation — The Segment qualification guidelines are inclusive;
i.e., any entity with a legitimate interest in the reliability of the Bulk Power
System that can meet any one of the eligibility criteria for a Segment is entitled to
belong to and vote in each Segment for which it qualifies, subject to limitations
defined in Sections 305.3 and 305.5.

3.

General Criteria for Registered Ballot Body Membership — The general
criteria for membership in the Segments are:
3.1

Multiple Segments — A corporation or other organization with integrated
operations or with affiliates that qualifies to belong to more than one
Segment (e.g., Transmission Owners and Load-Serving Entities) may join
once in each Segment for which it qualifies, provided that each Segment
constitutes a separate membership and the organization is represented in
each Segment by a different representative. Affiliated entities are
collectively limited to one membership in each Segment for which they
are qualified.

3.2

Withdrawing from a Segment or Changing Segments — After its
initial registration in a Segment, each registered participant may elect to
withdraw from a Segment or apply to change Segments at any time.

3.3

Review of Segment Criteria — The Board shall review the qualification
guidelines and rules for joining Segments at least every three years to
ensure that the process continues to be fair, open, balanced, and inclusive.
Public input will be solicited in the review of these guidelines.

4.

Proxies for Voting on Reliability Standards — Any registered participant may
designate an agent or proxy to vote on its behalf. There are no limits on how
many proxies an agent may hold. However, for the proxy to be valid, NERC must
have in its possession written documentation signed by the representative of the
registered participant that the voting right by proxy has been transferred from the
registered participant to the agent.

5.

Segments — The specific criteria for membership in each Registered Ballot Body
Segment are defined in the Standard Processes Manual in Appendix 3A.

6.

Review of Segment Entries — NERC shall review all applications for joining
the Registered Ballot Body, and shall make a determination of whether the

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Rules of Procedure of the North American Electric Reliability Corporation

applicant’s self-selection of a Segment satisfies at least one of the guidelines to
belong to that Segment. The entity shall then become eligible to participate as a
voting member of that Segment. The Standards Committee shall resolve disputes
regarding eligibility for membership in a Segment, with the applicant having the
right of appeal to the Board.
306.

Standards Committee
The Standards Committee shall provide oversight of the Reliability Standards
development process to ensure stakeholder interests are fairly represented. The Standards
Committee shall not under any circumstance change the substance of a draft or approved
Reliability Standard.
1.

Membership — The Standards Committee is a representative committee
comprising representatives of two members of each of the Segments in the
Registered Ballot Body.

2.

Elections — Standards Committee members are elected for staggered (one per
Segment per year) two-year terms by the respective Segments in accordance with
the Procedure for the Election of Members of the NERC Standards Committee,
which is incorporated into these Rules of Procedure as Appendix 3B. Segments
may use their own election procedure if such a procedure is ratified by two-thirds
of the members of a Segment and approved by the Board.

3.

Canadian Representation
3.1

Provision for Sufficient Canadian Representation — If any regular
election of Standards Committee members does not result in at least two
Canadian members on the Standards Committee, the Canadian nominees
who were not elected but who received the next highest percentage of
votes within their respective Segment(s) will be designated as additional
members of the Standards Committee, as needed to achieve a total of two
Canadian members.

3.2

Terms of Specially Designated Canadian Members — Each specially
designated Canadian member of the Standards Committee shall have a
term ending with the next annual election.

3.3

Segment Preference — If any Segment has an unfilled representative
position on the Standards Committee following the annual election, the
first preference is to assign each specially designated Canadian
representative to a Segment with an unfilled representative position for
which his or her organization qualifies.

3.4

Rights of Specially Designated Canadian Members — Any specially
designated Canadian members of the Standards Committee shall have the

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Rules of Procedure of the North American Electric Reliability Corporation

same rights and obligations as all other members of the Standards
Committee.
4.

307.

Open Meetings — All meetings of the Standards Committee shall be open and
publicly noticed on the NERC website.

Standards Process Manager
NERC shall assign a standards process manager to administer the development of
Reliability Standards. The standards process manager shall be responsible for ensuring
that the development and revision of Reliability Standards are in accordance with the
NERC Standard Processes Manual. The standards process manager shall work to
achieve the highest degree of integrity and consistency of quality and completeness of the
Reliability Standards. The standards process manager shall coordinate with any Regional
Entities that develop Regional Reliability Standards to ensure those Regional Reliability
Standards are effectively integrated with the NERC Reliability Standards.

308.

Steps in the Development of Reliability Standards
1.

Procedure — NERC shall develop Reliability Standards through the process set
forth in the NERC Standard Processes Manual (Appendix 3A). The procedure
includes a provision for approval of urgent action Reliability Standards that can
be completed within 60 days and emergency actions that may be further
expedited.

2.

Board Approval — Reliability Standards or revisions to Reliability Standards
approved by the ballot pool in accordance with the Standard Processes Manual
shall be submitted for approval by the Board. No Reliability Standard or revision
to a Reliability Standard shall be effective unless approved by the Board.

3.

Governmental Approval — After receiving Board approval, a Reliability
Standard or revision to a Reliability Standard shall be submitted to all Applicable
Governmental Authorities in accordance with Section 309. No Reliability
Standard or revision to a Reliability Standard shall be effective within a
geographic area over which an Applicable Governmental Authority has
jurisdiction unless approved by such Applicable Governmental Authority or is
otherwise made effective pursuant to the laws applicable to such Applicable
Governmental Authority.

309. Filing of Reliability Standards for Approval by Applicable Governmental
Authorities
1.

Filing of Reliability Standards for Approval — Where authorized by applicable
legislation or agreement, NERC shall file with the Applicable Governmental

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Rules of Procedure of the North American Electric Reliability Corporation

Authorities each Reliability Standard, modification to a Reliability Standard, or
withdrawal of a Reliability Standard that is approved by the Board. Each filing
shall be in the format required by the Applicable Governmental Authority and
shall include: a concise statement of the basis and purpose of the Reliability
Standard; the text of the Reliability Standard; the implementation plan for the
Reliability Standard; a demonstration that the Reliability Standard meets the
essential attributes of Reliability Standards as stated in Section 302; the drafting
team roster; the ballot pool and final ballot results; and a discussion of public
comments received during the development of the Reliability Standard and the
consideration of those comments.
2.

Remanded Reliability Standards and Directives to Develop Standards — If
an Applicable Governmental Authority remands a Reliability Standard to NERC
or directs NERC to develop a Reliability Standard, NERC shall within five (5)
business days notify all other Applicable Governmental Authorities, and shall
within thirty (30) calendar days report to all Applicable Governmental Authorities
a plan and timetable for modification or development of the Reliability Standard.
Reliability Standards that are remanded or directed by an Applicable
Governmental Authority shall be modified or developed using the Standard
Processes Manual. NERC shall, during the development of a modification for the
remanded Reliability Standard or directed Reliability Standard, consult with other
Applicable Governmental Authorities to coordinate any impacts of the proposed
Reliability Standards in those other jurisdictions. The expedited action procedure
may be applied if necessary to meet a timetable for action required by the
Applicable Governmental Authorities, respecting to the extent possible the
provisions in the Reliability Standards development process for reasonable notice
and opportunity for public comment, due process, openness, and a balance of
interest in developing Reliability Standards. If the Board of Trustees determines
that the process did not result in a Reliability Standard that addresses a specific
matter that is identified in a directive issued by an Applicable Governmental
Authority, then Rule 321 of these Rules of Procedure shall apply.

3.

Directives to Develop Reliability Standards under Extraordinary
Circumstances — An Applicable Governmental Authority may, on its own
initiative, determine that extraordinary circumstances exist requiring expedited
development of a Reliability Standard. In such a case, the Applicable
Governmental Authority may direct the development of a Reliability Standard
within a certain deadline. NERC staff shall prepare the Standards Authorization
Request and seek a stakeholder sponsor for the request. If NERC is unable to find
a sponsor for the proposed Reliability Standard, NERC will be designated as the
requestor. The proposed Reliability Standard will then proceed through the
Reliability Standards development process, using the expedited action procedures
described in the Standard Processes Manual as necessary to meet the specified
deadline. The timeline will be developed to respect, to the extent possible, the
provisions in the Reliability Standards development process for reasonable notice
and opportunity for public comment, due process, openness, and a balance of

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Rules of Procedure of the North American Electric Reliability Corporation

interests in developing Reliability Standards. If the Board of Trustees determines
that the process did not result in a Reliability Standard that addresses a specific
matter that is identified in a directive issued by an Applicable Governmental
Authority, then Rule 321 of these Rules of Procedure shall apply, with appropriate
modification of the timeline.
3.1

310.

Consistent with all Reliability Standards developed under the expedited
action process, each of the three possible follow-up actions as documented
in the Standard Processes Manual are to be completed through the
Reliability Standards development process and are subject to approval by
the Applicable Governmental Authorities in the U.S. and Canada.

Annual Reliability Standards Development Plan
NERC shall develop and provide an annual Reliability Standards Development Plan for
development of Reliability Standards to the Applicable Governmental Authorities. NERC
shall consider the comments and priorities of the Applicable Governmental Authorities in
developing and updating the annual Reliability Standards Development Plan. Each
annual Reliability Standards Development Plan shall include a progress report comparing
results achieved to the prior year’s Reliability Standards Development Plan.

311.

Regional Entity Standards Development Procedures
1.

NERC Approval of Regional Entity Reliability Standards Development
Procedure — To enable a Regional Entity to develop Regional Reliability
Standards that are to be recognized and made part of NERC Reliability Standards,
a Regional Entity may request NERC to approve a Regional Reliability Standards
development procedure.

2.

Public Notice and Comment on Regional Reliability Standards Development
Procedure — Upon receipt of such a request, NERC shall publicly notice and
request comment on the proposed Regional Reliability Standards development
procedure, allowing a minimum of 45 days for comment. The Regional Entity
shall have an opportunity to resolve any objections identified in the comments and
may choose to withdraw the request, revise the Regional Reliability Standards
development procedure and request another posting for comment, or submit the
Regional Reliability Standards development procedure, along with its
consideration of any objections received, for approval by NERC.

3.

Evaluation of Regional Reliability Standards Development Procedure —
NERC shall evaluate whether a Regional Reliability Standards development
procedure meets the criteria listed below and shall consider stakeholder
comments, any unresolved stakeholder objections, and the consideration of
comments provided by the Regional Entity, in making that determination. If
NERC determines the Regional Reliability Standards development procedure
meets these requirements, the Regional Reliability Standards development

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procedure shall be submitted to the Board for approval. The Board shall consider
the recommended action, stakeholder comments, any unresolved stakeholder
comments, and the Regional Entity consideration of comments in determining
whether to approve the Regional Reliability Standards development procedure.
3.1

Evaluation Criteria — The Regional Reliability Standards development
procedure shall be:
3.1.1

Open — The Regional Reliability Standards development
procedure shall provide that any person or entity who is directly
and materially affected by the reliability of the Bulk Power
Systems within the Regional Entity shall be able to participate in
the development and approval of Reliability Standards. There shall
be no undue financial barriers to participation. Participation shall
not be conditional upon membership in the Regional Entity, a
Regional Entity or any organization, and shall not be unreasonably
restricted on the basis of technical qualifications or other such
requirements.

3.1.2

Inclusive — The Regional Reliability Standards development
procedure shall provide that any Person with a direct and material
interest has a right to participate by expressing an opinion and its
basis, having that position considered, and appealing through an
established appeals process if adversely affected.

3.1.3

Balanced — The Regional Reliability Standards development
procedure shall have a balance of interests and shall not permit any
two interest categories to control the vote on a matter or any single
interest category to defeat a matter.

3.1.4

Due Process — The Regional Reliability Standards development
procedure shall provide for reasonable notice and opportunity for
public comment. At a minimum, the Regional Reliability
Standards development procedure shall include public notice of the
intent to develop a Regional Reliability Standard, a public
comment period on the proposed Regional Reliability Standard,
due consideration of those public comments, and a ballot of
interested stakeholders.

3.1.5

Transparent — All actions material to the development of
Regional Reliability Standards shall be transparent. All Regional
Reliability Standards development meetings shall be open and
publicly noticed on the Regional Entity’s website.

3.1.6

Accreditation of Regional Standards Development Procedure
— A Regional Entity’s Regional Reliability Standards

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development procedure that is accredited by the American
National Standards Institute or the Standards Council of Canada
shall be deemed to meet the criteria listed in this Section 311.3.1,
although such accreditation is not a prerequisite for approval by
NERC.
3.1.7

312.

Use of NERC Procedure — A Regional Entity may adopt the
NERC Standard Processes Manual as the Regional Reliability
Standards development procedure, in which case the Regional
Entity’s Regional Reliability Standards development procedure
shall be deemed to meet the criteria listed in this Section 311.3.1.

4.

Revisions of Regional Reliability Standards Development Procedures — Any
revision to a Regional Reliability Standards development procedure shall be
subject to the same approval requirements set forth in Sections 311.1 through
311.3.

5.

Duration of Regional Reliability Standards Development Procedures — The
Regional Reliability Standards development procedure shall remain in effect until
such time as it is replaced with a new version approved by NERC or it is
withdrawn by the Regional Entity. The Regional Entity may, at its discretion,
withdraw its Regional Reliability Standards development procedure at any time.

Regional Reliability Standards
1.

Basis for Regional Reliability Standards — Regional Entities may propose
Regional Reliability Standards that set more stringent reliability requirements
than the NERC Reliability Standard or cover matters not covered by an existing
NERC Reliability Standard. Such Regional Reliability Standards shall in all cases
be approved by NERC and made part of the NERC Reliability Standards and shall
be enforceable in accordance with the delegation agreement between NERC and
the Regional Entity or other instrument granting authority over enforcement to the
Regional Entity. No entities other than NERC and the Regional Entity shall be
permitted to develop Regional Reliability Standards that are enforceable under
statutory authority delegated to NERC and the Regional Entity.

2.

Regional Reliability Standards That are Directed by a NERC Reliability
Standard — Although it is the intent of NERC to promote uniform Reliability
Standards across North America, in some cases it may not be feasible to achieve a
reliability objective with a Reliability Standard that is uniformly applicable across
North America. In such cases, NERC may direct Regional Entities to develop
Regional Reliability Standards necessary to implement a NERC Reliability
Standard. Such Regional Reliability Standards that are developed pursuant to a
direction by NERC shall be made part of the NERC Reliability Standards.

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3.

Procedure for Developing an Interconnection-wide Regional Standard — A
Regional Entity organized on an Interconnection-wide basis may propose a
Regional Reliability Standard for approval as a NERC Reliability Standard to be
made mandatory for all applicable Bulk Power System owners, operators, and
users within that Interconnection.
3.1

Presumption of Validity — An Interconnection-wide Regional
Reliability Standard that is determined by NERC to be just, reasonable,
and not unduly discriminatory or preferential, and in the public interest,
and consistent with such other applicable standards of governmental
authorities, shall be adopted as a NERC Reliability Standard. NERC shall
rebuttably presume that a Regional Reliability Standard developed, in
accordance with a Regional Reliability Standards development process
approved by NERC, by a Regional Entity organized on an
Interconnection-wide basis, is just, reasonable, and not unduly
discriminatory or preferential, and in the public interest, and consistent
with such other applicable standards of governmental authorities.

3.2

Notice and Comment Procedure for Interconnection-wide Regional
Reliability Standard — NERC shall publicly notice and request
comment on the proposed Interconnection-wide Regional Reliability
Standard, allowing a minimum of 45 days for comment. NERC may
publicly notice and post for comment the proposed Regional Reliability
Standard concurrent with similar steps in the Regional Entity’s Regional
Reliability Standards development process. The Regional Entity shall have
an opportunity to resolve any objections identified in the comments and
may choose to comment on or withdraw the request, revise the proposed
Regional Reliability Standard and request another posting for comment, or
submit the proposed Regional Reliability Standard along with its
consideration of any objections received, for approval by NERC.

3.3

Approval of Interconnection-wide Regional Reliability Standard by
NERC — NERC shall evaluate and recommend whether a proposed
Interconnection-wide Regional Reliability Standard has been developed in
accordance with all applicable procedural requirements and whether the
Regional Entity has considered and resolved stakeholder objections that
could serve as a basis for rebutting the presumption of validity of the
Regional Reliability Standard. The Regional Entity, having been notified
of the results of the evaluation and recommendation concerning NERC
proposed Regional Reliability Standard, shall have the option of
presenting the proposed Regional Reliability Standard to the Board for
approval as a NERC Reliability Standard. The Board shall consider the
Regional Entity’s request, NERC’s recommendation for action on the
Regional Reliability Standard, any unresolved stakeholder comments, and
the Regional Entity’s consideration of comments, in determining whether

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to approve the Regional Reliability Standard as a NERC Reliability
Standard.

4.

3.4

Applicable Governmental Authority Approval — An Interconnectionwide Regional Reliability Standard that has been approved by the Board
shall be filed with the Applicable Governmental Authorities for approval,
where authorized by applicable legislation or agreement, and shall become
effective when approved by such Applicable Governmental Authorities or
on a date set by the Applicable Governmental Authorities.

3.5

Enforcement of Interconnection-wide Regional Reliability Standard
— An Interconnection-wide Regional Reliability Standard that has been
approved by the Board and by the Applicable Governmental Authorities or
is otherwise made effective within Canada as mandatory within a
particular Region shall be applicable and enforced as a NERC Reliability
Standard within the Region.

Procedure for Developing Non-Interconnection-Wide Regional Reliability
Standards — Regional Entities that are not organized on an Interconnection-wide
basis may propose Regional Reliability Standards to apply within their respective
Regions. Such Regional Reliability Standards may be developed through the
NERC Reliability Standards development procedure, or alternatively, through a
Regional Reliability Standards development procedure that has been approved by
NERC.
4.1

No Presumption of Validity — Regional Reliability Standards that are
not proposed to be applied on an Interconnection-wide basis are not
presumed to be valid but may be demonstrated by the proponent to be
valid.

4.2

Notice and Comment Procedure for Non-Interconnection-wide
Regional Reliability Standards — NERC shall publicly notice and
request comment on the proposed Regional Reliability Standard, allowing
a minimum of 45 days for comment. NERC may publicly notice and post
for comment the proposed Regional Reliability Standard concurrent with
similar steps in the Regional Entity’s Regional Reliability Standards
development process. The Regional Entity shall have an opportunity to
comment on or resolve any objections identified in the comments and may
choose to withdraw the request, revise the proposed Regional Reliability
Standard and request another posting for comment, or submit the proposed
Regional Reliability Standard along with its consideration of any
objections received, for approval by NERC.

4.3

NERC Approval of Non-Interconnection-wide Regional Reliability
Standards — NERC shall evaluate and recommend whether a proposed
non-Interconnection-wide Regional Reliability Standard has been

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developed in accordance with all applicable procedural requirements and
whether the Regional Entity has considered and resolved stakeholder
objections. The Regional Entity, having been notified of the results of the
evaluation and recommendation concerning proposed Regional Reliability
Standard, shall have the option of presenting the proposed Regional
Reliability Standard to the Board for approval as a NERC Reliability
Standard. The Board shall consider the Regional Entity’s request, the
recommendation for action on the Regional Reliability Standard, any
unresolved stakeholder comments, and the Regional Entity’s consideration
of comments, in determining whether to approve the Regional Reliability
Standard as a NERC Reliability Standard.

5.

313.

4.4

Applicable Governmental Authority Approval — A nonInterconnection-wide Regional Reliability Standard that has been
approved by the Board shall be filed with the Applicable Governmental
Authorities for approval, where authorized by applicable legislation or
agreement, and shall become effective when approved by such Applicable
Governmental Authorities or on a date set by the Applicable
Governmental Authorities.

4.5

Enforcement of Non-Interconnection-wide Regional Reliability
Standards — A non-Interconnection-wide Regional Reliability Standard
that has been approved by the Board and by the Applicable Governmental
Authorities or is otherwise made effective within Canada as mandatory
within a particular Region shall be applicable and enforced as a NERC
Reliability Standard within the Region.

Appeals — A Regional Entity shall have the right to appeal NERC’s decision not
to approve a proposed Regional Reliability Standard or Variance to the
Commission or other Applicable Governmental Authority.

Other Regional Criteria, Guides, Procedures, Agreements, Etc.
1.

Regional Criteria — Regional Entities may develop Regional Criteria that are
necessary to implement, to augment, or to comply with Reliability Standards, but
which are not Reliability Standards. Regional Criteria may also address issues not
within the scope of Reliability Standards, such as resource adequacy. Regional
Criteria may include specific acceptable operating or planning parameters, guides,
agreements, protocols or other documents used to enhance the reliability of the
Bulk Power System in the Region. These documents typically provide benefits by
promoting more consistent implementation of the NERC Reliability Standards
within the Region. These documents are not NERC Reliability Standards,
Regional Reliability Standards, or regional Variances, and therefore are not
enforceable under authority delegated by NERC pursuant to delegation
agreements and do not require NERC approval.

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2.

314.

Catalog of Regional Criteria — NERC shall maintain a current catalog of
Regional Criteria. Regional Entities shall provide a catalog listing of Regional
Criteria to NERC and shall notify NERC of changes to the listing. Regional
Entities shall provide any listed document to NERC upon written request.

Conflicts with Statutes, Regulations, and Orders
Notice of Potential Conflict — If a Bulk Power System owner, operator, or user
determines that a NERC or Regional Reliability Standard may conflict with a function,
rule, order, tariff, rate schedule, legislative requirement or agreement that has been
accepted, approved, or ordered by a governmental authority affecting that entity, the
entity shall expeditiously notify the governmental authority, NERC, and the relevant
Regional Entity of the conflict.

315.

1.

Determination of Conflict — NERC, upon request of the governmental
authority, may advise the governmental authority regarding the conflict and
propose a resolution of the conflict, including revision of the Reliability Standard
if appropriate.

2.

Regulatory Precedence — Unless otherwise ordered by a governmental
authority, the affected Bulk Power System owner, operator, or user shall continue
to follow the function, rule, order, tariff, rate schedule, legislative requirement, or
agreement accepted, approved, or ordered by the governmental authority until the
governmental authority finds that a conflict exists and orders a remedy and such
remedy is affected.

Revisions to NERC Reliability Standards Development Procedure
Any person or entity may submit a written request to modify NERC Standard Processes
Manual. Consideration of the request and development of the revision shall follow the
process defined in the NERC Standard Processes Manual. Upon approval by the Board,
the revision shall be submitted to the Applicable Governmental Authorities for approval.
Changes shall become effective only upon approval by the Applicable Governmental
Authorities or on a date designated by the Applicable Governmental Authorities or as
otherwise applicable in a particular jurisdiction.

316.

Accreditation
NERC shall seek continuing accreditation of the NERC Reliability Standards
development process by the American National Standards Institute and the Standards
Council of Canada.

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317.

Five-Year Review of Reliability Standards
NERC shall complete a review of each NERC Reliability Standard at least once every
five years from the effective date of the Reliability Standard or the latest revision to the
Reliability Standard, whichever is later. The review process shall be conducted in
accordance with the NERC Standard Processes Manual. The standards process manager
shall be responsible for administration of the five-year review of Reliability Standards.
As a result of this review, the NERC Reliability Standard shall be reaffirmed, revised, or
withdrawn. If the review indicates a need to revise or withdraw the Reliability Standard, a
request for revision or withdrawal shall be prepared, submitted and addressed in
accordance with the NERC Standard Processes Manual.

318.

Coordination with the North American Energy Standards Board
NERC shall, through a memorandum of understanding, maintain a close working
relationship with the North American Energy Standards Board and ISO/RTO Council to
ensure effective coordination of wholesale electric business practice standards and market
protocols with the NERC Reliability Standards.

319.

Archived Standards Information
NERC shall maintain a historical record of Reliability Standards information that is no
longer maintained on-line. For example, Reliability Standards that expired or were
replaced may be removed from the on-line system. Archived information shall be
retained indefinitely as practical, but in no case less than five years or one complete
Reliability Standards review cycle from the date on which the Reliability Standard was
no longer in effect. Archived records of Reliability Standards information shall be
available electronically within 30 days following the receipt by the standards process
manager of a written request.

320.

Alternate Method for Adopting Violation Risk Factors
In the event the Reliability Standards development process fails to produce Violation
Risk Factors for a particular Reliability Standard in a timely manner, the Board of
Trustees may adopt Violation Risk Factors for that Reliability Standard using the
procedures set out in Section 1400 of these Rules of Procedure.

321.

Special Rule to Address Certain Regulatory Directives
In circumstances where this Rule 321 applies, the Board of Trustees shall have the
authority to take one or more of the actions set out below. The Board of Trustees shall
have the authority to choose which one or more of the actions are appropriate to the
circumstances and need not take these actions in sequential steps.

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Rules of Procedure of the North American Electric Reliability Corporation

1.

The Standards Committee shall have the responsibility to ensure that standards
drafting teams address specific matters that are identified in directives issued by
Applicable Governmental Authorities. If the Board of Trustees is presented with a
proposed Reliability Standard that fails to address such directives, the Board of
Trustees has the authority to remand, with instructions (including establishing a
timetable for action), the proposed Reliability Standard to the Standards
Committee.

2.

Upon a written finding by the Board of Trustees that a ballot pool has failed to
approve a proposed Reliability Standard that contains a provision to address a
specific matter identified in a directive issued by an Applicable Governmental
Authority, the Board of Trustees has the authority to remand the proposed
Reliability Standard to the Standards Committee, with instructions to (i) convene
a public technical conference to discuss the issues surrounding the regulatory
directive, including whether or not the proposed Reliability Standard is just,
reasonable, not unduly discriminatory or preferential, in the public interest,
helpful to reliability, practical, technically sound, technically feasible, and costjustified; (ii) working with NERC staff, prepare a memorandum discussing the
issues, an analysis of the alternatives considered and other appropriate matters;
and (iii) re-ballot the proposed Reliability Standard one additional time, with such
adjustments in the schedule as are necessary to meet the deadline contained in
paragraph 2.1 of this Rule.
2.1

Such a re-ballot shall be completed within forty-five (45) days of the
remand. The Standards Committee memorandum shall be included in the
materials made available to the ballot pool in connection with the reballot.

2.2

In any such re-ballot, negative votes without comments related to the
proposal shall be counted for purposes of establishing a quorum, but only
affirmative votes and negative votes with comments related to the
proposal shall be counted for purposes of determining the number of votes
cast and whether the proposed Reliability Standard has been approved.

3.

If the re-balloted proposed Reliability Standard achieves at least an affirmative
two-thirds majority vote of the weighted Segment votes cast, with a quorum
established, then the proposed Reliability Standard shall be deemed approved by
the ballot pool and shall be considered by the Board of Trustees for approval.

4.

If the re-balloted proposed Reliability Standard fails to achieve at least an
affirmative two-thirds majority vote of the weighted Segment votes cast, but does
achieve at least a sixty percent affirmative majority of the weighted Segment
votes cast, with a quorum established, then the Board of Trustees has the authority
to consider the proposed Reliability Standard for approval under the following
procedures:
4.1

The Board of Trustees shall issue notice of its intent to consider the
proposed Reliability Standard and shall solicit written public comment

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particularly focused on the technical aspects of the provisions of the
proposed Reliability Standard that address the specific matter identified in
the regulatory directive, including whether or not the proposed Reliability
Standard is just, reasonable, not unduly discriminatory or preferential, in
the public interest, helpful to reliability, practical, technically sound,
technically feasible, and cost-justified.

A5.

4.2

The Board of Trustees may, in its discretion, convene a public technical
conference to receive additional input on the matter.

4.3

After considering the developmental record, the comments received
during balloting and the additional input received under paragraphs 4.1
and 4.2 of this Rule, the Board of Trustees has authority to act on the
proposed Reliability Standard.
4.3.1

If the Board of Trustees finds that the proposed Reliability
Standard is just, reasonable, not unduly discriminatory or
preferential, and in the public interest, considering (among other
things) whether it is helpful to reliability, practical, technically
sound, technically feasible, and cost-justified, then it has authority
to approve the proposed Reliability Standard and direct that it be
filed with Applicable Governmental Authorities with a request that
it be made effective.

4.3.2

If the Board of Trustees is unable to find that the proposed
Reliability Standard is just, reasonable, not unduly discriminatory
or preferential, and in the public interest, considering (among other
things) whether it is helpful to reliability, practical, technically
sound, technically feasible, and cost-justified, then it has authority
to treat the proposed Reliability Standard as a draft Reliability
Standard and direct that the draft Reliability Standard and
complete developmental record, including the additional input
received under paragraphs 4.1 and 4.2 of this Rule, be filed with
the Applicable Governmental Authorities as a compliance filing in
response to the order giving rise to the regulatory directive, along
with a recommendation that the Reliability Standard not be made
effective and an explanation of the basis for the recommendation.

Upon a written finding by the Board of Trustees that standard drafting team has
failed to develop, or a ballot pool has failed to approve, a proposed Reliability
Standard that contains a provision to address a specific matter identified in a
directive issued by an Applicable Governmental Authority, the Board of Trustees
has the authority to direct the Standards Committee (with the assistance of
stakeholders and NERC staff) to prepare a draft Reliability Standard that
addresses the regulatory directive, taking account of the entire developmental
record pertaining to the matter. If the Standards Committee fails to prepare such

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Rules of Procedure of the North American Electric Reliability Corporation

draft Reliability Standard, the Board of Trustees may direct NERC management
to prepare such draft Reliability Standard.

6.

5.1

The Board of Trustees may, in its discretion, convene a public technical
conference to receive input on the matter. The draft Reliability Standard
shall be posted for a 45-day public comment period.

5.2

If, after considering the entire developmental record (including the
comments received under paragraph 5.1 of this Rule), the Board of
Trustees finds that the draft Reliability Standard, with such modifications
as the Board of Trustees determines are appropriate in light of the
comments received, is just, reasonable, not unduly discriminatory or
preferential, and in the public interest, considering (among other things)
whether it is practical, technically sound, technically feasible, costjustified and serves the best interests of reliability of the Bulk Power
System, then the Board of Trustees has the authority to approve the draft
Reliability Standard and direct that the proposed Reliability Standard be
filed with Applicable Governmental Authorities with a request that the
proposed Reliability Standard be made effective.

5.3

If, after considering the entire developmental record (including the
comments received under paragraph 5.1 of this Rule), the Board of
Trustees is unable to find that the draft Reliability Standard, even with
modifications, is just, reasonable, not unduly discriminatory or
preferential, and in the public interest, considering (among other things)
whether it is practical, technically sound, technically feasible, costjustified and serves the best interests of reliability of the Bulk Power
System, then the Board of Trustees has the authority to direct that the
draft Reliability Standard and complete developmental record be filed as a
compliance filing in response to the regulatory directive with the
Applicable Governmental Authority issuing the regulatory directive, with
a recommendation that the draft Reliability Standard not be made
effective.

5.4

The filing of the Reliability Standard under either paragraph 5.2 or
paragraph 5.3 of this Rule shall include an explanation of the basis for the
decision by the Board of Trustees.

5.5

A Reliability Standard approved under paragraph 5 of this Rule shall not
be eligible for submission as an American National Standard.

NERC shall on or before March 31st of each year file a report with Applicable
Governmental Authorities on the status and timetable for addressing each
outstanding directive to address a specific matter received from an Applicable
Governmental Authority.

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SECTION 400 — COMPLIANCE ENFORCEMENT
401.

Scope of the NERC Compliance Monitoring and Enforcement Program
1.

Components of the NERC Compliance Monitoring and Enforcement
Program — NERC shall develop and implement a NERC Compliance
Monitoring and Enforcement Program to promote the reliability of the Bulk
Power System by enforcing compliance with approved Reliability Standards in
those regions of North American in which NERC and/or a Regional Entity
(pursuant to a delegation agreement with NERC that has been approved by the
Applicable Governmental Authority) has been given enforcement authority.
There are four distinct parts of the NERC Compliance Monitoring and
Enforcement Program: (1) NERC’s oversight of the Regional Entity Compliance
Monitoring and Enforcement Programs (Section 402), (2) the definition of the
required Regional Entity Compliance Monitoring and Enforcement Program
attributes (Section 403), (3) NERC’s monitoring of Regional Entity compliance
with Reliability Standards (Section 404), and (4) the monitoring of compliance
with Reliability Standards that are applicable to NERC (Sections 405–406).

2.

Who Must Comply — Where required by applicable legislation, regulation, rule
or agreement, all Bulk Power System owners, operators, and users, Regional
Entities, and NERC, are required to comply with all approved NERC Reliability
Standards at all times. Regional Reliability Standards and Variances approved by
NERC and the Applicable Governmental Authority shall be considered NERC
Reliability Standards and shall apply to all Bulk Power System owners, operators,
or users responsible for meeting those Reliability Standards within the Regional
Entity boundaries, whether or not the Bulk Power System owner, operator, or user
is a member of the Regional Entity.

3.

Data Access — All Bulk Power System owners, operators, and users shall
provide to NERC and the applicable Regional Entity such information as is
necessary to monitor compliance with the Reliability Standards. NERC and the
applicable Regional Entity will define the data retention and reporting
requirements in the Reliability Standards and compliance reporting procedures.

4.

Role of Regional Entities in the Compliance Monitoring and Enforcement
Program — Each Regional Entity that has been delegated authority through a
delegation agreement or other legal instrument approved by the Applicable
Governmental Authority shall, in accordance with the terms of the approved
delegation agreement, administer a Regional Entity Compliance Monitoring and
Enforcement program to meet the NERC Compliance Monitoring and
Enforcement Program goals and the requirements in this Section 400.

5.

Program Continuity — NERC will ensure continuity of compliance monitoring
and enforcement within the geographic boundaries of a Regional Entity in the
event that NERC does not have a delegation agreement, or the Regional Entity
withdraws from the agreement or does not operate its Compliance Monitoring and
Enforcement Program in accordance with the delegation agreement or other
applicable requirements.

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5.1

5.2

Should NERC not have a delegation agreement with a Regional Entity
covering a geographic area, or a Regional Entity withdraws from an
existing delegation agreement or the delegation agreement is otherwise
terminated, NERC will directly administer the Compliance Monitoring
and Enforcement Program applicable to owners, operators and users of the
Bulk Power System within that geographic area.
1.

This monitoring and enforcement will be accomplished by NERC
and Compliance Staff from another approved Regional Entity.

2.

If an existing delegation agreement with a Regional Entity is
terminating, the Regional Entity shall promptly provide to NERC
all relevant compliance information regarding Registered Entities,
contacts, prior compliance information and actions, Mitigation
Plans, and remedial actions for the period in which the Regional
Entity was responsible for administering the Compliance
Monitoring and Enforcement Program.

3.

NERC will levy and collect all Penalties directly and will utilize
any Penalty monies collected to offset the expenses of
administering the Compliance Monitoring and Enforcement
Program for the geographic area.

Should a Regional Entity seek to withdraw from its delegation agreement,
NERC will seek agreement from another Regional Entity to amend its
delegation agreement with NERC to extend that Regional Entity’s
boundaries for compliance monitoring and enforcement. In the event no
Regional Entity is willing to accept this responsibility, NERC will
administer the Compliance Monitoring and Enforcement Program within
the geographical boundaries of the Regional Entity seeking to withdraw
from the delegation agreement, in accordance with Section 401.5.1.

6.

Actively Monitored Requirements — NERC, with input from the Regional
entities, stakeholders, and regulators, shall annually select a subset of the NERC
Reliability Standards and Requirements to be actively monitored and audited in
the annual NERC Compliance Monitoring and Enforcement Program
Implementation Plan. Compliance is required with all NERC Reliability
Standards whether or not they are included in the subset of Reliability Standards
and Requirements designated to be actively monitored and audited in the annual
NERC Compliance Monitoring and Enforcement Program Implementation Plan.

7.

Penalties, Sanctions, and Remedial Actions — NERC and Regional Entities
will apply Penalties, sanctions, and remedial actions that bear a reasonable
relation to the seriousness of a violation and take into consideration timely
remedial efforts as defined in the NERC Sanction Guidelines, which is
incorporated into these rules as Appendix 4B.

8.

Multiple Enforcement Actions – A Registered Entity shall not be subject to an
enforcement action by NERC and a Regional Entity for the same violation.

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9.

Records — NERC shall maintain a record of each compliance submission,
including Self-Reported, Possible, Alleged, and Confirmed Violations of
approved Reliability Standards; associated Penalties, sanctions, remedial actions
and settlements; and the status of mitigation actions.

10.

Confidential Information — NERC will treat all Possible and Alleged
Violations of Reliability Standards and matters related to a Compliance
Monitoring and Enforcement Program process, including the status of any
Compliance Investigation or other Compliance Monitoring and Enforcement
Program process, as confidential in accordance with Section 1500.
The types of information that will be considered confidential and will not (subject
to statutory and regulatory requirements) be disclosed in any public information
reported by NERC are identified in Section 1500. Information that would
jeopardize Bulk Power System reliability, including information relating to a
Cyber Security Incident, will be identified and protected from public disclosure as
Critical Energy Infrastructure Information in accordance with Section 1500.
The Regional Entity and NERC shall give Bulk Power System owners, operators,
and users a reasonable opportunity to demonstrate that information concerning a
violation is confidential before such report is disclosed to the public.

11.

Public Posting — When the affected Bulk Power System owner, operator, or user
either agrees with a Possible or Alleged Violation(s) of a Reliability Standard(s)
or a report of a Compliance Audit or Compliance Investigation, or enters into a
settlement agreement concerning a Possible or Alleged Violation(s), or the time
for submitting an appeal is passed, or all appeals processes are complete, NERC
shall, subject to the confidentiality requirements of these Rules of Procedure,
publicly post each Confirmed Violation, Penalty or sanction, settlement
agreement, and final Compliance Audit or Compliance Investigation report, on its
website.
11.1

Each Bulk Power System owner, operator, or user may provide NERC
with a statement to accompany the Confirmed Violation or report to be
posted publicly. The statement must be on company letterhead and
include a signature, as well as the name and title of the person submitting
the information.

11.2

In accordance with Section 1500, information deemed by a Bulk Power
System owner, operator, or user, Regional Entity, or NERC as Critical
Energy Infrastructure Information (NERC Security Guidelines for the
Electricity Sector — Protecting Potentially Sensitive Information may be
used as a guide) or other Confidential Information shall be redacted in
accordance with Section 1500 and not be released publicly.

11.3

Subject to redaction of Critical Energy Infrastructure Information or other
Confidential Information, for each Confirmed Violation or settlement
relating to a Possible Violation or an Alleged Violation, the public posting

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Rules of Procedure of the North American Electric Reliability Corporation

shall include the name of any relevant entity, the nature, time period, and
circumstances of such Possible, Alleged or Confirmed Violation, any
Mitigation Plan to be implemented by the Registered Entity in connection
with the Confirmed Violation or settlement, and sufficient facts to assist
owners, operators and users of the Bulk Power System to evaluate whether
they have engaged in or are engaging in similar activities.
12.

402.

Violation Information Review — NERC Compliance Staff shall periodically
review and analyze all reports of Possible, Alleged and Confirmed Violations to
identify trends and other pertinent reliability issues.

NERC Oversight of the Regional Entity Compliance Monitoring and Enforcement
Programs
1.

NERC Monitoring Program — NERC shall have a program to monitor the
Compliance Monitoring and Enforcement Program of each Regional Entity that
has been delegated authority. The objective of this monitoring program shall be
to ensure that the Regional Entity carries out its Compliance Monitoring and
Enforcement Program in accordance with these Rules of Procedure and the terms
of the delegation agreement, and to ensure consistency and fairness of the
Regional Entity’s Compliance Monitoring and Enforcement Program. Oversight
and monitoring by NERC shall be accomplished through an annual Compliance
Monitoring and Enforcement Program review, program audits, and regular
evaluations of Regional Entity Compliance Monitoring and Enforcement Program
performance as described below.
1.1

NERC Review of Annual Regional Entity Compliance Monitoring
and Enforcement Program Implementation Plans — NERC shall
require each Regional Entity to submit for review and approval an annual
Regional Entity Compliance Monitoring and Enforcement Program
Implementation Plan. NERC shall review each annual Regional Entity
Compliance Monitoring and Enforcement Program Implementation Plan
and shall accept the plan if it meets NERC requirements and the
requirements of the delegation agreement.

1.2

Regional Entity Compliance Monitoring and Enforcement Program
Evaluation — NERC shall annually evaluate the goals, tools, and
procedures of each Regional Entity Compliance Monitoring and
Enforcement Program to determine the effectiveness of each Regional
Entity Compliance Monitoring and Enforcement Program, using criteria
developed by the NERC Compliance and Certification Committee.

1.3

Regional Entity Compliance Monitoring and Enforcement Program
Audit — At least once every five years, NERC shall conduct an audit to
evaluate how each Regional Entity Compliance Monitoring and
Enforcement Program implements the NERC Compliance Monitoring and
Enforcement Program. The evaluation shall be based on these Rules of
Procedure, including Appendix 4C, the delegation agreement, directives in
effect pursuant to the delegation agreement, approved annual Regional

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Entity Compliance Monitoring and Enforcement Program Implementation
Plans, required Compliance Monitoring and Enforcement Program
attributes, and the NERC Compliance Monitoring and Enforcement
Program procedures. These evaluations shall be provided to the
Applicable Governmental Authorities to demonstrate the effectiveness of
each Regional Entity. In addition, audits of Cross-Border Regional
Entities shall cover applicable requirements imposed on the Regional
Entity by statute, regulation, or order of, or agreement with, provincial
governmental and/or regulatory authorities for which NERC has auditing
responsibilities over the Regional Entity’s compliance with such
requirements within Canada or Mexico. Participation of a representative
of an Applicable Governmental Authority shall be subject to the
limitations of sections 3.1.6 and 8.0 of Appendix 4C of these Rules of
Procedure regarding disclosures of non-public compliance information
related to other jurisdictions. NERC shall maintain an audit procedure
containing the requirements, steps, and timelines to conduct an audit of
each Regional Entity Compliance Monitoring and Enforcement Program.
The current procedure is contained in the NERC Audit of Regional Entity
Compliance Programs, which is incorporated into these rules as Appendix
4A.
1.3.1. NERC shall establish a program to audit bulk power system
owners, operators, and users operating within a regional entity to
verify the findings of previous compliance audits conducted by the
regional entity to evaluate how well the regional entity compliance
enforcement program is meeting its delegated authority and
responsibility.
1.4

2.

Applicable Governmental Authorities will be allowed to participate as an
observer in any audit conducted by NERC of a Regional Entity’s
Compliance Monitoring and Enforcement Program. A representative of
the Regional Entity being audited will be allowed to participate in the
audit as an observer.

Consistency Among Regional Compliance Monitoring and Enforcement
Programs — To provide for a consistent Compliance Monitoring and
Enforcement Program for all Bulk Power System owners, operators, and users
required to comply with approved Reliability Standards, NERC shall maintain a
single, uniform Compliance Monitoring and Enforcement Program, which is
incorporated into these rules of procedure as Appendix 4C. Any differences in
Regional Entity Compliance Monitoring and Enforcement Program methods,
including determination of violations and Penalty assessment, shall be justified on
a case-by-case basis and fully documented in each Regional Entity delegation
agreement.
2.1

NERC shall ensure that each of the Regional Entity Compliance
Monitoring and Enforcement Programs meets these Rules of Procedure,
including Appendix 4C, and follows the terms of the delegation

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agreement and the approved annual Regional Entity Compliance
Monitoring and Enforcement Program Implementation Plan.
2.2

NERC shall maintain a single, uniform Compliance Monitoring and
Enforcement Program in Appendix 4C containing the procedures to
ensure the consistency and fairness of the processes used to determine
Regional Entity Compliance Monitoring and Enforcement Program
findings of compliance and noncompliance, and the application of
Penalties and sanctions.

2.3

NERC shall periodically conduct Regional Entity compliance manager
forums. These forums shall use the results of Regional Entity Compliance
Monitoring and Enforcement Program audits and findings of NERC
Compliance Staff to identify and refine Regional Entity Compliance
Monitoring and Enforcement Program differences into a set of best
practices over time.

3.

Information Collection and Reporting — NERC and the Regional Entities shall
implement data management procedures that address data reporting requirements,
data integrity, data retention, data security, and data confidentiality.

4.

Violation Disclosure — NERC shall disclose all Confirmed Violations and
maintain as confidential Possible Violations and Alleged Violations, according to
the reporting and disclosure process in Appendix 4C.

5.

Authority to Determine Noncompliance, Levy Penalties and Sanctions, and
Issue Remedial Action Directives — NERC and Regional Entity Compliance
Staff shall have the authority and responsibility to make initial determinations of
compliance or noncompliance, and where authorized by the Applicable
Governmental Authorities or where otherwise authorized, to determine Penalties
and sanctions for noncompliance with a Reliability Standard, and issue Remedial
Action Directives. Regional Entity boards or a compliance panel reporting
directly to the Regional Entity board will be vested with the authority for the
overall Regional Entity Compliance Monitoring and Enforcement Program and
have the authority to impose Penalties and sanctions on behalf of NERC, where
authorized by applicable legislation or agreement. Remedial Action Directives
may be issued by NERC or a Regional Entity that is aware of a Bulk Power
System owner, operator, or user that is about to engage in an act or practice that
would result in noncompliance with a Reliability Standard, where such Remedial
Action Directive is immediately necessary to protect the reliability of the Bulk
Power System from an imminent threat. If, after receiving such a Remedial
Action Directive, the Bulk Power System owner, operator, or user does not take
appropriate action to avert a violation of a Reliability Standard, NERC may
petition the Applicable Governmental Authority to issue a compliance order.

6.

Due Process — NERC shall establish and maintain a fair, independent, and
nondiscriminatory appeals process. The appeals process is set forth in Sections

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Rules of Procedure of the North American Electric Reliability Corporation

408-410. The process shall allow Bulk Power System owners, operators, and
users to appeal the Regional Entity’s findings of noncompliance and to appeal
Penalties, sanctions, and Remedial Action Directives that are levied by the
Regional Entity. Appeals beyond the NERC process will be heard by the
Applicable Governmental Authority.
The appeals process will also allow for appeals to NERC of any findings of
noncompliance issued by NERC to a Regional Entity for Reliability Standards
and Requirements where the Regional Entity is monitored for compliance to a
Reliability Standard. No monetary Penalties will be levied in these matters;
however sanctions, remedial actions, and directives to comply may be applied by
NERC.
7.

Conflict Disclosure — NERC shall disclose to the appropriate governmental
authorities any potential conflicts between a market rule and the enforcement of a
Regional Reliability Standard.

8.

Confidentiality — To maintain the integrity of the NERC Compliance
Monitoring and Enforcement Program, NERC and Regional Entity staff,
Compliance Audit team members, and committee members shall maintain the
confidentiality of information obtained and shared during compliance monitoring
and enforcement processes including Compliance Investigations, Compliance
Audits, Spot Checks, drafting of reports, appeals, and closed meetings.
8.1

NERC and the Regional Entity shall have in place appropriate codes of
conduct and confidentiality agreements for staff and other Compliance
Monitoring and Enforcement Program participants.

8.2

Individuals not bound by NERC or Regional Entity codes of conduct who
serve on compliance-related committees or Compliance Audit teams shall
sign a NERC confidentiality agreement prior to participating on the
committee or Compliance Audit team.

8.3

Information deemed by a Bulk Power System owner, operator, or user,
Regional Entity, or NERC as Critical Energy Infrastructure Information
shall not be distributed outside of a committee or team, nor released
publicly. Other information subject to confidentiality is identified in
Section 1500.

8.4

In the event that a staff, committee, or Compliance Audit team member
violates any of the confidentiality rules set forth above, the staff,
committee, or Compliance Audit team member and any member
organization with which the individual is associated may be subject to
appropriate action by the Regional Entity or NERC, including prohibiting
participation in future Compliance Monitoring and Enforcement Program
activities.

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9.

Auditor Training — NERC shall develop and provide training in auditing skills
to all people who participate in NERC and Regional Entity Compliance Audits.
Training for NERC and Regional Entity personnel and others who serve as
Compliance Audit team leaders shall be more comprehensive than training given
to industry subject matter experts and Regional Entity members. Training for
Regional Entity members may be delegated to the Regional Entity.

403. Required Attributes of Regional Entity Compliance Monitoring and Enforcement
Programs
Each Regional Entity Compliance Monitoring and Enforcement Program shall promote
excellence in the enforcement of Reliability Standards. To accomplish this goal, each
Regional Entity Compliance Monitoring and Enforcement Program shall (i) conform to
and comply with the NERC uniform Compliance Monitoring and Enforcement Program,
Appendix 4C to these Rules of Procedure, except to the extent of any deviations that are
stated in the Regional Entity’s delegation agreement, and (ii) meet all of the attributes set
forth in this Section 403.
Program Structure
1.

Independence — Each Regional Entity’s governance of its Compliance
Monitoring and Enforcement Program shall exhibit independence, meaning the
Compliance Monitoring and Enforcement Program shall be organized so that its
compliance monitoring and enforcement activities are carried out separately from
other activities of the Regional Entity. The Compliance Monitoring and
Enforcement Program shall not be unduly influenced by the Bulk Power System
owners, operators, and users being monitored or other Regional Entity activities
that are required to meet the Reliability Standards. Regional Entities must include
rules providing that no two industry sectors may control any decision and no
single segment may veto any matter related to compliance.

2.

Exercising Authority — Each Regional Entity Compliance Monitoring and
Enforcement Program shall exercise the responsibility and authority in carrying
out the delegated functions of the NERC Compliance Monitoring and
Enforcement Program in accordance with delegation agreements and Appendix
4C. These functions include but are not limited to: data gathering, data reporting,
Compliance Investigations, Compliance Audit activities, evaluating compliance
and noncompliance, imposing Penalties and sanctions, and approving and
tracking mitigation actions.

3.

Delegation of Authority — To maintain independence, fairness, and consistency
in the NERC Compliance Monitoring and Enforcement Program, a Regional
Entity shall not sub-delegate its Compliance Monitoring and Enforcement
Program duties to entities or persons other than the Regional Entity Compliance
Staff, unless (i) required by statute or regulation in the applicable jurisdiction, or
(ii) by agreement with express approval of NERC and of FERC or other
Applicable Governmental Authority, to another Regional Entity.

4.

Hearings of Contested Findings or Sanctions — The Regional Entity board or
compliance panel reporting directly to the Regional Entity board (with appropriate

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Rules of Procedure of the North American Electric Reliability Corporation

recusal procedures) will be vested with the authority for conducting compliance
hearings in which any Bulk Power System owner, operator, or user provided a
Notice of Alleged Violation may present facts and other information to contest a
Notice of Alleged Violation or any proposed Penalty, sanction, any Remedial
Action Directive, or any Mitigation Plan component. Compliance hearings shall
be conducted in accordance with the Hearing Procedures set forth in Attachment 2
to Appendix 4C. If a stakeholder body serves as the Hearing Body, no two
industry sectors may control any decision and no single segment may veto any
matter related to compliance after recusals.
Program Resources
5.

Regional Entity Compliance Staff — Each Regional Entity shall have sufficient
resources to meet delegated compliance monitoring and enforcement
responsibilities, including the necessary professional staff to manage and
implement the Regional Entity Compliance Monitoring and Enforcement
Program.

6.

Regional Entity Compliance Staff Independence — The Regional Entity
Compliance Staff shall be capable of and required to make all determinations of
compliance and noncompliance and determine Penalties, sanctions, and remedial
actions.
6.1

Regional Entity Compliance Staff shall not have a conflict of interest, real
or perceived, in the outcome of compliance monitoring and enforcement
processes, reports, or sanctions. The Regional Entity shall have in effect a
conflict of interest policy.

6.2

Regional Entity Compliance Staff shall have the authority and
responsibility to carry out compliance monitoring and enforcement
processes (with the input of industry subject matter experts), make
determinations of compliance or noncompliance, and levy Penalties and
sanctions without interference or undue influence from Regional Entity
members and their representative or other industry entities.

6.3

Regional Entity Compliance Staff may call upon independent technical
subject matter experts who have no conflict of interest in the outcome of
the compliance monitoring and enforcement process to provide technical
advice or recommendations in the determination of compliance or
noncompliance.

6.4

Regional Entity Compliance Staff shall abide by the confidentiality
requirements contained in Section 1500 and Appendix 4C of these Rules
of Procedure, the NERC delegation agreement and other confidentiality
agreements required by the NERC Compliance Monitoring and
Enforcement Program.

6.5

Contracting with independent consultants or others working for the
Regional Entity Compliance Monitoring and Enforcement Program shall
be permitted provided the individual has not received compensation from
a Bulk Power System owner, operator, or user being monitored for a

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Rules of Procedure of the North American Electric Reliability Corporation

period of at least the preceding six months and owns no financial interest
in any Bulk Power System owner, operator, or user being monitored for
compliance to the Reliability Standard, regardless of where the Bulk
Power System owner, operator, or user operates. Any such individuals for
the purpose of these Rules of Procedure shall be considered as augmenting
Regional Entity Compliance Staff.
7.

Use of Industry Subject Matter Experts and Regional Entity Members —
Industry experts and Regional Entity members may be called upon to provide
their technical expertise in Compliance Monitoring and Enforcement Program
activities.
7.1

The Regional Entity shall have procedures defining the allowable
involvement of industry subject matter experts and Regional Entity
members. The procedures shall address applicable antitrust laws and
conflicts of interest.

7.2

Industry subject matter experts and Regional Entity members shall have
no conflict of interest or financial interests in the outcome of their
activities.

7.3

Regional Entity members and industry subject matter experts, as part of
teams or Regional Entity committees, may provide input to the Regional
Entity Compliance Staff so long as the authority and responsibility for (i)
evaluating and determining compliance or noncompliance and (ii) levying
Penalties, sanctions, or remedial actions shall not be delegated to any
person or entity other than the Compliance Staff of the Regional Entity.
Industry subject matter experts, Regional Entity members, or Regional
Entity committees shall not make determinations of noncompliance or
levy Penalties, sanctions, or remedial actions. Any committee involved
shall be organized so that no two industry sectors may control any
decision and no single segment may veto any matter related to
compliance.

7.4

Industry subject matter experts and Regional Entity members shall sign a
confidentiality agreement appropriate for the activity being performed.

7.5

All industry subject matter experts and Regional Entity members
participating in Compliance Audits and Compliance Investigations shall
successfully complete auditor training provided by NERC or the Regional
Entity prior to performing these activities

Program Design
8.

Regional Entity Compliance Monitoring and Enforcement Program Content
— All approved Reliability Standards shall be included in the Regional Entity
Compliance Monitoring and Enforcement Program for all Bulk Power System
owners, operators, and users within the defined boundaries of the Regional Entity.

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Rules of Procedure of the North American Electric Reliability Corporation

Compliance to approved Regional Reliability Standards is applicable only within
the Region of the Regional Entity that submitted those particular Regional
Reliability Standards for approval. NERC will identify the minimum set of
Reliability Standards and Requirements to be actively monitored by the Regional
Entity in a given year.
9.

Antitrust Provisions — Each Regional Entity’s Compliance Monitoring and
Enforcement Program shall be structured and administered to abide by U.S.
antitrust law and Canadian competition law.

10.

Information Submittal — All Bulk Power System owners, operators, and users
within the Regional Entity responsible for complying with Reliability Standards
shall submit timely and accurate information when requested by the Regional
Entity or NERC. NERC and the Regional Entities shall preserve any mark of
confidentiality on information submitted pursuant to Section 1502.1.
10.1

Each Regional Entity has the authority to collect the necessary information
to determine compliance and shall develop processes for gathering data
from the Bulk Power System owners, operators, and users the Regional
Entity monitors.

10.2

The Regional Entity or NERC has the authority to request information
from Bulk Power System owners, operators, and users pursuant to Section
401.3 or this Section 403.10 without invoking a specific compliance
monitoring and enforcement process in Appendix 4C, for purposes of
determining whether to pursue one such process in a particular case and/or
validating in the enforcement phase of a matter the conclusions reached
through the compliance monitoring and enforcement process(es).

10.3

When required or requested, the Regional Entities shall report information
to NERC promptly and in accordance with Appendix 4C and other NERC
procedures.

10.4

Regional Entities shall notify NERC of all Possible, Alleged and
Confirmed Violations of NERC Reliability Standards by Registered
Entities over which the Regional Entity has compliance monitoring and
enforcement authority, in accordance with Appendix 4C.

10.5

A Bulk Power System owner, operator, or user found in noncompliance
with a Reliability Standard shall submit a Mitigation Plan with a timeline
addressing how the noncompliance will be corrected. The Regional Entity
Compliance Staff shall review and approve the Mitigation Plan in
accordance with Appendix 4C.

10.6

An officer of a Bulk Power System owner, operator, or user shall certify
as accurate all compliance data Self-Reported to the Regional Entity
Compliance Monitoring and Enforcement Program.

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10.7

11.

12.

Regional Entities shall develop and implement procedures to verify the
compliance information submitted by Bulk Power System owners,
operators, and users.

Compliance Audits of Bulk Power System Owners, Operators, and Users —
Each Regional Entity will maintain and implement a program of proactive
Compliance Audits of Bulk Power System owners, operators, and users
responsible for complying with Reliability Standards, in accordance with
Appendix 4C. A Compliance Audit is a process in which a detailed review of the
activities of a Bulk Power System owner, operator, or user is performed to
determine if that Bulk Power System owner, operator, or user is complying with
approved Reliability Standards.
11.1

For an entity registered as a Balancing Authority, Reliability Coordinator,
or Transmission Operator, the Compliance Audit will be performed at
least once every three years. For other Bulk Power System owners,
operators, and users on the NERC Compliance Registry, Compliance
Audits shall be performed on a schedule established by NERC.

11.2

Compliance Audits of Balancing Authorities, Reliability Coordinators,
and Transmission Operators will include a component at the audited
entity’s site. For other Bulk Power System owners, operators, and users
on the NERC Compliance Registry, the Compliance Audit may be either
an on-site Compliance Audit or based on review of documents, as
determined to be necessary and appropriate by NERC or Regional Entity
Compliance Staff.

11.3

Compliance Audits must include a detailed review of the activities of the
Bulk Power System owner, operator, or user to determine if the Bulk
Power System owner, operator, or user is complying with all approved
Reliability Standards identified for audit by NERC. The Compliance
Audit shall include a review of supporting documentation and evidence
used by the Bulk Power System owner, operator or user to demonstrate
compliance for an appropriate period prior to the Compliance Audit.

Confidentiality of Compliance Monitoring and Enforcement Processes — All
compliance monitoring and enforcement processes, and information obtained
from such processes, are to be non-public and treated as confidential in
accordance with Section 1500 and Appendix 4C of these Rules of Procedure,
unless NERC, the Regional Entity or FERC or another Applicable Governmental
Authority with jurisdiction determines a need to conduct a Compliance
Monitoring and Enforcement Program process on a public basis, provided, that
NERC and the Regional Entities shall publish (i) schedules of Compliance Audits
scheduled in each year, (ii) a public report of each Compliance Audit, and (iii)
Notices of Penalty and settlement agreements. Advance authorization from the
Applicable Governmental Authority is required to make public any compliance
monitoring and enforcement process or any information relating to a compliance

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Rules of Procedure of the North American Electric Reliability Corporation

monitoring and enforcement process, or to permit interventions when determining
whether to impose a Penalty. This prohibition on making public any compliance
monitoring and enforcement process does not prohibit NERC or a Regional Entity
from publicly disclosing (i) the initiation of or results from an analysis of a
significant system event under Section 807 or of off-normal events or system
performance under Section 808, or (ii) information of general applicability and
usefulness to owners, operators, and users of the Bulk Power System concerning
reliability and compliance matters, so long as specific allegations or conclusions
regarding Possible or Alleged Violations of Reliability Standards are not included
in such disclosures.
13.

Critical Energy Infrastructure Information — Information that would
jeopardize Bulk Power System reliability, including information relating to a
Cyber Security Incident will be identified and protected from public disclosure as
Critical Energy Infrastructure Information. In accordance with Section 1500,
information deemed by a Bulk Power System owner, operator, or user, Regional
Entity, or NERC as Critical Energy Infrastructure Information shall be redacted
according to NERC procedures and shall not be released publicly.

14.

Penalties, Sanctions, and Remedial Action Directives — Each Regional Entity
will apply all Penalties, sanctions, and Remedial Action Directives in accordance
with the approved Sanction Guidelines, Appendix 4B to these Rules of
Procedure. Any changes to the Sanction Guidelines to be used by any Regional
Entity must be approved by NERC and submitted to the Applicable Governmental
Authority for approval. All Confirmed Violations, Penalties, and sanctions will
be provided to NERC for review and filing with Applicable Governmental
Authorities as a Notice of Penalty, in accordance with Appendix 4C.

15.

Regional Entity Hearing Process — Each Regional Entity Compliance
Monitoring and Enforcement Program shall establish and maintain a fair,
independent, and nondiscriminatory process for hearing contested violations and
any Penalties or sanctions levied, in conformance with Attachment 2 to Appendix
4C to these Rules of Procedure and any deviations therefrom that are set forth in
the Regional Entity’s delegation agreement. The hearing process shall allow Bulk
Power System owners, operators, and users to contest findings of compliance
violations, any Penalties and sanctions that are proposed to be levied, proposed
Remedial Action Directives, and components of proposed Mitigation Plans. The
Regional Entity hearing process shall be conducted before the Regional Entity
board or a balanced committee established by and reporting to the Regional Entity
board as the final adjudicator, provided, that Canadian provincial regulators may
act as the final adjudicator in their respective jurisdictions. The Regional Entity
hearing process shall (i) include provisions for recusal of any members of the
Hearing Body with a potential conflict of interest, real or perceived, from all
compliance matters considered by the Hearing Body for which the potential
conflict of interest exists and (ii) provide that no two industry sectors may control
any decision and no single segment may veto any matter brought before the
Hearing Body after recusals.

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Rules of Procedure of the North American Electric Reliability Corporation

Each Regional Entity will notify NERC of all hearings and NERC may observe
any of the proceedings. Each Regional Entity will notify NERC of the outcome
of all hearings.
If a Bulk Power System owner, operator, or user has completed the Regional
Entity hearing process and desires to appeal the outcome of the hearing, the Bulk
Power System owner, operator, or user shall appeal to NERC in accordance with
Section 409 of these Rules of Procedure, except that a determination of violation
or Penalty that has been directly adjudicated by an Applicable Governmental
Authority shall be appealed with that Applicable Governmental Authority.
16.

404.

Annual Regional Entity Compliance Monitoring and Enforcement Program
Implementation Plan — Each Regional Entity shall annually develop and submit
to NERC for approval a Regional Entity Compliance Monitoring and
Enforcement Implementation Plan in accordance with Appendix 4C that
identifies the Reliability Standards and Requirements to be actively monitored
(both those required by NERC and any additional Reliability Standards the
Regional Entity proposes to monitor), and how each NERC and Regional Entity
identified Reliability Standard will be monitored, evaluated, reported, sanctioned,
and appealed. These Regional Implementation Plans will be submitted to NERC
on the schedule established by NERC, generally on or about November 1 of the
preceding year. In conjunction with the annual Regional Implementation Plan,
each Regional Entity must report to NERC regarding how it carried out its
delegated compliance monitoring and enforcement authority in the previous year,
the effectiveness of the Compliance Monitoring and Enforcement Program, and
changes expected to correct any deficiencies identified. Each Regional Entity will
provide its annual report on the schedule established by NERC, generally on or
about February 15 of the following year.

NERC Monitoring of Compliance for Regional Entities or Bulk Power Owners,
Operator, or Users
NERC shall monitor Regional Entity compliance with NERC Reliability Standards and,
if no there is no delegation agreement in effect with a Regional Entity for the geographic
area, shall monitor Bulk Power System owners, operators, and users for compliance with
NERC Reliability Standards. Industry subject matter experts may be used as appropriate
in Compliance Investigations, Compliance Audits, and other Compliance Monitoring and
Enforcement Program activities, subject to confidentiality, antitrust, and conflict of
interest provisions.
1.

NERC Obligations — NERC Compliance Staff shall monitor the compliance of
the Regional Entity with the Reliability Standards for which the Regional Entities
are responsible, in accordance with Appendix 4C. NERC shall actively monitor
in its annual Compliance Enforcement and Monitoring Program selected
Reliability Standards that apply to the Regional Entities. NERC shall evaluate
compliance and noncompliance with all of the Reliability Standards that apply to
the Regional Entities and shall impose sanctions, Penalties, or Remedial Action

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Rules of Procedure of the North American Electric Reliability Corporation

Directives when there is a finding of noncompliance. NERC shall post all
violations of Reliability Standards that apply to the Regional Entities as described
in the reporting and disclosure process in Appendix 4C.
In addition, NERC will directly monitor Bulk Power System owners, operators,
and users for compliance with NERC Reliability Standards in any geographic area
for which there is not a delegation agreement in effect with a Regional Entity, in
accordance with Appendix 4C. In such cases, NERC will serve as the
Compliance Enforcement Authority described in Appendix 4C. Compliance
matters contested by Bulk Power System owners, operators, and users in such an
event will be heard by the NERC Compliance and Certification Committee.

405.

2.

Compliance Audit of the Regional Entity — NERC shall perform a Compliance
Audit of each Regional Entity responsible for complying with Reliability
Standards at least once every three years. NERC shall make an evaluation of
compliance based on the information obtained through the Compliance Audit.
After due process is complete, the final Compliance Audit report shall be made
public in accordance with the reporting and disclosure process in Appendix 4C.

3.

Appeals Process —Any Regional Entity or Bulk Power System owner, operator
or user found by NERC, as opposed to a Regional Entity, to be in noncompliance
with a Reliability Standard may appeal the findings of noncompliance with
Reliability Standards and any sanctions or Remedial Action Directives that are
issued by, or Mitigation Plan components imposed by, NERC, pursuant to the
processes described in Sections 408 through 410.

Monitoring of Reliability Standards and Other Requirements Applicable to NERC
The NERC Compliance and Certification Committee shall establish and implement a
process to monitor NERC’s compliance with the Reliability Standards that apply to
NERC. The process shall use independent monitors with no conflict of interest, real or
perceived, in the outcomes of the process. All violations shall be made public according
to the reporting and disclosure process in Appendix 4C. The Compliance and
Certification Committee will also establish a procedure for monitoring NERC’s
compliance with its Rules of Procedure for the Standards Development, Compliance
Monitoring and Enforcement, and Organization Registration and Certification Programs.
Such procedures shall not be used to circumvent the appeals processes established for
those programs.

406.

Independent Audits of the NERC Compliance Monitoring and Enforcement
Program
NERC shall provide for an independent audit of its Compliance Monitoring and
Enforcement Program at least once every three years, or more frequently as determined
by the Board. The audit shall be conducted by independent expert auditors as selected by
the Board. The independent audit shall meet the following minimum requirements and
any other requirements established by the NERC Board.

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407.

408.

1.

Effectiveness — The audit shall evaluate the success and effectiveness of the
NERC Compliance Monitoring and Enforcement Program in achieving its
mission.

2.

Relationship — The audit shall evaluate the relationship between NERC and the
Regional Entity Compliance Monitoring and Enforcement Programs and the
effectiveness of the programs in ensuring reliability.

3.

Final Report Posting — The final report shall be posted by NERC for public
viewing in accordance with Appendix 4C.

4.

Response to Recommendations — If the audit report includes recommendations
to improve the NERC Compliance Monitoring and Enforcement Program, the
administrators of the NERC Compliance Monitoring and Enforcement Program
shall provide a written response and plan to the Board within 30 days of the
release of the final audit report.

Penalties, Sanctions, and Remedial Actions
1.

NERC Review of Regional Entity Penalties and Sanctions — NERC shall
review all Penalties, sanctions, and remedial actions imposed by each Regional
Entity for violations of Reliability Standards to determine if the Regional Entity’s
determination is supported by a sufficient record compiled by the Regional Entity,
is consistent with the Sanction Guidelines incorporated into these Rules of
Procedure as Appendix 4B and with other directives, guidance and directions
issued by NERC pursuant to the delegation agreement, and is consistent with
Penalties, sanctions and remedial actions imposed by the Regional Entity and by
other Regional Entities for violations involving the same or similar facts and
circumstances.

2.

Developing Penalties and Sanctions — The Regional Entity Compliance Staff
shall use the Sanction Guidelines, which are incorporated into these Rules of
Procedure as Appendix 4B, to develop an appropriate Penalty, sanction, or
remedial action for a violation, and shall notify NERC of the Penalty or sanction.

3.

Effective Date of Penalty — Where authorized by applicable legislation or
agreement, no Penalty imposed for a violation of a Reliability Standard shall take
effect until the thirty-first day after NERC files, with the Applicable
Governmental Authority, a “Notice of Penalty” and the record of the proceedings
in which the violation and Penalty were determined, or such other date as ordered
by the Applicable Governmental Authority.

Review of NERC Decisions
1.

Scope of Review — A Registered Entity or a Regional Entity wishing to
challenge a finding of noncompliance and the imposition of a Penalty for a
compliance measure directly administered by NERC, or a Regional Entity
wishing to challenge a Regional Entity Compliance Monitoring and Enforcement
Program audit finding, may do so by filing a notice of the challenge with NERC’s

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Director of Compliance no later than 21 days after issuance of the notice of
finding of violation or audit finding. Appeals by Registered Entities of decisions
of Regional Entity Hearing Bodies shall be pursuant to Section 409 .
2.

Contents of Notice — The notice of challenge shall include the full text of the
decision that is being challenged, a concise statement of the error or errors
contained in the decision, a clear statement of the relief being sought, and
argument in sufficient detail to justify such relief.

3.

Response by NERC Compliance Monitoring and Enforcement Program —
Within 21 days after receiving a copy of the notice of challenge, the NERC
Director of Compliance may file with the Hearing Panel a response to the issues
raised in the notice, with a copy to the Regional Entity.

4.

Hearing by Compliance and Certification Committee — The NERC
Compliance and Certification Committee shall provide representatives of the
Regional Entity or Registered Entity, and the NERC Compliance Monitoring and
Enforcement Program an opportunity to be heard and shall decide the matter
based upon the filings and presentations made, with a written explanation of its
decision.

5.

Appeal — The Regional Entity, or Registered Entity may appeal the decision of
the Compliance and Certification Committee by filing a notice of appeal with
NERC’s Director of Compliance no later than 21 days after issuance of the
written decision by the Compliance and Certification Committee. The notice of
appeal shall include the full text of the written decision of the Compliance and
Certification Committee that is being appealed, a concise statement of the error or
errors contained in the decision, a clear statement of the relief being sought, and
argument in sufficient detail to justify such relief. No factual material shall be
presented in the appeal that was not presented to the Compliance and Certification
Committee.

6.

Response by NERC Compliance Monitoring and Enforcement Program —
Within 21 days after receiving a copy of the notice of appeal, the NERC
Compliance Monitoring and Enforcement Program staff may file its response to
the issues raised in the notice of appeal, with a copy to the entity filing the notice.

7.

Reply — The entity filing the appeal may file a reply within 7 days.

8.

Decision — The Compliance Committee of the NERC Board of Trustees shall
decide the appeal, in writing, based upon the notice of appeal, the record, the
response, and any reply. At its discretion, the Compliance Committee may invite
representatives of the Regional Entity or Registered Entity, and the NERC
Compliance Monitoring and Enforcement Program to appear before the
Compliance Committee. Decisions of the Compliance Committee shall be final,
except for further appeal to the Applicable Governmental Authority.

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409.

9.

Impartiality — No member of the Compliance and Certification Committee or
the Board of Trustees Compliance Committee having an actual or perceived
conflict of interest in the matter may participate in any aspect of the challenge or
appeal except as a party or witness.

10.

Expenses — Each party in the challenge and appeals processes shall pay its own
expenses for each step in the process.

11.

Non-Public Proceedings — All challenges and appeals shall be closed to the
public to protect Confidential Information.

Appeals from Final Decisions of Regional Entities
1.

Time for Appeal — An owner, operator or user of the Bulk Power System
wishing to appeal from a final decision of a Regional Entity that finds a violation
of a Reliability Standard or imposes a Penalty for violation of a Reliability
Standard shall file its notice of appeal with NERC’s Director of Compliance, with
a copy to the Regional Entity, no later than 21 days after issuance of the final
decision of the Regional Entity Hearing Body. The same appeal procedures will
apply regardless of whether the matter first arose in a Compliance Investigation,
Compliance Audit or Self-Report, other compliance monitoring and enforcement
process, or in a reliability readiness evaluation.

2.

Contents — The notice of appeal shall include the full text of the final decision
of the Regional Entity Hearing Body that is being appealed, a concise statement
of the error or errors contained in the final decision, a clear statement of the relief
being sought, and argument in sufficient detail to justify such relief. No factual
material shall be presented in the appeal that was not first presented during the
compliance hearing before the Regional Entity Hearing Body.

3.

Response by Regional Entity — Within 21 days after receiving a copy of the
notice of appeal, the Regional Entity shall file the entire record of the matter with
NERC’s Director of Compliance, with a copy to the Registered Entity filing the
notice, together with its response to the issues raised in the notice of appeal.

4.

Reply — The Registered Entity filing the appeal may file a reply to the Regional
Entity within 7 days.

5.

Decision — The Compliance Committee of the NERC Board of Trustees shall
decide the appeal, in writing, based upon the notice of appeal, the record of the
matter from the Regional Entity, the response, and any reply filed with NERC. At
its discretion, the Compliance Committee may invite representatives of the
Registered Entity making the appeal and the Regional Entity to appear before the
Committee. Decisions of the Compliance Committee shall be final, except for
further appeal to the Applicable Governmental Authority.

6.

Expenses — Each party in the appeals process shall pay its own expenses for
each step in the process.

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7.
410.

Non-Public Proceedings — All appeals shall be closed to the public to protect
Confidential Information.

Hold Harmless
A condition of invoking the challenge or appeals processes under Section 408 or 409 is
that the entity requesting the challenge or appeal agrees that neither NERC (defined to
include its Members, Board of Trustees, committees, subcommittees, staff and industry
subject matter experts), any person assisting in the challenge or appeals processes, nor
any company employing a person assisting in the challenge or appeals processes, shall be
liable, and they shall be held harmless against the consequences of or any action or
inaction or of any agreement reached in resolution of the dispute or any failure to reach
agreement as a result of the challenge or appeals proceeding. This “hold harmless”
clause does not extend to matters constituting gross negligence, intentional misconduct,
or a breach of confidentiality.

411. Requests for Technical Feasibility Exceptions to NERC Critical Infrastructure
Protection Reliability Standards
A Registered Entity that is subject to an Applicable Requirement of a NERC Critical
Infrastructure Protection Standard for which Technical Feasibility Exceptions are
permitted, may request a Technical Feasibility Exception to the Requirement, and the
request will be reviewed, approved or disapproved, and if approved, implemented, in
accordance with the NERC Procedure for Requesting and Receiving Technical
Feasibility Exceptions to NERC Critical Infrastructure Protection Standard, Appendix
4D to these Rules of Procedure.

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Rules of Procedure of the North American Electric Reliability Corporation

SECTION 500 — ORGANIZATION REGISTRATION AND
CERTIFICATION
501.

Scope of the Organization Registration and Organization Certification Programs
The purpose of the Organization Registration Program is to clearly identify those entities
that are responsible for compliance with the FERC approved Reliability Standards.
Organizations that are registered are included on the NERC Compliance Registry (NCR)
and are responsible for knowing the content of and for complying with all applicable
Reliability Standards. Registered Entities are not and do not become Members of NERC
or a Regional Entity, by virtue of being listed on the NCR. Membership in NERC is
governed by Article II of NERC’s Bylaws; membership in a Regional Entity or regional
reliability organization is governed by that entity’s bylaws or rules.
The purpose of the Organization Certification Program is to ensure that the new entity
(i.e., applicant to be an RC, BA, or TOP that is not already performing the function for
which it is applying to be certified as) has the tools, processes, training, and procedures to
demonstrate their ability to meet the Requirements/sub-Requirements of all of the
Reliability Standards applicable to the function(s) for which it is applying thereby
demonstrating the ability to become certified and then operational.
Organization Registration and Organization Certification may be delegated to Regional
Entities in accordance with the procedures in this Section 500; the NERC Organization
Registration and Organization Certification Manual, which is incorporated into these
Rules of Procedure as Appendix 5A; and, approved Regional Entity delegation
agreements or other applicable agreements.
1.

NERC Compliance Registry — NERC shall establish and maintain the NCR of
the Bulk Power System owners, operators, and users that are subject to approved
Reliability Standards.
1.1

(a) The NCR shall set forth the identity and functions performed for each
organization responsible for meeting Requirements/sub-Requirements of
the Reliability Standards. Bulk Power System owners, operators, and
users (i) shall provide to NERC and the applicable Regional Entity
information necessary to complete the Registration, and (ii) shall provide
NERC and the applicable Regional Entity with timely updates to
information concerning the Registered Entity’s ownership, operations,
contact information, and other information that may affect the Registered
Entity’s Registration status or other information recorded in the
Compliance Registry.
(b) A generation or transmission cooperative, a joint-action agency or
another organization may register as a Joint Registration Organization
(JRO), in lieu of each of the JRO’s members or related entities being
registered individually for one or more functions. Refer to Section 507.

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(c) Multiple entities may each register using a Coordinated Functional
Registration (CFR) for one or more Reliability Standard(s) and/or for one
or more Requirements/sub-Requirements within particular Reliability
Standard(s) applicable to a specific function pursuant to a written
agreement for the division of compliance responsibility. Refer to Section
508.
1.2

In the development of the NCR, NERC and the Regional Entities shall
determine which organizations should be placed on the NCR based on the
criteria provided in the NERC Statement of Compliance Registry Criteria
which is incorporated into these Rules of Procedure as Appendix 5B.

1.3

NERC and the Regional Entities shall use the following rules for
establishing and maintaining the NCR based on the Registration criteria as
set forth in Appendix 5B Statement of Compliance Registry Criteria:
1.3.1

NERC shall notify each organization that it is on the NCR. The
Registered Entity is responsible for compliance with all the
Reliability Standards applicable to the functions for which it is
registered from the time it receives the Registration notification
from NERC.

1.3.2

Any organization receiving such a notice may challenge its
placement on the NCR according to the process in Appendix 5A
Organization Registration and Organization Certification Manual,
Section V.

1.3.3

The Compliance Committee of the Board of Trustees shall
promptly issue a written decision on the challenge, including the
reasons for the decision.

1.3.4

The decision of the Compliance Committee of the Board of
Trustees shall be final unless, within 21 days of the date of the
Compliance Committee of the Board of Trustees decision, the
organization appeals the decision to the Applicable Governmental
Authority.

1.3.5

Each Registered Entity identified on the NCR shall notify its
corresponding Regional Entity(s) of any corrections, revisions,
deletions, changes in ownership, corporate structure, or similar
matters that affect the Registered Entity’s responsibilities with
respect to the Reliability Standards. Failure to notify will not
relieve the Registered Entity from any responsibility to comply
with the Reliability Standards or shield it from any Penalties or
sanctions associated with failing to comply with the Reliability
Standards applicable to its associated Registration.

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1.4

1.5

2.

For all geographical or electrical areas of the Bulk Power System, the
Registration process shall ensure that (1) no areas are lacking any entities
to perform the duties and tasks identified in and required by the Reliability
Standards to the fullest extent practical, and (2) there is no unnecessary
duplication of such coverage or of required oversight of such coverage. In
particular the process shall:
1.4.1

Ensure that all areas are under the oversight of one and only one
Reliability Coordinator.

1.4.2

Ensure that all Balancing Authorities and Transmission Operator
entities2 are under the responsibility of one and only one
Reliability Coordinator.

1.4.3

Ensure that all transmission Facilities of the Bulk Power System
are the responsibility and under the control of one and only one
Transmission Planner, Planning Authority, and Transmission
Operator.

1.4.4

Ensure that all Loadsloads and generators are under the
responsibility and control of one and only one Balancing
Authority.

NERC shall maintain the NCR of organizations responsible for meeting
the Requirements/sub-Requirements of the Reliability Standards currently
in effect on its website and shall update the NCR monthly.

Entity Certification — NERC shall provide for Certification of all entities with
primary reliability responsibilities requiring Certification. This includes those
entities that satisfy the criteria established in the NERC provisional Certification
process. The NERC programs shall:
2.1

Evaluate and certify the competency of entities performing reliability
functions. The entities presently expected to be certified include
Reliability Coordinators, Transmission Operators, and Balancing
Authorities.

2.2

Evaluate and certify each applicant’s ability to meet the requirements for
Certification.

2.3

Maintain process documentation.

2

Some organizations perform the listed functions (e.g., Balancing Authority, Transmission Operator) over areas that transcend
the Footprints of more than one Reliability Coordinator. Such organizations will have multiple Registrations, with each such
Registration corresponding to that portion of the organization’s overall area that is within the Footprint of a particular Reliability
Coordinator.

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3.

502.

2.4

Maintain records of currently certified entities.

2.5

Issue a Certification document to the applicant that successfully
demonstrates its competency to perform the evaluated functions.

Delegation and Oversight
3.1

NERC may delegate responsibilities for Organization Registration and
Organization Certification to Regional Entities in accordance with
requirements established by NERC. Delegation will be via the delegation
agreement between NERC and the Regional Entity or other applicable
agreement. The Regional Entity shall administer Organization
Registration and Organization Certification Programs in accordance with
such delegations to meet NERC’s programs goals and requirements
subject to NERC oversight.

3.2

NERC shall develop and maintain a plan to ensure the continuity of
Organization Registration and Organization Certification within the
geographic or electrical boundaries of a Regional Entity in the event that
no entity is functioning as a Regional Entity for that Region, or the
Regional Entity withdraws as a Regional Entity, or does not operate its
Organization Registration and Organization Certification Programs in
accordance with delegation agreements.

3.3

NERC shall develop and maintain a program to monitor and oversee the
NERC Organization Registration and Organization Certification Programs
activities that are delegated to each Regional Entity through a delegation
agreement or other applicable agreement.
3.3.1

This program shall monitor whether the Regional Entity carries out
those delegated activities in accordance with NERC requirements,
and whether there is consistency, fairness of administration, and
comparability.

3.3.2

Monitoring and oversight shall be accomplished through direct
participation in the Organization Registration and Organization
Certification Programs with periodic reviews of documents and
records of both programs.

Organization Registration and Organization Certification Program Requirements
1.

NERC shall maintain the Organization Registration and Organization
Certification Programs.
1.1

The roles and authority of Regional Entities in the programs are delegated
from NERC pursuant to the Rules of Procedure through regional
delegation agreements or other applicable agreements.

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2.

1.2

Processes for the programs shall be administered by NERC and the
Regional Entities. Materials that each Regional Entity uses are subject to
review and approval by NERC.

1.3

The appeals process for the Organization Registration and Organization
Certification Programs are identified in Appendix 5A Organization
Registration and Organization Certification Manual, Sections V and VI,
respectively.

1.4

The Certification Team membership is identified in Appendix 5A
Organization Registration and Organization Certification Manual,
Section IV.8.d.

To ensure consistency and fairness of the Organization Registration and
Organization Certification Programs, NERC shall develop procedures to be used
by all Regional Entities and NERC in accordance with the following criteria:
2.1

NERC and the Regional Entities shall have data management processes
and procedures that provide for confidentiality, integrity, and retention of
data and information collected.

2.2

Documentation used to substantiate the conclusions of the Regional
Entity/ NERC related to Registration and/or Certification must be retained
by the Regional Entity for (6) six years, unless a different retention period
is otherwise identified, for the purposes of future audits of these programs.

2.3

To maintain the integrity of the NERC Organization Registration and
Organization Certification Programs, NERC, Regional Entities,
Certification Team members, program audit team members (Section 506),
and committee members shall maintain the confidentiality of information
provided by an applicant or entities.
2.2.1

NERC and the Regional Entities shall have appropriate codes of
conduct and confidentiality agreements for staff, Certification
Team, Certification related committees, and Certification program
audit team members.

2.2.2

NERC, Regional Entities, Certification Team members, program
audit team members and committee members shall maintain the
confidentiality of any Registration or Certification-related
discussions or documents designated as confidential (see Section
1500 for types of Confidential Information).

2.2.3

NERC, Regional Entities, Certification Team members, program
audit team members and committee members shall treat as
confidential the individual comments expressed during
evaluations, program audits and report-drafting sessions.

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2.4

2.2.4

Copies of notes, draft reports, and other interim documents
developed or used during an entity Certification evaluation or
program audit shall be destroyed after the public posting of a final,
uncontested report.

2.2.5

Information deemed by an applicant, entity, a Regional Entity, or
NERC as confidential, including Critical Energy Infrastructure
Information, shall not be released publicly or distributed outside of
a committee or team.

2.2.6

In the event that an individual violates any of the confidentiality
rules set forth above, that individual and any member organization
with which the individual is associated will be subject to
immediate dismissal from the audit team and may be prohibited
from future participation in Compliance Monitoring and
Enforcement Program activities by the Regional Entity or NERC.

2.2.7

NERC shall develop and provide training in auditing skills to all
individuals prior to their participation in Certification evaluations.
Training for Certification Team leaders shall be more
comprehensive than the training given to industry subject matter
experts and Regional Entity members. Training for Regional
Entity members may be delegated to the Regional Entity.

An applicant that is determined to be competent to perform a function
after completing all Certification requirements shall be deemed certified
by NERC to perform that function for which it has demonstrated full
competency.
2.4.1

503.

All NERC certified entities shall be included on the NCR.

Regional Entity Implementation of Organization Registration and Organization
Certification Program Requirements
1.

Delegation — Recognizing the Regional Entity’s knowledge of and experience
with their members, NERC may delegate responsibility for Organization
Registration and Organization Certification to the Regional Entity through a
delegation agreement.

2.

Registration — The following Organization Registration activities shall be
managed by the Regional Entity per the NERC Organization Registration and
Organization Certification Manual, which is incorporated into the Rules of
Procedure as Appendix 5A Organization Registration and Organization
Certification Manual:
2.1

Regional Entities shall verify that all Reliability Coordinators, Balancing
Authorities, and Transmission Operators meet the Registration
requirements of Section 501(1.4).

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3.

504.

Certification — The following Organization Certification activities shall be
managed by the Regional Entity in accordance with an approved delegation
agreement or another applicable agreement:
3.1

An entity seeking Certification to perform one of the functions requiring
Certification shall contact the Regional Entity for the Region(s) in which it
plans to operate to apply for Certification.

3.2

An entity seeking Certification and other affected entities shall provide all
information and data requested by NERC or the Regional Entity to
conduct the Certification process.

3.3

Regional Entities shall notify NERC of all Certification applicants.

3.4

NERC and/or the Regional Entity shall evaluate the competency of entities
requiring Certification to meet the NERC Certification requirements.

3.5

NERC or the Regional Entity shall establish Certification procedures to
include evaluation processes, schedules and deadlines, expectations of the
applicants and all entities participating in the evaluation and Certification
processes, and requirements for Certification Team members.
3.5.1

The NERC / Regional Entity Certification procedures will include
provisions for on-site visits to the applicant’s facilities to review
the data collected through questionnaires, interviewing the
operations and management personnel, inspecting the facilities and
equipment (including requesting a demonstration of all tools
identified in the Certification process), reviewing all necessary
documents and data (including all agreements, processes, and
procedures identified in the Certification process), reviewing
Certification documents and projected system operator work
schedules, and reviewing any additional documentation needed to
support the completed questionnaire or inquiries arising during the
site visit.

3.5.2

The NERC/ Regional Entity Certification procedures will provide
for preparation of a written report by the Certification Team,
detailing any deficiencies that must be resolved prior to granting
Certification, along with any other recommendations for
consideration by the applicant, the Regional Entity, or NERC.

Appeals
1.

NERC shall maintain an appeals process to resolve any disputes related to
Registration or Certification activities per the Organization Registration and
Organization Certification Manual, which is incorporated in these Rules of
Procedure as Appendix 5A.

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2.

505.

The Regional Entity Certification appeals process shall culminate with the
Regional Entity board or a committee established by and reporting to the Regional
Entity board as the final adjudicator, provided that where applicable, Canadian
provincial governmental authorities may act as the final adjudicator in their
jurisdictions. NERC shall be notified of all appeals and may observe any
proceedings (Appendix 5A Organization Registration and Organization
Certification Manual).

Program Maintenance
NERC shall maintain its program materials, including such manuals or other documents
as it deems necessary, of the governing policies and procedures of the Organization
Registration and Organization Certification Programs.

506.

507.

Independent Audit of NERC Organization Registration and Organization
Certification Program
1.

NERC, through the Compliance and Certification Committee, shall provide for an
independent audit of its Organization Registration and Organization Certification
Programs at least once every three years, or more frequently, as determined by the
Board. The audit shall be conducted by independent expert auditors as selected
by the Board.

2.

The audit shall evaluate the success, effectiveness and consistency of the NERC
Organization Registration and Organization Certification Programs.

3.

The final report shall be posted by NERC for public viewing.

4.

If the audit report includes recommendations to improve the program, the
administrators of the program shall provide a written response to the Board within
30 days of the final report, detailing the disposition of each and every
recommendation, including an explanation of the reasons for rejecting a
recommendation and an implementation plan for the recommendations accepted.

Provisions Relating to Joint Registration Organizations (JRO)
1.

In addition to registering as the entity responsible for all functions that it performs
itself, an entity may register as a JRO on behalf of one or more of its members or
related entities for one or more functions for which such members or related
entities would otherwise be required to register and, thereby, accept on behalf of
such members or related entities all compliance responsibility for that function or
those functions including all reporting requirements. Any entity seeking to
register as a JRO must submit a written agreement with its members or related
entities for all Requirements/sub-Requirements for the function(s) for which the
entity is registering for and takes responsibility for, which would otherwise be the
responsibility of one or more of its members or related entities. Neither NERC nor

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the Regional Entity shall be parties to any such agreement, nor shall NERC or the
Regional Entity have responsibility for reviewing or approving any such
agreement, other than to verify that the agreement provides for an allocation or
assignment of responsibilities consistent with the JRO Registration.

508.

2.

The JRO Registration data must include the same Registration information as a
normal compliance Registration entry. The JRO is responsible for providing all of
the information and data, including submitting reports, as needed by the Regional
Entity for performing assessments of compliance.

3.

The Regional Entity shall notify NERC of each JRO that the Regional Entity
accepts. The notification will identify the point of contact and the functions(s)
being registered for on behalf of its members or related entities.

4.

For purposes of Compliance Audits, the Regional Entity shall keep a list of all
JROs. This document shall contain a list of each JRO’s members or related
entities and the function(s) for which the JRO is registered for that member(s) or
related entity(s). It is the responsibility of the JRO to provide the Regional Entity
with this information as well as the applicable JRO agreement(s).

5.

The Regional Entity may request clarification of any list submitted to it that
identifies the members of the JRO and may request such additional information as
the Regional Entity deems appropriate.

6.

The Regional Entity’s acceptance of a JRO shall be a representation by the
Regional Entity to NERC that the Regional Entity has concluded the JRO will
meet the Registration requirements of Section 501(1.4).

7.

NERC shall maintain, and post on its website, a JRO registry listing all JRO
Registrations that have been reviewed and accepted by the Regional Entity. The
posting shall identify the JRO entity taking compliance responsibilities for itself
and its members.

8.

The JRO shall inform the Regional Entity of any changes to an existing JRO. The
Regional Entity shall promptly notify NERC of each such revision.

9.

Nothing in Section 507 shall preclude a member of a JRO, a related entity, or any
other entity from registering on its own behalf and undertaking full compliance
responsibility including reporting Requirements for the Reliability Standards
applicable to the function(s) for which the member or other entity is registering.
A JRO member or related entity that registers as responsible for any Reliability
Standard or Requirement/sub-Requirement of a Reliability Standard shall inform
the JRO of its Registration.

Provisions Relating to Coordinated Functional Registration (CFR) Entities
1.

In addition to registering as an entity responsible for all functions that it performs
itself, multiple entities may each register using a CFR for one or more Reliability

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Standard(s) and/or for one or more Requirements/sub-Requirements within
particular Reliability Standard(s) applicable to a specific function. The CFR
submission must include a written agreement that governs itself and clearly
specifies the entities’ respective compliance responsibilities. The Registration of
the CFR is the complete Registration for each entity. Additionally, each entity
shall take full compliance responsibility for those Reliability Standards and/or
Requirements/sub-Requirements it has registered for in the CFR. Neither NERC
nor the Regional Entity shall be parties to any such agreement, nor shall NERC or
the Regional Entity have responsibility for reviewing or approving any such
agreement, other than to verify that the agreement provides for an allocation or
assignment of responsibilities consistent with the CFR.
2.

Each CFR or each individual entity within a CFR must identify a point of contact
that is responsible for providing information and data, including submitting
reports as needed by the Regional Entity related to the CFR Registration.

3.

The Regional Entity shall notify NERC of each CFR that the Regional Entity
accepts.

4.

NERC or the Regional Entity may request clarification of any list submitted to it
that identifies the compliance responsibilities of the CFR and may request such
additional information as NERC or the Regional Entity deems appropriate.

5.

The Regional Entity’s acceptance of that CFR shall be a representation by the
Regional Entity to NERC that the Regional Entity has concluded the CFR will
meet the Registration requirements of Section 501(1.4).

6.

NERC shall maintain, and post on its website, a CFR registry listing all CFR
Registrations that have been accepted by NERC or by a Regional Entity. The
posting shall clearly list all the Reliability Standards or Requirements/subRequirements thereof for which each entity of the CFR is responsible for under
the CFR.

7.

The point of contact shall inform the Regional Entity of any changes to an
existing CFR. The Regional Entity shall promptly notify NERC of each such
revision.

8.

In the event of a violation of a Reliability Standard or of a Requirement/subRequirement of a Reliability Standard for which an entity of a CFR is registered,
that entity shall be identified in the Notice of Alleged Violation and shall be
assessed the sanction or Penalty in accordance with the NERC Sanctions
Guidelines. In the event a Regional Entity is not able to determine which
entity(ies) is responsible for a particular Reliability Standard, or
Requirements/sub-Requirements thereof that has been violated, the Regional
Entity shall investigate the noncompliance in accordance with the NERC Rules of
Procedure Section 400, Compliance Enforcement, to determine the entity(ies) to
which the Regional Entity shall to issue the sanction or Penalty for the violation.

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9.

509.

Nothing in Section 508 shall preclude an entity registered in a CFR, or any other
entity from registering on its own behalf and undertaking full compliance
responsibility including reporting Requirements for the Reliability Standards
applicable to the function(s) for which the entity is registering. An entity
registered in a CFR that registers as responsible for any Reliability Standard or
Requirement/sub-Requirement of a Reliability Standard shall inform the point of
contact of its Registration.

Exceptions to the Definition of the Bulk Electric System
An Element is considered to be (or not be) part of the Bulk Electric System by applying
the BES Definition to the Element (including the inclusions and exclusions set forth
therein). Appendix 5C sets forth the procedures by which (i) an entity may request a
determination that an Element that falls within the definition of the Bulk Electric System
should be exempted from being considered a part of the Bulk Electric System, or (ii) an
entity may request that an Element that falls outside of the definition of the Bulk Electric
System should be considered part of the Bulk Electric System.

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SECTION 600 — PERSONNEL CERTIFICATION
601.

Scope of Personnel Certification
Maintaining the reliability of the Bulk Electric System through implementation of the
Reliability Standards requires skilled, trained and qualified system operators. The
System Operator Certification Program provides the mechanism to ensure system
operators are provided the education and training necessary to obtain the essential
knowledge and skills and are therefore qualified to operate the Bulk Electric System.
NERC, as the ERO, will ensure skilled, trained, and qualified system operators through
the System Operator Certification Program.
NERC shall develop and maintain a personnel Certification program to evaluate
individuals and to issue Credentials to individuals who demonstrate the required level of
competence. A current version of such a program is the System Operator Certification
Program Manual, which is incorporated into these Rules of Procedure as Appendix 6.

602.

Structure of ERO Personnel Certification Program
1.

The NERC personnel Certification program shall be international in scope.

2.

The personnel Certification program shall have a governing body that (1) is able
to independently exercise decision-making for all matters pertaining to
Certification, (2) includes individuals from the discipline being certified and
whose composition addresses the needs of the users of the program (e.g.,
employers, regulators, etc.), and (3) has representation for each specialty or level
within a discipline.

3.

NERC shall maintain a nominating process for membership in the governing
body. Nominations shall be open to all interested parties and self-nominations
shall be accepted. The NERC Board of Trustees shall appoint members to the
governing body from among those nominated. The members of the governing
body shall serve at the pleasure of the Board.

4.

The personnel Certification program governing body shall have control over the
matters related to the personnel Certification and re-Certification programs listed
below, without being subject to approval by any other body.
4.1

Policies and procedures, including eligibility requirements and application
processing.

4.2

Requirements for personnel Certification, maintaining Certification, and
re-Certification.

4.3

Examination content, development, and administration.

4.4

Examination cut score.

4.5

Grievance and disciplinary processes.

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603.

4.6

Governing body and subgroup(s)’ meeting rules including agenda,
frequency, and related procedures.

4.7

Subgroup(s) appointments and work assignments.

4.8

Publications about personnel Certification and re-Certification.

4.9

Setting fees for application, and all other services provided as a part of the
personnel Certification and re-Certification activities.

4.10

Program funding, spending, and budget authority. Financial matters
related to the operation of the program shall be segregated from other
NERC activities.

5.

The personnel Certification program shall utilize written procedures for the
selection of members of the governing body that prohibit the governing body
from selecting a majority of its successors.

6.

The personnel Certification program shall be separate from the accreditation and
education functions of NERC in related disciplines.

7.

No member of the personnel Certification program governing body or staff
member working with the personnel Certification program governing body shall
have or exercise any authority or responsibility for compliance matters related to
Reliability Standards concerning personnel Certification.

Candidate Testing Mechanisms
1.

The personnel Certification program shall utilize reliable testing mechanisms to
evaluate individual competence in a manner that is objective, fair to all
candidates, job-related, and based on the knowledge and skill needed to function
in the discipline.

2.

The personnel Certification program shall implement a formal policy of periodic
review of the testing mechanisms to ensure ongoing relevance of the mechanisms
to knowledge and skill needed in the discipline.

3.

The personnel Certification program shall utilize policies and procedures to
ensure that all test administration and development materials are secure and
demonstrate that these policies and procedures are consistently implemented.

4.

The personnel Certification program shall establish pass/fail levels that protect the
public with a method that is based on competence and generally accepted in the
psychometric community as being fair and reasonable.

5.

The personnel Certification program shall conduct ongoing studies to substantiate
the reliability and validity of the testing mechanisms.

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604.

605.

6.

The personnel Certification program shall utilize policies and procedures that
govern how long examination records are kept in their original format.

7.

The personnel Certification program shall demonstrate that different forms of the
testing mechanisms assess equivalent content and that candidates are not
penalized for taking forms of varying difficulty.

Public Information About the Personnel Certification Program
1.

The personnel Certification program shall provide for publishing and availability
of general descriptive material on the procedures used in examination
construction and validation; all eligibility requirements and determination; fees;
and examination administration documents, including: reporting of results, reCertification requirements, and disciplinary and grievance procedures.

2.

The personnel Certification program shall publish and make available a
comprehensive summary or outline of the information, knowledge, or functions
covered by the examination.

3.

The personnel Certification program shall publish and make available at least
annually a summary of Certification activities for the program, including at least
the following information: number of examinations delivered, the number passed,
the number failed, and the number certified.

Responsibilities to Applicants for Certification or Re-Certification
The personnel Certification program:
1.

Shall not discriminate among applicants as to age, gender, race, religion, national
origin, disability, or marital status and shall include a statement of nondiscrimination in announcements of the program.

2.

Shall comply with all requirements of applicable federal and state/provincial laws
with respect to all Certification and re-Certification activities, and shall require
compliance of all contractors and/or providers of services.

3.

Shall make available to all applicants copies of formalized procedures for
application for, and attainment of, personnel Certification and re-Certification and
shall uniformly follow and enforce such procedures for all applicants.

4.

Shall implement a formal policy for the periodic review of eligibility criteria and
application procedures to ensure that they are fair and equitable.

5.

Shall provide competently proctored examination sites.

6.

Shall uniformly report examination results to applicants in a timely manner.

7.

Shall give applicants failing the examination information on general content areas
of deficiency.

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606.

8.

Shall implement policies and procedures providing due process for applicants
questioning eligibility determination, examination results, and Certification status,
and shall publish this information. A current version of such a procedure is the
NERC System Operator Certification Dispute Resolution Process, which is
incorporated into these Rules of Procedure as part of Appendix 6.

9.

Shall develop and maintain a program manual containing the processes and
procedures for applicants for Certification and re-Certification.

Responsibilities to the Public and to Employers of Certified Practitioners
The personnel Certification program:
1.

Shall demonstrate that the testing mechanisms adequately measure the knowledge
and skill required for entry, maintenance, and/or advancement in the profession
for each position to be certified.

2.

Shall award Certification and re-Certification only after the skill and knowledge
of the individual have been evaluated and determined to be acceptable.

3.

Shall periodically publish or maintain, in an electronic format, a current list of
those persons certified in the programs and have polices and procedures that
delineate what information about a Credential holder may be made public and
under what circumstances.

4.

Shall have formal policies and procedures for discipline of a Credential holder,
including the revocation of the certificate, for conduct deemed harmful to the
public or inappropriate to the discipline (e.g., incompetence, unethical behavior,
physical or mental impairment affecting performance). These procedures shall
incorporate due process. The current procedure is the NERC Certified System
Operator Credential Disciplinary Action Procedure, which is incorporated into
these Rules of Procedure as part of Appendix 6.

5.

Shall demonstrate that any title or Credential awarded accurately reflects or
applies to the practitioner’s daily occupational or professional duties and is not
confusing to employers, consumers, regulators, related professions, and/or other
interested parties.

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SECTION 700 — RELIABILITY READINESS EVALUATION AND
IMPROVEMENT AND FORMATION OF
SECTOR FORUMS
701.

702.

Confidentiality Requirements for Readiness Evaluations and Evaluation Team
Members
1.

All information made available or created during the course of any reliability
readiness evaluation including, but not limited to, data, Documents, observations
and notes, shall be maintained as confidential by all evaluation team members, in
accordance with the requirements of Section 1500.

2.

Evaluation team members are obligated to destroy all confidential evaluation
notes following the posting of the final report of the reliability readiness
evaluation.

3.

NERC will retain reliability readiness evaluation-related documentation, notes,
and materials for a period of time as defined by NERC.

4.

These confidentiality requirements shall survive the termination of the NERC
Reliability Readiness Evaluation and Improvement Program.

Formation of Sector Forum
1.

NERC will form a sector forum at the request of any five members of NERC that
share a common interest in the safety and reliability of the Bulk Power System.
The members of sector forum may invite such others of the members of NERC to
join the sector forum as the sector forum deems appropriate.

2.

The request to form a sector forum must include a proposed charter for the sector
forum. The Board must approve the charter.

3.

NERC will provide notification of the formation of a sector forum to its
membership roster. Notices and agendas of meetings shall be posted on NERC’s
website.

4.

A sector forum may make recommendations to any of the NERC committees and
may submit a Standards Authorization Request to the NERC Reliability Standards
Development Procedure.

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SECTION 800 — RELIABILITY ASSESSMENT AND
PERFORMANCE ANALYSIS
801.

Objectives of the Reliability Assessment and Performance Analysis Program
The objectives of the NERC Reliability Assessment and Performance Analysis Program
are to: (1) conduct, and report the results of, an independent assessment of the overall
reliability and adequacy of the interconnected North American Bulk Power Systems, both
as existing and as planned; (2) analyze off-normal events on the Bulk Power System; (3)
identify the root causes of events that may be precursors of potentially more serious
events; (4) assess past reliability performance for lessons learned; (5) disseminate
findings and lessons learned to the electric industry to improve reliability performance;
and (6) develop reliability performance benchmarks. The final reliability assessment
reports shall be approved by the Board for publication to the electric industry and the
general public.

802.

Scope of the Reliability Assessment Program
1.

2.

The scope of the Reliability Assessment Program shall include:
1.1

Review, assess, and report on the overall electric generation and
transmission reliability (adequacy and operating reliability) of the
interconnected Bulk Power Systems, both existing and as planned.

1.2

Assess and report on the key issues, risks, and uncertainties that affect or
have the potential to affect the reliability of existing and future electric
supply and transmission.

1.3

Review, analyze, and report on Regional Entity self-assessments of
electric supply and bulk power transmission reliability, including
reliability issues of specific regional concern.

1.4

Identify, analyze, and project trends in electric customer demand, supply,
and transmission and their impacts on Bulk Power System reliability.

1.5

Investigate, assess, and report on the potential impacts of new and
evolving electricity market practices, new or proposed regulatory
procedures, and new or proposed legislation (e.g. environmental
requirements) on the adequacy and operating reliability of the Bulk Power
Systems.

The Reliability Assessment Program shall be performed in a manner consistent
with the Reliability Standards of NERC including but not limited to those that
specify reliability assessment Requirements.

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803.

Reliability Assessment Reports
The number and type of periodic assessments that are to be conducted shall be at the
discretion of NERC. The results of the reliability assessments shall be documented in
three reports: the long-term and the annual seasonal (summer) and the annual seasonal
(winter) assessment reports. NERC shall also conduct special reliability assessments
from time to time as circumstances warrant. The reliability assessment reports shall be
reviewed and approved for publication by the Board. The three regular reports are
described below.
1.

Long-Term Reliability Assessment Report — The annual long-term report shall
cover a ten-year planning horizon. The planning horizon of the long-term
reliability assessment report shall be subject to change at the discretion of NERC.
Detailed generation and transmission adequacy assessments shall be conducted
for the first five years of the review period. For the second five years of the
review period, the assessment shall focus on the identification, analysis, and
projection of trends in peak demand, electric supply, and transmission adequacy,
as well as other industry trends and developments that may impact future electric
system reliability. Reliability issues of concern and their potential impacts shall
be presented along with any mitigation plans or alternatives. The long-term
reliability assessment reports will generally be published in the fall (September)
of each year. NERC will also publish electricity supply and demand data
associated with the long-term reliability assessment report.

2.

Summer Assessment Report — The annual summer seasonal assessment report
typically shall cover the four-month (June–September) summer period. It shall
provide an overall perspective on the adequacy of the generation resources and
the transmission systems necessary to meet projected summer peak demands. It
shall also identify reliability issues of interest and regional and subregional areas
of concern in meeting projected customer demands and may include possible
mitigation alternatives. The report will generally be published in mid-May for the
upcoming summer period.

3.

Winter Assessment Report — The annual winter seasonal assessment report
shall cover the three-month (December–February) winter period. The report shall
provide an overall perspective on the adequacy of the generation resources and
the transmission systems necessary to meet projected winter peak demands.
Similar to the summer assessment, the winter assessment shall identify reliability
issues of interest and regional and subregional areas of concern in meeting
projected customer demands and may also include possible mitigation
alternatives. The winter assessment report will generally be published in midNovember for the upcoming winter period.

4.

Special Reliability Assessment Reports — In addition to the long-term and
seasonal reliability assessment reports, NERC shall also conduct special reliability
assessments on a regional, interregional, and Interconnection basis as conditions
warrant, or as requested by the Board or governmental authorities. The teams of
reliability and technical experts also may initiate special assessments of key

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reliability issues and their impacts on the reliability of a regions, subregions, or
Interconnection (or a portion thereof). Such special reliability assessments may
include, among other things, operational reliability assessments, evaluations of
emergency response preparedness, adequacy of fuel supply, hydro conditions,
reliability impacts of new or proposed environmental rules and regulations, and
reliability impacts of new or proposed legislation that affects or has the potential
to affect the reliability of the interconnected Bulk Power Systems in North
America.
804.

Reliability Assessment Data and Information Requirements
To carry out the reviews and assessments of the overall reliability of the interconnected
Bulk Power Systems, the Regional Entities and other entities shall provide sufficient data
and other information requested by NERC in support of the annual long-term and
seasonal assessments and any special reliability assessments.
Some of the data provided for these reviews and assessment may be considered
confidential from a competitive marketing perspective, a Critical Energy Infrastructure
Information perspective, or for other purposes. Such data shall be treated in accordance
with the provisions of Section 1500 – Confidential Information.
While the major sources of data and information for this program are the Regional
Entities, a team of reliability and technical experts is responsible for developing and
formulating its own independent conclusions about the near-term and long-term
reliability of the Bulk Power Systems.
In connection with the reliability assessment reports, requests shall be submitted to each
of the Regional Entities for required reliability assessment data and other information,
and for each Regional Entity’s self-assessment report. The timing of the requests will be
governed by the schedule for the preparation of the assessment reports.
The Regional Entity self-assessments are to be conducted in compliance with NERC
Reliability Standards and the respective regional planning criteria. The team(s) of
reliability and technical experts shall also conduct interviews with the Regional Entities
as needed. The summary of the Regional Entity self-assessments that are to be included
in the assessment reports shall follow the general outline identified in NERC’s request.
This outline may change from time to time as key reliability issues change.
In general, the Regional Entity reliability self-assessments shall address, among other
areas, the following topics: demand and Net Energy for Load; assessment of projected
resource adequacy; any transmission constraints that may impact bulk transmission
adequacy and plans to alleviate those constraints; any unusual operating conditions that
could impact reliability for the assessment period; fuel supply adequacy; the
deliverability of generation (both internal and external) to Loadload; and any other
reliability issues in the Region and their potential impacts on the reliability of the Bulk
Power Systems.

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805. Reliability Assessment Process
Based on their expertise, the review of the collected data, the review of the Regional
Entity self-assessment reports, and interviews with the Regional Entities, as appropriate,
the teams of reliability and technical experts shall perform an independent review and
assessment of the generation and transmission adequacy of each Region’s existing and
planned Bulk Power System. The results of the review teams shall form the basis of
NERC’s long-term and seasonal reliability assessment reports. The review and
assessment process is briefly summarized below.
1.

Resource Adequacy Assessment — The teams shall evaluate the regional
demand and resource capacity data for completeness in the context of the overall
resource capacity needs of the Region. The team shall independently evaluate the
ability of the Regional Entity members to serve their obligations given the
demand growth projections, the amount of existing and planned capacity,
including committed and uncommitted capacity, contracted capacity, or capacity
outside of the Region. If the Region relies on capacity from outside of the Region
to meet its resource objectives, the ability to deliver that capacity shall be factored
into the assessment. The demand and resource capacity information shall be
compared to the resource adequacy requirements of the Regional Entity for the
year(s) or season(s) being assessed. The assessment shall determine if the
resource information submitted represents a reasonable and attainable plan for the
Regional Entity and its members. For cases of inadequate capacity or reserve
margin, the Regional Entity will be requested to analyze and explain any resource
capacity inadequacies and its plans to mitigate the reliability impact of the
potential inadequacies. The analysis may be expanded to include surrounding
areas. If the expanded analysis indicates further inadequacies, then an
interregional problem may exist and will be explored with the applicable Regions.
The results of these analyses shall be described in the assessment report.

2.

Transmission Adequacy and Operating Reliability Assessment — The teams
shall evaluate transmission system information that relates to the adequacy and
operating reliability of the regional transmission system. That information shall
include: regional planning study reports, interregional planning study reports,
and/or regional operational study reports. If additional information is required,
another data request shall be sent to the Regional Entity. The assessment shall
provide a judgment on the ability of the regional transmission system to operate
reliably under the expected range of operating conditions over the assessment
period as required by NERC Reliability Standards. If sub-areas of the regional
system are especially critical to the Reliable Operation of the regional bulk
transmission system, these Facilities or sub-areas shall be reviewed and addressed
in the assessment. Any areas of concern related to the adequacy or operating
reliability of the system shall be identified and reported in the assessment.

3.

Seasonal Operating Reliability Assessment — The team(s) shall evaluate the
overall operating reliability of the regional bulk transmission systems. In areas
with potential resource adequacy or system operating reliability problems,
operational readiness of the affected Regional Entities for the upcoming season

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shall be reviewed and analyzed. The assessment may consider unusual but
possible operating scenarios and how the system is expected to perform.
Operating reliability shall take into account a wide range of activities, all of which
should reinforce the Regional Entity’s ability to deal with the situations that might
occur during the upcoming season. Typical activities in the assessment may
include: facility modifications and additions, new or modified operating
procedures, emergency procedures enhancement, and planning and operating
studies. The teams shall report the overall seasonal operating reliability of the
regional transmission systems in the annual summer and winter assessment
reports.
4.

Reporting of Reliability Assessment Results — The teams of reliability and
technical experts shall provide an independent assessment of the reliability of the
Regional Entities and the North American interconnected Bulk Power System for
the period of the assessment. While the Regional Entities are relied upon to
provide the information to perform such assessments, the review team is not
required to accept the conclusions provided by the Regional Entities. Instead, the
review team is expected, based on their expertise, to reach their own independent
conclusions about the status of the adequacy of the generation and bulk power
transmission systems of North America.
The review team also shall strive to achieve consensus in their assessments. The
assessments that are made are based on the best information available at the time.
However, since judgment is applied to this information, legitimate differences of
opinion can develop. Despite these differences, the review team shall work to
achieve consensus on their findings.
In addition to providing long-term and seasonal assessments in connection with
the Reliability Assessment Program, the review team of experts shall also be
responsible for recommending new and revised Reliability Standards related to
the reliability assessments and the reliability of the Bulk Power Systems. These
proposals for new or revised Reliability Standards shall be entered into NERC’s
Reliability Standards development process.
Upon completion of the assessment, the team shall share the results with the
Regional Entities. The Regional Entities shall be given the opportunity to review
and comment on the conclusions in the assessment and to provide additional
information as appropriate. The reliability assessments and their conclusions are
the responsibility of NERC’s technical review team and NERC.
The preparation and approval of NERC’s reliability assessment reports shall
follow a prescribed schedule including review, comment, and possible approval
by appropriate NERC committees. The long-term and seasonal (summer and
winter) reliability assessment reports shall be further reviewed for approval by the
Board for publication to the electric industry.

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806. Scope of the Reliability Performance and Analysis Program
The components of the program will include analysis of large-scale outages,
disturbances, and near misses to determine root causes and lessons learned; identification
and continuous monitoring of performance indices to detect emerging trends and signs of
a decline in reliability performance; and communications of performance results, trends,
recommendations, and initiatives to those responsible to take actions; followed with
confirmation of actions to correct any deficiencies identified. Within NERC, the
reliability performance program will provide performance results to the Reliability
Standards Development and Compliance Monitoring and Enforcement Programs to make
the necessary adjustments to preserve reliability based on a risk-based approach.
807.

Analysis of Major Events
Responding to major blackouts and other system disturbances or emergencies can be
divided into four phases: situational assessment and communications; situation tracking
and communications; data collection, investigation, analysis, and reporting; and followup on recommendations.
a. NERC’s role following a blackout or other major Bulk Power System disturbance
or emergency is to provide leadership, coordination, technical expertise, and
assistance to the industry in responding to the event. Working closely with the
Regional Entities and Reliability Coordinators, NERC will coordinate and
facilitate efforts among industry participants, and with state, federal, and
provincial governments in the United States and Canada to support the industry’s
response.
b. When responding to any event where physical or cyber security is suspected as a
cause or contributing factor to an event, NERC will immediately notify
appropriate government agencies and coordinate its activities with them.
c. Each user, owner, and operator of the Bulk Power System shall provide NERC
and the applicable Regional Entities with such information as is necessary to
enable NERC and the applicable Regional Entities to carry out their
responsibilities under this section.
d. During the conduct of some NERC analyses, assistance may be needed from
government agencies. This assistance could include: authority to require data
reporting from affected or involved parties; communications with other agencies
of government; investigations related to possible criminal or terrorist involvement
in the event; resources for initial data gathering immediately after the event;
authority to call meetings of affected or involved parties; and technical and
analytical resources for studies.
e. NERC shall work with other participants to establish a clear delineation of roles,
responsibilities, and coordination requirements among industry and government
for the investigation and reporting of findings, conclusions, and recommendations
related to major blackouts, disturbances, or other emergencies affecting the Bulk
Power System with the objective of avoiding, to the extent possible, multiple

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investigations of the same event. If the event is confined to a single Regional
Entity, NERC representatives will participate as members of the Regional Entity
analysis team.
f. NERC and applicable entity(s) shall apply the NERC Blackout and Disturbance
Response Procedures, which are incorporated into these Rules of Procedure as
Appendix 8. These procedures provide a framework to guide NERC’s response
to events that may have multiregional, national, or international implications.
Experienced industry leadership shall be applied to tailor the response to the
specific circumstances of the event. In accordance with that procedure, the NERC
president will determine whether the event warrants analysis at the NERC-level.
A Regional Entity may request that NERC elevate any analysis to a NERC level.
g. NERC will screen and analyze the findings and recommendations from the
analysis, and those with generic applicability will be disseminated to the industry
in accordance with Section 810.
808.

809.

Analysis of Off-Normal Events, Potential System Vulnerabilities, and System
Performance
1.

NERC and Regional Entities shall analyze system and equipment performance
events that do not rise to the level of a major blackout, disturbance, or system
emergency, as described in Section 807. NERC and Regional Entities shall also
analyze potential vulnerabilities in the Bulk Power System brought to their
attention by government agencies. The purpose of these analyses is to identify the
root causes of events that may be precursors of potentially more serious events or
that have the potential to cause more serious events, to assess past reliability
performance for lessons learned, and to develop reliability performance
benchmarks and trends.

2.

NERC and Regional Entities will screen and analyze events and potential
vulnerabilities for significance, and information from those with generic
applicability will be disseminated to the industry in accordance with Section 810.

3.

Each user, owner, and operator, of the Bulk Power System shall provide NERC
and the applicable Regional Entities with such information as is necessary to
enable NERC and the applicable Regional Entities to carry out their
responsibilities under this section.

Reliability Benchmarking
NERC shall identify and track key reliability indicators as a means of benchmarking
reliability performance and measuring reliability improvements. This program will
include assessing available metrics, developing guidelines for acceptable metrics,
maintaining a performance metrics “dashboard” on the NERC website, and developing
appropriate reliability performance benchmarks.

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810.

Information Exchange and Issuance of NERC Advisories, Recommendations and
Essential Actions
1.

Members of NERC and Bulk Power System owners, operators, and users shall
provide NERC with detailed and timely operating experience information and
data.

2.

In the normal course of operations, NERC disseminates the results of its events
analysis findings, lessons learned and other analysis and information gathering to
the industry. These findings, lessons learned and other information will be used
to guide the Reliability Assessment Program.

3.

When NERC determines it is necessary to place the industry or segments of the
industry on formal notice of its findings, analyses, and recommendations, NERC
will provide such notification in the form of specific operations or equipment
Advisories, Recommendations or Essential Actions:
3.1

Level 1 (Advisories) – purely informational, intended to advise certain
segments of the owners, operators and users of the Bulk Power System of
findings and lessons learned;

3.2

Level 2 (Recommendations) – specific actions that NERC is
recommending be considered on a particular topic by certain segments of
owners, operators, and users of the Bulk Power System according to each
entity’s facts and circumstances;

3.3

Level 3 (Essential Actions) – specific actions that NERC has determined
are essential for certain segments of owners, operators, or users of the
Bulk Power System to take to ensure the reliability of the Bulk Power
System. Such Essential Actions require NERC Board approval before
issuance.

4.

The Bulk Power System owners, operators, and users to which Level 2
(Recommendations) and Level 3 (Essential Actions) notifications apply are to
evaluate and take appropriate action on such issuances by NERC. Such Bulk
Power System owners, operators, and users shall also provide reports of actions
taken and timely updates on progress towards resolving the issues raised in the
Recommendations and Essential Actions in accordance with the reporting date(s)
specified by NERC.

5.

NERC will advise the Commission and other Applicable Governmental
Authorities of its intent to issue all Level 1 (Advisories), Level 2
(Recommendations), and Level 3 (Essential Actions) at least five (5) business
days prior to issuance, unless extraordinary circumstances exist that warrant
issuance less than five (5) business days after such advice. NERC will file a
report with the Commission and other Applicable Governmental Authorities no
later than thirty (30) days following the date by which NERC has requested the
Bulk Power System owners, operators, and users to which a Level 2

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(Recommendation) or Level 3 (Essential Action) issuance applies to provide
reports of actions taken in response to the notification. NERC’s report to the
Commission and other Applicable Governmental Authorities will describe the
actions taken by the relevant owners, operators, and users of the Bulk Power
System and the success of such actions taken in correcting any vulnerability or
deficiency that was the subject of the notification, with appropriate protection for
Confidential Information or Critical Energy Infrastructure Information.
811.

Equipment Performance Data
Through its Generating Availability Data System (GADS), NERC shall collect operating
information about the performance of electric generating equipment; provide assistance
to those researching information on power plant outages stored in its database; and
support equipment reliability as well as availability analyses and other decision-making
processes developed by GADS subscribers. GADS data is also used in conducting
assessments of generation resource adequacy.

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SECTION 900 — TRAINING AND EDUCATION
901.

Scope of the Training and Education Program
Maintaining the reliability of the Bulk Electric System through implementation of the
Reliability Standards requires informed and trained personnel. The training and
education program will provide the education and training necessary for Bulk Power
System personnel and regulators to obtain the essential knowledge necessary to
understand and operate the Bulk Electric System.
NERC shall develop and maintain training and education programs for the purpose of
establishing training requirements, developing materials, and developing training
activities. The target audience of the training and education programs shall be Bulk
Power System operating personnel including system operations personnel, operations
support personnel (engineering and information technology), supervisors and managers,
training personnel, and other personnel directly responsible for complying with NERC
Reliability Standards who, through their actions or inactions, may impact the real-time, or
day-ahead reliability of the Bulk Power System.
NERC shall also develop and provide appropriate training and education for industry
participants and regulators affected by new or changed Reliability Standards or
compliance Requirements.
To accomplish those objectives:

902.

1.

NERC shall periodically conduct job task analyses for targeted Bulk Power
System personnel to ensure that the training program content is properly aligned
to the job tasks performed by those personnel.

2.

NERC shall develop and maintain personnel training program curriculum
requirements based on valid job-task analysis.

3.

NERC shall periodically conduct performance surveys to determine the
effectiveness of the training program and identify areas for further training
development and improvement.

4.

NERC shall develop training and education materials and activities to assist Bulk
Power System entities implementing new or revised Reliability Standard
Requirements or other NERC-related changes.

5.

NERC shall develop and provide training to people who participate in NERC and
Regional Entity evaluations, audits, and investigations for the Compliance
Monitoring and Enforcement Program, Organization Certification Program, and
the continuing education program.

Continuing Education Program
NERC shall develop and maintain a continuing education program to foster the
improvement of training and to promote quality in the training programs used by and

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implemented by Bulk Power System entities. The program shall approve or accredit
those activities and entities meeting NERC continuing education requirements.
1.

NERC shall develop and implement continuing education program requirements
that promote excellence in training programs and advance improved performance
for Bulk Power System personnel identified in Section 901.

2.

NERC shall develop and maintain a process to approve or accredit continuing
education Providers and activities seeking approval or accreditation and meeting
NERC-approved continuing education requirements.

3.

NERC shall perform periodic audits on continuing education Providers and
training activities to ensure that the approved or accredited Providers and training
activities satisfy NERC continuing education requirements.

4.

NERC shall develop and maintain an appeals process for disputed application
reviews, interpretations of guidelines and standards, probation or suspension of
NERC-approved Provider status, or Continuing Education Hour disputes.

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SECTION 1000 — SITUATION AWARENESS AND
INFRASTRUCTURE SECURITY
1001. Situation Awareness
NERC shall through the use of Reliability Coordinators and available tools, monitor
present conditions on the Bulk Power System and provide leadership coordination,
technical expertise, and assistance to the industry in responding to events as necessary.
To accomplish these goals, NERC will:
1.

Maintain real-time situation awareness of conditions on the Bulk Power System;

2.

Notify the industry of significant Bulk Power System events that have occurred in
one area, and which have the potential to impact reliability in other areas;

3.

Maintain and strengthen high-level communication, coordination, and cooperation
with governments and government agencies regarding real-time conditions; and

4.

Enable the Reliable Operation of interconnected Bulk Power Systems by
facilitating information exchange and coordination among reliability service
organizations.

1002. Reliability Support Services
NERC will provide tools and other support services for the benefit of Reliability
Coordinators and other system operators, including the Area Control Error (ACE) and
Frequency Monitoring System, NERC Hotline, Real-time Flows, System Data Exchange
(SDX), Reliability Coordinator Information System (RCIS), Transmission Services
Information Network (TSIN), Interchange Distribution Calculator (IDC), Interregional
Security Network (ISN), and Central Repository for Security Events (CRC). To
accomplish this goal, NERC will:
1.

Maintain the reliability and effectiveness of all mission-critical operating
reliability support systems and services;

2.

Continue to support maintenance of a transmission provider curtailment report on
the CRC site in response to Federal Energy Regulatory Commission Order 605;

3.

Investigate and analyze the use of high-speed real-time system measurements,
including phasors, in predicting the behavior and performance of the Eastern
Interconnection; and

4.

Facilitate real-time voice and data exchange services among Reliability
Coordinators (e.g., Hotline, Interregional Security Network, NERCnet, System
Data Exchange, etc.).

1003. Infrastructure Security Program
NERC shall coordinate electric industry activities to promote Critical Infrastructure
protection of the Bulk Power System in North America by taking a leadership role in
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Critical Infrastructure protection of the electricity sector so as to reduce vulnerability and
improve mitigation and protection of the electricity sector’s Critical Infrastructure. To
accomplish these goals, NERC shall perform the following functions.
1.

2.

Electric Sector Information Sharing and Analysis Center (ESISAC)
1.1

NERC shall serve as the electricity sector’s sector coordinator and operate
its Information Sharing and Analysis Center to gather information and
communicate security-related threats and incidents within the sector, with
United States and Canadian government agencies, and with other Critical
Infrastructure sectors.

1.2

NERC shall improve the capability of the ESISAC to analyze security
threats and incident information and provide situational assessments for
the electricity sector and governments.

1.3

NERC shall work closely with the United States Department of Homeland
Security, Department of Energy, Natural Resources Canada, and Public
Safety and Emergency Preparedness Canada.

1.4

NERC shall strengthen and expand these functions and working
relationships with the electricity sector, other Critical Infrastructure
industries, governments, and government agencies throughout North
America to ensure the protection of the infrastructure of the Bulk Power
System.

1.5

NERC shall fill the role of the Electricity Sector Coordinating Council and
coordinate with the Government Coordinating Council.

1.6

NERC shall coordinate with other Critical Infrastructure sectors through
active participation with the other Sector Coordinating Councils, the other
ISACs, and the National Infrastructure Advisory Committee.

1.7

NERC shall encourage and participate in coordinated Critical
Infrastructure protection exercises, including interdependencies with other
Critical Infrastructure sectors.

Security Planning
2.1

NERC shall take a risk management approach to Critical Infrastructure
protection, considering probability and severity, and recognizing that
mitigation and recovery can be practical alternatives to prevention.

2.2

NERC shall keep abreast of the changing threat environment through
collaboration with government agencies.

2.3

NERC shall develop criteria to identify critical physical assets and Critical
Cyber Assets, assess security threats, identify risk assessment

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methodologies, and assess effectiveness of physical and cyber protection
measures.
2.4

NERC shall enhance and maintain the Bulk Power System critical spare
transformer program, encourage increased participation by asset owners,
and continue to assess the need to expand this program to include other
critical Bulk Power System equipment.

2.5

NERC shall support implementation of the Critical Infrastructure
Protection Standards through education and outreach.

2.6

NERC shall review and improve existing security guidelines, develop new
security guidelines to meet the needs of the electricity sector, and consider
whether any guidelines should be developed into Reliability Standards.

2.7

NERC shall conduct education and outreach initiatives to increase
awareness and respond to the needs of the electricity sector.

2.8

NERC shall strengthen relationships with federal, state, and provincial
government agencies on Critical Infrastructure protection matters.

2.9

NERC shall maintain and improve mechanisms for the sharing of sensitive
or classified information with federal, state, and provincial government
agencies on Critical Infrastructure protection matters; work with DOE and
DHS to implement the National Infrastructure Protection Plan, as
applicable to the electricity sector; and coordinate this work with PSEPC.

2.10

NERC shall improve methods to better assess the impact of a possible
physical attack on the Bulk Power System and means to deter, mitigate,
and respond following an attack.

2.11

NERC shall assess the results of vulnerability assessments and enhance
the security of system control and data acquisition (SCADA) and process
control systems by developing methods to detect an emerging cyber attack
and the means to mitigate impacts on the Bulk Power Systems.

2.12

NERC shall work with the National SCADA Test Bed and the Process
Control Systems Forum to accelerate the development of technology that
will enhance the security, safety, and reliability of process control and
SCADA systems.

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SECTION 1100 — ANNUAL NERC BUSINESS PLANS AND
BUDGETS
1101. Scope of Business Plans and Budgets
The Board shall determine the content of the budgets to be submitted to the Applicable
Governmental Authorities with consultation from the members of the Member
Representatives Committee, Regional Entities, and others in accordance with the Bylaws.
The Board shall identify any activities outside the scope of NERC’s statutory reliability
functions, if any, and the appropriate funding mechanisms for those activities.
1102. NERC Funding and Cost Allocation
1.

In order that NERC’s costs shall be fairly allocated among Interconnections and
among Regional Entities, the NERC funding mechanism for all statutory
functions shall be based on Net Energy for Load (NEL).

2.

NERC’s costs shall be allocated so that all Loadload (or, in the case of costs for
an Interconnection or Regional Entity, all Loadload within that Interconnection or
Regional Entity) bears an equitable share of such costs based on NEL.

3.

Costs shall be equitably allocated between countries or Regional Entities thereof
for which NERC has been designated or recognized as the Electric Reliability
Organization.

4.

Costs incurred to accomplish the statutory functions for one Interconnection,
Regional Entity, or group of entities will be directly assigned to that
Interconnection, Regional Entity, or group of entities provided that such costs are
allocated equitably to end-users based on Net Energy for Load.

1103. NERC Budget Development
1.

The NERC annual budget process shall be scheduled and conducted for each
calendar year so as to allow a sufficient amount of time for NERC to receive
Member inputs, develop the budget, and receive Board and, where authorized by
applicable legislation or agreement, Applicable Governmental Authority approval
of the NERC budget for the following fiscal year, including timely submission of
the proposed budget to FERC for approval in accordance with FERC regulations.

2.

The NERC budget submittal to Applicable Governmental Authorities shall
include provisions for all ERO functions, all Regional Entity delegated functions
as specified in delegation agreements and reasonable reserves and contingencies.

3.

The NERC annual budget submittal to Applicable Governmental Authorities shall
include description and explanation of NERC’s proposed ERO program activities
for the year; budget component justification based on statutory or other
authorities; explanation of how each budgeted activity lends itself to the
accomplishment of the statutory or other authorities; sufficiency of resources

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provided for in the budget to carry out the ERO program responsibilities;
explanation of the calculations and budget estimates; identification and
explanation of changes in budget components from the previous year’s budget;
information on staffing and organization charts; and such other information as is
required by FERC and other Applicable Governmental Authorities having
authority to approve the proposed budget.
4.

NERC shall develop, in consultation with the Regional Entities, a reasonable and
consistent system of accounts, to allow a meaningful comparison of actual results
at the NERC and Regional Entity level by the Applicable Governmental
Authorities.

1104. Submittal of Regional Entity Budgets to NERC
1.

Each Regional Entity shall submit its proposed annual budget for carrying out its
delegated authority functions as well as all other activities and funding to NERC
in accordance with a schedule developed by NERC and the Regional Entities,
which shall provide for the Regional Entity to submit its final budget that has
been approved by its board of directors or other governing body no later than July
1 of the prior year, in order to provide sufficient time for NERC’s review and
comment on the proposed budget and approval of the Regional Entity budget by
the NERC Board of Trustees in time for the NERC and Regional Entity budgets
to be submitted to FERC and other Applicable Governmental Authorities for
approval in accordance with their regulations. The Regional Entity’s budget shall
include supporting materials in accordance with the budget and reporting format
developed by NERC and the Regional Entities, including the Regional Entity’s
complete business plan and organization chart, explaining the proposed collection
of all dues, fees, and charges and the proposed expenditure of funds collected in
sufficient detail to justify the requested funding collection and budget
expenditures.

2.

NERC shall review and approve each Regional Entity’s budget for meeting the
requirements of its delegated authority. Concurrent with approving the NERC
budget, NERC shall review and approve, or reject, each Regional Entity budget
for filing.

3.

NERC shall also have the right to review from time to time, in reasonable
intervals but no less frequently than every three years, the financial books and
records of each Regional Entity having delegated authority in order to ensure that
the documentation fairly represents in all material aspects appropriate funding of
delegated functions.

1105. Submittal of NERC and Regional Entity Budgets to Governmental Authorities for
Approval
1.

NERC shall file for approval by the Applicable Governmental Authorities at least
130 days in advance of the start of each fiscal year. The filing shall include: (1)
the complete NERC and Regional Entity budgets including the business plans and
organizational charts approved by the Board, (2) NERC’s annual funding
requirement (including Regional Entity costs for delegated functions), and (3) the

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mechanism for assessing charges to recover that annual funding requirement,
together with supporting materials in sufficient detail to support the requested
funding requirement.
2.

NERC shall seek approval from each Applicable Governmental Authority
requiring such approval for the funding requirements necessary to perform ERO
activities within their jurisdictions.

1106. NERC and Regional Entity Billing and Collections
1.

NERC shall request the Regional Entities to identify all Load-Serving Entities3
within each Regional Entity and the NEL assigned to each Load-Serving Entity,
and the Regional Entities shall supply the requested information. The assignment
of a funding requirement to an entity shall not be the basis for determining that
the entity must be registered in the Compliance Registry.

2.

NERC shall accumulate the NEL by Load-Serving Entities for each Applicable
Governmental Authority and submit the proportional share of NERC funding
requirements to each Applicable Governmental Authority for approval together
with supporting materials in sufficient detail to support the requested funding
requirement.

3.

NEL reported by Balancing Authorities within a Region shall be used to
rationalize and validate amounts allocated for collection through Regional Entity
processes.

4.

The billing and collection processes shall provide:

5.

4.1

A clear validation of billing and application of payments.

4.2

A minimum of data requests to those being billed.

4.3

Adequate controls to ensure integrity in the billing determinants including
identification of entities responsible for funding NERC’s activities.

4.4

Consistent billing and collection terms.

NERC will bill and collect all budget requirements approved by Applicable
Governmental Authorities (including the funds required to support those functions
assigned to the Regional Entities through the delegation agreements) directly from
the Load-Serving Entities or their designees or as directed by particular
Applicable Governmental Authorities, except where the Regional Entity is
required to collect the budget requirements for NERC, in which case the Regional
Entity will collect directly from the Load-Serving Entities or as otherwise

3

A Regional Entity may allocate funding obligations using an alternative method approved by NERC and by FERC and other
Applicable Governmental Authorities, as provided for in the regional delegation agreement.

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provided by agreement and submit funds to NERC. Alternatively, a load-serving
entity may pay its allocated ERO costs through a Regional Entity managed
collection mechanism.
6.

NERC shall set a minimum threshold limit on the billing of small LSEs to
minimize the administrative burden of collection.

7.

NERC shall pursue any non-payments and shall request assistance from
Applicable Governmental Authorities as necessary to secure collection.

8.

In the case where a Regional Entity performs the collection for ERO, the Regional
Entity will not be responsible for non-payment in the event that a user, owner or
operator of the Bulk Power System does not pay its share of dues, fees and
charges in a timely manner, provided that such a Regional Entity shall use
reasonably diligent efforts to collect dues, fees, and other charges from all entities
obligated to pay them. However, any revenues not paid shall be recovered from
others within the same Region to avoid cross-subsidization between Regions.

9.

Both NERC and the Regional Entities also may bill members or others for
functions and services not within statutory requirements or otherwise authorized
by the Applicable Governmental Authorities. Costs and revenues associated with
these functions and services shall be separately identified and not commingled
with billings associated with the funding of NERC or of the Regional Entities for
delegated activities.

1107. Penalty Applications
1.

Where NERC or a Regional Entity initiates a compliance monitoring and
enforcement process that leads to imposition of a Penalty, the entity that initiated
the process shall receive any Penalty monies imposed and collected as a result of
that process, unless a different disposition of the Penalty monies is provided for in
the delegation agreement, or in a contract or a disposition of the violation that is
approved by NERC and FERC.

2.

All funds from financial Penalties assessed in the United States received by the
entity initiating the compliance monitoring and enforcement process shall be
applied as a general offset to the entity’s budget requirements for the subsequent
fiscal year, if received by July 1, or for the second subsequent fiscal year, if
received on or after July 1. Funds from financial Penalties shall not be directly
applied to any program maintained by the entity conducting the compliance
monitoring and enforcement process. Funds from financial Penalties assessed
against a Canadian entity shall be applied as specified by legislation or agreement.

3.

In the event that a compliance monitoring and enforcement process is conducted
jointly by NERC and a Regional Entity, the Regional Entity shall receive the
Penalty monies and offset the Regional Entity’s budget requirements for the
subsequent fiscal year.

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4.

Exceptions or alternatives to the foregoing provisions will be allowed if approved
by NERC and by FERC or any other Applicable Governmental Authority.

1108. Special Assessments
On a demonstration of unforeseen and extraordinary circumstances requiring additional
funds prior to the next funding cycle, NERC shall file with the Applicable Governmental
Authorities, where authorized by applicable legislation or agreement, for authorization
for an amended or supplemental budget for NERC or a Regional Entity and, if necessary
under the amended or supplemental budget, to collect a special or additional assessment
for statutory functions of NERC or the Regional Entity. Such filing shall include
supporting materials to justify the requested funding, including any departure from the
approved funding formula or method.

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SECTION 1200 — REGIONAL DELEGATION AGREEMENTS
1201. Pro Forma Regional Delegation Agreement
NERC shall develop and maintain a pro forma Regional Entity delegation agreement,
which shall serve as the basis for negotiation of consistent agreements for the delegation
of ERO functions to Regional Entities.
1202. Regional Entity Essential Requirements
NERC shall establish the essential requirements for an entity to become qualified and
maintain good standing as a Regional Entity.
1203. Negotiation of Regional Delegation Agreements
NERC shall, for all areas of North America that have provided NERC with the
appropriate authority, negotiate regional delegation agreements for the purpose of
ensuring all areas of the North American Bulk Power Systems are within a Regional
Entity Region. In the event NERC is unable to reach agreement with Regional Entities
for all areas, NERC shall provide alternative means and resources for implementing
NERC functions within those areas. No delegation agreement shall take effect until it has
been approved by the Applicable Governmental Authority.
1204. Conformance to Rules and Terms of Regional Delegation Agreements
NERC and each Regional Entity shall comply with all applicable ERO Rules of
Procedure and the obligations stated in the regional delegation agreement.
1205. Sub-delegation
The Regional Entity shall not sub-delegate any responsibilities and authorities delegated
to it by its regional delegation agreement with NERC except with the approval of NERC
and FERC and other Applicable Governmental Authorities. Responsibilities and
authorities may only be sub-delegated to another Regional Entity. Regional Entities may
share resources with one another so long as such arrangements do not result in crosssubsidization or in any sub-delegation of authorities.
1206. Nonconformance to Rules or Terms of Regional Delegation Agreement
If a Regional Entity is unable to comply or is not in compliance with an ERO Rule of
Procedure or the terms of the regional delegation agreement, the Regional Entity shall
immediately notify NERC in writing, describing the area of nonconformance and the
reason for not being able to conform to the Rule of Procedure. NERC shall evaluate each
case and inform the affected Regional Entity of the results of the evaluation. If NERC
determines that a Rule of Procedure or term of the regional delegation agreement has
been violated by a Regional Entity or cannot practically be implemented by a Regional
Entity, NERC shall notify the Applicable Governmental Authorities and take any actions
necessary to address the situation.

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1207. Regional Entity Audits
Approximately every five years and more frequently if necessary for cause, NERC shall
audit each Regional Entity to verify that the Regional Entity continues to comply with
NERC Rules of Procedure and the obligations of NERC delegation agreement. Audits of
Regional Entities shall be conducted, to the extent practical, based on professional
auditing standards recognized in the U.S., including Generally Accepted Auditing
Standards, Generally Accepted Government Auditing Standards, and standards
sanctioned by the Institute of Internal Auditors, and if applicable to the coverage of the
audit, may be based on Canadian or other international standards. The audits required by
this Section 1207 shall not duplicate the audits of Regional Entity Compliance
Monitoring and Enforcement Programs provided for in Appendix 4A, Audit of Regional
Compliance Programs, to these Rules of Procedure.
1208. Process for Considering Registered Entity Requests to Transfer to Another
Regional Entity
1.

A Registered Entity that is registered in the Region of one Regional Entity and
believes its registration should be transferred to a different Regional Entity may
submit a written request to both Regional Entities requesting that they process the
proposed transfer in accordance with this section. The Registered Entity’s written
request shall set forth the reasons the Registered Entity believes justify the
proposed transfer and shall describe any impacts of the proposed transfer on other
Bulk Power System owners, operators, and users.

2.

After receiving the Registered Entity’s written request, the two Regional Entities
shall consult with each other as to whether they agree or disagree that the
requested transfer is appropriate. The Regional Entities may also consult with
affected Reliability Coordinators, Balancing Authorities and Transmission
Operators as appropriate. Each Regional Entity shall post the request on its
website for public comment period of 21 days. In evaluating the proposed
transfer, the Regional Entities shall consider the location of the Registered
Entity’s Bulk Power System facilities in relation to the geographic and electrical
boundaries of the respective Regions; the impacts of the proposed transfer on
other Bulk Power System owners, operators; and users, the impacts of the
proposed transfer on the current and future staffing, resources, budgets and
assessments to other Load-Serving Entities of each Regional Entity, including the
sufficiency of the proposed transferee Regional Entity’s staffing and resources to
perform compliance monitoring and enforcement activities with respect to the
Registered Entity; the Registered Entity’s compliance history with its current
Regional Entity; and the manner in which pending compliance monitoring and
enforcement matters concerning the Registered Entity would be transitioned from
the current Regional Entity to the transferee Regional Entity; along with any other
reasons for the proposed transfer stated by the Registered Entity and any other
reasons either Regional Entity considers relevant. The Regional Entities may

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request that the Registered Entity provide additional data and information
concerning the proposed transfer for the Regional Entities’ use in their evaluation.
The Registered Entity’s current Regional Entity shall notify the Registered Entity
in writing as to whether (i) the two Regional Entities agree that the requested
transfer is appropriate, (ii) the two Regional Entities agree that the requested
transfer is not appropriate and should not be processed further, or (iii) the two
Regional Entities disagree as to whether the proposed transfer is appropriate.
3.

If the two Regional Entities agree that the requested transfer is appropriate, they
shall submit a joint written request to NERC requesting that the proposed transfer
be approved and that the delegation agreement between NERC and each of the
Regional Entities be amended accordingly. The Regional Entities’ joint written
submission to NERC shall describe the reasons for the proposed transfer; the
location of the Registered Entity’s Bulk Power System Facilities in relation to the
geographic and electrical boundaries of the respective Regions; the impacts of the
proposed transfer on other Bulk Power System owners, operators, and users; the
impacts of the proposed transfer on the current and future staffing, resources,
budgets and assessments of each Regional Entity, including the sufficiency of the
proposed transferee Regional Entity’s staffing and resources to perform
compliance monitoring and enforcement activities with respect to the Registered
Entity; the Registered Entity’s compliance history with its current Regional
Entity; and the manner in which pending compliance monitoring and enforcement
matters concerning the Registered Entity will be transitioned from the current
Regional Entity to the transferee Regional Entity. The NERC Board of Trustees
shall consider the proposed transfer based on the submissions of the Regional
Entities and any other information the Board considers relevant, and shall approve
or disapprove the proposed transfer and the related delegation agreement
amendments. The NERC Board may request that the Regional Entities provide
additional information, or obtain additional information from the Registered
Entity, for the use of the NERC Board in making its decision. If the NERC Board
approves the proposed transfer, NERC shall file the related delegation agreements
with FERC for approval.

4.

If the two Regional Entities do not agree with each other that the proposed
transfer is appropriate, the Regional Entity supporting the proposed transfer shall,
if requested by the Registered Entity, submit a written request to NERC to
approve the transfer and the related delegation agreement amendments. The
Regional Entity’s written request shall include the information specified in
Section 1208.3. The Regional Entity that does not believe the proposed transfer is
appropriate will be allowed to submit a written statement to NERC explaining
why the Regional Entity believes the transfer is not appropriate and should not be
approved. The NERC Board of Trustees shall consider the proposed transfer
based on the submissions of the Regional Entities and any other information the
Board considers relevant, and shall approve or disapprove the proposed transfer
and the related delegation agreement amendments. The NERC Board may request
that the Regional Entities provide additional information, or obtain additional

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information from the Registered Entity, for the use of the NERC Board in making
its decision. If the NERC Board approves the proposed transfer, NERC shall file
the related delegation agreements with FERC for approval.
5.

Prior to action by the NERC Board of Trustees on a proposed transfer of
registration under Section 1208.3 or 1208.4, NERC shall post information
concerning the proposed transfer, including the submissions from the Regional
Entities, on its website for at least twenty-one (21) days for the purpose of
receiving public comment.

6.

If the NERC Board of Trustees disapproves a proposed transfer presented to it
pursuant to either Section 1208.3 or 1208.4, the Regional Entity or Regional
Entities that believe the transfer is appropriate may, if requested to do so by the
Registered Entity, file a petition with FERC pursuant to 18 C.F.R. section 39.8(f)
and (g) requesting that FERC order amendments to the delegation agreements of
the two Regional Entities to effectuate the proposed transfer.

7.

No transfer of a Registered Entity from one Regional Entity to another Regional
Entity shall be effective (i) unless approved by FERC, and (ii) any earlier than the
first day of January of the second calendar year following approval by FERC,
unless an earlier effective date is agreed to by both Regional Entities and NERC
and approved by FERC.

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SECTION 1300 — COMMITTEES
1301. Establishing Standing Committees
The Board may from time to time create standing committees. In doing so, the Board
shall approve the charter of each committee and assign specific authority to each
committee necessary to conduct business within that charter. Each standing committee
shall work within its Board-approved charter and shall be accountable to the Board for
performance of its Board-assigned responsibilities. A NERC standing committee may
not delegate its assigned work to a member forum, but, in its deliberations, may request
the opinions of and consider the recommendations of a member forum.
1302. Committee Membership
Each committee shall have a defined membership composition that is explained in its
charter. Committee membership may be unique to each committee, and can provide for
balanced decision-making by providing for representatives from each Sector or, where
Sector representation will not bring together the necessary diversity of opinions, technical
knowledge and experience in a particular subject area, by bringing together a wide
diversity of opinions from industry experts with outstanding technical knowledge and
experience in a particular subject area. Committee membership shall also provide the
opportunity for an equitable number of members from the United States and Canada,
based approximately on proportionate Net Energy for Load. All committees and other
subgroups (except for those organized on other than a Sector basis because Sector
representation will not bring together the necessary diversity of opinions, technical
knowledge and experience in a particular subject area) must ensure that no two
stakeholder Sectors are able to control the vote on any matter, and no single Sector is able
to defeat a matter. With regard to committees and subgroups pertaining to development
of, interpretation of, or compliance with Reliability Standards, NERC shall provide a
reasonable opportunity for membership from Sectors desiring to participate. Committees
and subgroups organized on other than a Sector basis shall be reported to the NERC
Board and the Member Representatives Committee, along with the reasons for
constituting the committee or subgroup in the manner chosen. In such cases and subject
to reasonable restrictions necessary to accomplish the mission of such committee or
subgroup, NERC shall provide a reasonable opportunity for additional participation, as
members or official observers, for Sectors not represented on the committee or subgroup.
1303. Procedures for Appointing Committee Members
Committee members shall be nominated and selected in a manner that is open, inclusive,
and fair. Unless otherwise stated in these Rules of Procedure or approved by the Board,
all committee member appointments shall be approved by the board, and committee
officers shall be appointed by the Chairman of the Board.
1304. Procedures for Conduct of Committee Business
1.

Notice to the public of the dates, places, and times of meetings of all committees,
and all nonconfidential material provided to committee members, shall be posted

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on NERC’s website at approximately the same time that notice is given to
committee members. Meetings of all standing committees shall be open to the
public, subject to reasonable limitations due to the availability and size of meeting
facilities; provided that the meeting may be held in or adjourn to closed session to
discuss matters of a confidential nature, including but not limited to personnel
matters, compliance enforcement matters, litigation, or commercially sensitive or
Critical Energy Infrastructure Information of any entity.
2.

NERC shall maintain a set of procedures, approved by the Board, to guide the
conduct of business by standing committees.

1305. Committee Subgroups
Standing committees may appoint subgroups using the same principles as in Section
1302.

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SECTION 1400 — AMENDMENTS TO THE NERC RULES OF
PROCEDURE
1401. Proposals for Amendment or Repeal of Rules of Procedure
In accordance with the Bylaws of NERC, requests to amend or repeal the Rules of
Procedure may be submitted by (1) any ten Members of NERC, which number shall
include Members from at least three membership Sectors, (2) the Member
Representatives Committee, (3) a standing committee of NERC to whose function and
purpose the Rule of Procedure pertains, or (4) an officer of the ERO.
1402. Approval of Amendment or Repeal of Rules of Procedure
Amendment to or repeal of Rules of Procedure shall be approved by the Board after
public notice and opportunity for comment in accordance with the Bylaws of NERC. In
approving changes to the Rules of Procedure, the Board shall consider the inputs of the
Member Representatives Committee, other ERO committees affected by the particular
changes to the Rules of Procedure, and other stakeholders as appropriate. After Board
approval, the amendment or repeal shall be submitted to the Applicable Governmental
Authorities for approval, where authorized by legislation or agreement. No amendment
to or repeal of the Rules of Procedure shall be effective until it has been approved by the
Applicable Governmental Authorities.
1403. Alternative Procedure for Violation Risk Factors
In the event the Reliability Standards development process fails to produce Violation
Risk Factors for a particular Reliability Standard in a timely manner, the Board of
Trustees may adopt Violation Risk Factors for that standard after notice and opportunity
for comment. In adopting Violation Risk Factors, the Board shall consider the inputs of
the Member Representatives Committee and affected stakeholders.

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SECTION 1500 — CONFIDENTIAL INFORMATION
1501. Definitions
1.

Confidential Information means (i) Confidential Business and Market
Information; (ii) Critical Energy Infrastructure Information; (iii) personnel
information that identifies or could be used to identify a specific individual, or
reveals personnel, financial, medical, or other personal information; (iv) work
papers, including any records produced for or created in the course of an
evaluation or audit; (v) investigative files, including any records produced for or
created in the course of an investigation; or (vi) Cyber Security Incident
Information; provided, that public information developed or acquired by an entity
shall be excluded from this definition.

2.

Confidential Business and Market Information means any information that
pertains to the interests of any entity, that was developed or acquired by that
entity, and that is proprietary or competitively sensitive.

3.

Critical Energy Infrastructure Information means specific engineering,
vulnerability, or detailed design information about proposed or existing Critical
Infrastructure that (i) relates details about the production, generation,
transportation, transmission, or distribution of energy; (ii) could be useful to a
person in planning an attack on Critical Infrastructure; and (iii) does not simply
give the location of the Critical Infrastructure.

4.

Critical Infrastructure means existing and proposed systems and assets, whether
physical or virtual, the incapacity or destruction of which would negatively affect
security, economic security, public health or safety, or any combination of those
matters.

5.

Cyber Security Incident Information means any information related to,
describing, or which could be used to plan or cause a Cyber Security Incident.

1502. Protection of Confidential Information
1.

Identification of Confidential Information — An owner, operator, or user of
the Bulk Power System and any other party (the “Submitting Entity”) shall mark
as confidential any information that it submits to NERC or a Regional Entity (the
“Receiving Entity”) that it reasonably believes contains Confidential Information
as defined by these Rules of Procedure, indicating the category or categories
defined in Section 1501 in which the information falls. If the information is
subject to a prohibition on public disclosure in the Commission-approved rules of
a regional transmission organization or independent system operator or a similar
prohibition in applicable federal, state, or provincial laws, the Submitting Entity
shall so indicate and provide supporting references and details.

2.

Confidentiality — Except as provided herein, a Receiving Entity shall keep in
confidence and not copy, disclose, or distribute any Confidential Information or

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any part thereof without the permission of the Submitting Entity, except as
otherwise legally required.
3.

Information no longer Confidential – If a Submitting Entity concludes that
information for which it had sought confidential treatment no longer qualifies for
that treatment, the Submitting Entity shall promptly so notify NERC or the
relevant Regional Entity.

1503. Requests for Information
1.

Limitation — A Receiving Entity shall make information available only to one
with a demonstrated need for access to the information from the Receiving Entity.

2.

Form of Request — A person with such a need may request access to
information by using the following procedure:
2.1

The request must be in writing and clearly marked “Request for
Information.”

2.2

The request must identify the individual or entity that will use the
information, explain the requester’s need for access to the information,
explain how the requester will use the information in furtherance of that
need, and state whether the information is publicly available or available
from another source or through another means. If the requester seeks
access to information that is subject to a prohibition on public disclosure
in the Commission-approved rules of a regional transmission organization
or independent system operator or a similar prohibition in applicable
federal, state, or provincial laws, the requester shall describe how it
qualifies to receive such information.

2.3

The request must stipulate that, if the requester does not seek public
disclosure, the requester will maintain as confidential any information
received for which a Submitting Party has made a claim of confidentiality
in accordance with NERC’s rules. As a condition to gaining access to such
information, a requester shall execute a non-disclosure agreement in a
form approved by NERC’s Board of Trustees.

3.

Notice and Opportunity for Comment — Prior to any decision to disclose
information marked as confidential, the Receiving Entity shall provide written
notice to the Submitting Entity and an opportunity for the Submitting Entity to
either waive objection to disclosure or provide comments as to why the
Confidential Information should not be disclosed. Failure to provide such
comments or otherwise respond is not deemed waiver of the claim of
confidentiality.

4.

Determination by ERO or Regional Entity — Based on the information
provided by the requester under Rule 1503.2, any comments provided by the
Submitting Entity, and any other relevant available information, the chief

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executive officer or his or her designee of the Receiving Entity shall determine
whether to disclose such information.
5.

Appeal — A person whose request for information is denied in whole or part may
appeal that determination to the President of NERC (or the President’s designee)
within 30 days of the determination. Appeals filed pursuant to this Section must
be in writing, addressed to the President of NERC (or the President’s designee),
and clearly marked “Appeal of Information Request Denial.”
NERC will provide written notice of such appeal to the Submitting Entity and an
opportunity for the Submitting Entity to either waive objection to disclosure or
provide comments as to why the Confidential Information should not be
disclosed; provided that any such comments must be received within 30 days of
the notice and any failure to provide such comments or otherwise respond is not
deemed a waiver of the claim of confidentiality.
The President of NERC (or the President’s designee) will make a determination
with respect to any appeal within 30 days. In unusual circumstances, this time
limit may be extended by the President of NERC (or the President’s designee),
who will send written notice to the requester setting forth the reasons for the
extension and the date on which a determination on the appeal is expected.

6.

Disclosure of Information — In the event the Receiving Entity, after following
the procedures herein, determines to disclose information designated as
Confidential Information, it shall provide the Submitting Entity no fewer than 21
days’ written notice prior to releasing the Confidential Information in order to
enable such Submitting Entity to (a) seek an appropriate protective order or other
remedy, (b) consult with the Receiving Entity with respect to taking steps to resist
or narrow the scope of such request or legal process, or (c) waive compliance, in
whole or in part, with the terms of this Section. Should a Receiving Entity be
required to disclose Confidential Information, or should the Submitting Entity
waive objection to disclosure, the Receiving Entity shall furnish only that portion
of the Confidential Information which the Receiving Entity’s counsel advises is
legally required.

7.

Posting of Determinations on Requests for Disclosure of Confidential
Information — Upon making its determination on a request for disclosure of
Confidential Information, NERC or the Regional Entity, as applicable, shall (i)
notify the requester that the request for disclosure is granted or denied, (ii)
publicly post any determination to deny the request to disclose Confidential
Information, including in such posting an explanation of the reasons for the denial
(but without in such explanation disclosing the Confidential Information), and
(iii) publicly post any determination that information claimed by the Submitting
Entity to be Confidential Information is not Confidential Information (but without
in such posting disclosing any information that has been determined to be
Confidential Information).

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1504. Employees, Contractors and Agents
A Receiving Entity shall ensure that its officers, trustees, directors, employees,
subcontractors and subcontractors’ employees, and agents to whom Confidential
Information is exposed are under obligations of confidentiality that are at least as
restrictive as those contained herein.
1505. Provision of Information to FERC and Other Governmental Authorities
1.

Request — A request from FERC for reliability information with respect to
owners, operators, and users of the Bulk Power System within the United States is
authorized by Section 215 of the Federal Power Act. Other Applicable
Governmental Authorities may have similar authorizing legislation that grants a
right of access to such information. Unless otherwise directed by FERC or its
staff or the other Applicable Governmental Authority requesting the information,
upon receiving such a request, a Receiving Entity shall provide contemporaneous
notice to the applicable Submitting Entity. In its response to such a request, a
Receiving Entity shall preserve any mark of confidentiality and shall notify FERC
or other Applicable Governmental Authorities that the Submitting Entity has
marked the information as confidential.

2.

Continued Confidentiality — Each Receiving Entity shall continue to treat as
confidential all Confidential Information that it has submitted to NERC or to
FERC or another Applicable Governmental Authority, until such time as FERC or
the other Applicable Governmental Authority authorizes disclosure of such
information.

1506. Permitted Disclosures
1.

Confirmed Violations — Nothing in this Section 1500 shall prohibit the
disclosure of a violation at the point when the matter is filed with an Applicable
Governmental Authority as a Notice of Penalty, the “violator” admits to the
violation, or the alleged violator and NERC or the Regional Entity reach a
settlement regarding the violation.

2.

Compliance Information — NERC and the Regional Entities are authorized to
exchange Confidential Information related to evaluations, Compliance Audits,
and Compliance Investigations in furtherance of the Compliance Monitoring and
Enforcement Program, on condition they continue to maintain the confidentiality
of such information.

1507. Remedies for Improper Disclosure
Any person engaged in NERC or Regional Entity activity under Section 215 of the
Federal Power Act or the equivalent laws of other Applicable Governmental Authorities
who improperly discloses information determined to be confidential may lose access to
Confidential Information on a temporary or permanent basis and may be subject to
adverse personnel action, including suspension or termination. Nothing in Section 1500

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precludes an entity whose information was improperly disclosed from seeking a remedy
in an appropriate court.

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SECTION 1600 — REQUESTS FOR DATA OR INFORMATION
1601. Scope of a NERC or Regional Entity Request for Data or Information
Within the United States, NERC and Regional Entities may request data or information
that is necessary to meet their obligations under Section 215 of the Federal Power Act, as
authorized by Section 39.2(d) of the Commission’s regulations, 18 C.F.R. § 39.2(d). In
other jurisdictions NERC and Regional Entities may request comparable data or
information, using such authority as may exist pursuant to these Rules of Procedure and
as may be granted by Applicable Governmental Authorities in those other jurisdictions.
The provisions of Section 1600 shall not apply to Requirements contained in any
Reliability Standard to provide data or information; the Requirements in the Reliability
Standards govern. The provisions of Section 1600 shall also not apply to data or
information requested in connection with a compliance or enforcement action under
Section 215 of the Federal Power Act, Section 400 of these Rules of Procedure, or any
procedures adopted pursuant to those authorities, in which case the Rules of Procedure
applicable to the production of data or information for compliance and enforcement
actions shall apply.
1602. Procedure for Authorizing a NERC Request for Data or Information
1. NERC shall provide a proposed request for data or information or a proposed
modification to a previously-authorized request, including the information specified
in Section 1602.2.1 or 1602.2.2 as applicable, to the Commission’s Office of Electric
Reliability at least twenty-one (21) days prior to initially posting the request or
modification for public comment. Submission of the proposed request or
modification to the Office of Electric Reliability is for the information of the
Commission. NERC is not required to receive any approval from the Commission
prior to posting the proposed request or modification for public comment in
accordance with Section 1602.2 or issuing the request or modification to Reporting
Entities following approval by the Board of Trustees.
2. NERC shall post a proposed request for data or information or a proposed
modification to a previously authorized request for data or information for a forty-five
(45) day public comment period.
2.1. A proposed request for data or information shall contain, at a minimum, the
following information: (i) a description of the data or information to be
requested, how the data or information will be used, and how the availability of
the data or information is necessary for NERC to meet its obligations under
applicable laws and agreements; (ii) a description of how the data or information
will be collected and validated; (iii) a description of the entities (by functional
class and jurisdiction) that will be required to provide the data or information
(“Reporting Entities”); (iv) the schedule or due date for the data or information;
(v) a description of any restrictions on disseminating the data or information
(e.g., “Confidential Information,” “Critical Energy Infrastructure Information,”

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“aggregating” or “identity masking”); and (vi) an estimate of the relative burden
imposed on the Reporting Entities to accommodate the data or information
request.
2.2. A proposed modification to a previously authorized request for data or
information shall explain (i) the nature of the modifications; (ii) an estimate of
the burden imposed on the Reporting Entities to accommodate the modified data
or information request, and (iii) any other items from Section 1602.2.1 that
require updating as a result of the modifications.
3. After the close of the comment period, NERC shall make such revisions to the
proposed request for data or information as are appropriate in light of the comments.
NERC shall submit the proposed request for data or information, as revised, along
with the comments received, NERC’s evaluation of the comments and
recommendations, to the Board of Trustees.
4. In acting on the proposed request for data or information, the Board of Trustees may
authorize NERC to issue it, modify it, or remand it for further consideration.
5. NERC may make minor changes to an authorized request for data or information
without Board approval. However, if a Reporting Entity objects to NERC in writing
to such changes within 21 days of issuance of the modified request, such changes
shall require Board approval before they are implemented.
6. Authorization of a request for data or information shall be final unless, within thirty
(30) days of the decision by the Board of Trustees, an affected party appeals the
authorization under this Section 1600 to the Applicable Governmental Authority.
1603. Owners, Operators, and Users to Comply
Owners, operators, and users of the Bulk Power System registered on the NERC
Compliance Registry shall comply with authorized requests for data and information. In
the event a Reporting Entity within the United States fails to comply with an authorized
request for data or information under Section 1600, NERC may request the Commission
to exercise its enforcement authority to require the Reporting Entity to comply with the
request for data or information and for other appropriate enforcement action by the
Commission. NERC will make any request for the Commission to enforce a request for
data or information through a non-public submission to the Commission’s enforcement
staff.
1604. Requests by Regional Entity for Data or Information
1. A Regional Entity may request that NERC seek authorization for a request for data or
information to be applicable within the Region of the Regional Entity, either as a
freestanding request or as part of a proposed NERC request for data or information.
Any such request must be consistent with this Section 1600.

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2. A Regional Entity may also develop its own procedures for requesting data or
information, but any such procedures must include at least the same procedural
elements as are included in this Section 1600. Any such Regional Entity procedures
or changes to such procedures shall be submitted to NERC for approval. Upon
approving such procedures or changes thereto, NERC shall file the proposed
procedures or proposed changes for approval by the Commission and any other
Applicable Governmental Authorities applicable to the Regional Entity. The
Regional Entity procedures or changes to such procedures shall not be effective in a
jurisdiction until approved by, and in accordance with any revisions directed by, the
Commission or other Applicable Governmental Authority.
1605. Confidentiality
If the approved data or information request includes a statement under Section
1602.1.1(v) that the requested data or information will be held confidential or treated as
Critical Energy Infrastructure Information, then the applicable provisions of Section 1500
will apply without further action by a Submitting Entity. A Submitting Entity may
designate any other data or information as Confidential Information pursuant to the
provisions of Section 1500, and NERC or the Regional Entity shall treat that data or
information in accordance with Section 1500. NERC or a Regional Entity may utilize
additional protective procedures for handling particular requests for data or information
as may be necessary under the circumstances.
1606. Expedited Procedures for Requesting Time-Sensitive Data or Information
1. In the event NERC or a Regional Entity must obtain data or information by a date or
within a time period that does not permit adherence to the time periods specified in
Section 1602, the procedures specified in Section 1606 may be used to obtain the data
or information. Without limiting the circumstances in which the procedures in
Section 1606 may be used, such circumstances include situations in which it is
necessary to obtain the data or information (in order to evaluate a threat to the
reliability or security of the Bulk Power System, or to comply with a directive in an
order issued by the Commission or by another Applicable Governmental Authority)
within a shorter time period than possible under Section 1602. The procedures
specified in Section 1606 may only be used if authorized by the NERC Board of
Trustees prior to activation of such procedures.
2. Prior to posting a proposed request for data or information, or a modification to a
previously-authorized request, for public comment under Section 1606, NERC shall
provide the proposed request or modification, including the information specified in
paragraph 1602.2.1 or 1602.2.2 as applicable, to the Commission’s Office of Electric
Reliability. The submission to the Commission’s Office of Electric Reliability shall
also include an explanation of why it is necessary to use the expedited procedures of
Section 1606 to obtain the data or information. The submission shall be made to the
Commission’s Office of Electric Reliability as far in advance, up to twenty-one (21)
days, of the posting of the proposed request or modification for public comments as is

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reasonably possible under the circumstances, but in no event less than two (2) days in
advance of the public posting of the proposed request or modification.
3. NERC shall post the proposed request for data or information or proposed
modification to a previously-authorized request for data or information for a public
comment period that is reasonable in duration given the circumstances, but in no
event shorter than five (5) days. The proposed request for data or information or
proposed modification to a previously-authorized request for data or information shall
include the information specified in Section 1602.2.1 or 1602.2.2, as applicable, and
shall also include an explanation of why it is necessary to use the expedited
procedures of Section 1606 to obtain the data or information.
4. The provisions of Sections 1602.3, 1602.4, 1602.5 and 1602.6 shall be applicable to a
request for data or information or modification to a previously-authorized request for
data or information developed and issued pursuant to Section 1606, except that (a) if
NERC makes minor changes to an authorized request for data or information without
Board approval, such changes shall require Board approval if a Reporting Entity
objects to NERC in writing to such changes within five (5) days of issuance of the
modified request; and (b) authorization of the request for data or information shall be
final unless an affected party appeals the authorization of the request by the Board of
Trustees to the Applicable Governmental Authority within five (5) days following the
decision of the Board of Trustees authorizing the request, which decision shall be
promptly posted on NERC’s website.

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SECTION 1700 — CHALLENGES TO DETERMINATIONS
1701. Scope of Authority
Section 17001702 sets forth the procedures to be followed for Registered Entities to
challenge determinations made by Planning Coordinators under various Reliability
Standards PRC-023 or terms defined in the Glossary of Terms Used in NERC Reliability
Standards. Section 1703 sets forth the procedures to be followed when a Submitting
Entity or Owner wishes to challenge a determination by NERC to approve or to
disapprove an Exception Request or to terminate an Exception under Section 509.
1702. Challenges to Determinations by Planning Coordinators Under Reliability Standard
PRC-023
1.

This Section 1702 establishes the procedures to be followed when a Registered
Entity wishes to challenge a determination by a Planning Coordinator of the sub200 kV circuits in its Planning Coordinator area for which Transmission Owners,
Generator Owners, and Distribution Providers (defined as “Registered Entities”
for purposes of this Section 1702) must comply with the requirements of
Reliability Standard PRC-023.

2.

Planning Coordinator Procedures

3.

2.1

Each Planning Coordinator shall establish a procedure for a Registered
Entity to submit a written request for an explanation of a determination
made by the Planning Coordinator under PRC-023.

2.2

A Registered Entity shall follow the procedure established by the Planning
Coordinator for submitting the request for explanation and must submit
any such request within 60 days of receiving the determination under
PRC-023 from the Planning Coordinator.

2.3

Within 30 days of receiving a written request from a Registered Entity, the
Planning Coordinator shall provide the Registered Entity with a written
explanation of the basis for its determination under PRC-023, unless the
Planning Coordinator provided a written explanation of the basis for its
determination when it initially informed the Registered Entity of its
determination.

A Registered Entity may challenge the determination of the Planning Coordinator
by filing with the appropriate Regional Entity, with a copy to the Planning
Coordinator, within 60 days of receiving the written explanation from the
Planning Coordinator. The challenge shall include the following: (a) an
explanation of the technical reasons for its disagreement with the Planning
Coordinator’s determination, along with any supporting documentation, and (b) a
copy of the Planning Coordinator’s written explanation. Within 30 days of

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receipt of a challenge, the Planning Coordinator may file a response to the
Regional Entity, with a copy to the Registered Entity.
4.

The filing of a challenge in good faith shall toll the time period for compliance
with PRC-023 with respect to the subject facility until such time as the challenge
is withdrawn, settled or resolved.

5.

The Regional Entity shall issue its written decision setting forth the basis of its
determination within 90 days after it receives the challenge and send copies of the
decision to the Registered Entity and the Planning Coordinator. The Regional
Entity may convene a meeting of the involved entities and may request additional
information. The Regional Entity shall affirm the determination of the Planning
Coordinator if it is supported by substantial evidence.

6.

A Planning Coordinator or Registered Entity affected by the decision of the
Regional Entity may, within 30 days of the decision, file an appeal with NERC,
with copies to the Regional Entity and the Planning Coordinator or Registered
Entity. The appeal shall state the basis of the objection to the decision of the
Regional Entity and shall include the Regional Entity decision, the written
explanation of the Planning Coordinator’s determination under PRC-023, and the
documents and reasoning filed by the Registered Entity with the Regional Entity
in support of its objection. The Regional Entity, Planning Coordinator or
Registered Entity may file a response to the appeal within 30 days of the appeal.

7.

The NERC Board of Trustees shall appoint a panel to decide appeals from Region
Entity decisions under Section 1702.5. The panel, which may contain alternates,
shall consist of at least three appointees, one of whom must be a member of the
NERC staff, who are knowledgeable about PRC-023 and transmission planning
and do not have a direct financial or business interest in the outcome of the
appeal. The panel shall decide the appeal within 90 days of receiving the appeal
from the decision of the Regional Entity and shall affirm the determination of the
Planning Coordinator if it is supported by substantial evidence.

8.

The Planning Coordinator or Registered Entity affected by the decision of the
panel may request that the NERC Board of Trustees review the decision by filing
its request for review and a statement of reasons with NERC’s Chief Reliability
Officer within 30 days of the panel decision. The Board of Trustees may, in its
discretion, decline to review the decision of the panel, in which case the decision
of the panel shall be the final NERC decision. Within 90 days of the request for
review under this Section 1702.8, the NERC Board of Trustees may either (a)
issue a decision on the merits, which shall be the final NERC decision, or (b)
issue a notice declining to review the decision of the panel, in which case the
decision of the panel shall be the final NERC decision. If no written decision or
notice declining review is issued within 90 calendar days, the appeal shall be
deemed to have been denied by the NERC Board of Trustees and this will have
the same effect as a notice declining review.

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9.

The Registered Entity or Planning may appeal the final NERC decision to the
applicable governmental authority within 30 days of receipt of the Board of
Trustees’ final decision or notice declining review, or expiration of the 90-day
review period without any action by NERC.

10.

The Planning Coordinator and Registered Entity are encouraged, but not required,
to meet to resolve any dispute, including use of mutually agreed to alternative
dispute resolution procedures, at any time during the course of the matter. In the
event resolution occurs after the filing of a challenge, the Registered Entity and
Planning Coordinator shall jointly provide to the applicable Regional Entity a
written acknowledgement of withdrawal of the challenge or appeal, including a
statement that all outstanding issues have been resolved.

1703. Challenges to NERC Determinations of BES Exception Requests Under Section 509
1.

This Section 1703 establishes the procedures to be followed when a Submitting
Entity or Owner wishes to challenge a determination by NERC to approve or to
disapprove an Exception Request or to terminate an Exception under Section 509.

2.

A Submitting Entity (or Owner if different) aggrieved by the decision of NERC to
approve or disapprove an Exception Request or to terminate an Exception with
respect to any Element may, within 30 days following the date of the decision, file
a written challenge to the decision with the NERC director of compliance
operations, with copies to the Regional Entity and the Submitting Entity or Owner
if different. The written challenge shall state the basis of the objection to the
decision of NERC. The Regional Entity and the Submitting Entity or Owner if
different may file a response to the challenge within 30 days following the date
the challenge is filed with NERC.

3.

The challenge shall be decided by the Board of Trustees Compliance Committee.
Within 90 days of the date of submission of the challenge, the Board of Trustees
Compliance Committee shall issue its decision on the challenge. The decision of
the Board of Trustees Compliance Committee shall be the final NERC decision;
provided, that the Board of Trustees Compliance Committee may extend the
deadline date for its decision to a date more than 90 days following submission of
the challenge, by issuing a notice to the Submitting Entity, the Owner (if
different) and the Regional Entity stating the revised deadline date and the reason
for the extension.

4.

The Submitting Entity, or Owner if different, may appeal the final NERC decision
to, or seek review of the final NERC decision by, the Applicable Governmental
Authority(ies), in accordance with the legal authority and rules and procedures of
the Applicable Governmental Authority(ies). Any such appeal shall be filed
within thirty (30) days following the date of the decision of the Board of Trustees
Compliance Committee, or within such other time period as is provided for in the
legal authority, rules or procedures of the Applicable Governmental Authority.

Effective January 10, 2012

94

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 3A

REVISED APPENDIX 2 OF THE RULES OF PROCEDURE,
DEFINITIONS USED IN THE RULES OF PROCEDURE
CLEAN VERSION

Proposed revisions 1-9-2012

NORTH AMERICAN ELECTRIC RELIABILITY
CORPORATION

DEFINITIONS USED IN THE RULES OF PROCEDURE

APPENDIX 2 TO THE RULES OF PROCEDURE

Effective: [DATE], 2012

General
For purposes of the NERC Rules of Procedure, including all Appendices, the terms defined in
this Appendix shall have the meanings set forth herein. For convenience of reference to the user,
definitions of terms that are used in a particular Appendix may be repeated in that Appendix.
Where used in the Rules of Procedure, a defined term will be capitalized. Where a term defined
in this Appendix appears in the Rules of Procedure but is not capitalized, the term is there being
used in its ordinary and commonly understood meaning and not as defined in this Appendix (if
different). Other terms that are not defined terms, such as the names of entities, organizations,
committees, or programs; position titles; titles of documents or forms; section headings;
geographic locations; and other terms commonly presented as proper nouns, may also be
capitalized in the Rules of Procedure without being defined in this Appendix.
Definitions of terms in this Appendix that are marked with asterisks (**) are taken from the
NERC Glossary of Terms Used in Reliability Standards. Definitions of terms in this Appendix
that are marked with “pluses” (++) are taken from Section 215 of the Federal Power Act or the
Commission’s regulations at 18 C.F.R. Part 39 or Part 388.
Other terms used in the Rules of Procedure but not defined in this Appendix that have commonly
understood and used technical meanings in the electric power industry, including applicable
codes and standards, shall be construed in accordance with such commonly understood and used
technical meanings.

Specific Definitions
“Acceptance of the Exception Request” or “Acceptance” means the determination that an
eligible Exception Request (i.e., a Request permitted by section 4.1 of Appendix 5C) contains all
the Required Information so that it can undergo substantive review.
“Adjacent Balancing Authority” means a Balancing Authority Area that is interconnected to
another Balancing Authority Area either directly or via a multi-party agreement or transmission
tariff.**
“Adjusted Penalty Amount” means the proposed Penalty for a violation of a Reliability Standard
as determined based on application of the adjustment factors identified in Section 4.3 of the
Sanction Guidelines to the Base Penalty Amount.
“Advisories” or “Level 1 (Advisories)” is a notification issued by NERC in accordance with
Section 810.3.1 of the Rules of Procedure.
“Alleged Violation” means a Possible Violation for which the Compliance Enforcement
Authority has determined, based on an assessment of the facts and circumstances surrounding the
Possible Violation, that evidence exists to indicate a Registered Entity has violated a Reliability
Standard.

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“Annual Audit Plan” means a plan developed annually by the Compliance Enforcement
Authority that includes the Reliability Standards and Registered Entities to be audited, the
schedule of Compliance Audits, and Compliance Audit Participant requirements for the calendar
year.
“Annual Report” means the annual report to be filed by NERC with FERC and other Applicable
Governmental Authorities in accordance with Section 13.0 of Appendix 4D.
“Applicable Governmental Authority” means the FERC within the United States and the
appropriate governmental authority with subject matter jurisdiction over reliability in Canada
and Mexico.
“Applicable Requirement” means a Requirement of a CIP Standard that (i) expressly provides
either (A) that compliance with the terms of the Requirement is required where or as technically
feasible, or (B) that technical limitations may preclude compliance with the terms of the
Requirement; or (ii) is subject to Appendix 4D by FERC directive.
“Approval of the Exception Request” or “Approval” means the determination by NERC that an
Exception Request meets the criteria to receive the requested Exception.
“Balancing Authority” means the responsible entity that integrates resource plans ahead of time,
maintains Load-interchange-generation balance within a Balancing Authority Area, and supports
Interconnection frequency in real time.**
“Balancing Authority Area” means the collection of generation, transmission, and Loads within
the metered boundaries of the Balancing Authority. The Balancing Authority maintains Loadresource balance within this area.**
“Base Penalty Amount” means the proposed Penalty for a violation of a Reliability Standard as
initially determined pursuant to Sections 4.1 and 4.2 of the NERC Sanction Guidelines, before
application of any adjustment factors.
“BES Definition” means the NERC definition of the Bulk Electric System as set forth in the
NERC Glossary of Terms Used in Reliability Standards.
“Blackstart Resource” means a generating unit(s) and its associated set of equipment which has
the ability to be started without support from the System or is designed to remain energized
without connection to the remainder of the System, with the ability to energize a bus, meeting the
Transmission Operator’s restoration plan needs for Real and Reactive Power capability,
frequency and voltage control, and that has been included in the Transmission Operator’s
restoration plan.**
“Board” or “Board of Trustees” means the Board of Trustees of NERC.
“Board of Trustees Compliance Committee,” “BOTCC” or “Compliance Committee” means the
Compliance Committee of the NERC Board of Trustees.
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“Bulk Electric System” or “BES” means unless modified by the lists shown below, all
Transmission Elements operated at 100 kV or higher and Real Power and Reactive Power
resources connected at 100 kV or higher. This does not include facilities used in the local
distribution of electric energy.
Inclusions:
•
•

•
•

•

I1 - Transformers with the primary terminal and at least one secondary terminal operated
at 100 kV or higher unless excluded under Exclusion E1 or E3.
I2 - Generating resource(s) with gross individual nameplate rating greater than 20 MVA
or gross plant/facility aggregate nameplate rating greater than 75 MVA including the
generator terminals through the high-side of the step-up transformer(s) connected at a
voltage of 100 kV or above.
I3 - Blackstart Resources identified in the Transmission Operator’s restoration plan.
I4 - Dispersed power producing resources with aggregate capacity greater than 75 MVA
(gross aggregate nameplate rating) utilizing a system designed primarily for aggregating
capacity, connected at a common point at a voltage of 100 kV or above.
I5 –Static or dynamic devices (excluding generators) dedicated to supplying or absorbing
Reactive Power that are connected at 100 kV or higher, or through a dedicated
transformer with a high-side voltage of 100 kV or higher, or through a transformer that is
designated in Inclusion I1.

Exclusions:
•

•

E1 - Radial systems: A group of contiguous transmission Elements that emanates from a
single point of connection of 100 kV or higher and:
a) Only serves Load. Or,
b) Only includes generation resources, not identified in Inclusion I3, with an
aggregate capacity less than or equal to 75 MVA (gross nameplate rating).
Or,
c) Where the radial system serves Load and includes generation resources,
not identified in Inclusion I3, with an aggregate capacity of non-retail
generation less than or equal to 75 MVA (gross nameplate rating).
Note – A normally open switching device between radial systems, as depicted
on prints or one-line diagrams for example, does not affect this exclusion.
E2 - A generating unit or multiple generating units on the customer’s side of the retail
meter that serve all or part of the retail Load with electric energy if: (i) the net capacity
provided to the BES does not exceed 75 MVA, and (ii) standby, back-up, and
maintenance power services are provided to the generating unit or multiple generating
units or to the retail Load by a Balancing Authority, or provided pursuant to a binding

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•

•

obligation with a Generator Owner or Generator Operator, or under terms approved by
the applicable regulatory authority.
E3 - Local networks (LN): A group of contiguous transmission Elements operated at or
above 100 kV but less than 300 kV that distribute power to Load rather than transfer bulk
power across the interconnected system. LN’s emanate from multiple points of
connection at 100 kV or higher to improve the level of service to retail customer Load
and not to accommodate bulk power transfer across the interconnected system. The LN is
characterized by all of the following:
a) Limits on connected generation: The LN and its underlying Elements do
not include generation resources identified in Inclusion I3 and do not have
an aggregate capacity of non-retail generation greater than 75 MVA (gross
nameplate rating);
b) Power flows only into the LN and the LN does not transfer energy
originating outside the LN for delivery through the LN; and
c) Not part of a Flowgate or transfer path: The LN does not contain a
monitored Facility of a permanent Flowgate in the Eastern
Interconnection, a major transfer path within the Western Interconnection,
or a comparable monitored Facility in the ERCOT or Quebec
Interconnections, and is not a monitored Facility included in an
Interconnection Reliability Operating Limit (IROL).
E4 – Reactive Power devices owned and operated by the retail customer solely for its
own use.

Note - Elements may be included or excluded on a case-by-case basis through the Rules of
Procedure exception process.**
“Bulk Power System” means, depending on the context: (i) Facilities and control systems
necessary for operating an interconnected electric energy supply and transmission network (or
any portion thereof), and electric energy from generating facilities needed to maintain
transmission system reliability. The term does not include facilities used in the local distribution
of electric energy [++]. (ii) Solely for purposes of Appendix 4E, Bulk Electric System.
“Canadian” means one of the following: (a) a company or association incorporated or organized
under the laws of Canada, or its designated representative(s) irrespective of nationality; (b) an
agency of a federal, provincial, or local government in Canada, or its designated representative(s)
irrespective of nationality; or (c) a self-representing individual who is a Canadian citizen residing
in Canada.
“Canadian Entity” means a Registered Entity (or, solely for purposes of Appendix 4D, a
Responsible Entity) that is organized under Canadian federal or provincial law.

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“Cascading” means the uncontrolled successive loss of System Elements triggered by an incident
at any location. Cascading results in widespread electric service interruption that cannot be
restrained from sequentially spreading beyond an area predetermined by studies.**
“CCC” means the NERC Compliance and Certification Committee.
“Certification” means, depending on the context, (i) the process undertaken by NERC and a
Regional Entity to verify that an entity is capable of responsibilities for tasks associated with a
particular function such as a Balancing Authority, Transmission Operator and/or Reliability
Coordinator; such Certification activities are further described in Section 500 and Appendix 5A
of the NERC Rules of Procedure; or (ii) for purposes of Appendix 6, an official recognition that
indicates the recipient has passed a NERC exam or completed a specified number of Continuing
Education Hours.
“Certification Staff” means individuals employed or contracted by NERC who have the authority
to make initial determinations of Certification of entities performing reliability functions.
“Certification Team” means a team assembled by a Regional Entity that will be responsible for
performing the activities included in the Certification process for an entity pursuant to Appendix
5A.
“Classified National Security Information” means Required Information that has been
determined to be protected from unauthorized disclosure pursuant to Executive Order No. 12958,
as amended, and/or the regulations of the NRC at 10 C.F.R. §95.35; or pursuant to any
comparable provision of Canadian federal or provincial law.
“Clerk” means an individual as assigned by the Compliance Enforcement Authority to perform
duties described in Attachment 2, Hearing Procedures, to Appendix 4C.
“Commission” means the Federal Energy Regulatory Commission or FERC.
“Complaint” means an allegation that a Registered Entity violated a Reliability Standard.
“Compliance and Certification Manager” means individual/individuals within the Regional
Entity that is/are responsible for monitoring compliance of entities with applicable NERC
Reliability Standards.
“Compliance Audit” means a systematic, objective review and examination of records and
activities to determine whether a Registered Entity meets the Requirements of applicable
Reliability Standards.
“Compliance Audit Participants” means Registered Entities scheduled to be audited and the audit
team members.
“Compliance Enforcement Authority” means NERC or the Regional Entity in their respective
roles of monitoring and enforcing compliance with the NERC Reliability Standards.
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“Compliance Enforcement Authority’s Area of Responsibility” means the Compliance
Enforcement Authority’s Region. If a Regional Entity is the Compliance Enforcement
Authority, the Compliance Enforcement Authority’s Area of Responsibility is shown in Exhibit
A to the delegation agreement between the Regional Entity and NERC.
“Compliance Investigation” means a comprehensive investigation, which may include an on-site
visit with interviews of the appropriate personnel, to determine if a violation of a Reliability
Standard has occurred.
“Compliance Monitoring and Enforcement Program” or “CMEP” means, depending on the
context (1) the NERC Uniform Compliance Monitoring and Enforcement Program (Appendix
4C to the NERC Rules of Procedure) or the Commission-approved program of a Regional Entity,
as applicable, or (2) the program, department or organization within NERC or a Regional Entity
that is responsible for performing compliance monitoring and enforcement activities with respect
to Registered Entities’ compliance with Reliability Standards.
“Compliant Date” means the date by which a Responsible Entity is required to be in compliance
with an Applicable Requirement of a CIP Standard.
“Confidential Business and Market Information” means any information that pertains to the
interests of any entity, that was developed or acquired by that entity, and that is proprietary or
competitively sensitive.
“Confidential Information” means (i) Confidential Business and Market Information; (ii) Critical
Energy Infrastructure Information; (iii) personnel information that identifies or could be used to
identify a specific individual, or reveals personnel, financial, medical, or other personal
information; (iv) work papers, including any records produced for or created in the course of an
evaluation or audit; (v) investigative files, including any records produced for or created in the
course of an investigation; or (vi) Cyber Security Incident Information; provided, that public
information developed or acquired by an entity shall be excluded from this definition; or (vii) for
purposes of Appendix 4D, any other information that is designated as Confidential Information
in Section 11.0 of Appendix 4D.
“Confirmed Violation” means an Alleged Violation for which an entity has: (1) accepted the
finding of the violation by a Regional Entity or NERC and will not seek an appeal, or (2)
completed the hearing and appeals process within NERC, or (3) allowed the time for requesting a
hearing or submitting an appeal to expire, or (4) admitted to the violation in a settlement
agreement.
“Continuing Education Hour” or “CE Hour” means sixty minutes of participation in a group,
independent study, or self-study learning activity as approved by the NERC Continuing
Education Program.
“Continuing Education Program Provider” or “Provider” means the individual or organization
offering a learning activity to participants and maintaining documentation required by Appendix
6.
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“Coordinated Functional Registration” means where two or more entities (parties) agree in
writing upon a division of compliance responsibility among the parties for one or more
Reliability Standard(s) applicable to a particular function, and/or for one or more
Requirement(s)/sub-Requirement(s) within particular Reliability Standard(s).
“Covered Asset” means a Cyber Asset or Critical Cyber Asset that is subject to an Applicable
Requirement.
“Credential” means a NERC designation that indicates the level of qualification achieved (i.e.,
reliability operator; balancing, interchange, and transmission operator; balancing and interchange
operator; and transmission operator).
“Credential Maintenance” means to meet NERC CE Hours’ requirements to maintain a valid
NERC-issued system operator Credential.
“Critical Assets” means Facilities, systems, and equipment which, if destroyed, degraded, or
otherwise rendered unavailable, would affect the reliability or operability of the Bulk Electric
System.**
“Critical Cyber Assets” means Cyber Assets critical to the reliable operation of Critical
Assets.**
“Critical Energy Infrastructure Information” means specific engineering, vulnerability, or
detailed design information about proposed or existing Critical Infrastructure that (i) relates
details about the production, generation, transportation, transmission, or distribution of energy;
(ii) could be useful to a person in planning an attack on Critical Infrastructure; and (iii) does not
simply give the location of the Critical Infrastructure.++
“Critical Infrastructure” means existing and proposed systems and assets, whether physical or
virtual, the incapacity or destruction of which would negatively affect security, economic
security, public health or safety, or any combination of those matters.++
“Critical Infrastructure Protection Standard” or “CIP Standard” means any of NERC Reliability
Standards CIP-002 through CIP-009.
“Cross-Border Regional Entity” means a Regional Entity that encompasses a part of the United
States and a part of Canada or Mexico.++
“Cyber Assets” means programmable electronic devices and communication networks including
hardware, software, and data.**
“Cyber Security Incident” means any malicious or suspicious event that disrupts, or was an
attempt to disrupt, the operation of those programmable electronic devices and communications
networks including hardware, software and data that are essential to the Reliable Operation of
the Bulk Power System.++

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“Cyber Security Incident Information” means any information related to, describing, or which
could be used to plan or cause a Cyber Security Incident.
“Days”, as used in Appendix 5A with respect to the Registration and Certification processes,
means calendar days.
“Delegate” means a person to whom the Senior Manager of a Responsible Entity has delegated
authority pursuant to Requirement R2.3 of CIP Standard CIP-003-1 (or any successor provision).
“Director of Compliance” means the Director of Compliance of NERC or of the Compliance
Enforcement Authority, as applicable, who is responsible for the management and supervision of
Compliance Staff, or his or her designee.
“Disapproval of the Exception Request” or “Disapproval” means the determination by NERC
that an Exception Request does not meet the criteria to receive the requested Exception.
“Distribution Factor” means the portion of an Interchange Transaction, typically expressed in per
unit that flows across a transmission facility (Flowgate).**
“Distribution Provider” means the entity that provides and operates the “wires” between the
transmission system and the end-use customer. For those end-use customers who are served at
transmission voltages, the Transmission Owner also serves as the Distribution Provider. Thus,
the Distribution Provider is not defined by a specific voltage, but rather as performing the
distribution function at any voltage.**
“Document” means, in addition to the commonly understood meaning of the term as information
written or printed on paper, any electronically stored information, including writings, drawings,
graphs, charts, photographs, sound recordings, images and other data or data compilations stored
in any medium from which information can be obtained, and shall be translated by the producing
party into reasonably usable form.
“Effective Date” means the date, as specified in a notice rejecting or disapproving a TFE Request
or terminating an approved TFE, on which the rejection, disapproval or termination becomes
effective.
“Electric Reliability Organization” or “ERO” means the organization that is certified by the
Commission under Section 39.3 of its regulations, the purpose of which is to establish and
enforce Reliability Standards for the Bulk Power System in the United States, subject to
Commission review. The organization may also have received recognition by Applicable
Governmental Authorities in Canada and Mexico to establish and enforce Reliability Standards
for the Bulk Power Systems of the respective countries.
“Element” means any electrical device with terminals that may be connected to other electrical
devices such as a generator, transformer, circuit breaker, bus section, or transmission line. An
Element may be comprised of one or more components.**

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“Eligible Reviewer” means a person who has the required security clearances or other
qualifications, or who otherwise meets the applicable criteria, to have access to Confidential
Information, Classified National Security Information, NRC Safeguards Information or Protected
FOIA Information, as applicable to the particular information to be reviewed.
“End Date” means the last date of the period to be covered in a Compliance Audit.
“Essential Actions” or “Level 3 (Essential Actions)” is a notification issued by NERC in
accordance with Section 810.3.3 of the Rules of Procedure.
“Exception” means either an Inclusion Exception or an Exclusion Exception.
“Exception Procedure” means the procedure set forth in Appendix 5C.
“Exception Reporting” means information provided to the Compliance Enforcement Authority
by a Registered Entity indicating that a violation of a Reliability Standard has occurred (e.g., a
System Operating Limit has been exceeded) or enabling the Compliance Enforcement Authority
to ascertain the Registered Entity’s compliance.
“Exception Request” means a request made by a Submitting Entity in accordance with Appendix
5C for an Exception.
“Exception Request Form” means the form adopted by each Regional Entity, in accordance with
a template provided by NERC, for use by Submitting Entities in submitting Exception Requests;
provided, that the Exception Request Form must include Section III.B as adopted by NERC.
“Exclusion Exception” means a determination that an Element that falls within the BES
Definition should be excluded from the BES.
“Expiration Date” means the date on which an approved TFE expires.
“Facility” means a set of electrical equipment that operates as a single Bulk Electric System
Element (e.g., a line, a generator, a shunt compensator, transformer, etc.)**
“FERC” means the United States Federal Energy Regulatory Commission.
“Final Penalty Amount” means the final, proposed Penalty for violation of a Reliability
Standard, determined in accordance with the Sanction Guidelines.
“Flowgate” means 1.) A portion of the transmission system through which the Interchange
Distribution Calculator calculates the power flow from Interchange Transactions. 2.) A
mathematical construct, comprised of one or more monitored transmission Facilities and
optionally one or more contingency Facilities, used to analyze the impact of power flows upon
the Bulk Electric System.**
“FOIA” means the U.S. Freedom of Information Act, 5 U.S.C. §552.
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“Footprint” means the geographical or electric area served by an entity.
“Functional Entity” means an entity responsible for a function that is required to ensure the
Reliable Operation of the electric grid as identified in the NERC Reliability Standards.
“Generator Operator” means the entity that operates generating unit(s) and performs the
functions of supplying energy and Interconnected Operations Services.**
“Generator Owner” means an entity that owns and maintains generating units.**
“Hearing Body” or “Regional Entity Hearing Body” means the body established by a Regional
Entity to conduct hearings pursuant to the Hearing Procedures.
“Hearing Officer” means, depending on the context, (i) an individual employed or contracted by
the Compliance Enforcement Authority and designated by the Compliance Enforcement
Authority to preside over hearings conducted pursuant to Attachment 2, Hearing Procedures, of
Appendix 4C, or (ii) solely for hearings conducted pursuant to Appendix 4E, (A) a CCC member
or (B) an individual employed or contracted by NERC, as designated and approved by the CCC
to preside over hearings conducted pursuant to the Hearing Procedures in Appendix E; the
Hearing Officer shall not be a member of the Hearing Panel.
“Hearing Panel” means the five person hearing body established as set forth in the CCC Charter
on a case by case basis and that is responsible for adjudicating a matter as set forth in Appendix
4E.
“Hearing Procedures” means, depending on the context, (i) Attachment 2 to the NERC or a
Regional Entity CMEP, as applicable, or (ii) the hearing procedures of the NERC Compliance
and Certification Committee in Appendix 4E.
“Inclusion Exception” means a determination that an Element that falls outside the BES
Definition should be included in the BES.
“Interchange” means energy transfers that cross Balancing Authority boundaries.**
“Interchange Authority” means the responsible entity that authorizes the implementation of valid
and balanced Interchange Schedules between Balancing Authority Areas, and ensures
communications of Interchange information for reliability assessment purposes.**
“Interchange Distribution Calculator” means the mechanism used by Reliability Coordinators in
the Eastern Interconnection to calculate the distribution of Interchange Transactions over specific
Flowgates. It includes a database of all Interchange Transactions and a matrix of the Distribution
Factors for the Eastern Interconnection.**
“Interchange Schedule” means an agreed-upon Interchange Transaction size (megawatts), start
and end time, beginning and ending ramp times and rate, and type required for delivery and

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receipt of power and energy between the Source and Sink Balancing Authorities involved in the
transaction.**
“Interchange Transaction” means an agreement to transfer energy from a seller to a buyer that
crosses one or more Balancing Authority Area boundaries.**
“Interconnected Operations Service” means a service (exclusive of basic energy and
Transmission Services) that is required to support the Reliable Operation of interconnected Bulk
Electric Systems.**
“Interconnection” means a geographic area in which the operation of Bulk Power System
components is synchronized such that the failure of one or more of such components may
adversely affect the ability of the operators of other components within the system to maintain
Reliable Operation of the Facilities within their control.++
“Interconnection Reliability Operating Limit” means a System Operating Limit that, if violated,
could lead to instability, uncontrolled separation, or Cascading outages that adversely impact the
reliability of the Bulk Electric System.**
“Interpretation” means an addendum to a Reliability Standard, developed in accordance with the
NERC Standard Processes Manual and approved by the Applicable Governmental
Authority(ies), that provides additional clarity about one or more Requirements in the Reliability
Standard.
“Joint Registration Organization” means an entity that registers in the Compliance Registry to
perform reliability functions for itself and on behalf of one or more of its members or related
entities for which such members or related entities would otherwise be required to register.
“Lead Entity” means the entity that submits Exception Request information that is common to a
group of Submitting Entities that are submitting Exception Requests jointly.
“Lead Mediator” means a member of a mediation team formed pursuant to Appendix 4E who is
selected by the members to coordinate the mediation process and serve as the mediation team’s
primary contact with the Parties.
“Load” means an end-user device or customer that receives power from the electric system.**
“Load-Serving Entity” means an entity that secures energy and Transmission Service (and
related Interconnected Operations Services) to serve the electrical demand and energy
requirements of its end-use customers.**
“Mapping” means the process of determining whether a Regional Entity’s Footprint is being
served by Registered Entities.
“Mediation Settlement Agreement” means a written agreement entered into by the Parties to a
mediation pursuant to Appendix 4E that resolves the dispute.

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“Member” means a member of NERC pursuant to Article II of its Bylaws.
“Member Representatives Committee” or “MRC” means the body established pursuant to Article
VIII of the NERC Bylaws.
“Mexican Entity” means a Registered Entity that is organized under Mexican law.
“Mitigation Plan” means an action plan, required when a Registered Entity violates a Reliability
Standard as determined by any means including Compliance Enforcement Authority decision,
settlement agreement, or otherwise, that is developed by the Registered Entity to (1) correct a
violation of a Reliability Standard and (2) prevent re-occurrence of the violation.
“NERC-Approved Learning Activity” means training that maintains or improves professional
competence and has been approved by NERC for use in its Continuing Education Program.
“NERC Compliance Monitoring and Enforcement Program Implementation Plan” or “NERC
Implementation Plan” means the annual NERC Compliance Monitoring and Enforcement
Program Implementation Plan that specifies the Reliability Standards that are subject to reporting
by Registered Entities to the Compliance Enforcement Authority in order to verify compliance
and identifies the appropriate monitoring procedures and reporting schedules for each such
Reliability Standard.
“NERC Compliance Registry,” “Compliance Registry” or “NCR” means a list, maintained by
NERC pursuant to Section 500 of the NERC Rules of Procedure and Appendix 5B, the NERC
Statement of Compliance Registry Criteria, of the owners, operators and users of the Bulk Power
System, and the entities registered as their designees, that perform one or more functions in
support of reliability of the Bulk Power System and are required to comply with one or more
Requirements of Reliability Standards.
“NERC Identification Number” or “NERC ID” means a number given to NERC Registered
Entities that will be used to identify the entity for certain NERC activities. Corporate entities
may have multiple NERC IDs to show different corporate involvement in NERC activities.
“NERC Organization Certification” or “Organization Certification” means the process
undertaken by NERC and a Regional Entity to verify that a new entity is capable of
responsibilities for tasks associated with a particular function such as a Balancing Authority,
Transmission Operator, and/or Reliability Coordinator; such certification activities are further
described in Section 500 and Appendix 5A of the NERC Rules of Procedure.
“Net Energy for Load” or “NEL” means net generation of an electric system plus energy
received from others less energy delivered to others through interchange. It includes system
losses but excludes energy required for the storage of energy at energy storage facilities.
“Notice of Alleged Violation” means a notice issued by the Compliance Enforcement Authority
to a Registered Entity pursuant to Section 5.3 of Appendix 4C.

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“Notice of Completion of Enforcement Action” means a notice issued by the Compliance
Enforcement Authority to a Registered Entity, pursuant to Section 5.10 of Appendix 4C, stating
than an enforcement action is closed.
“Notice of Confirmed Violation” means a notice issued by the Compliance Enforcement
Authority to a Registered Entity confirming the violation of one or more Reliability Standards, as
a result of (1) the Registered Entity accepting a Notice of Alleged Violation and the proposed
Penalty or sanction, or (2) the finding of a violation through a hearing and appeal, or (3) the
expiration of the period for requesting a hearing or an appeal, or (4) the Registered Entity
admitting the violation as part of an executed settlement agreement.
“Notice of Penalty” means a notice prepared by NERC and filed with FERC, following approval
by NERC of a Notice of Confirmed Violation or a settlement agreement, stating the Penalty or
sanction imposed or agreed to for the Confirmed Violation or as part of the settlement.
“Notice of Possible Violation” means a notice issued by the Compliance Enforcement Authority
to a Registered Entity that (1) states a Possible Violation has been identified, (2) provides a brief
description of the Possible Violation, including the Reliability Standard Requirement(s) and the
date(s) involved, and (3) instructs the Registered Entity to retain and preserve all data and
records relating to the Possible Violation.
“NRC” means the United States Nuclear Regulatory Commission.
“NRC Safeguards Information” means Required Information that is subject to restrictions on
disclosure pursuant to 42 U.S.C. §2167 and the regulations of the NRC at 10 C.F.R. §73.2173.23; or pursuant to comparable provisions of Canadian federal or provincial law.
“Open Access Transmission Tariff” means an electronic transmission tariff accepted by the U.S.
Federal Energy Regulatory Commission requiring the Transmission Service Provider to furnish
to all shippers with non-discriminating service comparable to that provided by Transmission
Owners to themselves.**
“Owner” means the owner(s) of an Element or Elements that is or may be determined to be part
of the BES as a result of either the application of the BES Definition or an Exception, or another
entity, such as an operator, authorized to act on behalf of the owner of the Element or Elements
in the context of an Exception Request.
“Part A Required Information” means Required Information that is to be provided in Part A of a
Responsible Entity’s TFE Request.
“Part B Required Information” means Required Information that is to be provided in Part B of a
Responsible Entity’s TFE Request.
“Participant” means a Respondent and any other Person who is allowed or required by FERC to
participate as an intervenor in a proceeding conducted pursuant to the Hearing Procedures, and
as used in the Hearing Procedures shall include, depending on the context, the members of the
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Compliance Staff that participate in a proceeding or the members of the Certification Staff that
participate in a proceeding pursuant to Appendix 4E.
“Party” or “Parties” means a Person or the Persons participating in a mediation pursuant to
Appendix 4E.
“Penalty” means and includes all penalties and sanctions, including but not limited to a monetary
or non-monetary penalty; a limitation on an activity, function, operation or other appropriate
sanction; or the addition of the Registered Entity or Respondent to a reliability watch list
composed of major violators. Penalties must be within the range set forth in the NERC Sanction
Guidelines approved by FERC pursuant to 18 C.F.R. Section 39.7(g)(2), and shall bear a
reasonable relation to the seriousness of a Registered Entity’s or Respondent’s violation and take
into consideration any timely efforts made by the Registered Entity or Respondent to remedy the
violation.
“Periodic Data Submittals” means modeling, studies, analyses, documents, procedures,
methodologies, operating data, process information or other information to demonstrate
compliance with Reliability Standards and provided by Registered Entities to the Compliance
Enforcement Authority on a time frame required by a Reliability Standard or an ad hoc basis.
“Person” means any individual, partnership, corporation, limited liability company,
governmental body, association, joint stock company, public trust, organized group of persons,
whether incorporated or not, or any other legal entity.
“Planning Authority” means the responsible entity that coordinates and integrates transmission
Facilities and service plans, resource plans, and Protection Systems.**
“Point of Delivery” means a location that a Transmission Service Provider specifies on its
transmission system where an Interchange Transaction leaves or a Load-Serving Entity receives
its energy.**
“Point of Receipt” means a location that the Transmission Service Provider specifies on its
transmission system where an Interchange Transaction enters or a generator delivers its output.
“Possible Violation” means the identification, by the Compliance Enforcement Authority, using
one of the compliance monitoring and enforcement processes in Section 3.0 of Appendix 4C, of
a possible failure by a Registered Entity to comply with a Reliability Standard that is applicable
to the Registered Entity.
“Preliminary Screen” means an initial evaluation of evidence indicating potential noncompliance
with a Reliability Standard has occurred or is occurring, conducted by the Compliance
Enforcement Authority for the purpose of determining whether a Possible Violation exists, and
consisting of an evaluation of whether (1) the entity allegedly involved in the potential
noncompliance is registered, and (2) the Reliability Standard Requirement to which the evidence
of potential noncompliance relates is applicable to a reliability function for which the entity is
registered.
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“Probation” means a step in the disciplinary process pursuant to Appendix 6 during which the
certificate is still valid. During the probationary period, a subsequent offense of misconduct, as
determined through the same process as described above, may be cause for more serious
consequences.
“Protected FOIA Information” means Required Information, held by a governmental entity, that
is subject to an exemption from disclosure under FOIA (5 U.S.C. §552(e)), under any similar
state or local statutory provision, or under any comparable provision of Canadian federal or
provincial law, which would be lost were the Required Information to be placed into the public
domain.
“Protection System” means protective relays which respond to electrical quantities,
communications systems necessary for correct operation of protective functions, voltage and
current sensing devices providing inputs to protective relays, station dc supply associated with
protective functions (including batteries, battery chargers, and non-battery-based dc supply), and
control circuitry associated with protective functions through the trip coil(s) of the circuit
breakers or other interrupting devices.**
“Purchasing-Selling Entity” means the entity that purchases, or sells, and takes title to, energy,
capacity, and Interconnected Operations Services. Purchasing-Selling Entities may be affiliated
or unaffiliated merchants and may or may not own generating facilities.**
“Reactive Power” means the portion of electricity that establishes and sustains the electric and
magnetic fields of alternating-current equipment. Reactive Power must be supplied to most
types of magnetic equipment, such as motors and transformers. It also must supply the reactive
losses on transmission facilities. Reactive Power is provided by generators, synchronous
condensers, or electrostatic equipment such as capacitors and directly influences electric system
voltage. It is usually expressed in kilovars (kvar) or megavars (Mvar).**
“Real Power” means the portion of electricity that supplies energy to the Load.**
“Receiving Entity” means NERC or a Regional Entity receiving Confidential Information from
an owner, operator, or user of the Bulk Power System or from any other party.
“Recommendation” for purposes of Appendix 5C means the report to NERC containing the
evaluation prepared in accordance with section 5.2 of Appendix 5C concerning whether or to
what extent an Exception Request should be approved.
“Recommendations” or “Level 2 (Recommendations)” is a notification issued by NERC in
accordance with Section 810.3.2 of the Rules of Procedure.
“Region” means the geographic area, as specified in a Regional Entity’s delegation agreement
with NERC, within which the Regional Entity is responsible for performing delegated functions.
“Regional Criteria” means reliability requirements developed by a Regional Entity that are
necessary to implement, to augment, or to comply with Reliability Standards, but which are not
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Reliability Standards. Such Regional Criteria may be necessary to account for physical
differences in the Bulk Power System but are not inconsistent with Reliability Standards nor do
they result in lesser reliability. Such Regional Criteria are not enforceable pursuant to NERCdelegated authorities, but may be enforced through other available mechanisms. Regional
Criteria may include specific acceptable operating or planning parameters, guides, agreements,
protocols or other documents.
“Regional Entity” means an entity having enforcement authority pursuant to 18 C.F.R. § 39.8.++
“Regional Entity Compliance Monitoring and Enforcement Program Implementation Plan” or
“Regional Implementation Plan” means an annual plan, submitted by November 1 of each year
to NERC for approval that, in accordance with NERC Rule of Procedure Section 401.6 and the
NERC Compliance Monitoring and Enforcement Program Implementation Plan, identifies (1) all
Reliability Standards identified by NERC to be actively monitored during each year, (2) other
Reliability Standards proposed for active monitoring by the Regional Entity, (3) the methods to
be used by the Regional Entity for reporting, monitoring, evaluation, and assessment of
performance criteria with each Reliability Standard, and (4) the Regional Entity’s Annual Audit
Plan.
“Regional Reliability Standard” means a type of Reliability Standard that is applicable only
within a particular Regional Entity or group of Regional Entities. A Regional Reliability
Standard may augment, add detail to, or implement another Reliability Standard or cover matters
not addressed by other Reliability Standards. Regional Reliability Standards, upon adoption by
NERC and approval by the Applicable Governmental Authority(ies), shall be Reliability
Standards and shall be enforced within the applicable Regional Entity or Regional Entities
pursuant to delegated authorities or to procedures prescribed by the Applicable Governmental
Authority.
“Registered Ballot Body” means that aggregation of all entities or individuals that qualify for one
of the Segments approved by the Board of Trustees, and are registered with NERC as potential
ballot participants in the voting on proposed Reliability Standards.
“Registered Entity” means an owner, operator, or user of the Bulk Power System, or the entity
registered as its designee for the purpose of compliance, that is included in the NERC
Compliance Registry.
“Registration” or “Organization Registration” means the processes undertaken by NERC and
Regional Entities to identify which entities are responsible for reliability functions within the
Regional Entity’s Region.
“Rejection of the Exception Request” or “Rejection” means the determination that an Exception
Request is not an eligible Exception Request (i.e., a Request permitted by section 4.1 of
Appendix 5C) or does not contain all the Required Information in accordance with section 4.5 of
Appendix 5C in order to be reviewed for substance.

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“Reliability Coordinator” means the entity that is the highest level of authority who is
responsible for the Reliable Operation of the Bulk Electric System, has the Wide Area view of
the Bulk Electric System, and has the operating tools, processes and procedures, including the
authority to prevent or mitigate emergency operating situations in both next-day analysis and
real-time operations. The Reliability Coordinator has the purview that is broad enough to enable
the calculation of Interconnection Reliability Operating Limits, which may be based on the
operating parameters of transmission systems beyond any Transmission Operator’s vision.**
“Reliability Coordinator Area” means the collection of generation, transmission and loads within
the boundaries of the Reliability Coordinator. Its boundary coincides with one or more
Balancing Authority Areas.**
“Reliability Standard” means a requirement to provide for Reliable Operation of the Bulk Power
System, including without limiting the foregoing, requirements for the operation of existing Bulk
Power System Facilities, including cyber security protection, and including the design of planned
additions or modifications to such Facilities to the extent necessary for Reliable Operation of the
Bulk Power System, but the term does not include any requirement to enlarge Bulk Power
System Facilities or to construct new transmission capacity or generation capacity. A Reliability
Standard shall not be effective in the United States until approved by the Federal Energy
Regulatory Commission and shall not be effective in other jurisdictions until made or allowed to
become effective by the Applicable Governmental Authority.
“Reliability Standards Development Plan” means the forward-looking plan developed by NERC
on an annual basis setting forth the Reliability Standards development projects that are scheduled
to be worked on during the ensuing three-year period, as specified in Section 310 of the Rules of
Procedure.
“Reliable Operation” means operating the Elements of the Bulk Power System within equipment
and electric system thermal, voltage, and stability limits so that instability, uncontrolled
separation, or Cascading failures of such system will not occur as a result of a sudden
disturbance, including a Cyber Security Incident, or unanticipated failure of system Elements.++
“Remedial Action Directive” means an action (other than a Penalty or sanction) required by a
Compliance Enforcement Authority that (1) is to bring a Registered Entity into compliance with
a Reliability Standard or to avoid a Reliability Standard violation, and (2) is immediately
necessary to protect the reliability of the Bulk Power System from an imminent threat.
“Reporting Entity” means an entity required to provide data or information requested by NERC
or a Regional Entity in a request for data or information pursuant to Section 1600 of the Rules of
Procedure.
“Requirement” means an explicit statement in a Reliability Standard that identifies the functional
entity responsible, the action or outcome that must be achieved, any conditions achieving the
action or outcome, and the reliability-related benefit of the action or outcome. Each
Requirement shall be a statement with which compliance is mandatory.

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“Required Date” means the date given a Registered Entity in a notice from the Compliance
Enforcement Authority by which some action by the Registered Entity is required.
“Required Information” means, as applicable, either (i) the information required to be provided
in a TFE Request, as specified in Section 4.0 of Appendix 4D; or (ii) the information required to
be provided in an Exception Request, as specified in section 4.0 of Appendix 5C.
“Reserve Sharing Group” means a group whose members consist of two or more Balancing
Authorities that collectively maintain, allocate, and supply operating reserves required for each
Balancing Authority’s use in recovering from contingencies within the group. Scheduling
energy from an Adjacent Balancing Authority to aid recovery need not constitute reserve sharing
provided the transaction is ramped in over a period the supplying party could reasonably be
expected to load generation in (e.g. ten minutes). If the transaction is ramped in quicker, (e.g.,
between zero and ten minutes), then, for the purposes of disturbance control performance, the
areas become a Reserve Sharing Group.**
“Resource Planner” means the entity that develops a long-term (generally one year and beyond)
plan for the resource adequacy of specific loads (customer demand and energy requirements)
within a Planning Authority area.**
“Respondent” means, depending on the context, the Registered Entity, who is the subject of the
Notice of Alleged Violation, contested Mitigation Plan or contested Remedial Action Directive
that is the basis for the proceeding, whichever is applicable, or the Registered Entity that is the
subject of the Certification decision that is the basis for a proceeding under Appendix 4E.
“Responsible Entity” means an entity that is registered for a reliability function in the NERC
Compliance Registry and is responsible for complying with an Applicable Requirement, as
specified in the “Applicability” section of the CIP Standard.
“Revoked” means a NERC certificate that has been suspended for more than twelve months.
While in this state, a certificate holder can not perform any task that requires an operator to be
NERC-certified. The certificate holder will be required to pass an exam to be certified again.
Any CE Hours accumulated prior to or during the revocation period will not be counted towards
Credential Maintenance.
“Revoke for Cause” means a step in the disciplinary process pursuant to Appendix 6 during
which the certificate is no longer valid and requiring successfully passing an exam to become
certified. However, an exam will not be authorized until the revocation period expires. CE
Hours earned before or during this revocation period will not be counted for maintaining a
Credential.
“Scope of Responsibility” means the registered functions of a Planning Authority, Reliability
Coordinator, Transmission Operator, Transmission Planner or Balancing Authority and the
geographical or electric region in which the Planning Authority, Reliability Coordinator,
Transmission Operator, Transmission Planner or Balancing Authority operates to perform its
registered functions, or with respect to a Regional Entity, its Regional Entity Region.
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“Section I Required Information” means Required Information that is to be provided in Section I
of a Submitting Entity’s Exception Request.
“Section II Required Information” means Required Information that is to be provided in Section
II of a Submitting Entity’s Exception Request.
“Section III Required Information” means Required Information that is to be provided in Section
III of a Submitting Entity’s Exception Request.
“Sector” means a group of Members of NERC that are Bulk Power System owners, operators, or
users or other persons and entities with substantially similar interests, including governmental
entities, as pertinent to the purposes and operations of NERC and the operation of the Bulk
Power System, as defined in Article II, Section 4 of the NERC Bylaws. Each Sector shall
constitute a class of Members for purposes of the New Jersey Nonprofit Corporation Act.
“Segment” means one of the subsets of the Registered Ballot Body whose members meet the
qualification criteria for the subset.
“Self-Certification” means attestation by a Registered Entity of compliance or non-compliance
with a Reliability Standard for which Self-Certification is required by the Compliance
Enforcement Authority and that is included for monitoring in the Regional Implementation Plan.
“Self-Reporting” means a report by a Registered Entity stating (1) that the Registered Entity
believes it has violated a Reliability Standard, and (2) the actions that have been taken or will be
taken to resolve the violation.
“Senior Manager” means the person assigned by the Responsible Entity, in accordance with CIP
Standard CIP-003-1 Requirement R2 (or subsequent versions), to have overall responsibility for
leading and managing the Responsible Entity’s implementation of, and adherence to, the CIP
Standards.
“Sink Balancing Authority” means the Balancing Authority in which the Load (sink) is located
for an Interchange Transaction.**
“Source Balancing Authority” means the Balancing Authority in which the generation (source) is
located for an Interchange Transaction.**
“Special Protection System” means an automatic protection system designed to detect abnormal
or predetermined system conditions, and take corrective actions other than and/or in addition to
the isolation of faulted components to maintain system reliability. Such action may include
changes in demand, generation (MW and Mvar), or system configuration to maintain system
stability, acceptable voltage, or power flows. A Special Protection System does not include (a)
underfrequency or undervoltage Load shedding or (b) fault conditions that must be isolated, or
(c) out-of-step relaying (not designed as an integral part of a Special Protection System).**
“Spot Checking” means a process in which the Compliance Enforcement Authority requests a
Registered Entity to provide information (1) to support the Registered Entity’s Self-Certification,
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Self-Reporting, or Periodic Data Submittal and to assess whether the Registered Entity complies
with Reliability Standards, or (2) as a random check, or (3) in response to events, as described in
the Reliability Standards or based on operating problems or system events.
“Staff” or “Compliance Staff” means individuals employed or contracted by NERC or the
Compliance Enforcement Authority who have the authority to make initial determinations of
compliance or violation with Reliability Standards by Registered Entities and associated
Penalties and Mitigation Plans.
“Strict Compliance” means compliance with the terms of an Applicable Requirement without
reliance on a Technical Feasibility Exception.
“Submitting Entity” means (i) an owner, operator, or user of the Bulk Power System or any other
party that submits information to NERC or a Regional Entity that it reasonably believes contains
Confidential Information or, (ii) solely for purposes of Appendix 5C, the entity that submits an
Exception Request in accordance with section 4.0 of Appendix 5C.
“Suspended” means certificate status due to an insufficient number of CE Hours being submitted
prior to the expiration of a certificate. While in this state, a certificate holder can not perform
any task that requires an operator to be NERC-certified.
“System” means a combination of generation, transmission and distribution components.**
“System Operating Limit” means the value (such as MW, Mvar, amperes, frequency or volts)
that satisfies the most limiting of the prescribed operating criteria for a specified system
configuration to ensure operation within acceptable reliability criteria.**
“Technical Advisor” means any Staff member, third-party contractor, or industry stakeholder
who satisfies NERC’s or the Compliance Enforcement Authority’s (as applicable) conflict of
interest policy and is selected to assist in a proceeding by providing technical advice to the
Hearing Officer and/or the Hearing Body or Hearing Panel.
“Technical Feasibility Exception” or “TFE” means an exception from Strict Compliance with the
terms of an Applicable Requirement on grounds of technical feasibility or technical limitations in
accordance with one or more of the criteria in section 3.0 of Appendix 4D.
“Technical Review Panel” means a panel established pursuant to section 5.3 of Appendix 5C.
“Termination of Credential” means a step in the disciplinary process pursuant to Appendix 6
whereby a Credential is permanently Revoked.
“TFE Request” means a request submitted by a Responsible Entity in accordance with Appendix
4D for an exception from Strict Compliance with an Applicable Requirement.
“Transmission Customer” means 1. any eligible customer (or its designated agent) that can or
does execute a Transmission Service agreement or can and does receive Transmission Service.

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2. Any of the following responsible entities: Generator Owner, Load-Serving Entity, or
Purchasing-Selling Entity.**
“Transmission Operator” means the entity responsible for the reliability of its “local”
transmission system, and that operates or directs the operations of the transmission Facilities.**
“Transmission Owner” means the entity that owns and maintains transmission Facilities.**
“Transmission Planner” means the entity that develops a long-term (generally one year and
beyond) plan for the reliability (adequacy) of the interconnected bulk electric transmission
systems within its portion of the Planning Authority area.**
“Transmission Service” means services provided to the Transmission Customer by the
Transmission Service Provider to move energy from a Point of Receipt to a Point of Delivery.**
“Transmission Service Provider” means the entity that administers the transmission tariff and
provides Transmission Service to Transmission Customers under applicable Transmission
Service agreements.**
“Type of CE Hours” means NERC-Approved Learning Activity covering topics from Appendix
A to Appendix 6, NERC Reliability Standards and/or simulations for which there is a minimum
requirement for Credential Maintenance.
“Variance” means an aspect or element of a Reliability Standard that applies only within a
particular Regional Entity or group of Regional Entities, or to a particular entity or class of
entities. A Variance allows an alternative approach to meeting the same reliability objective as
the Reliability Standard, and is typically necessitated by a physical difference. A Variance is
embodied within a Reliability Standard and as such, if adopted by NERC and approved by the
Applicable Governmental Authority(ies), shall be enforced within the applicable Regional Entity
or Regional Entities pursuant to delegated authorities or to procedures prescribed by the
Applicable Governmental Authority.
“Violation Risk Factor” or “VRF” means a factor (lower, medium or high) assigned to each
Requirement of a Reliability Standard to identify the potential reliability significance of
noncompliance with the Requirement.
“Violation Severity Level” or “VSL” means a measure (lower, moderate, high or severe) of the
degree to which compliance with a Requirement was not achieved.
“Wide Area” means the entire Reliability Coordinator Area as well as the critical flow and status
information from adjacent Reliability Coordinator Areas as determined by detailed system
studies to allow the calculation of Interconnected Reliability Operating Limits.**

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PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 3B

REVISED APPENDIX 2 OF THE RULES OF PROCEDURE,
DEFINITIONS USED IN THE RULES OF PROCEDURE
REDLINED VERSION

Proposed revisions 1-9-2012

NORTH AMERICAN ELECTRIC RELIABILITY
CORPORATION

DEFINITIONS USED IN THE RULES OF PROCEDURE

APPENDIX 2 TO THE RULES OF PROCEDURE

Effective: [DATE], 2012

General
For purposes of the NERC Rules of Procedure, including all Appendices, the terms defined in
this Appendix shall have the meanings set forth herein. For convenience of reference to the user,
definitions of terms that are used in a particular Appendix may be repeated in that Appendix.
Where used in the Rules of Procedure, a defined term will be capitalized. Where a term defined
in this Appendix appears in the Rules of Procedure but is not capitalized, the term is there being
used in its ordinary and commonly understood meaning and not as defined in this Appendix (if
different). Other terms that are not defined terms, such as the names of entities, organizations,
committees, or programs; position titles; titles of documents or forms; section headings;
geographic locations; and other terms commonly presented as proper nouns, may also be
capitalized in the Rules of Procedure without being defined in this Appendix.
Definitions of terms in this Appendix that are marked with asterisks (**) are taken from the
NERC Glossary of Terms Used in Reliability Standards. Definitions of terms in this Appendix
that are marked with “pluses” (++) are taken from Section 215 of the Federal Power Act or the
Commission’s regulations at 18 C.F.R. Part 39 or Part 388.
Other terms used in the Rules of Procedure but not defined in this Appendix that have commonly
understood and used technical meanings in the electric power industry, including applicable
codes and standards, shall be construed in accordance with such commonly understood and used
technical meanings.

Specific Definitions
“Acceptance of the Exception Request” or “Acceptance” means the determination that an
eligible Exception Request (i.e., a Request permitted by section 4.1 of Appendix 5C) contains all
the Required Information so that it can undergo substantive review.
“Adjacent Balancing Authority” means a Balancing Authority Area that is interconnected to
another Balancing Authority Area either directly or via a multi-party agreement or transmission
tariff.**
“Adjusted Penalty Amount” means the proposed Penalty for a violation of a Reliability Standard
as determined based on application of the adjustment factors identified in Section 4.3 of the
Sanction Guidelines to the Base Penalty Amount.
“Advisories” or “Level 1 (Advisories)” is a notification issued by NERC in accordance with
Section 810.3.1 of the Rules of Procedure.
“Alleged Violation” means a Possible Violation for which the Compliance Enforcement
Authority has determined, based on an assessment of the facts and circumstances surrounding the
Possible Violation, that evidence exists to indicate a Registered Entity has violated a Reliability
Standard.

Appendix 2 to the NERC Rules of Procedure
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1

“Annual Audit Plan” means a plan developed annually by the Compliance Enforcement
Authority that includes the Reliability Standards and Registered Entities to be audited, the
schedule of Compliance Audits, and Compliance Audit Participant requirements for the calendar
year.
“Annual Report” means the annual report to be filed by NERC with FERC and other Applicable
Governmental Authorities in accordance with Section 13.0 of Appendix 4D.
“Applicable Governmental Authority” means the FERC within the United States and the
appropriate governmental authority with subject matter jurisdiction over reliability in Canada
and Mexico.
“Applicable Requirement” means a Requirement of a CIP Standard that (i) expressly provides
either (A) that compliance with the terms of the Requirement is required where or as technically
feasible, or (B) that technical limitations may preclude compliance with the terms of the
Requirement; or (ii) is subject to Appendix 4D by FERC directive.
“Approval of the Exception Request” or “Approval” means the determination by NERC that an
Exception Request meets the criteria to receive the requested Exception.
“Balancing Authority” means the responsible entity that integrates resource plans ahead of time,
maintains lLoad-interchange-generation balance within a Balancing Authority Area, and
supports Interconnection frequency in real time.**
“Balancing Authority Area” means the collection of generation, transmission, and lLoads within
the metered boundaries of the Balancing Authority. The Balancing Authority maintains lLoadresource balance within this area.**
“Base Penalty Amount” means the proposed Penalty for a violation of a Reliability Standard as
initially determined pursuant to Sections 4.1 and 4.2 of the NERC Sanction Guidelines, before
application of any adjustment factors.
“BES Definition” means the NERC definition of the Bulk Electric System as set forth in the
NERC Glossary of Terms Used in Reliability Standards.
“Blackstart Resource” means a generating unit(s) and its associated set of equipment which has
the ability to be started without support from the System or is designed to remain energized
without connection to the remainder of the System, with the ability to energize a bus, meeting the
Transmission Operator’s restoration plan needs for rReal and rReactive pPower capability,
frequency and voltage control, and that has been included in the Transmission Operator’s
restoration plan.**
“Board” or “Board of Trustees” means the Board of Trustees of NERC.
“Board of Trustees Compliance Committee,” “BOTCC” or “Compliance Committee” means the
Compliance Committee of the NERC Board of Trustees.
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2

“Bulk Electric System” or “BES” means unless modified by the lists shown below, all
Transmission Elements operated at 100 kV or higher and Real Power and Reactive Power
resources connected at 100 kV or higher. This does not include facilities used in the local
distribution of electric energy.
Inclusions:
•
•

•
•

•

I1 - Transformers with the primary terminal and at least one secondary terminal operated
at 100 kV or higher unless excluded under Exclusion E1 or E3.
I2 - Generating resource(s) with gross individual nameplate rating greater than 20 MVA
or gross plant/facility aggregate nameplate rating greater than 75 MVA including the
generator terminals through the high-side of the step-up transformer(s) connected at a
voltage of 100 kV or above.
I3 - Blackstart Resources identified in the Transmission Operator’s restoration plan.
I4 - Dispersed power producing resources with aggregate capacity greater than 75 MVA
(gross aggregate nameplate rating) utilizing a system designed primarily for aggregating
capacity, connected at a common point at a voltage of 100 kV or above.
I5 –Static or dynamic devices (excluding generators) dedicated to supplying or absorbing
Reactive Power that are connected at 100 kV or higher, or through a dedicated
transformer with a high-side voltage of 100 kV or higher, or through a transformer that is
designated in Inclusion I1.

Exclusions:
•

•

E1 - Radial systems: A group of contiguous transmission Elements that emanates from a
single point of connection of 100 kV or higher and:
a) Only serves Load. Or,
b) Only includes generation resources, not identified in Inclusion I3, with an
aggregate capacity less than or equal to 75 MVA (gross nameplate rating).
Or,
c) Where the radial system serves Load and includes generation resources,
not identified in Inclusion I3, with an aggregate capacity of non-retail
generation less than or equal to 75 MVA (gross nameplate rating).
Note – A normally open switching device between radial systems, as depicted
on prints or one-line diagrams for example, does not affect this exclusion.
E2 - A generating unit or multiple generating units on the customer’s side of the retail
meter that serve all or part of the retail Load with electric energy if: (i) the net capacity
provided to the BES does not exceed 75 MVA, and (ii) standby, back-up, and
maintenance power services are provided to the generating unit or multiple generating
units or to the retail Load by a Balancing Authority, or provided pursuant to a binding

Appendix 2 to the NERC Rules of Procedure
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3

•

•

obligation with a Generator Owner or Generator Operator, or under terms approved by
the applicable regulatory authority.
E3 - Local networks (LN): A group of contiguous transmission Elements operated at or
above 100 kV but less than 300 kV that distribute power to Load rather than transfer bulk
power across the interconnected system. LN’s emanate from multiple points of
connection at 100 kV or higher to improve the level of service to retail customer Load
and not to accommodate bulk power transfer across the interconnected system. The LN is
characterized by all of the following:
a) Limits on connected generation: The LN and its underlying Elements do
not include generation resources identified in Inclusion I3 and do not have
an aggregate capacity of non-retail generation greater than 75 MVA (gross
nameplate rating);
b) Power flows only into the LN and the LN does not transfer energy
originating outside the LN for delivery through the LN; and
c) Not part of a Flowgate or transfer path: The LN does not contain a
monitored Facility of a permanent Flowgate in the Eastern
Interconnection, a major transfer path within the Western Interconnection,
or a comparable monitored Facility in the ERCOT or Quebec
Interconnections, and is not a monitored Facility included in an
Interconnection Reliability Operating Limit (IROL).
E4 – Reactive Power devices owned and operated by the retail customer solely for its
own use.

Note - Elements may be included or excluded on a case-by-case basis through the Rules of
Procedure exception process., as defined by the Regional Entity, the electrical generation
resources, transmission lines, interconnections with neighboring systems, and associated
equipment, generally operated at voltages of 100 kV or higher. Radial transmission facilities
serving only load with one transmission source are generally not included in this definition.**
“Bulk Power System” means, depending on the context: (i) Facilities and control systems
necessary for operating an interconnected electric energy supply and transmission network (or
any portion thereof), and electric energy from generating facilities needed to maintain
transmission system reliability. The term does not include facilities used in the local distribution
of electric energy [++]. (ii) Solely for purposes of Appendix 4E, Bulk Electric System.
“Canadian” means one of the following: (a) a company or association incorporated or organized
under the laws of Canada, or its designated representative(s) irrespective of nationality; (b) an
agency of a federal, provincial, or local government in Canada, or its designated representative(s)
irrespective of nationality; or (c) a self-representing individual who is a Canadian citizen residing
in Canada.
“Canadian Entity” means a Responsiblegistered Entity (or, solely for purposes of Appendix 4D,
a Responsible Entity) that is organized under Canadian federal or provincial law.
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“Cascading” means the uncontrolled successive loss of System Elements triggered by an incident
at any location. Cascading results in widespread electric service interruption that cannot be
restrained from sequentially spreading beyond an area predetermined by studies.**
“CCC” means the NERC Compliance and Certification Committee.
“Certification” means, depending on the context, (i) the process undertaken by NERC and a
Regional Entity to verify that an entity is capable of responsibilities for tasks associated with a
particular function such as a Balancing Authority, Transmission Operator and/or Reliability
Coordinator; such Certification activities are further described in Section 500 and Appendix 5A
of the NERC Rules of Procedure; or (ii) for purposes of Appendix 6, an official recognition that
indicates the recipient has passed a NERC exam or completed a specified number of Continuing
Education Hours.
“Certification Staff” means individuals employed or contracted by NERC who have the authority
to make initial determinations of Certification of entities performing reliability functions.
“Certification Team” means a team assembled by a Regional Entity that will be responsible for
performing the activities included in the Certification process for an entity pursuant to Appendix
5A.
“Classified National Security Information” means Required Information that has been
determined to be protected from unauthorized disclosure pursuant to Executive Order No. 12958,
as amended, and/or the regulations of the NRC at 10 C.F.R. §95.35; or pursuant to any
comparable provision of Canadian federal or provincial law.
“Clerk” means an individual as assigned by the Compliance Enforcement Authority to perform
duties described in Attachment 2, Hearing Procedures, to Appendix 4C.
“Commission” means the Federal Energy Regulatory Commission or FERC.
“Complaint” means an allegation that a Registered Entity violated a Reliability Standard.
“Compliance and Certification Manager” means individual/individuals within the Regional
Entity that is/are responsible for monitoring compliance of entities with applicable NERC
Reliability Standards.
“Compliance Audit” means a systematic, objective review and examination of records and
activities to determine whether a Registered Entity meets the Requirements of applicable
Reliability Standards.
“Compliance Audit Participants” means Registered Entities scheduled to be audited and the audit
team members.

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“Compliance Enforcement Authority” means NERC or the Regional Entity in their respective
roles of monitoring and enforcing compliance with the NERC Reliability Standards.
“Compliance Enforcement Authority’s Area of Responsibility” means the Compliance
Enforcement Authority’s Region. If a Regional Entity is the Compliance Enforcement
Authority, the Compliance Enforcement Authority’s Area of Responsibility is shown in Exhibit
A to the delegation agreement between the Regional Entity and NERC.
“Compliance Investigation” means a comprehensive investigation, which may include an on-site
visit with interviews of the appropriate personnel, to determine if a violation of a Reliability
Standard has occurred.
“Compliance Monitoring and Enforcement Program” or “CMEP” means, depending on the
context (1) the NERC Uniform Compliance Monitoring and Enforcement Program (Appendix
4C to the NERC Rules of Procedure) or the Commission-approved program of a Regional Entity,
as applicable, or (2) the program, department or organization within NERC or a Regional Entity
that is responsible for performing compliance monitoring and enforcement activities with respect
to Registered Entities’ compliance with Reliability Standards.
“Compliant Date” means the date by which a Responsible Entity is required to be in compliance
with an Applicable Requirement of a CIP Standard.
“Confidential Business and Market Information” means any information that pertains to the
interests of any entity, that was developed or acquired by that entity, and that is proprietary or
competitively sensitive.
“Confidential Information” means (i) Confidential Business and Market Information; (ii) Critical
Energy Infrastructure Information; (iii) personnel information that identifies or could be used to
identify a specific individual, or reveals personnel, financial, medical, or other personal
information; (iv) work papers, including any records produced for or created in the course of an
evaluation or audit; (v) investigative files, including any records produced for or created in the
course of an investigation; or (vi) Cyber Security Incident Information; provided, that public
information developed or acquired by an entity shall be excluded from this definition; or (vii) for
purposes of Appendix 4D, any other information that is designated as Confidential Information
in Section 11.0 of Appendix 4D.
“Confirmed Violation” means an Alleged Violation for which an entity has: (1) accepted the
finding of the violation by a Regional Entity or NERC and will not seek an appeal, or (2)
completed the hearing and appeals process within NERC, or (3) allowed the time for requesting a
hearing or submitting an appeal to expire, or (4) admitted to the violation in a settlement
agreement.
“Continuing Education Hour” or “CE Hour” means sixty minutes of participation in a group,
independent study, or self-study learning activity as approved by the NERC Continuing
Education Program.

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“Continuing Education Program Provider” or “Provider” means the individual or organization
offering a learning activity to participants and maintaining documentation required by Appendix
6.
“Coordinated Functional Registration” means where two or more entities (parties) agree in
writing upon a division of compliance responsibility among the parties for one or more
Reliability Standard(s) applicable to a particular function, and/or for one or more
Requirement(s)/sub-Requirement(s) within particular Reliability Standard(s).
“Covered Asset” means a Cyber Asset or Critical Cyber Asset that is subject to an Applicable
Requirement.
“Credential” means a NERC designation that indicates the level of qualification achieved (i.e.,
reliability operator; balancing, interchange, and transmission operator; balancing and interchange
operator; and transmission operator).
“Credential Maintenance” means to meet NERC CE Hours’ requirements to maintain a valid
NERC-issued system operator Credential.
“Critical Assets” means Facilities, systems, and equipment which, if destroyed, degraded, or
otherwise rendered unavailable, would affect the reliability or operability of the Bulk Electric
System.**
“Critical Cyber Assets” means Cyber Assets critical to the reliable operation of Critical
Assets.**
“Critical Energy Infrastructure Information” means specific engineering, vulnerability, or
detailed design information about proposed or existing Critical Infrastructure that (i) relates
details about the production, generation, transportation, transmission, or distribution of energy;
(ii) could be useful to a person in planning an attack on Critical Infrastructure; and (iii) does not
simply give the location of the Critical Infrastructure.++
“Critical Infrastructure” means existing and proposed systems and assets, whether physical or
virtual, the incapacity or destruction of which would negatively affect security, economic
security, public health or safety, or any combination of those matters.++
“Critical Infrastructure Protection Standard” or “CIP Standard” means any of NERC Reliability
Standards CIP-002 through CIP-009.
“Cross-Border Regional Entity” means a Regional Entity that encompasses a part of the United
States and a part of Canada or Mexico.++
“Cyber Assets” means programmable electronic devices and communication networks including
hardware, software, and data.**

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“Cyber Security Incident” means any malicious or suspicious event that disrupts, or was an
attempt to disrupt, the operation of those programmable electronic devices and communications
networks including hardware, software and data that are essential to the Reliable Operation of
the Bulk Power System.++
“Cyber Security Incident Information” means any information related to, describing, or which
could be used to plan or cause a Cyber Security Incident.
“Days”, as used in Appendix 5A with respect to the Registration and Certification processes,
means calendar days.
“Delegate” means a person to whom the Senior Manager of a Responsible Entity has delegated
authority pursuant to Requirement R2.3 of CIP Standard CIP-003-1 (or any successor provision).
“Director of Compliance” means the Director of Compliance of NERC or of the Compliance
Enforcement Authority, as applicable, who is responsible for the management and supervision of
Compliance Staff, or his or her designee.
“Disapproval of the Exception Request” or “Disapproval” means the determination by NERC
that an Exception Request does not meet the criteria to receive the requested Exception.
“Distribution Factor” means the portion of an Interchange Transaction, typically expressed in per
unit that flows across a transmission facility (Flowgate).**
“Distribution Provider” means the entity that provides and operates the “wires” between the
transmission system and the end-use customer. For those end-use customers who are served at
transmission voltages, the Transmission Owner also serves as the Distribution Provider. Thus,
the Distribution Provider is not defined by a specific voltage, but rather as performing the
distribution function at any voltage.**
“Document” means, in addition to the commonly understood meaning of the term as information
written or printed on paper, any electronically stored information, including writings, drawings,
graphs, charts, photographs, sound recordings, images and other data or data compilations stored
in any medium from which information can be obtained, and shall be translated by the producing
party into reasonably usable form.
“Effective Date” means the date, as specified in a notice rejecting or disapproving a TFE Request
or terminating an approved TFE, on which the rejection, disapproval or termination becomes
effective.
“Electric Reliability Organization” or “ERO” means the organization that is certified by the
Commission under Section 39.3 of its regulations, the purpose of which is to establish and
enforce Reliability Standards for the Bulk Power System in the United States, subject to
Commission review. The organization may also have received recognition by Applicable
Governmental Authorities in Canada and Mexico to establish and enforce Reliability Standards
for the Bulk Power Systems of the respective countries.
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“Element” means any electrical device with terminals that may be connected to other electrical
devices such as a generator, transformer, circuit breaker, bus section, or transmission line. An
Element may be comprised of one or more components.**
“Eligible Reviewer” means a person who has the required security clearances or other
qualifications, or who otherwise meets the applicable criteria, to have access to Confidential
Information, Classified National Security Information, NRC Safeguards Information or Protected
FOIA Information, as applicable to the particular information to be reviewed.
“End Date” means the last date of the period to be covered in a Compliance Audit.
“Essential Actions” or “Level 3 (Essential Actions)” is a notification issued by NERC in
accordance with Section 810.3.3 of the Rules of Procedure.
“Exception” means either an Inclusion Exception or an Exclusion Exception.
“Exception Procedure” means the procedure set forth in Appendix 5C.
“Exception Reporting” means information provided to the Compliance Enforcement Authority
by a Registered Entity indicating that a violation of a Reliability Standard has occurred (e.g., a
System Operating Limit has been exceeded) or enabling the Compliance Enforcement Authority
to ascertain the Registered Entity’s compliance.
“Exception Request” means a request made by a Submitting Entity in accordance with Appendix
5C for an Exception.
“Exception Request Form” means the form adopted by each Regional Entity, in accordance with
a template provided by NERC, for use by Submitting Entities in submitting Exception Requests;
provided, that the Exception Request Form must include Section III.B as adopted by NERC.
“Exclusion Exception” means a determination that an Element that falls within the BES
Definition should be excluded from the BES.
“Expiration Date” means the date on which an approved TFE expires.
“Facility” means a set of electrical equipment that operates as a single Bulk Electric System
Element (e.g., a line, a generator, a shunt compensator, transformer, etc.)**
“FERC” means the United States Federal Energy Regulatory Commission.
“Final Penalty Amount” means the final, proposed Penalty for violation of a Reliability
Standard, determined in accordance with the Sanction Guidelines.
“Flowgate” means 1.) A portion of the transmission system through which the Interchange
Distribution Calculator calculates the power flow from Interchange Transactions. 2.) A
mathematical construct, comprised of one or more monitored transmission Facilities and
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optionally one or more contingency Facilities, used to analyze the impact of power flows upon
the Bulk Electric System.**
“FOIA” means the U.S. Freedom of Information Act, 5 U.S.C. §552.
“Footprint” means the geographical or electric area served by an entity.
“Functional Entity” means an entity responsible for a function that is required to ensure the
Reliable Operation of the electric grid as identified in the NERC Reliability Standards.
“Generator Operator” means the entity that operates generating unit(s) and performs the
functions of supplying energy and Interconnected Operations Services.**
“Generator Owner” means an entity that owns and maintains generating units.**
“Hearing Body” or “Regional Entity Hearing Body” means the body established by a Regional
Entity to conduct hearings pursuant to the Hearing Procedures.
“Hearing Officer” means, depending on the context, (i) an individual employed or contracted by
the Compliance Enforcement Authority and designated by the Compliance Enforcement
Authority to preside over hearings conducted pursuant to Attachment 2, Hearing Procedures, of
Appendix 4C, or (ii) solely for hearings conducted pursuant to Appendix 4E, (A) a CCC member
or (B) an individual employed or contracted by NERC, as designated and approved by the CCC
to preside over hearings conducted pursuant to the Hearing Procedures in Appendix E; the
Hearing Officer shall not be a member of the Hearing Panel.
“Hearing Panel” means the five person hearing body established as set forth in the CCC Charter
on a case by case basis and that is responsible for adjudicating a matter as set forth in Appendix
4E.
“Hearing Procedures” means, depending on the context, (i) Attachment 2 to the NERC or a
Regional Entity CMEP, as applicable, or (ii) the hearing procedures of the NERC Compliance
and Certification Committee in Appendix 4E.
“Inclusion Exception” means a determination that an Element that falls outside the BES
Definition should be included in the BES.
“Interchange” means energy transfers that cross Balancing Authority boundaries.**
“Interchange Authority” means the responsible entity that authorizes the implementation of valid
and balanced Interchange Schedules between Balancing Authority Areas, and ensures
communications of Interchange information for reliability assessment purposes.**
“Interchange Distribution Calculator” means the mechanism used by Reliability Coordinators in
the Eastern Interconnection to calculate the distribution of Interchange Transactions over specific
Flowgates. It includes a database of all Interchange Transactions and a matrix of the Distribution
Factors for the Eastern Interconnection.**
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Effective [DATE], 2012

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“Interchange Schedule” means an agreed-upon Interchange Transaction size (megawatts), start
and end time, beginning and ending ramp times and rate, and type required for delivery and
receipt of power and energy between the Source and Sink Balancing Authorities involved in the
transaction.**
“Interchange Transaction” means an agreement to transfer energy from a seller to a buyer that
crosses one or more Balancing Authority Area boundaries.**
“Interconnected Operations Service” means a service (exclusive of basic energy and
Transmission Services) that is required to support the Reliable Operation of interconnected Bulk
Electric Systems.**
“Interconnection” means a geographic area in which the operation of Bulk Power System
components is synchronized such that the failure of one or more of such components may
adversely affect the ability of the operators of other components within the system to maintain
Reliable Operation of the Facilities within their control.++
“Interconnection Reliability Operating Limit” means a System Operating Limit that, if violated,
could lead to instability, uncontrolled separation, or Cascading outages that adversely impact the
reliability of the Bulk Electric System.**
“Interpretation” means an addendum to a Reliability Standard, developed in accordance with the
NERC Standard Processes Manual and approved by the Applicable Governmental
Authority(ies), that provides additional clarity about one or more Requirements in the Reliability
Standard.
“Joint Registration Organization” means an entity that registers in the Compliance Registry to
perform reliability functions for itself and on behalf of one or more of its members or related
entities for which such members or related entities would otherwise be required to register.
“Lead Entity” means the entity that submits Exception Request information that is common to a
group of Submitting Entities that are submitting Exception Requests jointly.
“Lead Mediator” means a member of a mediation team formed pursuant to Appendix 4E who is
selected by the members to coordinate the mediation process and serve as the mediation team’s
primary contact with the Parties.
“Load” means an end-user device or customer that receives power from the electric system.**
“Load-Serving Entity” means an entity that secures energy and Transmission Service (and
related Interconnected Operations Services) to serve the electrical demand and energy
requirements of its end-use customers.**
“Mapping” means the process of determining whether a Regional Entity’s Footprint is being
served by Registered Entities.
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“Mediation Settlement Agreement” means a written agreement entered into by the Parties to a
mediation pursuant to Appendix 4E that resolves the dispute.
“Member” means a member of NERC pursuant to Article II of its Bylaws.
“Member Representatives Committee” or “MRC” means the body established pursuant to Article
VIII of the NERC Bylaws.
“Mexican Entity” means a Registered Entity that is organized under Mexican law.
“Mitigation Plan” means an action plan, required when a Registered Entity violates a Reliability
Standard as determined by any means including Compliance Enforcement Authority decision,
settlement agreement, or otherwise, that is developed by the Registered Entity to (1) correct a
violation of a Reliability Standard and (2) prevent re-occurrence of the violation.
“NERC-Approved Learning Activity” means training that maintains or improves professional
competence and has been approved by NERC for use in its Continuing Education Program.
“NERC Compliance Monitoring and Enforcement Program Implementation Plan” or “NERC
Implementation Plan” means the annual NERC Compliance Monitoring and Enforcement
Program Implementation Plan that specifies the Reliability Standards that are subject to reporting
by Registered Entities to the Compliance Enforcement Authority in order to verify compliance
and identifies the appropriate monitoring procedures and reporting schedules for each such
Reliability Standard.
“NERC Compliance Registry,” “Compliance Registry” or “NCR” means a list, maintained by
NERC pursuant to Section 500 of the NERC Rules of Procedure and Appendix 5B, the NERC
Statement of Compliance Registry Criteria, of the owners, operators and users of the Bulk Power
System, and the entities registered as their designees, that perform one or more functions in
support of reliability of the Bulk Power System and are required to comply with one or more
Requirements of Reliability Standards.
“NERC Identification Number” or “NERC ID” means a number given to NERC Registered
Entities that will be used to identify the entity for certain NERC activities. Corporate entities
may have multiple NERC IDs to show different corporate involvement in NERC activities.
“NERC Organization Certification” or “Organization Certification” means the process
undertaken by NERC and a Regional Entity to verify that a new entity is capable of
responsibilities for tasks associated with a particular function such as a Balancing Authority,
Transmission Operator, and/or Reliability Coordinator; such certification activities are further
described in Section 500 and Appendix 5A of the NERC Rules of Procedure.
“Net Energy for Load” or “NEL” means net generation of an electric system plus energy
received from others less energy delivered to others through interchange. It includes system
losses but excludes energy required for the storage of energy at energy storage facilities.

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“Notice of Alleged Violation” means a notice issued by the Compliance Enforcement Authority
to a Registered Entity pursuant to Section 5.3 of Appendix 4C.
“Notice of Completion of Enforcement Action” means a notice issued by the Compliance
Enforcement Authority to a Registered Entity, pursuant to Section 5.10 of Appendix 4C, stating
than an enforcement action is closed.
“Notice of Confirmed Violation” means a notice issued by the Compliance Enforcement
Authority to a Registered Entity confirming the violation of one or more Reliability Standards, as
a result of (1) the Registered Entity accepting a Notice of Alleged Violation and the proposed
Penalty or sanction, or (2) the finding of a violation through a hearing and appeal, or (3) the
expiration of the period for requesting a hearing or an appeal, or (4) the Registered Entity
admitting the violation as part of an executed settlement agreement.
“Notice of Penalty” means a notice prepared by NERC and filed with FERC, following approval
by NERC of a Notice of Confirmed Violation or a settlement agreement, stating the Penalty or
sanction imposed or agreed to for the Confirmed Violation or as part of the settlement.
“Notice of Possible Violation” means a notice issued by the Compliance Enforcement Authority
to a Registered Entity that (1) states a Possible Violation has been identified, (2) provides a brief
description of the Possible Violation, including the Reliability Standard Requirement(s) and the
date(s) involved, and (3) instructs the Registered Entity to retain and preserve all data and
records relating to the Possible Violation.
“NRC” means the United States Nuclear Regulatory Commission.
“NRC Safeguards Information” means Required Information that is subject to restrictions on
disclosure pursuant to 42 U.S.C. §2167 and the regulations of the NRC at 10 C.F.R. §73.2173.23; or pursuant to comparable provisions of Canadian federal or provincial law.
“Open Access Transmission Tariff” means an electronic transmission tariff accepted by the U.S.
Federal Energy Regulatory Commission requiring the Transmission Service Provider to furnish
to all shippers with non-discriminating service comparable to that provided by Transmission
Owners to themselves.**
“Owner” means the owner(s) of an Element or Elements that is or may be determined to be part
of the BES as a result of either the application of the BES Definition or an Exception, or another
entity, such as an operator, authorized to act on behalf of the owner of the Element or Elements
in the context of an Exception Request.
“Part A Required Information” means Required Information that is to be provided in Part A of a
Responsible Entity’s TFE Request.
“Part B Required Information” means Required Information that is to be provided in Part B of a
Responsible Entity’s TFE Request.

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“Participant” means a Respondent and any other Person who is allowed or required by FERC to
participate as an intervenor in a proceeding conducted pursuant to the Hearing Procedures, and
as used in the Hearing Procedures shall include, depending on the context, the members of the
Compliance Staff that participate in a proceeding or the members of the Certification Staff that
participate in a proceeding pursuant to Appendix 4E.
“Party” or “Parties” means a Person or the Persons participating in a mediation pursuant to
Appendix 4E.
“Penalty” means and includes all penalties and sanctions, including but not limited to a monetary
or non-monetary penalty; a limitation on an activity, function, operation or other appropriate
sanction; or the addition of the Registered Entity or Respondent to a reliability watch list
composed of major violators. Penalties must be within the range set forth in the NERC Sanction
Guidelines approved by FERC pursuant to 18 C.F.R. Section 39.7(g)(2), and shall bear a
reasonable relation to the seriousness of a Registered Entity’s or Respondent’s violation and take
into consideration any timely efforts made by the Registered Entity or Respondent to remedy the
violation.
“Periodic Data Submittals” means modeling, studies, analyses, documents, procedures,
methodologies, operating data, process information or other information to demonstrate
compliance with Reliability Standards and provided by Registered Entities to the Compliance
Enforcement Authority on a time frame required by a Reliability Standard or an ad hoc basis.
“Person” means any individual, partnership, corporation, limited liability company,
governmental body, association, joint stock company, public trust, organized group of persons,
whether incorporated or not, or any other legal entity.
“Planning Authority” means the responsible entity that coordinates and integrates transmission
Facilities and service plans, resource plans, and Protection Systems.**
“Point of Delivery” means a location that a Transmission Service Provider specifies on its
transmission system where an Interchange Transaction leaves or a Load-Serving Entity receives
its energy.**
“Point of Receipt” means a location that the Transmission Service Provider specifies on its
transmission system where an Interchange Transaction enters or a generator delivers its output.
“Possible Violation” means the identification, by the Compliance Enforcement Authority, using
one of the compliance monitoring and enforcement processes in Section 3.0 of Appendix 4C, of
a possible failure by a Registered Entity to comply with a Reliability Standard that is applicable
to the Registered Entity.
“Preliminary Screen” means an initial evaluation of evidence indicating potential noncompliance
with a Reliability Standard has occurred or is occurring, conducted by the Compliance
Enforcement Authority for the purpose of determining whether a Possible Violation exists, and
consisting of an evaluation of whether (1) the entity allegedly involved in the potential
Appendix 2 to the NERC Rules of Procedure
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noncompliance is registered, and (2) the Reliability Standard Requirement to which the evidence
of potential noncompliance relates is applicable to a reliability function for which the entity is
registered.
“Probation” means a step in the disciplinary process pursuant to Appendix 6 during which the
certificate is still valid. During the probationary period, a subsequent offense of misconduct, as
determined through the same process as described above, may be cause for more serious
consequences.
“Protected FOIA Information” means Required Information, held by a governmental entity, that
is subject to an exemption from disclosure under FOIA (5 U.S.C. §552(e)), under any similar
state or local statutory provision, or under any comparable provision of Canadian federal or
provincial law, which would be lost were the Required Information to be placed into the public
domain.
“Protection System” means protective relays which respond to electrical quantities,
communications systems necessary for correct operation of protective functions, voltage and
current sensing devices providing inputs to protective relays, station dc supply associated with
protective functions (including batteries, battery chargers, and non-battery-based dc supply), and
control circuitry associated with protective functions through the trip coil(s) of the circuit
breakers or other interrupting devices.**
“Purchasing-Selling Entity” means the entity that purchases, or sells, and takes title to, energy,
capacity, and Interconnected Operations Services. Purchasing-Selling Entities may be affiliated
or unaffiliated merchants and may or may not own generating facilities.**
“Reactive Power” means the portion of electricity that establishes and sustains the electric and
magnetic fields of alternating-current equipment. Reactive Power must be supplied to most
types of magnetic equipment, such as motors and transformers. It also must supply the reactive
losses on transmission facilities. Reactive Power is provided by generators, synchronous
condensers, or electrostatic equipment such as capacitors and directly influences electric system
voltage. It is usually expressed in kilovars (kvar) or megavars (Mvar).**
“Real Power” means the portion of electricity that supplies energy to the Load.**
“Receiving Entity” means NERC or a Regional Entity receiving Confidential Information from
an owner, operator, or user of the Bulk Power System or from any other party.
“Recommendation” for purposes of Appendix 5C means the report to NERC containing the
evaluation prepared in accordance with section 5.2 of Appendix 5C concerning whether or to
what extent an Exception Request should be approved.
“Recommendations” or “Level 2 (Recommendations)” is a notification issued by NERC in
accordance with Section 810.3.2 of the Rules of Procedure.

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“Region” means the geographic area, as specified in a Regional Entity’s delegation agreement
with NERC, within which the Regional Entity is responsible for performing delegated functions.
“Regional Criteria” means reliability requirements developed by a Regional Entity that are
necessary to implement, to augment, or to comply with Reliability Standards, but which are not
Reliability Standards. Such Regional Criteria may be necessary to account for physical
differences in the Bulk Power System but are not inconsistent with Reliability Standards nor do
they result in lesser reliability. Such Regional Criteria are not enforceable pursuant to NERCdelegated authorities, but may be enforced through other available mechanisms. Regional
Criteria may include specific acceptable operating or planning parameters, guides, agreements,
protocols or other documents.
“Regional Entity” means an entity having enforcement authority pursuant to 18 C.F.R. § 39.8.++
“Regional Entity Compliance Monitoring and Enforcement Program Implementation Plan” or
“Regional Implementation Plan” means an annual plan, submitted by November 1 of each year
to NERC for approval that, in accordance with NERC Rule of Procedure Section 401.6 and the
NERC Compliance Monitoring and Enforcement Program Implementation Plan, identifies (1) all
Reliability Standards identified by NERC to be actively monitored during each year, (2) other
Reliability Standards proposed for active monitoring by the Regional Entity, (3) the methods to
be used by the Regional Entity for reporting, monitoring, evaluation, and assessment of
performance criteria with each Reliability Standard, and (4) the Regional Entity’s Annual Audit
Plan.
“Regional Reliability Standard” means a type of Reliability Standard that is applicable only
within a particular Regional Entity or group of Regional Entities. A Regional Reliability
Standard may augment, add detail to, or implement another Reliability Standard or cover matters
not addressed by other Reliability Standards. Regional Reliability Standards, upon adoption by
NERC and approval by the Applicable Governmental Authority(ies), shall be Reliability
Standards and shall be enforced within the applicable Regional Entity or Regional Entities
pursuant to delegated authorities or to procedures prescribed by the Applicable Governmental
Authority.
“Registered Ballot Body” means that aggregation of all entities or individuals that qualify for one
of the Segments approved by the Board of Trustees, and are registered with NERC as potential
ballot participants in the voting on proposed Reliability Standards.
“Registered Entity” means an owner, operator, or user of the Bulk Power System, or the entity
registered as its designee for the purpose of compliance, that is included in the NERC
Compliance Registry.
“Registration” or “Organization Registration” means the processes undertaken by NERC and
Regional Entities to identify which entities are responsible for reliability functions within the
Regional Entity’s Region.

Appendix 2 to the NERC Rules of Procedure
Effective [DATE], 2012

16

“Rejection of the Exception Request” or “Rejection” means the determination that an Exception
Request is not an eligible Exception Request (i.e., a Request permitted by section 4.1 of
Appendix 5C) or does not contain all the Required Information in accordance with section 4.5 of
Appendix 5C in order to be reviewed for substance.
“Reliability Coordinator” means the entity that is the highest level of authority who is
responsible for the Reliable Operation of the Bulk Electric System, has the Wide Area view of
the Bulk Electric System, and has the operating tools, processes and procedures, including the
authority to prevent or mitigate emergency operating situations in both next-day analysis and
real-time operations. The Reliability Coordinator has the purview that is broad enough to enable
the calculation of Interconnection Reliability Operating Limits, which may be based on the
operating parameters of transmission systems beyond any Transmission Operator’s vision.**
“Reliability Coordinator Area” means the collection of generation, transmission and loads within
the boundaries of the Reliability Coordinator. Its boundary coincides with one or more
Balancing Authority Areas.**
“Reliability Standard” means a requirement to provide for Reliable Operation of the Bulk Power
System, including without limiting the foregoing, requirements for the operation of existing Bulk
Power System Facilities, including cyber security protection, and including the design of planned
additions or modifications to such Facilities to the extent necessary for Reliable Operation of the
Bulk Power System, but the term does not include any requirement to enlarge Bulk Power
System Facilities or to construct new transmission capacity or generation capacity. A Reliability
Standard shall not be effective in the United States until approved by the Federal Energy
Regulatory Commission and shall not be effective in other jurisdictions until made or allowed to
become effective by the Applicable Governmental Authority.
“Reliability Standards Development Plan” means the forward-looking plan developed by NERC
on an annual basis setting forth the Reliability Standards development projects that are scheduled
to be worked on during the ensuing three-year period, as specified in Section 310 of the Rules of
Procedure.
“Reliable Operation” means operating the Elements of the Bulk Power System within equipment
and electric system thermal, voltage, and stability limits so that instability, uncontrolled
separation, or Cascading failures of such system will not occur as a result of a sudden
disturbance, including a Cyber Security Incident, or unanticipated failure of system Elements.++
“Remedial Action Directive” means an action (other than a Penalty or sanction) required by a
Compliance Enforcement Authority that (1) is to bring a Registered Entity into compliance with
a Reliability Standard or to avoid a Reliability Standard violation, and (2) is immediately
necessary to protect the reliability of the Bulk Power System from an imminent threat.
“Reporting Entity” means an entity required to provide data or information requested by NERC
or a Regional Entity in a request for data or information pursuant to Section 1600 of the Rules of
Procedure.

Appendix 2 to the NERC Rules of Procedure
Effective [DATE], 2012

17

“Requirement” means an explicit statement in a Reliability Standard that identifies the functional
entity responsible, the action or outcome that must be achieved, any conditions achieving the
action or outcome, and the reliability-related benefit of the action or outcome. Each
Requirement shall be a statement with which compliance is mandatory.
“Required Date” means the date given a Registered Entity in a notice from the Compliance
Enforcement Authority by which some action by the Registered Entity is required.
“Required Information” means, as applicable, either (i) the information required to be provided
in a TFE Request, as specified in Section 4.0 of Appendix 4D; or (ii) the information required to
be provided in an Exception Request, as specified in section 4.0 of Appendix 5C.
“Reserve Sharing Group” means a group whose members consist of two or more Balancing
Authorities that collectively maintain, allocate, and supply operating reserves required for each
Balancing Authority’s use in recovering from contingencies within the group. Scheduling
energy from an Adjacent Balancing Authority to aid recovery need not constitute reserve sharing
provided the transaction is ramped in over a period the supplying party could reasonably be
expected to load generation in (e.g. ten minutes). If the transaction is ramped in quicker, (e.g.,
between zero and ten minutes), then, for the purposes of disturbance control performance, the
areas become a Reserve Sharing Group.**
“Resource Planner” means the entity that develops a long-term (generally one year and beyond)
plan for the resource adequacy of specific loads (customer demand and energy requirements)
within a Planning Authority area.**
“Respondent” means, depending on the context, the Registered Entity, who is the subject of the
Notice of Alleged Violation, contested Mitigation Plan or contested Remedial Action Directive
that is the basis for the proceeding, whichever is applicable, or the Registered Entity that is the
subject of the Certification decision that is the basis for a proceeding under Appendix 4E.
“Responsible Entity” means an entity that is registered for a reliability function in the NERC
Compliance Registry and is responsible for complying with an Applicable Requirement, as
specified in the “Applicability” section of the CIP Standard.
“Revoked” means a NERC certificate that has been suspended for more than twelve months.
While in this state, a certificate holder can not perform any task that requires an operator to be
NERC-certified. The certificate holder will be required to pass an exam to be certified again.
Any CE Hours accumulated prior to or during the revocation period will not be counted towards
Credential Maintenance.
“Revoke for Cause” means a step in the disciplinary process pursuant to Appendix 6 during
which the certificate is no longer valid and requiring successfully passing an exam to become
certified. However, an exam will not be authorized until the revocation period expires. CE
Hours earned before or during this revocation period will not be counted for maintaining a
Credential.

Appendix 2 to the NERC Rules of Procedure
Effective [DATE], 2012

18

“Scope of Responsibility” means the registered functions of a Planning Authority, Reliability
Coordinator, Transmission Operator, Transmission Planner or Balancing Authority and the
geographical or electric region in which the Planning Authority, Reliability Coordinator,
Transmission Operator, Transmission Planner or Balancing Authority operates to perform its
registered functions, or with respect to a Regional Entity, its Regional Entity Region.
“Section I Required Information” means Required Information that is to be provided in Section I
of a Submitting Entity’s Exception Request.
“Section II Required Information” means Required Information that is to be provided in Section
II of a Submitting Entity’s Exception Request.
“Section III Required Information” means Required Information that is to be provided in Section
III of a Submitting Entity’s Exception Request.
“Sector” means a group of Members of NERC that are Bulk Power System owners, operators, or
users or other persons and entities with substantially similar interests, including governmental
entities, as pertinent to the purposes and operations of NERC and the operation of the Bulk
Power System, as defined in Article II, Section 4 of the NERC Bylaws. Each Sector shall
constitute a class of Members for purposes of the New Jersey Nonprofit Corporation Act.
“Segment” means one of the subsets of the Registered Ballot Body whose members meet the
qualification criteria for the subset.
“Self-Certification” means attestation by a Registered Entity of compliance or non-compliance
with a Reliability Standard for which Self-Certification is required by the Compliance
Enforcement Authority and that is included for monitoring in the Regional Implementation Plan.
“Self-Reporting” means a report by a Registered Entity stating (1) that the Registered Entity
believes it has violated a Reliability Standard, and (2) the actions that have been taken or will be
taken to resolve the violation.
“Senior Manager” means the person assigned by the Responsible Entity, in accordance with CIP
Standard CIP-003-1 Requirement R2 (or subsequent versions), to have overall responsibility for
leading and managing the Responsible Entity’s implementation of, and adherence to, the CIP
Standards.
“Sink Balancing Authority” means the Balancing Authority in which the lLoad (sink) is located
for an Interchange Transaction.**
“Source Balancing Authority” means the Balancing Authority in which the generation (source) is
located for an Interchange Transaction.**
“Special Protection System” means an automatic protection system designed to detect abnormal
or predetermined system conditions, and take corrective actions other than and/or in addition to
the isolation of faulted components to maintain system reliability. Such action may include
changes in demand, generation (MW and Mvar), or system configuration to maintain system
Appendix 2 to the NERC Rules of Procedure
Effective [DATE], 2012

19

stability, acceptable voltage, or power flows. A Special Protection System does not include (a)
underfrequency or undervoltage lLoad shedding or (b) fault conditions that must be isolated, or
(c) out-of-step relaying (not designed as an integral part of a Special Protection System).**
“Spot Checking” means a process in which the Compliance Enforcement Authority requests a
Registered Entity to provide information (1) to support the Registered Entity’s Self-Certification,
Self-Reporting, or Periodic Data Submittal and to assess whether the Registered Entity complies
with Reliability Standards, or (2) as a random check, or (3) in response to events, as described in
the Reliability Standards or based on operating problems or system events.
“Staff” or “Compliance Staff” means individuals employed or contracted by NERC or the
Compliance Enforcement Authority who have the authority to make initial determinations of
compliance or violation with Reliability Standards by Registered Entities and associated
Penalties and Mitigation Plans.
“Strict Compliance” means compliance with the terms of an Applicable Requirement without
reliance on a Technical Feasibility Exception.
“Submitting Entity” means (i) an owner, operator, or user of the Bulk Power System or any other
party that submits information to NERC or a Regional Entity that it reasonably believes contains
Confidential Information or, (ii) solely for purposes of Appendix 5C, the entity that submits an
Exception Request in accordance with section 4.0 of Appendix 5C.
“Suspended” means certificate status due to an insufficient number of CE Hours being submitted
prior to the expiration of a certificate. While in this state, a certificate holder can not perform
any task that requires an operator to be NERC-certified.
“System” means a combination of generation, transmission and distribution components.**
“System Operating Limit” means the value (such as MW, Mvar, amperes, frequency or volts)
that satisfies the most limiting of the prescribed operating criteria for a specified system
configuration to ensure operation within acceptable reliability criteria.**
“Technical Advisor” means any Staff member, third-party contractor, or industry stakeholder
who satisfies NERC’s or the Compliance Enforcement Authority’s (as applicable) conflict of
interest policy and is selected to assist in a proceeding by providing technical advice to the
Hearing Officer and/or the Hearing Body or Hearing Panel.
“Technical Feasibility Exception” or “TFE” means an exception from Strict Compliance with the
terms of an Applicable Requirement on grounds of technical feasibility or technical limitations in
accordance with one or more of the criteria in section 3.0 of Appendix 4D.
“Technical Review Panel” means a panel established pursuant to section 5.3 of Appendix 5C.
“Termination of Credential” means a step in the disciplinary process pursuant to Appendix 6
whereby a Credential is permanently Revoked.
Appendix 2 to the NERC Rules of Procedure
Effective [DATE], 2012

20

“TFE Request” means a request submitted by a Responsible Entity in accordance with Appendix
4D for an exception from Strict Compliance with an Applicable Requirement.
“Transmission Customer” means 1. any eligible customer (or its designated agent) that can or
does execute a Transmission Service agreement or can and does receive Transmission Service.
2. Any of the following responsible entities: Generator Owner, Load-Serving Entity, or
Purchasing-Selling Entity.**
“Transmission Operator” means the entity responsible for the reliability of its “local”
transmission system, and that operates or directs the operations of the transmission Facilities.**
“Transmission Owner” means the entity that owns and maintains transmission Facilities.**
“Transmission Planner” means the entity that develops a long-term (generally one year and
beyond) plan for the reliability (adequacy) of the interconnected bulk electric transmission
systems within its portion of the Planning Authority area.**
“Transmission Service” means services provided to the Transmission Customer by the
Transmission Service Provider to move energy from a Point of Receipt to a Point of Delivery.**
“Transmission Service Provider” means the entity that administers the transmission tariff and
provides Transmission Service to Transmission Customers under applicable Transmission
Service agreements.**
“Type of CE Hours” means NERC-Approved Learning Activity covering topics from Appendix
A to Appendix 6, NERC Reliability Standards and/or simulations for which there is a minimum
requirement for Credential Maintenance.
“Variance” means an aspect or element of a Reliability Standard that applies only within a
particular Regional Entity or group of Regional Entities, or to a particular entity or class of
entities. A Variance allows an alternative approach to meeting the same reliability objective as
the Reliability Standard, and is typically necessitated by a physical difference. A Variance is
embodied within a Reliability Standard and as such, if adopted by NERC and approved by the
Applicable Governmental Authority(ies), shall be enforced within the applicable Regional Entity
or Regional Entities pursuant to delegated authorities or to procedures prescribed by the
Applicable Governmental Authority.
“Violation Risk Factor” or “VRF” means a factor (lower, medium or high) assigned to each
Requirement of a Reliability Standard to identify the potential reliability significance of
noncompliance with the Requirement.
“Violation Severity Level” or “VSL” means a measure (lower, moderate, high or severe) of the
degree to which compliance with a Requirement was not achieved.

Appendix 2 to the NERC Rules of Procedure
Effective [DATE], 2012

21

“Wide Area” means the entire Reliability Coordinator Area as well as the critical flow and status
information from adjacent Reliability Coordinator Areas as determined by detailed system
studies to allow the calculation of Interconnected Reliability Operating Limits.**

Appendix 2 to the NERC Rules of Procedure
Effective [DATE], 2012

22

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 4A

REVISED APPENDIX 3D OF THE RULES OF PROCEDURE,
REGISTERED BALLOT BODY CRITERIA
CLEAN VERSION

Proposed Revisions 1-9-2012
[Incorporates revisions filed with
FERC on November 29, 2012]

Appendix 3D

Registered Ballot Body Criteria

Effective: November 17, 2011

116 -390 Village Boulevard, Princeton, New Jersey 08540-5721
Phone: 609.452.8030 · Fax: 609.452.9550 · www.nerc.com

Appendix 3D — Development of the Registered
Ballot Body1
Registration Procedures
The Registered Ballot Body comprises all organizations, entities, and individuals that:
1. Qualify for one of the Segments, and
2. Are registered with NERC as potential ballot participants in the voting on Reliability Standards,
and
3. Are current with any designated fees.
Each participant, when initially registering to join the Registered Ballot Body, and annually thereafter,
shall self-select to belong to one of the Segments described below.
NERC general counsel will review all applications for joining the Registered Ballot Body, and make a
determination of whether the self-selection satisfies at least one of the guidelines to belong to that
Segment. The entity or individual will then be “credentialed” to participate as a voting member of that
Segment. The Standards Committee will decide disputes, with an appeal to the Board of Trustees.
All registrations will be done electronically.

Segment Qualification Guidelines
1. Except as set forth below, the Segment qualification guidelines are inclusive; i.e., any entity or
individual with a legitimate interest in the reliability of the Bulk Power System that can meet any
one of the guidelines for a Segment is entitled to belong to and vote in that Segment.
2. Corporations or organizations with integrated operations or with affiliates that qualify to belong
to more than one Segment (e.g., transmission owners and Load Serving Entities) may belong to
each of the Segments in which they qualify, provided that each Segment constitutes a separate
membership and is represented by a different representative. Individuals or entities that elect to
participate in Segment 8 are not eligible to participate in multiple Segments.
3. At any given time, affiliated entities may collectively be registered only once within a Segment.
4. Any individual or entity, such as a consultant or vendor, providing products or services related to
Bulk Power System reliability within the previous 12 months to another entity eligible to join
Segments 1 through 7 shall be qualified to join any one Segment for which one of the entities
receiving those products or services is qualified to join.
5. Corporations, organizations, entities, and individuals may participate freely in all subgroups.
6. After their initial selection, registered participants may apply to change Segments annually, on a
schedule determined by the Standards Committee.

1

The Segment qualification guidelines were proposed in the final report of the NERC Standing Committees
Representation Task Force on February 7, 2002. The Board of Trustees endorsed the industry Segments and
weighted Segment voting model on February 20, 2002 and may change the model from time to time.

1

7. The qualification guidelines and rules for joining Segments will be reviewed periodically to
ensure that the process continues to be fair, open, balanced, and inclusive. Public input will be
solicited in the review of these guidelines.
8. Since all balloting of Reliability Standards will be done electronically, any registered participant
may designate a proxy to vote on its behalf. There are no limits on how many proxies a person
may hold. However, NERC must have in its possession, either in writing or by email,
documentation that the voting right by proxy has been transferred.

Segments
Segment 1.

Transmission Owners

a. Any entity that owns or controls at least 200 circuit miles of integrated transmission facilities, or
has an Open Access Transmission Tariff or equivalent on file with a regulatory authority.
b. Transmission owners that have placed their transmission under the operational control of an RTO
or ISO.
c. Independent transmission companies or organizations, merchant transmission developers, and
transcos that are not RTOs or ISOs.
d. Excludes RTOs and ISOs that are eligible to join to Segment 2.
Segment 2.
(ISOs)

Regional Transmission Organizations (RTOs) and Independent System Operators

a. Any entity authorized by appropriate governmental authority to operate as an RTO or ISO.
Segment 3.

Load-Serving Entities (LSEs)

a. Entities serving end-use customers under a regulated tariff, a contract governed by a regulatory
tariff, or other legal obligation to serve.
b. A member of a generation and transmission (G&T) cooperative or a joint-action agency is
permitted to designate the G&T or joint-action agency to represent it in this Segment; such
designation does not preclude the G&T or joint-action agency from participation and voting in
another Segment representing its direct interests.
c. Agents or associations can represent groups of LSEs
Segment 4.

Transmission Dependent Utilities (TDUs)

a. Entities with a regulatory, contractual, or other legal obligation to serve wholesale aggregators or
customers or end-use customers and that depend primarily on the transmission systems of third
parties to provide this service.
b. Agents or associations can represent groups of TDUs.
Segment 5.

Electric Generators

a. Affiliated and independent generators, including variable and other renewable resources.
b. A corporation that sets up separate corporate entities for each one or more generating plants in
which it is involved may only have one vote in this Segment regardless of how many single-plant
or multiple-plant corporations the parent corporation has established or is involved in.
2

c. Agents or associations can represent groups of electrical generators.
Segment 6.

Electricity Brokers, Aggregators, and Marketers

a. Entities serving end-use customers under a power marketing agreement or other authorization not
classified as a regulated tariff.
b. An entity that buys, sells, or brokers energy and related services for resale in wholesale or retail
markets, whether a non-jurisdictional entity operating within its charter or an entity licensed by a
jurisdictional regulator.
c. G&T cooperatives and joint-action agencies that perform an electricity broker, aggregator, or
marketer function are permitted to belong to this Segment.
d. Agents or associations can represent groups of electricity brokers, aggregators, or marketers.
e. This Segment also includes demand-side management providers.
Segment 7.

Large Electricity End Users

a. At least one service delivery taken at 50 kV (radial supply or facilities dedicated to serve
customers) that is not purchased for resale.
b. A single customer with an average aggregated service Load (not purchased for resale) of at least
50,000 MWh annually, excluding cogeneration or other back feed to the serving utility.
c. Agents or associations can represent groups of large end users.
Segment 8.

Small Electricity Users

a. Service taken at below 50 kV.
b. A single customer with an average aggregated service Load (not purchased for resale) of less than
50,000 MWh annually, excluding cogeneration or other back feed to the serving utility.
c. Agents, state consumer advocates, or other advocate groups can represent groups of small
customers.
d. Any entity or individual currently employed by an entity that is eligible to join one or more of the
other nine Segments, shall not be qualified to join Segment 8.
e. Any individual or entity, such as a consultant, employee or vendor, providing products or
services related to Bulk Power System reliability within the previous 12 months to another
entity eligible to join Segments 1 through 7, including trade associations representing such
Segments, shall be qualified to join any one Segment for which one of the entities receiving
those products or services is qualified to join and shall not be eligible to join Segment 8.
Segment 9.

Federal, State, and Provincial Regulatory or other Government Entities

a. Does not include federal power management agencies or the Tennessee Valley Authority.
b. May include public utility commissions.
Segment 10.

Regional Entities

a. Any entity that is a Regional Entity. It is recognized that there may be instances in which an
entity is both an RTO or ISO and a Regional Entity. In such a case, the two functions must be
sufficiently independent to meet NERC’s Rules of Procedure and applicable regulatory
3

requirements, as evidenced by the approval of a Regional Entity delegation agreement. Without
such an approval, the entity shall be limited to choosing to enter one Segment or the other, but not
both.

4

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 4B

REVISED APPENDIX 3D OF THE RULES OF PROCEDURE,
REGISTERED BALLOT BODY CRITERIA
REDLINED VERSION

Proposed Revisions 1-9-2012
[Incorporates revisions filed with
FERC on November 29, 2012]

Appendix 3D

Registered Ballot Body Criteria

Effective: November 17, 2011

116 -390 Village Boulevard, Princeton, New Jersey 08540-5721
Phone: 609.452.8030 · Fax: 609.452.9550 · www.nerc.com

Appendix 3D — Development of the Registered
Ballot Body1
Registration Procedures
The Registered Ballot Body comprises all organizations, entities, and individuals that:
1. Qualify for one of the Segments, and
2. Are registered with NERC as potential ballot participants in the voting on Reliability Standards,
and
3. Are current with any designated fees.
Each participant, when initially registering to join the Registered Ballot Body, and annually thereafter,
shall self-select to belong to one of the Segments described below.
NERC general counsel will review all applications for joining the Registered Ballot Body, and make a
determination of whether the self-selection satisfies at least one of the guidelines to belong to that
Segment. The entity or individual will then be “credentialed” to participate as a voting member of that
Segment. The Standards Committee will decide disputes, with an appeal to the Board of Trustees.
All registrations will be done electronically.

Segment Qualification Guidelines
1. Except as set forth below, the Segment qualification guidelines are inclusive; i.e., any entity or
individual with a legitimate interest in the reliability of the Bulk Power System that can meet any
one of the guidelines for a Segment is entitled to belong to and vote in that Segment.
2. Corporations or organizations with integrated operations or with affiliates that qualify to belong
to more than one Segment (e.g., transmission owners and Load Serving Entities) may belong to
each of the Segments in which they qualify, provided that each Segment constitutes a separate
membership and is represented by a different representative. Individuals or entities that elect to
participate in Segment 8 are not eligible to participate in multiple Segments.
3. At any given time, affiliated entities may collectively be registered only once within a Segment.
4. Any individual or entity, such as a consultant or vendor, providing products or services related to
Bulk Power System reliability within the previous 12 months to another entity eligible to join
Segments 1 through 7 shall be qualified to join any one Segment for which one of the entities
receiving those products or services is qualified to join.
5. Corporations, organizations, entities, and individuals may participate freely in all subgroups.
6. After their initial selection, registered participants may apply to change Segments annually, on a
schedule determined by the Standards Committee.

1

The Segment qualification guidelines were proposed in the final report of the NERC Standing Committees
Representation Task Force on February 7, 2002. The Board of Trustees endorsed the industry Segments and
weighted Segment voting model on February 20, 2002 and may change the model from time to time.

1

7. The qualification guidelines and rules for joining Segments will be reviewed periodically to
ensure that the process continues to be fair, open, balanced, and inclusive. Public input will be
solicited in the review of these guidelines.
8. Since all balloting of Reliability Standards will be done electronically, any registered participant
may designate a proxy to vote on its behalf. There are no limits on how many proxies a person
may hold. However, NERC must have in its possession, either in writing or by email,
documentation that the voting right by proxy has been transferred.

Segments
Segment 1.

Transmission Owners

a. Any entity that owns or controls at least 200 circuit miles of integrated transmission facilities, or
has an Open Access Transmission Tariff or equivalent on file with a regulatory authority.
b. Transmission owners that have placed their transmission under the operational control of an RTO
or ISO.
c. Independent transmission companies or organizations, merchant transmission developers, and
transcos that are not RTOs or ISOs.
d. Excludes RTOs and ISOs that are eligible to join to Segment 2.
Segment 2.
(ISOs)

Regional Transmission Organizations (RTOs) and Independent System Operators

a. Any entity authorized by appropriate governmental authority to operate as an RTO or ISO.
Segment 3.

Load-Serving Entities (LSEs)

a. Entities serving end-use customers under a regulated tariff, a contract governed by a regulatory
tariff, or other legal obligation to serve.
b. A member of a generation and transmission (G&T) cooperative or a joint-action agency is
permitted to designate the G&T or joint-action agency to represent it in this Segment; such
designation does not preclude the G&T or joint-action agency from participation and voting in
another Segment representing its direct interests.
c. Agents or associations can represent groups of LSEs
Segment 4.

Transmission Dependent Utilities (TDUs)

a. Entities with a regulatory, contractual, or other legal obligation to serve wholesale aggregators or
customers or end-use customers and that depend primarily on the transmission systems of third
parties to provide this service.
b. Agents or associations can represent groups of TDUs.
Segment 5.

Electric Generators

a. Affiliated and independent generators, including variable and other renewable resources.
b. A corporation that sets up separate corporate entities for each one or more generating plants in
which it is involved may only have one vote in this Segment regardless of how many single-plant
or multiple-plant corporations the parent corporation has established or is involved in.
2

c. Agents or associations can represent groups of electrical generators.
Segment 6.

Electricity Brokers, Aggregators, and Marketers

a. Entities serving end-use customers under a power marketing agreement or other authorization not
classified as a regulated tariff.
b. An entity that buys, sells, or brokers energy and related services for resale in wholesale or retail
markets, whether a non-jurisdictional entity operating within its charter or an entity licensed by a
jurisdictional regulator.
c. G&T cooperatives and joint-action agencies that perform an electricity broker, aggregator, or
marketer function are permitted to belong to this Segment.
d. Agents or associations can represent groups of electricity brokers, aggregators, or marketers.
e. This Segment also includes demand-side management providers.
Segment 7.

Large Electricity End Users

a. At least one service delivery taken at 50 kV (radial supply or facilities dedicated to serve
customers) that is not purchased for resale.
b. A single customer with an average aggregated service Loadload (not purchased for resale) of at
least 50,000 MWh annually, excluding cogeneration or other back feed to the serving utility.
c. Agents or associations can represent groups of large end users.
Segment 8.

Small Electricity Users

a. Service taken at below 50 kV.
b. A single customer with an average aggregated service Loadload (not purchased for resale) of less
than 50,000 MWh annually, excluding cogeneration or other back feed to the serving utility.
c. Agents, state consumer advocates, or other advocate groups can represent groups of small
customers.
d. Any entity or individual currently employed by an entity that is eligible to join one or more of the
other nine Segments, shall not be qualified to join Segment 8.
e. Any individual or entity, such as a consultant, employee or vendor, providing products or
services related to Bulk Power System reliability within the previous 12 months to another
entity eligible to join Segments 1 through 7, including trade associations representing such
Segments, shall be qualified to join any one Segment for which one of the entities receiving
those products or services is qualified to join and shall not be eligible to join Segment 8.
Segment 9.

Federal, State, and Provincial Regulatory or other Government Entities

a. Does not include federal power management agencies or the Tennessee Valley Authority.
b. May include public utility commissions.
Segment 10.

Regional Entities

a. Any entity that is a Regional Entity. It is recognized that there may be instances in which an
entity is both an RTO or ISO and a Regional Entity. In such a case, the two functions must be
sufficiently independent to meet NERC’s Rules of Procedure and applicable regulatory
3

requirements, as evidenced by the approval of a Regional Entity delegation agreement. Without
such an approval, the entity shall be limited to choosing to enter one Segment or the other, but not
both.

4

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 5A

REVISED APPENDIX 4B OF THE RULES OF PROCEDURE,
SANCTION GUIDELINES OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
CLEAN VERSION

Appendix 4B

Proposed Revisions 1-9-2012
[Incorporates revisions filed with
FERC on November 29, 2011]

Sanction Guidelines
of the
North American
Electric Reliability Corporation

Effective: January 1, 2011

Table of Contents

Table of Contents
1. Preamble and Overview ............................................................................................................................1
2. Document Scope and Exclusions ..............................................................................................................2
3. Basic Principles ..........................................................................................................................................3
3.1 Necessary Element of NERC Compliance Program .............................................................................3
3.2 Settlement of Compliance Violations....................................................................................................3
3.3 Settlement Request ................................................................................................................................4
3.4 Settlement Effect on Continuation of Determination of Penalties, Sanctions, or Remedial Actions ....4
3.5 Timing of Determination of Penalty, Sanction or Remedial Action .....................................................4
3.6 Determining Party .................................................................................................................................4
3.7 No Influence of Penalty, Sanction or Remedial Action upon Violation Confirmation Process............4
3.8 Reasonable Relationship to Violation ...................................................................................................4
3.9 Use and Facets of Factors to Determine Penalties.................................................................................5
3.10
Multiple Violations.........................................................................................................................5
3.11
Relation of the Penalty to the Seriousness of the Violation and Violator’s Ability to Pay ............5
3.12
Violation Time Horizon..................................................................................................................6
3.13
Extenuating Circumstances ............................................................................................................7
3.14
Concealment or Intentional Violation ............................................................................................7
3.15
Economic Choice to Violate...........................................................................................................7
3.16
No Influence by Outcome of Economic Choice to Violate ............................................................7
3.17
Non-Monetary Sanctions or Remedial Actions ..............................................................................7
3.18
Non-Exclusiveness of Monetary Penalties or Non-Monetary Sanctions........................................7
3.19
Monetization of the Value of Sanctions .........................................................................................7
3.20
Maximum Limitations on Penalties................................................................................................8
3.21
Frequency and Duration of Violations .......................................................................................... 9
4. Determination of Monetary Penalties ....................................................................................................11
4.1 Initial Value Range of the Base Penalty Amount................................................................................11
4.1.1
Violation Risk Factor............................................................................................................11
4.1.2
Violation Severity Level.......................................................................................................11
4.2 Setting of the Base Penalty Amount....................................................................................................12
4.2.1
Applicability of the Violation Risk Factor ...........................................................................12
4.2.2
First Violation.......................................................................................................................12
4.3 Application of Adjustment Factors......................................................................................................13
4.3.1
Repetitive Violations and Compliance History ....................................................................13
4.3.2
Failure to Comply with Compliance Directives ...................................................................14
4.3.3
Self-Disclosure and Voluntary Corrective Action................................................................14
4.3.4
Degree and Quality of Cooperation in Violation Investigation and Remedial Action .........14
4.3.5
Presence and Quality of Compliance Program .....................................................................14
4.3.6
Violation Concealment .........................................................................................................14
4.3.7
Intentional Violation.............................................................................................................15
4.3.8
Extenuating Circumstances ..................................................................................................15
4.4 Setting of the Final Penalty Amount ...................................................................................................15
4.4.1
Violator’s Financial Ability to Pay.......................................................................................15
4.4.2
Reconfirmation of Disgorgement of Unjust Profit or Gain ..................................................16
5. Determination of Non-Monetary Sanctions...........................................................................................17
6. Remedial Action .......................................................................................................................................18
6.1 Definition and Anticipated Use ...........................................................................................................18
6.2 Compliance Requirements...................................................................................................................18
6.3 No Obligation to Issue.........................................................................................................................18
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6.4
6.5
6.6
6.7

Version 12.3

Scope of Application ...........................................................................................................................18
Availability ..........................................................................................................................................19
No Impact on Confirmation of Violation, or Penalties or Sanctions...................................................19
Types of Remedial Actions .................................................................................................................19

Appendix A: Base Penalty Amount Table....................................................................................................20

Preamble and Overview

1. Preamble and Overview
The North American Electric Reliability Corporation, as the Electric Reliability Organization (ERO), and
Regional Entities to whom NERC has delegated authority (hereinafter referred to collectively as
“Regional Entities” or individually as a “Regional Entity”) shall determine and may levy monetary
Penalties and non-monetary sanctions and remedial actions against owners, operators, and users of the
Bulk Power System for violations of the Requirements of NERC Reliability Standards approved by the
Federal Energy Regulatory Commission (FERC) and Applicable Governmental Authorities in Canada
and/or Mexico. This document sets out the processes and principles to be followed, and factors that will
be considered when determining Penalties, sanctions, or remedial actions for violations. Collectively
these processes, principles and factors are NERC’s Penalties, sanctions, and remedial action guidelines.
NERC and the Regional Entities will exclusively follow the directives, principles and processes in these
Sanction Guidelines when determining Penalties, sanctions, or remedial action for a violation. However,
adjustment factors are also provided to afford NERC or the Regional Entity the flexibility needed to
accommodate the facts surrounding each violation. In this manner, rigid prescription of specific Penalty
formulae can be avoided at the same time that appropriate limitations on the degree of discretion and
flexibility available to address each violation on its merits is maintained. The outcome will be remedies
that are commensurate and fair compared to the reliability impact of the violation and to remedies levied
for similar violations, yet appropriately reflective of any unique facts and circumstances regarding the
specific violation and violator.
The adjustment factors established in this document are generally consistent with those listed in the FERC
Policy Statement on Enforcement issued on October 20, 2005. However, discussion of the factors
presented in this document is not exhaustive as other facets of these factors, or other additional factors not
discussed herein, may also be considered to determine a given Penalty, sanction, or remedial action, as
NERC or the Regional Entity deems appropriate under the circumstances.
Regional Entities shall follow these guidelines to determine Penalties, sanctions, or remedial actions.
NERC shall oversee the Regional Entities’ application of the guidelines to ensure that acceptable levels of
consistency are achieved. NERC’s oversight will also ensure comparable outcomes; i.e. that there is
acceptable similarity in the degree and type of sanction for violations constituting comparable levels of
threat to reliability of the Bulk Power System. In order to facilitate this oversight, Regional Entities’
reporting to NERC of Penalties and sanctions they have determined will be thorough and in sufficient
detail that NERC can understand and reasonably replicate the outcomes reached; NERC may develop
reporting requirements or a standard reporting form for use by the Regional Entities for this purpose, as
NERC deems necessary or appropriate.
As experience is gained by NERC and the Regional Entities through the use and application of these
guidelines, NERC will review the guidelines and may modify them as NERC deems appropriate or
necessary. Authority delegated by NERC to the Regional Entities with respect to Penalties, sanctions, or
remedial actions does not include the authority to modify these guidelines.
Any revision to this document or to the principles and factors identified or addressed within it must first
be approved by the NERC Board, then by FERC, Applicable Governmental Authorities in Canada or
Applicable Governmental Authorities in Mexico prior to becoming effective and applicable within the
United States or these Applicable Governmental Authorities’ respective jurisdictions.

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Document Scope and Exclusions

2. Document Scope and Exclusions
This document identifies and discusses the processes and principles to be followed, and factors that will
be considered to determine Penalties, sanctions, or remedial actions for violations of the Reliability
Standards.
This document notes but does not otherwise address the progression of actions and steps that NERC or
the Regional Entity will follow to process a violation from its initial incoming status upon discovery as a
Possible Violation, through to its possible final determination as a Confirmed Violation. This is set out in
the NERC Compliance Monitoring and Enforcement Program, Appendix 4C to the NERC Rules of
Procedure.
This document notes but does not otherwise address how a Possible Violation or Alleged Violation is
reviewed in order to confirm or dismiss it. NERC’s process and requirements for this review are set out in
the NERC Compliance Monitoring and Enforcement Program, Appendix 4C to the NERC Rules of
Procedure. Regional Entities will undertake such reviews using the processes and requirements set out in
the NERC Compliance Monitoring and Enforcement Program.
This document notes but does not otherwise address the processes and procedural steps by which a
Confirmed Violation can be appealed, or by which a Penalty, sanction, or remedial action determined and
levied for a violation can be appealed. These procedures are set out in the NERC Compliance Monitoring
and Enforcement Program, Appendix 4C to the NERC Rules of Procedure, and applicable Regional
Entity program documents.
The NERC Compliance Monitoring and Enforcement Program provides for the possibility of settlements
within NERC or Regional Entity Compliance Monitoring and Enforcement Programs. This document
makes reference to settlements too, but does not address them further.

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Basic Principles

3. Basic Principles
The following paragraphs identify and discuss the basic principles underpinning why and how NERC and
the Regional Entities will determine Penalties, sanctions, and remedial actions for violations of the
Requirements of the Reliability Standards.
The principles are unique and complimentary; the order in which they are presented does not set or
indicate order of precedence.
3.1
Necessary Element of NERC Compliance Program
Primary objectives of NERC as the ERO include the promotion and enforcement of compliance with
the Reliability Standards by owners, operators, and users of the Bulk Power System; Reliability
Standards made mandatory by duly-authorized legislative bodies in the U.S and Canada, and designed
to maintain and promote the reliability of the two countries’ shared power grids. Consistent with
these objectives, NERC and the Regional Entities will monitor and act to verify compliance with
Reliability Standards’ Requirements; however, beyond monitoring and acting only to verify
compliance, NERC and the Regional Entities will also hold Bulk Power System owners, operators,
and users — or their delegates — accountable for Confirmed Violations. This accountability will
include determination and the possible levying of Penalties, sanctions, or remedial actions.
Penalties, sanctions, and remedial actions are valid and necessary mechanisms to NERC and the
Regional Entities for the enforcement and promotion of compliance to the Reliability Standards, in
part because they can:
a. promote compliance behavior;
b. provide deterrence to future incidents, actions or situations of noncompliance by the violator or
others;
c. implement actions that will promptly correct behavior;
d. disgorge benefits that may or may have accrued to a violator as a consequence of violating;
e. visit upon a violator some portion of any damage their violation may or may have visited upon
others.
Accordingly, the determination and potential levying of appropriate Penalties, sanctions, or remedial
actions by NERC or the Regional Entity upon those responsible for violations shall be a required step
within the NERC and Regional Entity Compliance Monitoring and Enforcement Programs.
3.2
Settlement of Compliance Violations
NERC and the Regional Entities shall maintain the reliability of the Bulk Power System by enforcing
compliance with NERC and Regional Reliability Standards. NERC and Regional Entity Compliance
Monitoring and Enforcements Programs will lay out how NERC and the Regional Entities will do
this. In particular and by necessity, elements of these programs regarding the confirmation of
violations, the determination and levying of Penalties, sanctions, or remedial actions, and appeals are
rigid and legalistic in form and nature in order to respect the basic tenets of due process and natural
justice inherent within United States and Canadian justice systems, respectively, upon which they are
being based. However, absolute adherence to the Compliance Monitoring and Enforcement Programs,
to the exclusion of other options, may not be the most appropriate, efficient or desirable means by
which to achieve the end goal in all circumstances, to all entities party to a violation.
As set out in the NERC Compliance Monitoring and Enforcement Program, Appendix 4C to the
NERC Rules of Procedure, violations of the Reliability Standards may be dealt with through
settlements reached between NERC, Regional Entity and the Registered Entity or Entities to whom a
Possible, Alleged, or Confirmed Violation is attributed to by NERC or the Regional Entity. Any
provisions made within a settlement regarding Penalties, sanctions, or remedial actions can supersede
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any corresponding Penalties, sanctions that would otherwise be determined pursuant to these
guidelines.
3.3
Settlement Request
Any Registered Entity found in or being investigated for a violation may request settlement
negotiations at any time, including prior to issuance of a Notice of Alleged Violation; however,
NERC or the Regional Entity may decline to enter into or continue settlement negotiations after the
Possible Violation or Alleged Violation becomes a Confirmed Violation.
3.4

Settlement Effect on Continuation of Determination of Penalties, Sanctions, or
Remedial Actions
Until a settlement is finalized or parties to that settlement agree otherwise, NERC or the Regional
Entity may continue activities and actions towards the determination and levying of a Penalty,
sanction, or remedial action that would otherwise be applicable pursuant to these guidelines, or that
will be applicable if the settlement is not finalized.
3.5
Timing of Determination of Penalty, Sanction or Remedial Action
All Possible Violations and Alleged Violations will be reviewed by NERC or the Regional Entity
with the outcome that either the violation will be confirmed or the violation will be dismissed.
The Penalty, sanction, or other remedial action for a violation will be determined when the violation
becomes a Confirmed Violation or is resolved as part of a settlement agreement.
At any time during confirmation review, hearing, or appeals NERC or the Regional Entity may
determine that remedial action is warranted by the subject Registered Entity of the review, hearing, or
appeals. NERC or the Regional Entity may direct that such remedial actions be undertaken by the
subject Registered Entity at any time, including prior to confirmation of a violation, and without
regulatory approval.
3.6
Determining Party
The determination of Penalty, sanction or other remedial action for a violation will generally be
undertaken by the same entity determining the violation to be a Confirmed Violation, but subject to
review by NERC if the determination is made by a Regional Entity.
3.7

No Influence of Penalty, Sanction or Remedial Action upon Violation
Confirmation Process
The Penalty, sanction, or remedial action determined for a violation will not influence the outcome of
the Regional Entity’ or NERC’s confirmation review of the violation. In particular, if the
determination of Penalty, sanction, or remedial action for a probable violation is being undertaken by
the same entity undertaking the confirmation review, the entity will insure that there is sufficient
separation, in such terms as time, process, personnel or the like, to preclude that the Penalty, sanction,
or remedial action determined influences the outcome of the confirmation review.
3.8
Reasonable Relationship to Violation
Penalties, sanctions, and remedial actions levied or applied for the violation of a Reliability Standard
shall bear a reasonable relation to the seriousness of the violation while also reflecting consideration
of the factors that these guidelines direct to take into account. In the United States, the legislation
establishing mandatory enforceable Reliability Standards and the ERO requires that “Any penalty
imposed … shall; (A) bear a reasonable relation to the seriousness of the violation; and (B) take into
consideration the efforts of the user, owner, or operator to remedy the violation in a timely manner1.”

1

H.R.6, Energy Policy Act of 2005, Section 215, Paragraph e, subparagraph 6.
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3.9
Use and Facets of Factors to Determine Penalties
Penalties levied for a given violation will be based on all facts and other information relevant to the
incident or situation. To that end, these guidelines include factors which NERC and the Regional
Entities will consider while determining the Penalty or sanction to be levied.
NERC considers, and these guidelines direct, that the presence of some factors within a violation
aggravates the seriousness of that violation and should cause an increase or expansion of the Penalty
to be levied. Conversely, the presence of some other factors mitigates that seriousness and should
cause a decrease or reduction of the Penalty to be levied. Also, some factors may mitigate or
aggravate, and should have commensurate impact. NERC considers, and these guidelines direct, that
the absence of an aggravating or mitigating factor will have no impact, as opposed to a mitigating or
aggravating impact, respectively, to a Penalty.
This document presents many of the relevant facets of the factors included in these guidelines.
However, additional facets of these factors, or additional factors not discussed herein, may also be
considered to determine a given Penalty, sanction, or remedial action, as NERC or the Regional
Entity deems appropriate under the circumstances. Where additional factors or facets are used they
will be identified and their use will be justified. The effect of using these factors or facets on the
Penalty, sanction, or remedial action determined will also be fully and clearly disclosed.
3.10 Multiple Violations
A violation is a failure or inadequacy to meet a Requirement of a Reliability Standard by a party
responsible to comply with that Requirement.
The failure or inadequacy of a violator to comply may involve more than one Reliability Standard or
several Requirements of a single Reliability Standard; as such, multiple individual violations may be
in play when Penalties, sanctions, or remedial actions for an incident or situation of noncompliance
are being determined.
Strictly speaking, NERC or the Regional Entity can determine and levy a separate Penalty or
sanction, or direct remedial action, upon a violator for each individual violation. However, in
instances of multiple violations related to a single act or common incidence of noncompliance, NERC
or the Regional Entity will generally determine and issue a single aggregate Penalty, sanction, or
Remedial Action Directive bearing reasonable relationship to the aggregate of the related violations.
The Penalty, sanction, or remedial action will not be that determined individually for the least serious
of the violations; it will generally be at least as large or expansive as what would be called for
individually for the most serious of the violations.
Some entities may be registered as being responsible for more than one function (e.g., Transmission
Owner, Transmission Operator, Balancing Authority, Generation Operator), and a single Requirement
in some Reliability Standards may apply to the responsible entity for several functions. Where several
functions are performed by the same Registered Entity, a violation will be assessed against the
Registered Entity, not against each function.
3.11

Relation of the Penalty to the Seriousness of the Violation and Violator’s
Ability to Pay
As discussed in Section 3.8, above, Penalties levied for the violation of a Reliability Standard shall
bear a reasonable relation to the seriousness of the violation. The seriousness of a given violation by a
given violator shall be assessed by review of the applicability of the Violation Risk Factors2
associated with the violation to the characteristics of the violator’s operation or power system. Size is
a characteristic of a violator’s operation or system. The size of the violator can be considered in the
assessment but shall not be the only characteristic considered. Where size is considered in such a
2

See Section 4 Part 4.11 for a discussion of these factors
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review the facts relating to the violation in question will be reviewed such that the “actual” size of the
violator is properly discerned and appropriately considered; the following are provided as illustrative
examples:
• If the violator belongs to a generation and transmission cooperative or joint-action agency,
size will be attributed to the particular violator, rather than to that generation and transmission
cooperative or joint-action agency.
• If the violator constitutes part of a corporate family the size of the violator will be attributed
to that violator alone, in the absence of any facts indicating involvement of the whole
corporation or corporate affiliates of the violator.
• If the violator is an entity established solely as a shell to register as subject to one or more
Reliability Standards the size of the entity will be disregarded in favor of consideration of the
size of parent entity or any affiliates that NERC or the Regional Entity deems involved and
constituting the “actual” size of the violator.
At the request of the violator, NERC or the Regional Entity may review the Penalty in light of the
violator’s financial ability to pay the Penalty. Financial ability shall include both the financial strength
of the Registered Entity as well as its structure (e.g., for-profit versus non-profit). Where Penalties are
reduced or eliminated NERC or the Regional Entity shall consider non-monetary sanctions or
remedial action as alternatives or substitutes to the Penalty, pursuant to Sections 3.17, 3.18 and 3.19,
below, of this document.
The above actions will: (i) promote that violators are penalized or sanctioned commensurate with the
risk or effect that their specific violation of the Reliability Standards had or is having to the reliability
of the Bulk Power System while also; (ii) mitigating overly burdensome Penalties to less
consequential or financially-limited entities concurrent with; (iii) promoting that no Penalty is
inconsequential to the violator to whom it is assessed. This will promote that Penalties levied for
violations of Reliability Standards bear a reasonable relation to the seriousness of the violation while
also addressing violators’ ability to pay the Penalties they are assessed.
3.12 Violation Time Horizon
Reliability Standards involving longer and broader time horizons, such as long-term planning
activities, may have a lesser immediate impact and pose less immediate risk to the reliability of the
Bulk Power System than Reliability Standards addressing shorter and narrower timeframes, such as
Registered Entities’ conduct in real time. Similarly, Reliability Standards involving longer and
broader time horizons typically will provide a longer time period over which to discover and remedy
a violation when compared to Reliability Standards addressing more immediate activities such as
next-day planning, same-day operations or real-time operations. Using a time horizon element in the
determination of Penalties for violations provides for recognition of the “more immediate” nature —
and hence higher risk — of the threat of some violations as opposed to the lesser-risk “future threat if
not corrected” nature of other violations.
Penalties levied for the violation of a Reliability Standard shall consider the time horizon of the
Reliability Standard violated; violations of Reliability Standards involving more immediate or realtime activities will generally incur larger Penalties than violations of Reliability Standards with longer
or broader horizons.
Time horizons inherent in Reliability Standard Requirements are not reflected in their assigned
Violation Risk Factors or Violation Severity Levels3. Accordingly, the time horizon element of a
violation will be considered when determining the Base Penalty Amount4 for the violation.

3

See Section 4 Part 4.11 for a discussion of these factors.
See Section 4 Part 4.2
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The time horizon considered and its impact on the selection of the Base Penalty Amount for the
violation will be decided upon by NERC or the Regional Entity based upon judgment and the facts of
the violation. The rationale for the time horizon used and its impact on the setting of the Base Penalty
Amount will be documented by NERC or the Regional Entity and provided within the Notice of
Penalty issued for the violation.
3.13 Extenuating Circumstances
In unique extenuating circumstances, such as significant natural disasters, Penalties may be
significantly reduced or eliminated.
3.14 Concealment or Intentional Violation
Penalties levied for the violation of a Reliability Standard shall always take into consideration any
attempt by a violator to conceal the violation from NERC or the Regional Entity, or any intentional
violation incurred for purposes other than a demonstrably good faith effort to avoid a significant and
greater threat to the immediate reliability of the Bulk Power System.
3.15 Economic Choice to Violate
Owners, operators, and users of the Bulk Power System may be presented with situations or
circumstances where compliance with the Reliability Standards preclude or reduce an economic gain
that could be realized by violating the Reliability Standards. Penalties shall be sufficient to assure that
entities responsible for complying with Reliability Standards do not find it attractive to make
economic choices that cause or unduly risk violations to Reliability Standards, or risk or cause
incidents resulting from violations of the Reliability Standards. Penalties levied to violators who have
made such a choice shall reflect this aspect of the violation.
3.16 No Influence by Outcome of Economic Choice to Violate
Economic choices to violate are generally made for the violator’s own potential gain, but making
such a choice does not always result in all potential gains being realized or may result in damage or
loss. However, irrespective of the outcome to the Registered Entity making an economic choice to
violate, such decisions risk others’ reliability, commonly without either their knowledge or consent.
Penalties levied to violators making an economic choice to violate shall reflect only that the choice
was made at all; the lack of or reduced magnitude of any actual benefit received, or any damage
suffered, by the violator as a consequence of making this choice will have no influence on the
determination of the Penalty to be levied.
3.17 Non-Monetary Sanctions or Remedial Actions
Enforcement actions taken by NERC or a Regional Entity are not limited to monetary Penalties; at the
discretion of NERC or the Regional Entity, sanctions or remedial actions may also be applied and can
include limitations on activities, functions, operations, or other appropriate sanctions, including the
establishment of a reliability watch list composed of major violators.
3.18 Non-Exclusiveness of Monetary Penalties or Non-Monetary Sanctions
A non-monetary sanction may be imposed either in lieu of or in addition to a monetary Penalty
imposed for the same Confirmed Violation, and vice versa. Imposition of a monetary Penalty or nonmonetary sanction for a violation does not preclude the imposition of the other as long as, in
combination, the aggregate Penalty continues to bear a reasonable relation to the seriousness of the
violation.
3.19 Monetization of the Value of Sanctions
A significant element of NERC’s oversight of Penalties, sanctions, and remedial action determined
and levied by Regional Entities is ensuring acceptable similarity in the degree and type of sanction for
violations constituting comparable levels of threat to the reliability of the Bulk Power System. It is
also a requirement and a commitment of NERC and its designees that Penalties, sanctions, or
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remedial actions levied or applied for the violation of a Reliability Standard bear reasonable relation
to the seriousness of the violation. Specifically with respect to Penalties and sanctions, it is intuitive
that it will be easier, more objective, and more transparent to monitor and test for acceptable
similarity if (monetary) Penalties or monetized values of sanctions determined for violations are used
as the primary basis of comparison, versus comparisons made on the basis of other (non-monetized)
considerations. Similarly, there will be strong intuitiveness and transparency, particularly to those
interested but not strongly familiar with the power industry, that the seriousness of a violation has
been reasonably addressed if the consequences for it to the violator are determined and can be
expressed clearly and quantifiably in monetary terms.
Penalties determined and levied by NERC or Regional Entities will by definition be valued in
monetary terms: U.S or Canadian dollars. It will be the preference of NERC that (non-monetary)
sanctions imposed either in lieu of or in addition to a Penalty include disclosure of the monetary value
that the sanctions represent to the violator. It is intuitive that defensible monetary values for those
sanctions will be most easily determined if the Penalty for the violation pursuant to these guidelines is
first determined and then the sanctions to be levied are introduced and justified as appropriate
alternatives to that Penalty or additions to a lesser Penalty. However, sanctions may be determined
directly (e.g. without first determining a Penalty amount) and monetized using other methods.
NERC does not have a preference between Penalties and sanctions for violations. The preference
expressed here will support ensuring comparability of outcomes regarding application of these
guidelines and the promotion of reasonable relationship between the seriousness of a violation and the
sanctions, or Penalties and sanctions, levied for it.
3.20 Maximum Limitations on Penalties
Penalties are direct, monetary judgments levied against a violator by NERC or the Regional Entity for
the violation of Requirements of the Reliability Standards. In contrast, sanctions will impose
limitations or restrictions of some kind that may result in economic or other impacts to the violator,
and remedial actions are directives by NERC or a Regional Entity to the violator regarding the
correction of conditions, practices or any other relevant action or activity underlying the
noncompliance(s) involved.
In the United States, the Federal Power Act allows for the imposition of civil penalties of up to
$1,000,000 per day per violation. NERC and the Regional Entities draw their authority to levy
Penalties from the Federal Power Act; accordingly this figure is and can be understood as the
maximum monetary Penalty that NERC or Regional Entities are authorized to levy. However, as this
legislation also requires that “[a]ny penalty imposed … shall; (A) bear a reasonable relation to the
seriousness of the violation; and (B) take into consideration the efforts of the user, owner, or operator
to remedy the violation in a timely manner5” entities required to comply with the Reliability
Standards must also understand that NERC and the Regional Entities will be obligated to assess
Penalties amounts up to and including the maximum amount for violations where warranted
pursuant to these guidelines.
In Canadian jurisdictions, the maximum monetary Penalty potentially assessable for a Reliability
Standard violation is significantly less than the amount allowed in the United States under the Federal
Power Act. Also, legislation presently governing some Canadian jurisdictions does not accommodate
the levying of such a Penalty under some circumstances, may not accommodate the levying of such a
Penalty for all violations, or does not accommodate the levying of any monetary Penalties.

5

H.R.6, Energy Policy Act of 2005, Section 215, Paragraph e, subparagraph 6.
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When a Penalty may be levied, or proposed to Applicable Governmental Authorities with jurisdiction
to be levied, the following steps will be followed:
a. NERC or the Regional Entity will initially disregard the Penalty limitations of the Applicable
Governmental Authorities with jurisdiction, and determine what the Penalties or sanctions would
be pursuant to these sanction guidelines only.
b. NERC or the Regional Entity will review the maximum Penalty allowed by the Applicable
Governmental Authorities with jurisdiction.
c. NERC or the Regional Entity will set the actual Penalty to be levied, or proposed to the
Applicable Governmental Authorities with jurisdiction to be levied, as the lesser of that
determined pursuant to these guidelines and the maximum Penalty or sanction allowed by the
Applicable Governmental Authorities.
d. If the lesser Penalty is the maximum Penalty allowed by the Applicable Governmental
Authorities, the Notice of Penalty or similar document issued by NERC or the Regional Entity
regarding the violation will also list the Penalty that was determined pursuant to these guidelines.
Adhering to the above steps will insure that the result of the determination of any Penalty for any
violation will produce output that can be directly compared (i.e. without influence of local Applicable
Governmental Authorities’ Penalty limitations or restrictions) with the Penalty determined for any
other violation, assisting efforts of NERC and others to ensure that these guidelines are uniformly
applied and that there is an acceptable level of consistency in the application of these sanction
guidelines across North America. Applicable Governmental Authorities with jurisdiction may also
find such information useful for their determination of the appropriateness of any Penalty or sanction
proposed to them to be levied. Similarly, policy and legislative bodies may find such information of
value to the review or development of arrangements addressing such matters.
3.21 Frequency and Duration of Violations
Section 316A of the Federal Power Act [16 U.S.C. § 825o-1(b)], as amended by the Energy Policy
Act of 2005, provides that “any person who violates any provision of Part II of this title or any
provision of any rule or order thereunder shall be subject to a civil penalty of not more than
$1,000,000 for each day that such violation continues.”
FERC Order No. 672 interprets this statement as setting a cap on the monetary Penalties that the
Commission, NERC and Regional Entities can impose under FPA section 215. FERC has referred to
this statutory provision as imposing a maximum $1,000,000 “per day, per violation” Penalty and has
directed that the ERO must ensure that in the U.S. such a Penalty amount ($1,000,000), in such a
manner (“per day, per violation”), can be imposed for a violation of the Reliability Standards should
the conduct at issue so warrant.
Some Reliability Standards may not support the assessment of Penalties on a “per day, per violation”
basis, but instead should have Penalties calculated based on an alternative Penalty frequency or
duration. Where NERC or the Regional Entity deems that a monetary Penalty is warranted, or where
NERC or the Regional Entity is monetizing (Section 3.19) the value of a non-monetary sanction, for
the violation of such a Reliability Standard NERC or the Regional Entity shall determine the Penalty
or monetized amount consistent with the following:
Multiple Instances of Violation on One Day
The nature of some Reliability Standards includes the possibility that a Registered Entity could
violate the same Requirement two or more times on the same day. In this instance NERC or the
Regional Entity is not limited to penalizing the violator a maximum of $1,000,000 per day. As NERC
or the Regional Entity deems appropriate NERC or the Regional Entity may deem that there have
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Basic Principles

been multiple violations that occurred on the same day, each of which is subject to the maximum
potential Penalty of $1,000,000 per violation, per day. Also, NERC or the Regional Entity is not
constrained to assessing the same Penalty amount for each of the multiple violations, irrespective of
their proximity in time.
Cumulative Over Time
Certain Requirements of the Reliability Standards are measured not on the basis of discrete acts, but
of cumulative acts over time. Reliability Standards that fall into this category are generally those
involving measurements based on averages over a given period. Where a violation of such a
Reliability Standard has occurred the element of averaging performance over a period of time
introduces the difficulty to NERC or the Regional Entity of reasonably identifying (i) what date the
violation should be deemed to have occurred and (ii) its duration.
If a Reliability Standard Requirement measured by an average over time can only be violated once
per applicable period, then there is risk that a disproportionately mild Penalty might be levied in a
situation where the violation was serious and the effects on the Bulk Power System severe. In the
future, each Reliability Standard Requirement that is based on an average over time will specify the
minimum period in which a violation could occur and how to determine when a violation arises,
which may be other than once per applicable period6. In the interim until relevant Reliability
Standards are so modified, any ambiguity on this point will be construed conservatively, meaning that
where a Registered Entity has not complied with such a Reliability Standard NERC or the Regional
Entity will generally consider that only one violation occurred per measurement period. However,
notwithstanding this general principle of one violation per measurement period, if an average must be
measured by a span of time greater than a month, each month of that span shall constitute at a
minimum one violation.
Periodically Monitored Discrete Violation
Some Reliability Standards may involve discrete events which are only monitored periodically or
which are reported by exception. If a Requirement of such a Reliability Standard states that a discrete
event constitutes a violation, then (i) a violation arises when that event occurs and (ii) that violation
continues until remedied; furthermore, (iii) the violation is deemed to have occurred at the point that
the Registered Entity entered into noncompliance with the Reliability Standard regardless of the
monitoring period for the activity or its date of discovery or reporting. For example, if a task required
by a Reliability Standard Requirement has not been done by the required date, it is irrelevant that
monitoring for compliance for the Requirement occurs only on a yearly or other periodic basis;
NERC or the Regional Entity will deem a violation to have occurred on the first day of
noncompliance and each day thereafter until compliance is effectuated. Similarly, if a discrete event
occurs and is not remedied on the date of occurrence, then NERC or the Regional Entity will deem a
violation to have occurred on the day of the first instance of the noncompliance and each day, or
portion thereof thereafter until compliance is effectuated.
Non-compliance with a Reliability Standard of this type will subject the violator to the potential
maximum monetary Penalty of $1,000,000 per violation per day in violation.
NERC or the Regional Entity is not constrained to assessing the same Penalty amount for each day
that the Registered Entity was in violation of the Reliability Standard Requirement in question.

6

Para. 41; FERC Order on Clarification and Rehearing [Docket No. RR06-1-006]
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Determination of Monetary Penalties

4. Determination of Monetary Penalties
The following describes the steps that NERC or the Regional Entity will follow to determine the
monetary Penalty for a violation7. The determination of non-monetary sanctions is discussed in Section 5
of this document; Section 6 discusses remedial action.
Step 1.

The Base Penalty Amount for the violation will be set as discussed in Sections 4.1 and 4.2,
below.

Step 2.

The Base Penalty Amount set in Step 1 will be reviewed pursuant to Section 4.3, below. This
will result in the Adjusted Penalty Amount.

Step 3.

The Adjusted Penalty Amount determined in Step 2 may be reviewed in light of the violator’s
financial ability to pay the Penalty. Also, where applicable NERC or the Regional Entity will
reconfirm that the Penalty set will disgorge unjust profits or economic benefits associated with
an economic choice to violate8. At the conclusion of this review the Final Penalty Amount will
be set.

Unless NERC or the Regional Entity deems alternative frequency or duration is warranted Penalties shall
be assessed on a per violation per day basis. Where NERC or the Regional Entity deems that alternative
Penalty frequency or duration is warranted the Notice of Penalty associated with the violation will clearly
identify this and provide the rationale for it. Where NERC or the Regional Entity deems that alternative
Penalty frequency or duration is warranted, Penalties shall be determined in accordance with section 3.21
of the Sanction Guidelines.
4.1
Initial Value Range of the Base Penalty Amount
NERC or the Regional Entity will determine an initial value range for the Base Penalty Amount by
considering two factors regarding the violation: the Violation Risk Factor (VRF) of the Requirement
violated and the Violation Severity Level (VSL) assessed for the violation. Using the Base Penalty
Amount Table provided in Appendix A NERC or the Regional Entity will look up the initial value
range for the Base Penalty Amount by finding the intersection of the violation’s VRF and VSL on the
table9.
4.1.1 Violation Risk Factor
Each Requirement set out within NERC’s Reliability Standards has been assigned a Violation
Risk Factor (VRF) through the NERC Reliability Standards development process. The factors
have been defined and approved through the Reliability Standards development process and
are assigned to Requirements to provide clear, concise and comparative association between
the violation of a Requirement and the expected or potential impact of the violation to the
reliability of the Bulk Power System. One of three defined levels of risk is assigned to each
Reliability Standards Requirement: lower Violation Risk Factor, or; medium Violation Risk
Factor, or; high Violation Risk Factor. Definitions of the factors can be found in appropriate
Reliability Standards development process documentation.
4.1.2 Violation Severity Level
Violation Severity Levels (VSLs) are defined measurements of the degree to which a violator
violated a Requirement of a Reliability Standard. Whereas Violation Risk Factors are
determined pre-violation and indicate the relative potential impacts that violations of each
7

The text in this section discusses the determination of a single Penalty for an individual violation; however, the
process laid out is also applicable to determining the individual Penalties, or a single aggregate Penalty, for multiple
violations that are associated with each other as discussed in Section 3 Part 3.1 of this document.
8
Reference: Section 3 Parts 3.15 and 3.16.
9
As discussed in Section 3 Part 3.1 of this document where there is more than one violation in play, but the
violations are sufficiently associated, NERC or the Regional Entity may set a single initial value range that is
appropriate in light of the individual VRF/VSL combinations of the violations.
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Determination of Monetary Penalties

Reliability Standard could pose to the reliability of the Bulk Power System, the Violation
Severity Level is assessed post-violation and is an indicator of how severely the violator
actually violated the Reliability Standard(s) Requirement(s) in question.
These guidelines utilize the Violation Severity Levels that have been established10 by NERC
for Requirements of the Reliability Standards. Up to four levels can be defined for each
Requirement; the levels have been designated as: lower, moderate, high, and severe.
4.2
Setting of the Base Penalty Amount
NERC or the Regional Entity will set the Base Penalty Amount for the violation. The Base Penalty
Amount set for the violation may be set at the highest figure of the initial value range determined
pursuant to Section 4.1, above. However, NERC or the Regional Entity may set the Base Penalty
Amount at or below the lowest figure of the initial value range in light of two specific circumstances
regarding the violation and the violator, specifically:
a.

The applicability of the Violation Risk Factor of the violation to the specific circumstances11 of
violator.

b. Whether this is an inconsequential first violation by the violator of the Reliability Standard(s) in
question.
As noted in Section 3.12 NERC or the Regional Entity will consider the time horizon involved with
the violation when setting the Base Penalty Amount for the violation. As also noted in Section 3.12
this consideration will be documented for inclusion in the Notice of Penalty issued for the violation.
The Penalty amount resulting from this review will be the Base Penalty Amount that is used as the
basis for further adjustment pursuant to the factors discussed in the next section (4.3) of this
document.
4.2.1 Applicability of the Violation Risk Factor
Violation Risk Factors are assigned to Reliability Standards’ Requirements as indicators of
the expected risk or harm to the Bulk Power System posed by the violation of a Requirement
by a typical or median Registered Entity that is required to comply. NERC or the Regional
Entity may consider the specific circumstances of the violator to determine if the violation of
the Requirement in question actually produced the degree of risk or harm anticipated by the
Violation Risk Factor. If that expected risk or harm was not or would not have been
produced, NERC or the Regional Entity may set the Base Penalty Amount to a value it (i)
deems appropriate and (ii) is within the initial value range set above pursuant to Section 4.1.
4.2.2 First Violation
If the actual or foreseen impact of the violation is judged to be inconsequential by NERC or
the Regional Entity and the violation is the first incidence of violation of the Requirement in
question by the violator, NERC or the Regional Entity may at its discretion: (i) set the Base
Penalty Amount to a value it deems appropriate within the initial value range set above
pursuant to Section 4.1, or (ii) excuse the Penalty for the violation (i.e. set the Base Penalty
Amount to 0$).
This relief will generally not be afforded to the violator if NERC or the Regional Entity
determines that the violator has a poor compliance record; e.g. the circumstances discussed in

10

Assignment of these levels will be complete and filed with the Commission by March 1, 2008 in accordance with
FERC Order on Compliance Filing dated June 7, 2007 [Docket No. RR06-1-007] .
11
The circumstances of the violator will include but not be limited to, as appropriate: the violator’s aggregate and
net Load; interconnections characteristics such as voltage class and transfer ratings.
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Determination of Monetary Penalties

Section 4.3.1 have been an aggravating factor in one or more previous Penalties assessed to
the violator.
This relief will not be available for consideration in instances where the violator has
concealed or attempted to conceal the violation, failed or refused to comply with compliance
directives from NERC or the Regional Entity, or intentionally violated for purposes other
than a demonstrably good faith effort to avoid a significant and greater threat to the
immediate reliability of the Bulk Power System.
4.3
Application of Adjustment Factors
Adjustment factors provide the opportunity to NERC or the Regional Entity to adjust the Base
Penalty Amount to reflect the specific facts and circumstances material to each violation and violator.
These guidelines recognize and require that, as a minimum, NERC or the Regional Entity consider
the following:
a. Repetitive violations and the violator’s compliance history
b. Failure of the violator to comply with compliance directives
c. Self-disclosure and voluntary corrective action by the violator
d. Degree and quality of cooperation by the violator in the violation investigation and in any
remedial action directed for the violation
e. The presence and quality of the violator’s compliance program quality
f.

Any attempt by the violator to conceal the violation

g. Intentional violations
h. Extenuating circumstances
Two documents issued by United States regulatory agencies will be instructive to NERC and the
Regional Entities when they are determining Penalties for violations of the Reliability Standards: the
FERC’s Policy Statement on Enforcement issued on October 20, 2005 under Docket No. PL06-00,
and; U.S Securities and Exchange Commission (SEC) Release No. 44969 under the Securities and
Exchange Act of 1934, issued on October 23 2001, also concurrently issued by the SEC as Release
No. 1470 under Accounting and Auditing Enforcement.
NERC or the Regional Entity may also consider other additional factors it deems appropriate under
the circumstances as long as their use is clearly identified and adequately justified. The effect of using
these factors will also be fully and clearly disclosed.
4.3.1 Repetitive Violations and Compliance History
A bulleted point under Paragraph 20 of the FERC Policy Statement on Enforcement
highlights repeat offenses by a violator. If a violator has had repetitive infractions of the same
or a closely-related Reliability Standard Requirement, particularly within a time frame
defined within the Reliability Standard(s) or deemed appropriate by NERC or the Regional
Entity in the absence of the Reliability Standard(s) defining the time frame, NERC or the
Regional Entity shall consider some increase to the Penalty.
The term “violation reset time period” of a Reliability Standards Requirement may be defined
or implied within a given Reliability Standard to describe the period of time generally
required for a violator to continue operations without incidence of further violation(s) of the
Reliability Standards, particularly of the initial or a similar Reliability Standard violated, in
order to avoid or minimize consideration of the violator’s previous violation history for
sanctioning purposes in the event of a subsequent violation(s). NERC and the Regional
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Determination of Monetary Penalties

Entities shall exercise appropriate judgment and discretion in this regard as warranted,
particularly where no reset time period is specifically set within the Reliability Standard
violated. Repeat violations within violation reset time periods are aggravating factors in the
determination of sanctioning. Accordingly, a violation history of no violations will produce
no mitigation of the Penalty otherwise determined; a violation history of infrequent minor
violations of lesser risk Requirements assessed lower Violation Severity Levels may result in
small or no increase; a history of more frequent violations or previous violations of higher
risk Requirements assessed more severe Violation Severity Levels will generally incur
commensurately larger increases.
4.3.2 Failure to Comply with Compliance Directives
If the violator has violated Reliability Standard Requirements notwithstanding having
received related compliance directives, such as for remedial action from NERC or the
Regional Entity, NERC or the Regional Entity shall consider some increase to the Penalty.
4.3.3 Self-Disclosure and Voluntary Corrective Action
NERC or the Regional Entity shall consider whether a violator self-disclosed the violation
prior to detection or intervention by NERC or the Regional Entity, and any action undertaken
by the violator to correct the situation. NERC or the Regional Entity will be instructed in their
consideration of these factors by the text of Paragraphs 24 and 25 of the FERC Policy
Statement on Enforcement. As they deem warranted, NERC or the Regional Entity may
reduce the violator’s Penalty consistent with the cited sections of the FERC policy.
4.3.4

Degree and Quality of Cooperation in Violation Investigation and
Remedial Action
NERC or the Regional Entity shall consider the degree and quality of the violator’s
cooperation with NERC or the Regional Entity in the investigation of the violation and any
remedial action arising from it. NERC or the Regional Entity will be instructed in making
their determination on this by the text of Paragraphs 26 and 27 of the FERC Policy Statement
on Enforcement. NERC or the Regional Entity may adjust the violator’s Penalty as they deem
warranted commensurate with the cited sections of the FERC policy statement. This may
result in an increase, a decrease or no change to the Penalty.
4.3.5 Presence and Quality of Compliance Program
NERC or the Regional Entity shall consider the presence and quality of the violator’s
compliance program. NERC or the Regional Entity will be instructed in making their
determination on this factor by the text of Paragraphs 22 and 23 of the FERC Policy
Statement on Enforcement. As they deem warranted, NERC or the Regional Entity may
reduce the violator’s Penalty consistent with the cited sections of the FERC policy.
Consistent with the FERC policy NERC or the Regional Entity may not increase a violator’s
Penalty specifically on the grounds that the violator has no program or a poor quality
program.
4.3.6 Violation Concealment
Two bulleted points under Paragraph 20 of the FERC Policy Statement on Enforcement
highlight misrepresentation of material facts and resistance or impediment to inquiry of a
violation. When determining a Penalty NERC or the Regional Entity shall consider any
concealment or attempt to conceal the violation, or information needed to investigate the
violation, on the part of the violator. If the violator concealed or attempted to conceal, some
significant increase to the Penalty shall be considered; doubling of the Penalty otherwise
determined is suggested. Conduct of this nature on more than one occasion regarding one
violation, or with respect to more than one violation, should incur an even larger increase to
the Penalty otherwise determined.
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Determination of Monetary Penalties

4.3.7 Intentional Violation
Another bulleted point under Paragraph 20 of the FERC Policy Statement on Enforcement
highlights offenses as willful action by a violator. When determining a Penalty NERC or the
Regional Entity shall consider if the violator intentionally violated without just cause; i.e., for
purposes other than a demonstrably good faith effort to avoid a significant and greater threat
to the immediate reliability of the Bulk Power System. If the violator engaged in such
conduct, some significant increase to the Penalty shall be considered; doubling of the Penalty
otherwise determined is suggested. If conduct of this nature has been detected on more than
one occasion, NERC or the Regional Entity should assess an even larger increase to the
Penalty otherwise determined.
NERC or the Regional Entity will consider violations attributable to an economic choice to
violate as intentional violations. Consistent with the FERC Policy Statement on Enforcement
any Penalty issued involving conduct of this manner shall as a minimum disgorge any profits
or economic benefits acquired as a consequence of the behavior, whenever and to the extent
that they can be determined or reasonably estimated.
4.3.8 Extenuating Circumstances
NERC or the Regional Entity will consider if there are extenuating circumstances regarding
the violation that justify reduction or elimination of the Penalty otherwise determined.
Consideration of adjusting a Penalty for this factor would be inconsistent with NERC or the
Regional Entity increasing a Penalty after consideration of any other factor included in this
section of these guidelines, such as intentional violation without justifiable cause or
concealment or attempt to conceal.
4.4
Setting of the Final Penalty Amount
The Adjusted Penalty Amount determined in Step 2 may be reviewed in light of the violator’s
financial ability to pay the Penalty. Also, if the violation was an economic choice, NERC or the
Regional Entity will reconfirm that the Penalty set will disgorge any unjust profits or economic
benefits. At the conclusion of this review the Final Penalty Amount will be set.
4.4.1 Violator’s Financial Ability to Pay12
At the written request of the violator NERC or the Regional Entity will review the Penalty
determined in Step 2 in light of relevant, verifiable information that the violator provides
regarding their financial ability to pay. At the conclusion of this review NERC or the
Regional Entity may:
1. Reduce the Penalty payable to an amount that NERC or the Regional Entity, as
applicable, deems the violator has the financial ability to pay, or;
2. Excuse the Penalty amount payable, or;
3. Sustain the Penalty amount determined in Step 2.
Where the Penalty amount has been reduced or excused, NERC or the Regional Entity shall
consider the assessment of appropriate non-monetary sanction(s) as a substitute or an
alternative for the Penalty amount that has been excused or by which the Penalty has been
reduced.

12

NERC anticipates that this will be the primary vehicle for addressing the ability to pay of “not-for-profit” and
other similar organizations.
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Determination of Non-Monetary Sanctions

4.4.2 Reconfirmation of Disgorgement of Unjust Profit or Gain
Notwithstanding the application of any other consideration or factor applicable to the
determination of a just and reasonable Penalty for the violation, if the violation in question
involved an economic choice to violate NERC or the Regional Entity shall reconfirm that the
Penalty set meets the requirements set forth in Parts 3.15 and 3.16 of Section 3 of this
document.

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Determination of Non-Monetary Sanctions

5. Determination of Non-Monetary Sanctions
The imposition of sanctions is not bounded to monetary Penalties. Non-monetary sanctions applied must
be applied with the objective of promoting reliability and compliance with the Reliability Standards.
Non-monetary sanctions may include, but not be limited to, the following:
a. Limitations on activities, functions, or operations
b. Placing an entity on a reliability watch list composed of major violators

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Remedial Action

6. Remedial Action Directives
6.1
Definition and Anticipated Use
Remedial Action Directives are directives that may be issued to a Bulk Power System owner,
operator, or user to resolve an Alleged Violation of a Reliability Standard by addressing conditions,
practices, or any other relevant action or activity that is immediately necessary to terminate or correct
to protect the reliability of the Bulk Power System from an imminent threat. A Remedial Action
Directive will be issued when NERC or the Regional Entity identifies an Alleged Violation of a
Reliability Standard that must be corrected immediately to protect the reliability of the Bulk Power
System from the imminent threat that NERC or the Regional Entity has identified.
NERC or the Regional Entity will generally employ Remedial Action Directives where they deem it
necessary to clearly specify minimum corrective actions that the subject of the Remedial Action
Directive must take; additionally or alternatively a Remedial Action Directive may clearly specify
timelines within which the Registered Entity must take specified actions, complete specified tasks, or
achieve specified outcomes. Also, to the extent NERC or the Regional Entity is authorized to do so, a
Remedial Action Directive may communicate Penalties, sanctions, or further Remedial Action
Directives that may be imposed should the specific Remedial Action Directive not be complied with
by those to whom it has been issued. As a rule of thumb, Remedial Action Directives will be of use to
NERC or the Regional Entity whenever any significant combination of specificity, clarity, or time is
of the essence to address a threat to the reliability of the Bulk Power System brought on by lack of or
inadequate compliance to the Reliability Standards.
6.2
Compliance Requirements
In the United States, the Commission has concluded that owners, operators, or users of the Bulk
Power System must comply with Remedial Action Directives issued to them by NERC or a Regional
Entity. Noncompliance with a Remedial Action Directive may result in a substantially increased
Penalty or sanction.
Remedial Action Directives issued by NERC or the Regional Entity will include a deadline by which
time the owner, operator, or user must complete requirements set out in the Remedial Action
Directive, and by which time the Registered Entity must demonstrate compliance to the Remedial
Action Directive to NERC or the Regional Entity that issued it. Failure or refusal to meet the
requirements or deadlines set out in a Remedial Action Directive may itself result in further Remedial
Action Directives or significantly increased Penalties or sanctions by NERC or the Regional Entity.
6.3
No Obligation to Issue
NERC or the Regional Entity may, but is not obligated, to issue Remedial Action Directives. Lack of
being issued a Remedial Action Directive does not relieve a Bulk Power System owner, operator, or
user from any responsibilities they otherwise have to comply or maintain compliance with
Requirements of the Reliability Standards. Remedial Action Directives will be used by NERC or the
Regional Entities only as they deem warranted, when they deem warranted.
6.4
Scope of Application
The scope of Remedial Action Directives issued by NERC or the Regional Entity will be limited to
conditions, practices, or any other relevant actions or activities resulting in noncompliance, or that
NERC or the Regional Entity considers at significant risk of becoming noncompliant, to
Requirements of the Reliability Standards, and that present an imminent threat to the reliability of the
Bulk Power System. However, beyond merely directing compliance or improved compliance with
Reliability Standards’ Requirements, where NERC or the Regional Entity is authorized to do so, the
Remedial Action Directive may also stipulate how compliance or the improvement to compliance is
to be achieved.
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Remedial Action

6.5
Availability
In the United States, the Commission has interpreted the Federal Power Act to authorize the NERC or
the Regional Entity can issue a Remedial Action Directive prior to completion of the confirmation
review of a probable violation, or prior to the determination of a Penalty or sanction for that violation.
The Commission also concluded it is not necessary for NERC or the Regional Entity to acquire the
Commission’s or other regulators’ approval prior to issuing Remedial Action Directives.
Accordingly, NERC or the Regional Entity may issue Remedial Action Directives to Registered
Entities in the United States whenever they deem it necessary or otherwise warranted to do so. Also,
NERC or the Regional Entity may issue Remedial Action Directives to Registered Entities in the
United States regarding a violation that is immediately necessary to terminate or correct to protect the
reliability of the Bulk Power System from an imminent threat, irrespective of whether that violation is
ultimately verified or dismissed by NERC or the Regional Entity’s investigation of the violation.
6.6
No Impact on Confirmation of Violation, or Penalties or Sanctions
Remedial Action Directives issued regarding a violation, in particular any costs incurred by the
violator to comply with any such Remedial Action Directive, will not be considered when reviewing
whether the aggregate of any Penalties and sanctions levied for that violation bear a reasonable
relation to the seriousness of the violation. Also, any Remedial Action Directives issued with respect
to a violation will not influence the outcome of the confirmation review of that violation nor the
determination of Penalties or sanctions for that violation; ordering a violator to correct what needs
correcting anyway is no grounds for dispelling a violation nor reducing or eliminating a Penalty or
sanction that would otherwise be determined appropriate for the violator for that violation.
6.7
Types of Remedial Actions
NERC or the Regional Entities may issue Remedial Action Directives to correct compliance with
NERC or Regional Reliability Standards and reduce or eliminate imminent threats to the reliability of
the Bulk Power System. Examples of Remedial Action Directives include:
a. Specifying operating or planning criteria, limits, or limitations
b. Requiring specific system studies
c. Defining operating practices or guidelines
d. Requiring confirmation of data, practices, or procedures through inspection testing or other
methods
e. Requiring specific training for personnel
f.

Requiring development of specific operating plans

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Appendix A

Appendix A: Base Penalty Amount Table
The following lists the Base Penalty amounts corresponding to combinations of Violation Risk Factor and
Violation Severity Level.

Violation Severity Level
Violation
Risk
Factor

Lower
Range Limits
Low
High

Moderate
Range Limits
Low
High

High
Range Limits
Low
High

Severe
Range Limits
Low
High

Lower

$1,000

$3,000

$2,000

$7,500

$3,000

$15,000

$5,000

$25,000

Medium

$2,000

$30,000

$4,000

$100,000

$6,000

$200,000

$10,000

$335,000

High

$4,000

$125,000

$8,000

$300,000

$12,000

$625,000

$20,000

$1,000,000

NOTE: This table describes the amount of Penalty that could be applied for each day that a violation
continues, subject to the considerations of Section 3.21 regarding frequency and duration of violations.

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20

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 5B

REVISED APPENDIX 4B OF THE RULES OF PROCEDURE,
SANCTION GUIDELINES OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
REDLINED VERSION

Appendix 4B

Proposed Revisions 1-9-2012
[Incorporates revisions filed with
FERC on November 29, 2011]

Sanction Guidelines
of the
North American
Electric Reliability Corporation

Effective: January 1, 2011

Table of Contents

Table of Contents
1. Preamble and Overview ............................................................................................................................1
2. Document Scope and Exclusions ..............................................................................................................2
3. Basic Principles ..........................................................................................................................................3
3.1 Necessary Element of NERC Compliance Program .............................................................................3
3.2 Settlement of Compliance Violations....................................................................................................3
3.3 Settlement Request ................................................................................................................................4
3.4 Settlement Effect on Continuation of Determination of Penalties, Sanctions, or Remedial Actions ....4
3.5 Timing of Determination of Penalty, Sanction or Remedial Action .....................................................4
3.6 Determining Party .................................................................................................................................4
3.7 No Influence of Penalty, Sanction or Remedial Action upon Violation Confirmation Process............4
3.8 Reasonable Relationship to Violation ...................................................................................................4
3.9 Use and Facets of Factors to Determine Penalties.................................................................................5
3.10
Multiple Violations.........................................................................................................................5
3.11
Relation of the Penalty to the Seriousness of the Violation and Violator’s Ability to Pay ............5
3.12
Violation Time Horizon..................................................................................................................6
3.13
Extenuating Circumstances ............................................................................................................7
3.14
Concealment or Intentional Violation ............................................................................................7
3.15
Economic Choice to Violate...........................................................................................................7
3.16
No Influence by Outcome of Economic Choice to Violate ............................................................7
3.17
Non-Monetary Sanctions or Remedial Actions ..............................................................................7
3.18
Non-Exclusiveness of Monetary Penalties or Non-Monetary Sanctions........................................7
3.19
Monetization of the Value of Sanctions .........................................................................................7
3.20
Maximum Limitations on Penalties................................................................................................8
3.21
Frequency and Duration of Violations .......................................................................................... 9
4. Determination of Monetary Penalties ....................................................................................................11
4.1 Initial Value Range of the Base Penalty Amount................................................................................11
4.1.1
Violation Risk Factor............................................................................................................11
4.1.2
Violation Severity Level.......................................................................................................11
4.2 Setting of the Base Penalty Amount....................................................................................................12
4.2.1
Applicability of the Violation Risk Factor ...........................................................................12
4.2.2
First Violation.......................................................................................................................12
4.3 Application of Adjustment Factors......................................................................................................13
4.3.1
Repetitive Violations and Compliance History ....................................................................13
4.3.2
Failure to Comply with Compliance Directives ...................................................................14
4.3.3
Self-Disclosure and Voluntary Corrective Action................................................................14
4.3.4
Degree and Quality of Cooperation in Violation Investigation and Remedial Action .........14
4.3.5
Presence and Quality of Compliance Program .....................................................................14
4.3.6
Violation Concealment .........................................................................................................14
4.3.7
Intentional Violation.............................................................................................................15
4.3.8
Extenuating Circumstances ..................................................................................................15
4.4 Setting of the Final Penalty Amount ...................................................................................................15
4.4.1
Violator’s Financial Ability to Pay.......................................................................................15
4.4.2
Reconfirmation of Disgorgement of Unjust Profit or Gain ..................................................16
5. Determination of Non-Monetary Sanctions...........................................................................................17
6. Remedial Action .......................................................................................................................................18
6.1 Definition and Anticipated Use ...........................................................................................................18
6.2 Compliance Requirements...................................................................................................................18
6.3 No Obligation to Issue.........................................................................................................................18
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6.4
6.5
6.6
6.7

Version 12.3

Scope of Application ...........................................................................................................................18
Availability ..........................................................................................................................................19
No Impact on Confirmation of Violation, or Penalties or Sanctions...................................................19
Types of Remedial Actions .................................................................................................................19

Appendix A: Base Penalty Amount Table....................................................................................................20

Preamble and Overview

1. Preamble and Overview
The North American Electric Reliability Corporation, as the Electric Reliability Organization (ERO), and
Regional Entities to whom NERC has delegated authority (hereinafter referred to collectively as
“Regional Entities” or individually as a “Regional Entity”) shall determine and may levy monetary
Penalties and non-monetary sanctions and remedial actions against owners, operators, and users of the
Bulk Power System for violations of the Requirements of NERC Reliability Standards approved by the
Federal Energy Regulatory Commission (FERC) and Applicable Governmental Authorities in Canada
and/or Mexico. This document sets out the processes and principles to be followed, and factors that will
be considered when determining Penalties, sanctions, or remedial actions for violations. Collectively
these processes, principles and factors are NERC’s Penalties, sanctions, and remedial action guidelines.
NERC and the Regional Entities will exclusively follow the directives, principles and processes in these
Sanction Guidelines when determining Penalties, sanctions, or remedial action for a violation. However,
adjustment factors are also provided to afford NERC or the Regional Entity the flexibility needed to
accommodate the facts surrounding each violation. In this manner, rigid prescription of specific Penalty
formulae can be avoided at the same time that appropriate limitations on the degree of discretion and
flexibility available to address each violation on its merits is maintained. The outcome will be remedies
that are commensurate and fair compared to the reliability impact of the violation and to remedies levied
for similar violations, yet appropriately reflective of any unique facts and circumstances regarding the
specific violation and violator.
The adjustment factors established in this document are generally consistent with those listed in the FERC
Policy Statement on Enforcement issued on October 20, 2005. However, discussion of the factors
presented in this document is not exhaustive as other facets of these factors, or other additional factors not
discussed herein, may also be considered to determine a given Penalty, sanction, or remedial action, as
NERC or the Regional Entity deems appropriate under the circumstances.
Regional Entities shall follow these guidelines to determine Penalties, sanctions, or remedial actions.
NERC shall oversee the Regional Entities’ application of the guidelines to ensure that acceptable levels of
consistency are achieved. NERC’s oversight will also ensure comparable outcomes; i.e. that there is
acceptable similarity in the degree and type of sanction for violations constituting comparable levels of
threat to reliability of the Bulk Power System. In order to facilitate this oversight, Regional Entities’
reporting to NERC of Penalties and sanctions they have determined will be thorough and in sufficient
detail that NERC can understand and reasonably replicate the outcomes reached; NERC may develop
reporting requirements or a standard reporting form for use by the Regional Entities for this purpose, as
NERC deems necessary or appropriate.
As experience is gained by NERC and the Regional Entities through the use and application of these
guidelines, NERC will review the guidelines and may modify them as NERC deems appropriate or
necessary. Authority delegated by NERC to the Regional Entities with respect to Penalties, sanctions, or
remedial actions does not include the authority to modify these guidelines.
Any revision to this document or to the principles and factors identified or addressed within it must first
be approved by the NERC Board, then by FERC, Applicable Governmental Authorities in Canada or
Applicable Governmental Authorities in Mexico prior to becoming effective and applicable within the
United States or these Applicable Governmental Authorities’ respective jurisdictions.

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Document Scope and Exclusions

2. Document Scope and Exclusions
This document identifies and discusses the processes and principles to be followed, and factors that will
be considered to determine Penalties, sanctions, or remedial actions for violations of the Reliability
Standards.
This document notes but does not otherwise address the progression of actions and steps that NERC or
the Regional Entity will follow to process a violation from its initial incoming status upon discovery as a
Possible Violation, through to its possible final determination as a Confirmed Violation. This is set out in
the NERC Compliance Monitoring and Enforcement Program, Appendix 4C to the NERC Rules of
Procedure.
This document notes but does not otherwise address how a Possible Violation or Alleged Violation is
reviewed in order to confirm or dismiss it. NERC’s process and requirements for this review are set out in
the NERC Compliance Monitoring and Enforcement Program, Appendix 4C to the NERC Rules of
Procedure. Regional Entities will undertake such reviews using the processes and requirements set out in
the NERC Compliance Monitoring and Enforcement Program.
This document notes but does not otherwise address the processes and procedural steps by which a
Confirmed Violation can be appealed, or by which a Penalty, sanction, or remedial action determined and
levied for a violation can be appealed. These procedures are set out in the NERC Compliance Monitoring
and Enforcement Program, Appendix 4C to the NERC Rules of Procedure, and applicable Regional
Entity program documents.
The NERC Compliance Monitoring and Enforcement Program provides for the possibility of settlements
within NERC or Regional Entity Compliance Monitoring and Enforcement Programs. This document
makes reference to settlements too, but does not address them further.

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3. Basic Principles
The following paragraphs identify and discuss the basic principles underpinning why and how NERC and
the Regional Entities will determine Penalties, sanctions, and remedial actions for violations of the
Requirements of the Reliability Standards.
The principles are unique and complimentary; the order in which they are presented does not set or
indicate order of precedence.
3.1
Necessary Element of NERC Compliance Program
Primary objectives of NERC as the ERO include the promotion and enforcement of compliance with
the Reliability Standards by owners, operators, and users of the Bulk Power System; Reliability
Standards made mandatory by duly-authorized legislative bodies in the U.S and Canada, and designed
to maintain and promote the reliability of the two countries’ shared power grids. Consistent with
these objectives, NERC and the Regional Entities will monitor and act to verify compliance with
Reliability Standards’ Requirements; however, beyond monitoring and acting only to verify
compliance, NERC and the Regional Entities will also hold Bulk Power System owners, operators,
and users — or their delegates — accountable for Confirmed Violations. This accountability will
include determination and the possible levying of Penalties, sanctions, or remedial actions.
Penalties, sanctions, and remedial actions are valid and necessary mechanisms to NERC and the
Regional Entities for the enforcement and promotion of compliance to the Reliability Standards, in
part because they can:
a. promote compliance behavior;
b. provide deterrence to future incidents, actions or situations of noncompliance by the violator or
others;
c. implement actions that will promptly correct behavior;
d. disgorge benefits that may or may have accrued to a violator as a consequence of violating;
e. visit upon a violator some portion of any damage their violation may or may have visited upon
others.
Accordingly, the determination and potential levying of appropriate Penalties, sanctions, or remedial
actions by NERC or the Regional Entity upon those responsible for violations shall be a required step
within the NERC and Regional Entity Compliance Monitoring and Enforcement Programs.
3.2
Settlement of Compliance Violations
NERC and the Regional Entities shall maintain the reliability of the Bulk Power System by enforcing
compliance with NERC and Regional Reliability Standards. NERC and Regional Entity Compliance
Monitoring and Enforcements Programs will lay out how NERC and the Regional Entities will do
this. In particular and by necessity, elements of these programs regarding the confirmation of
violations, the determination and levying of Penalties, sanctions, or remedial actions, and appeals are
rigid and legalistic in form and nature in order to respect the basic tenets of due process and natural
justice inherent within United States and Canadian justice systems, respectively, upon which they are
being based. However, absolute adherence to the Compliance Monitoring and Enforcement Programs,
to the exclusion of other options, may not be the most appropriate, efficient or desirable means by
which to achieve the end goal in all circumstances, to all entities party to a violation.
As set out in the NERC Compliance Monitoring and Enforcement Program, Appendix 4C to the
NERC Rules of Procedure, violations of the Reliability Standards may be dealt with through
settlements reached between NERC, Regional Entity and the Registered Entity or Entities to whom a
Possible, Alleged, or Confirmed Violation is attributed to by NERC or the Regional Entity. Any
provisions made within a settlement regarding Penalties, sanctions, or remedial actions can supersede
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Basic Principles

any corresponding Penalties, sanctions that would otherwise be determined pursuant to these
guidelines.
3.3
Settlement Request
Any Registered Entity found in or being investigated for a violation may request settlement
negotiations at any time, including prior to issuance of a Notice of Alleged Violation; however,
NERC or the Regional Entity may decline to enter into or continue settlement negotiations after the
Possible Violation or Alleged Violation becomes a Confirmed Violation.
3.4

Settlement Effect on Continuation of Determination of Penalties, Sanctions, or
Remedial Actions
Until a settlement is finalized or parties to that settlement agree otherwise, NERC or the Regional
Entity may continue activities and actions towards the determination and levying of a Penalty,
sanction, or remedial action that would otherwise be applicable pursuant to these guidelines, or that
will be applicable if the settlement is not finalized.
3.5
Timing of Determination of Penalty, Sanction or Remedial Action
All Possible Violations and Alleged Violations will be reviewed by NERC or the Regional Entity
with the outcome that either the violation will be confirmed or the violation will be dismissed.
The Penalty, sanction, or other remedial action for a violation will be determined when the violation
becomes a Confirmed Violation or is resolved as part of a settlement agreement.
At any time during confirmation review, hearing, or appeals NERC or the Regional Entity may
determine that remedial action is warranted by the subject Registered Entity of the review, hearing, or
appeals. NERC or the Regional Entity may direct that such remedial actions be undertaken by the
subject Registered Entity at any time, including prior to confirmation of a violation, and without
regulatory approval.
3.6
Determining Party
The determination of Penalty, sanction or other remedial action for a violation will generally be
undertaken by the same entity determining the violation to be a Confirmed Violation, but subject to
review by NERC if the determination is made by a Regional Entity.
3.7

No Influence of Penalty, Sanction or Remedial Action upon Violation
Confirmation Process
The Penalty, sanction, or remedial action determined for a violation will not influence the outcome of
the Regional Entity’ or NERC’s confirmation review of the violation. In particular, if the
determination of Penalty, sanction, or remedial action for a probable violation is being undertaken by
the same entity undertaking the confirmation review, the entity will insure that there is sufficient
separation, in such terms as time, process, personnel or the like, to preclude that the Penalty, sanction,
or remedial action determined influences the outcome of the confirmation review.
3.8
Reasonable Relationship to Violation
Penalties, sanctions, and remedial actions levied or applied for the violation of a Reliability Standard
shall bear a reasonable relation to the seriousness of the violation while also reflecting consideration
of the factors that these guidelines direct to take into account. In the United States, the legislation
establishing mandatory enforceable Reliability Standards and the ERO requires that “Any penalty
imposed … shall; (A) bear a reasonable relation to the seriousness of the violation; and (B) take into
consideration the efforts of the user, owner, or operator to remedy the violation in a timely manner1.”

1

H.R.6, Energy Policy Act of 2005, Section 215, Paragraph e, subparagraph 6.
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3.9
Use and Facets of Factors to Determine Penalties
Penalties levied for a given violation will be based on all facts and other information relevant to the
incident or situation. To that end, these guidelines include factors which NERC and the Regional
Entities will consider while determining the Penalty or sanction to be levied.
NERC considers, and these guidelines direct, that the presence of some factors within a violation
aggravates the seriousness of that violation and should cause an increase or expansion of the Penalty
to be levied. Conversely, the presence of some other factors mitigates that seriousness and should
cause a decrease or reduction of the Penalty to be levied. Also, some factors may mitigate or
aggravate, and should have commensurate impact. NERC considers, and these guidelines direct, that
the absence of an aggravating or mitigating factor will have no impact, as opposed to a mitigating or
aggravating impact, respectively, to a Penalty.
This document presents many of the relevant facets of the factors included in these guidelines.
However, additional facets of these factors, or additional factors not discussed herein, may also be
considered to determine a given Penalty, sanction, or remedial action, as NERC or the Regional
Entity deems appropriate under the circumstances. Where additional factors or facets are used they
will be identified and their use will be justified. The effect of using these factors or facets on the
Penalty, sanction, or remedial action determined will also be fully and clearly disclosed.
3.10 Multiple Violations
A violation is a failure or inadequacy to meet a Requirement of a Reliability Standard by a party
responsible to comply with that Requirement.
The failure or inadequacy of a violator to comply may involve more than one Reliability Standard or
several Requirements of a single Reliability Standard; as such, multiple individual violations may be
in play when Penalties, sanctions, or remedial actions for an incident or situation of noncompliance
are being determined.
Strictly speaking, NERC or the Regional Entity can determine and levy a separate Penalty or
sanction, or direct remedial action, upon a violator for each individual violation. However, in
instances of multiple violations related to a single act or common incidence of noncompliance, NERC
or the Regional Entity will generally determine and issue a single aggregate Penalty, sanction, or
Remedial Action Directive bearing reasonable relationship to the aggregate of the related violations.
The Penalty, sanction, or remedial action will not be that determined individually for the least serious
of the violations; it will generally be at least as large or expansive as what would be called for
individually for the most serious of the violations.
Some entities may be registered as being responsible for more than one function (e.g., Transmission
Owner, Transmission Operator, Balancing Authority, Generation Operator), and a single Requirement
in some Reliability Standards may apply to the responsible entity for several functions. Where several
functions are performed by the same Registered Entity, a violation will be assessed against the
Registered Entity, not against each function.
3.11

Relation of the Penalty to the Seriousness of the Violation and Violator’s
Ability to Pay
As discussed in Section 3.8, above, Penalties levied for the violation of a Reliability Standard shall
bear a reasonable relation to the seriousness of the violation. The seriousness of a given violation by a
given violator shall be assessed by review of the applicability of the Violation Risk Factors2
associated with the violation to the characteristics of the violator’s operation or power system. Size is
a characteristic of a violator’s operation or system. The size of the violator can be considered in the
assessment but shall not be the only characteristic considered. Where size is considered in such a
2

See Section 4 Part 4.11 for a discussion of these factors
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review the facts relating to the violation in question will be reviewed such that the “actual” size of the
violator is properly discerned and appropriately considered; the following are provided as illustrative
examples:
• If the violator belongs to a generation and transmission cooperative or joint-action agency,
size will be attributed to the particular violator, rather than to that generation and transmission
cooperative or joint-action agency.
• If the violator constitutes part of a corporate family the size of the violator will be attributed
to that violator alone, in the absence of any facts indicating involvement of the whole
corporation or corporate affiliates of the violator.
• If the violator is an entity established solely as a shell to register as subject to one or more
Reliability Standards the size of the entity will be disregarded in favor of consideration of the
size of parent entity or any affiliates that NERC or the Regional Entity deems involved and
constituting the “actual” size of the violator.
At the request of the violator, NERC or the Regional Entity may review the Penalty in light of the
violator’s financial ability to pay the Penalty. Financial ability shall include both the financial strength
of the Registered Entity as well as its structure (e.g., for-profit versus non-profit). Where Penalties are
reduced or eliminated NERC or the Regional Entity shall consider non-monetary sanctions or
remedial action as alternatives or substitutes to the Penalty, pursuant to Sections 3.17, 3.18 and 3.19,
below, of this document.
The above actions will: (i) promote that violators are penalized or sanctioned commensurate with the
risk or effect that their specific violation of the Reliability Standards had or is having to the reliability
of the Bulk Power System while also; (ii) mitigating overly burdensome Penalties to less
consequential or financially-limited entities concurrent with; (iii) promoting that no Penalty is
inconsequential to the violator to whom it is assessed. This will promote that Penalties levied for
violations of Reliability Standards bear a reasonable relation to the seriousness of the violation while
also addressing violators’ ability to pay the Penalties they are assessed.
3.12 Violation Time Horizon
Reliability Standards involving longer and broader time horizons, such as long-term planning
activities, may have a lesser immediate impact and pose less immediate risk to the reliability of the
Bulk Power System than Reliability Standards addressing shorter and narrower timeframes, such as
Registered Entities’ conduct in real time. Similarly, Reliability Standards involving longer and
broader time horizons typically will provide a longer time period over which to discover and remedy
a violation when compared to Reliability Standards addressing more immediate activities such as
next-day planning, same-day operations or real-time operations. Using a time horizon element in the
determination of Penalties for violations provides for recognition of the “more immediate” nature —
and hence higher risk — of the threat of some violations as opposed to the lesser-risk “future threat if
not corrected” nature of other violations.
Penalties levied for the violation of a Reliability Standard shall consider the time horizon of the
Reliability Standard violated; violations of Reliability Standards involving more immediate or realtime activities will generally incur larger Penalties than violations of Reliability Standards with longer
or broader horizons.
Time horizons inherent in Reliability Standard Requirements are not reflected in their assigned
Violation Risk Factors or Violation Severity Levels3. Accordingly, the time horizon element of a
violation will be considered when determining the Base Penalty Amount4 for the violation.

3

See Section 4 Part 4.11 for a discussion of these factors.
See Section 4 Part 4.2
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The time horizon considered and its impact on the selection of the Base Penalty Amount for the
violation will be decided upon by NERC or the Regional Entity based upon judgment and the facts of
the violation. The rationale for the time horizon used and its impact on the setting of the Base Penalty
Amount will be documented by NERC or the Regional Entity and provided within the Notice of
Penalty issued for the violation.
3.13 Extenuating Circumstances
In unique extenuating circumstances, such as significant natural disasters, Penalties may be
significantly reduced or eliminated.
3.14 Concealment or Intentional Violation
Penalties levied for the violation of a Reliability Standard shall always take into consideration any
attempt by a violator to conceal the violation from NERC or the Regional Entity, or any intentional
violation incurred for purposes other than a demonstrably good faith effort to avoid a significant and
greater threat to the immediate reliability of the Bulk Power System.
3.15 Economic Choice to Violate
Owners, operators, and users of the Bulk Power System may be presented with situations or
circumstances where compliance with the Reliability Standards preclude or reduce an economic gain
that could be realized by violating the Reliability Standards. Penalties shall be sufficient to assure that
entities responsible for complying with Reliability Standards do not find it attractive to make
economic choices that cause or unduly risk violations to Reliability Standards, or risk or cause
incidents resulting from violations of the Reliability Standards. Penalties levied to violators who have
made such a choice shall reflect this aspect of the violation.
3.16 No Influence by Outcome of Economic Choice to Violate
Economic choices to violate are generally made for the violator’s own potential gain, but making
such a choice does not always result in all potential gains being realized or may result in damage or
loss. However, irrespective of the outcome to the Registered Entity making an economic choice to
violate, such decisions risk others’ reliability, commonly without either their knowledge or consent.
Penalties levied to violators making an economic choice to violate shall reflect only that the choice
was made at all; the lack of or reduced magnitude of any actual benefit received, or any damage
suffered, by the violator as a consequence of making this choice will have no influence on the
determination of the Penalty to be levied.
3.17 Non-Monetary Sanctions or Remedial Actions
Enforcement actions taken by NERC or a Regional Entity are not limited to monetary Penalties; at the
discretion of NERC or the Regional Entity, sanctions or remedial actions may also be applied and can
include limitations on activities, functions, operations, or other appropriate sanctions, including the
establishment of a reliability watch list composed of major violators.
3.18 Non-Exclusiveness of Monetary Penalties or Non-Monetary Sanctions
A non-monetary sanction may be imposed either in lieu of or in addition to a monetary Penalty
imposed for the same Confirmed Violation, and vice versa. Imposition of a monetary Penalty or nonmonetary sanction for a violation does not preclude the imposition of the other as long as, in
combination, the aggregate Penalty continues to bear a reasonable relation to the seriousness of the
violation.
3.19 Monetization of the Value of Sanctions
A significant element of NERC’s oversight of Penalties, sanctions, and remedial action determined
and levied by Regional Entities is ensuring acceptable similarity in the degree and type of sanction for
violations constituting comparable levels of threat to the reliability of the Bulk Power System. It is
also a requirement and a commitment of NERC and its designees that Penalties, sanctions, or
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remedial actions levied or applied for the violation of a Reliability Standard bear reasonable relation
to the seriousness of the violation. Specifically with respect to Penalties and sanctions, it is intuitive
that it will be easier, more objective, and more transparent to monitor and test for acceptable
similarity if (monetary) Penalties or monetized values of sanctions determined for violations are used
as the primary basis of comparison, versus comparisons made on the basis of other (non-monetized)
considerations. Similarly, there will be strong intuitiveness and transparency, particularly to those
interested but not strongly familiar with the power industry, that the seriousness of a violation has
been reasonably addressed if the consequences for it to the violator are determined and can be
expressed clearly and quantifiably in monetary terms.
Penalties determined and levied by NERC or Regional Entities will by definition be valued in
monetary terms: U.S or Canadian dollars. It will be the preference of NERC that (non-monetary)
sanctions imposed either in lieu of or in addition to a Penalty include disclosure of the monetary value
that the sanctions represent to the violator. It is intuitive that defensible monetary values for those
sanctions will be most easily determined if the Penalty for the violation pursuant to these guidelines is
first determined and then the sanctions to be levied are introduced and justified as appropriate
alternatives to that Penalty or additions to a lesser Penalty. However, sanctions may be determined
directly (e.g. without first determining a Penalty amount) and monetized using other methods.
NERC does not have a preference between Penalties and sanctions for violations. The preference
expressed here will support ensuring comparability of outcomes regarding application of these
guidelines and the promotion of reasonable relationship between the seriousness of a violation and the
sanctions, or Penalties and sanctions, levied for it.
3.20 Maximum Limitations on Penalties
Penalties are direct, monetary judgments levied against a violator by NERC or the Regional Entity for
the violation of Requirements of the Reliability Standards. In contrast, sanctions will impose
limitations or restrictions of some kind that may result in economic or other impacts to the violator,
and remedial actions are directives by NERC or a Regional Entity to the violator regarding the
correction of conditions, practices or any other relevant action or activity underlying the
noncompliance(s) involved.
In the United States, the Federal Power Act allows for the imposition of civil penalties of up to
$1,000,000 per day per violation. NERC and the Regional Entities draw their authority to levy
Penalties from the Federal Power Act; accordingly this figure is and can be understood as the
maximum monetary Penalty that NERC or Regional Entities are authorized to levy. However, as this
legislation also requires that “[a]ny penalty imposed … shall; (A) bear a reasonable relation to the
seriousness of the violation; and (B) take into consideration the efforts of the user, owner, or operator
to remedy the violation in a timely manner5” entities required to comply with the Reliability
Standards must also understand that NERC and the Regional Entities will be obligated to assess
Penalties amounts up to and including the maximum amount for violations where warranted
pursuant to these guidelines.
In Canadian jurisdictions, the maximum monetary Penalty potentially assessable for a Reliability
Standard violation is significantly less than the amount allowed in the United States under the Federal
Power Act. Also, legislation presently governing some Canadian jurisdictions does not accommodate
the levying of such a Penalty under some circumstances, may not accommodate the levying of such a
Penalty for all violations, or does not accommodate the levying of any monetary Penalties.

5

H.R.6, Energy Policy Act of 2005, Section 215, Paragraph e, subparagraph 6.
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When a Penalty may be levied, or proposed to Applicable Governmental Authorities with jurisdiction
to be levied, the following steps will be followed:
a. NERC or the Regional Entity will initially disregard the Penalty limitations of the Applicable
Governmental Authorities with jurisdiction, and determine what the Penalties or sanctions would
be pursuant to these sanction guidelines only.
b. NERC or the Regional Entity will review the maximum Penalty allowed by the Applicable
Governmental Authorities with jurisdiction.
c. NERC or the Regional Entity will set the actual Penalty to be levied, or proposed to the
Applicable Governmental Authorities with jurisdiction to be levied, as the lesser of that
determined pursuant to these guidelines and the maximum Penalty or sanction allowed by the
Applicable Governmental Authorities.
d. If the lesser Penalty is the maximum Penalty allowed by the Applicable Governmental
Authorities, the Notice of Penalty or similar document issued by NERC or the Regional Entity
regarding the violation will also list the Penalty that was determined pursuant to these guidelines.
Adhering to the above steps will insure that the result of the determination of any Penalty for any
violation will produce output that can be directly compared (i.e. without influence of local Applicable
Governmental Authorities’ Penalty limitations or restrictions) with the Penalty determined for any
other violation, assisting efforts of NERC and others to ensure that these guidelines are uniformly
applied and that there is an acceptable level of consistency in the application of these sanction
guidelines across North America. Applicable Governmental Authorities with jurisdiction may also
find such information useful for their determination of the appropriateness of any Penalty or sanction
proposed to them to be levied. Similarly, policy and legislative bodies may find such information of
value to the review or development of arrangements addressing such matters.
3.21 Frequency and Duration of Violations
Section 316A of the Federal Power Act [16 U.S.C. § 825o-1(b)], as amended by the Energy Policy
Act of 2005, provides that “any person who violates any provision of Part II of this title or any
provision of any rule or order thereunder shall be subject to a civil penalty of not more than
$1,000,000 for each day that such violation continues.”
FERC Order No. 672 interprets this statement as setting a cap on the monetary Penalties that the
Commission, NERC and Regional Entities can impose under FPA section 215. FERC has referred to
this statutory provision as imposing a maximum $1,000,000 “per day, per violation” Penalty and has
directed that the ERO must ensure that in the U.S. such a Penalty amount ($1,000,000), in such a
manner (“per day, per violation”), can be imposed for a violation of the Reliability Standards should
the conduct at issue so warrant.
Some Reliability Standards may not support the assessment of Penalties on a “per day, per violation”
basis, but instead should have Penalties calculated based on an alternative Penalty frequency or
duration. Where NERC or the Regional Entity deems that a monetary Penalty is warranted, or where
NERC or the Regional Entity is monetizing (Section 3.19) the value of a non-monetary sanction, for
the violation of such a Reliability Standard NERC or the Regional Entity shall determine the Penalty
or monetized amount consistent with the following:
Multiple Instances of Violation on One Day
The nature of some Reliability Standards includes the possibility that a Registered Entity could
violate the same Requirement two or more times on the same day. In this instance NERC or the
Regional Entity is not limited to penalizing the violator a maximum of $1,000,000 per day. As NERC
or the Regional Entity deems appropriate NERC or the Regional Entity may deem that there have
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Basic Principles

been multiple violations that occurred on the same day, each of which is subject to the maximum
potential Penalty of $1,000,000 per violation, per day. Also, NERC or the Regional Entity is not
constrained to assessing the same Penalty amount for each of the multiple violations, irrespective of
their proximity in time.
Cumulative Over Time
Certain Requirements of the Reliability Standards are measured not on the basis of discrete acts, but
of cumulative acts over time. Reliability Standards that fall into this category are generally those
involving measurements based on averages over a given period. Where a violation of such a
Reliability Standard has occurred the element of averaging performance over a period of time
introduces the difficulty to NERC or the Regional Entity of reasonably identifying (i) what date the
violation should be deemed to have occurred and (ii) its duration.
If a Reliability Standard Requirement measured by an average over time can only be violated once
per applicable period, then there is risk that a disproportionately mild Penalty might be levied in a
situation where the violation was serious and the effects on the Bulk Power System severe. In the
future, each Reliability Standard Requirement that is based on an average over time will specify the
minimum period in which a violation could occur and how to determine when a violation arises,
which may be other than once per applicable period6. In the interim until relevant Reliability
Standards are so modified, any ambiguity on this point will be construed conservatively, meaning that
where a Registered Entity has not complied with such a Reliability Standard NERC or the Regional
Entity will generally consider that only one violation occurred per measurement period. However,
notwithstanding this general principle of one violation per measurement period, if an average must be
measured by a span of time greater than a month, each month of that span shall constitute at a
minimum one violation.
Periodically Monitored Discrete Violation
Some Reliability Standards may involve discrete events which are only monitored periodically or
which are reported by exception. If a Requirement of such a Reliability Standard states that a discrete
event constitutes a violation, then (i) a violation arises when that event occurs and (ii) that violation
continues until remedied; furthermore, (iii) the violation is deemed to have occurred at the point that
the Registered Entity entered into noncompliance with the Reliability Standard regardless of the
monitoring period for the activity or its date of discovery or reporting. For example, if a task required
by a Reliability Standard Requirement has not been done by the required date, it is irrelevant that
monitoring for compliance for the Requirement occurs only on a yearly or other periodic basis;
NERC or the Regional Entity will deem a violation to have occurred on the first day of
noncompliance and each day thereafter until compliance is effectuated. Similarly, if a discrete event
occurs and is not remedied on the date of occurrence, then NERC or the Regional Entity will deem a
violation to have occurred on the day of the first instance of the noncompliance and each day, or
portion thereof thereafter until compliance is effectuated.
Non-compliance with a Reliability Standard of this type will subject the violator to the potential
maximum monetary Penalty of $1,000,000 per violation per day in violation.
NERC or the Regional Entity is not constrained to assessing the same Penalty amount for each day
that the Registered Entity was in violation of the Reliability Standard Requirement in question.

6

Para. 41; FERC Order on Clarification and Rehearing [Docket No. RR06-1-006]
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Determination of Monetary Penalties

4. Determination of Monetary Penalties
The following describes the steps that NERC or the Regional Entity will follow to determine the
monetary Penalty for a violation7. The determination of non-monetary sanctions is discussed in Section 5
of this document; Section 6 discusses remedial action.
Step 1.

The Base Penalty Amount for the violation will be set as discussed in Sections 4.1 and 4.2,
below.

Step 2.

The Base Penalty Amount set in Step 1 will be reviewed pursuant to Section 4.3, below. This
will result in the Adjusted Penalty Amount.

Step 3.

The Adjusted Penalty Amount determined in Step 2 may be reviewed in light of the violator’s
financial ability to pay the Penalty. Also, where applicable NERC or the Regional Entity will
reconfirm that the Penalty set will disgorge unjust profits or economic benefits associated with
an economic choice to violate8. At the conclusion of this review the Final Penalty Amount will
be set.

Unless NERC or the Regional Entity deems alternative frequency or duration is warranted Penalties shall
be assessed on a per violation per day basis. Where NERC or the Regional Entity deems that alternative
Penalty frequency or duration is warranted the Notice of Penalty associated with the violation will clearly
identify this and provide the rationale for it. Where NERC or the Regional Entity deems that alternative
Penalty frequency or duration is warranted, Penalties shall be determined in accordance with section 3.21
of the Sanction Guidelines.
4.1
Initial Value Range of the Base Penalty Amount
NERC or the Regional Entity will determine an initial value range for the Base Penalty Amount by
considering two factors regarding the violation: the Violation Risk Factor (VRF) of the Requirement
violated and the Violation Severity Level (VSL) assessed for the violation. Using the Base Penalty
Amount Table provided in Appendix A NERC or the Regional Entity will look up the initial value
range for the Base Penalty Amount by finding the intersection of the violation’s VRF and VSL on the
table9.
4.1.1 Violation Risk Factor
Each Requirement set out within NERC’s Reliability Standards has been assigned a Violation
Risk Factor (VRF) through the NERC Reliability Standards development process. The factors
have been defined and approved through the Reliability Standards development process and
are assigned to Requirements to provide clear, concise and comparative association between
the violation of a Requirement and the expected or potential impact of the violation to the
reliability of the Bulk Power System. One of three defined levels of risk is assigned to each
Reliability Standards Requirement: lower Violation Risk Factor, or; medium Violation Risk
Factor, or; high Violation Risk Factor. Definitions of the factors can be found in appropriate
Reliability Standards development process documentation.
4.1.2 Violation Severity Level
Violation Severity Levels (VSLs) are defined measurements of the degree to which a violator
violated a Requirement of a Reliability Standard. Whereas Violation Risk Factors are
determined pre-violation and indicate the relative potential impacts that violations of each
7

The text in this section discusses the determination of a single Penalty for an individual violation; however, the
process laid out is also applicable to determining the individual Penalties, or a single aggregate Penalty, for multiple
violations that are associated with each other as discussed in Section 3 Part 3.1 of this document.
8
Reference: Section 3 Parts 3.15 and 3.16.
9
As discussed in Section 3 Part 3.1 of this document where there is more than one violation in play, but the
violations are sufficiently associated, NERC or the Regional Entity may set a single initial value range that is
appropriate in light of the individual VRF/VSL combinations of the violations.
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Determination of Monetary Penalties

Reliability Standard could pose to the reliability of the Bulk Power System, the Violation
Severity Level is assessed post-violation and is an indicator of how severely the violator
actually violated the Reliability Standard(s) Requirement(s) in question.
These guidelines utilize the Violation Severity Levels that have been established10 by NERC
for Requirements of the Reliability Standards. Up to four levels can be defined for each
Requirement; the levels have been designated as: lower, moderate, high, and severe.
4.2
Setting of the Base Penalty Amount
NERC or the Regional Entity will set the Base Penalty Amount for the violation. The Base Penalty
Amount set for the violation may be set at the highest figure of the initial value range determined
pursuant to Section 4.1, above. However, NERC or the Regional Entity may set the Base Penalty
Amount at or below the lowest figure of the initial value range in light of two specific circumstances
regarding the violation and the violator, specifically:
a.

The applicability of the Violation Risk Factor of the violation to the specific circumstances11 of
violator.

b. Whether this is an inconsequential first violation by the violator of the Reliability Standard(s) in
question.
As noted in Section 3.12 NERC or the Regional Entity will consider the time horizon involved with
the violation when setting the Base Penalty Amount for the violation. As also noted in Section 3.12
this consideration will be documented for inclusion in the Notice of Penalty issued for the violation.
The Penalty amount resulting from this review will be the Base Penalty Amount that is used as the
basis for further adjustment pursuant to the factors discussed in the next section (4.3) of this
document.
4.2.1 Applicability of the Violation Risk Factor
Violation Risk Factors are assigned to Reliability Standards’ Requirements as indicators of
the expected risk or harm to the Bulk Power System posed by the violation of a Requirement
by a typical or median Registered Entity that is required to comply. NERC or the Regional
Entity may consider the specific circumstances of the violator to determine if the violation of
the Requirement in question actually produced the degree of risk or harm anticipated by the
Violation Risk Factor. If that expected risk or harm was not or would not have been
produced, NERC or the Regional Entity may set the Base Penalty Amount to a value it (i)
deems appropriate and (ii) is within the initial value range set above pursuant to Section 4.1.
4.2.2 First Violation
If the actual or foreseen impact of the violation is judged to be inconsequential by NERC or
the Regional Entity and the violation is the first incidence of violation of the Requirement in
question by the violator, NERC or the Regional Entity may at its discretion: (i) set the Base
Penalty Amount to a value it deems appropriate within the initial value range set above
pursuant to Section 4.1, or (ii) excuse the Penalty for the violation (i.e. set the Base Penalty
Amount to 0$).
This relief will generally not be afforded to the violator if NERC or the Regional Entity
determines that the violator has a poor compliance record; e.g. the circumstances discussed in

10

Assignment of these levels will be complete and filed with the Commission by March 1, 2008 in accordance with
FERC Order on Compliance Filing dated June 7, 2007 [Docket No. RR06-1-007] .
11
The circumstances of the violator will include but not be limited to, as appropriate: the violator’s aggregate and
net Loadload; interconnections characteristics such as voltage class and transfer ratings.
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Determination of Monetary Penalties

Section 4.3.1 have been an aggravating factor in one or more previous Penalties assessed to
the violator.
This relief will not be available for consideration in instances where the violator has
concealed or attempted to conceal the violation, failed or refused to comply with compliance
directives from NERC or the Regional Entity, or intentionally violated for purposes other
than a demonstrably good faith effort to avoid a significant and greater threat to the
immediate reliability of the Bulk Power System.
4.3
Application of Adjustment Factors
Adjustment factors provide the opportunity to NERC or the Regional Entity to adjust the Base
Penalty Amount to reflect the specific facts and circumstances material to each violation and violator.
These guidelines recognize and require that, as a minimum, NERC or the Regional Entity consider
the following:
a. Repetitive violations and the violator’s compliance history
b. Failure of the violator to comply with compliance directives
c. Self-disclosure and voluntary corrective action by the violator
d. Degree and quality of cooperation by the violator in the violation investigation and in any
remedial action directed for the violation
e. The presence and quality of the violator’s compliance program quality
f.

Any attempt by the violator to conceal the violation

g. Intentional violations
h. Extenuating circumstances
Two documents issued by United States regulatory agencies will be instructive to NERC and the
Regional Entities when they are determining Penalties for violations of the Reliability Standards: the
FERC’s Policy Statement on Enforcement issued on October 20, 2005 under Docket No. PL06-00,
and; U.S Securities and Exchange Commission (SEC) Release No. 44969 under the Securities and
Exchange Act of 1934, issued on October 23 2001, also concurrently issued by the SEC as Release
No. 1470 under Accounting and Auditing Enforcement.
NERC or the Regional Entity may also consider other additional factors it deems appropriate under
the circumstances as long as their use is clearly identified and adequately justified. The effect of using
these factors will also be fully and clearly disclosed.
4.3.1 Repetitive Violations and Compliance History
A bulleted point under Paragraph 20 of the FERC Policy Statement on Enforcement
highlights repeat offenses by a violator. If a violator has had repetitive infractions of the same
or a closely-related Reliability Standard Requirement, particularly within a time frame
defined within the Reliability Standard(s) or deemed appropriate by NERC or the Regional
Entity in the absence of the Reliability Standard(s) defining the time frame, NERC or the
Regional Entity shall consider some increase to the Penalty.
The term “violation reset time period” of a Reliability Standards Requirement may be defined
or implied within a given Reliability Standard to describe the period of time generally
required for a violator to continue operations without incidence of further violation(s) of the
Reliability Standards, particularly of the initial or a similar Reliability Standard violated, in
order to avoid or minimize consideration of the violator’s previous violation history for
sanctioning purposes in the event of a subsequent violation(s). NERC and the Regional
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Determination of Monetary Penalties

Entities shall exercise appropriate judgment and discretion in this regard as warranted,
particularly where no reset time period is specifically set within the Reliability Standard
violated. Repeat violations within violation reset time periods are aggravating factors in the
determination of sanctioning. Accordingly, a violation history of no violations will produce
no mitigation of the Penalty otherwise determined; a violation history of infrequent minor
violations of lesser risk Requirements assessed lower Violation Severity Levels may result in
small or no increase; a history of more frequent violations or previous violations of higher
risk Requirements assessed more severe Violation Severity Levels will generally incur
commensurately larger increases.
4.3.2 Failure to Comply with Compliance Directives
If the violator has violated Reliability Standard Requirements notwithstanding having
received related compliance directives, such as for remedial action from NERC or the
Regional Entity, NERC or the Regional Entity shall consider some increase to the Penalty.
4.3.3 Self-Disclosure and Voluntary Corrective Action
NERC or the Regional Entity shall consider whether a violator self-disclosed the violation
prior to detection or intervention by NERC or the Regional Entity, and any action undertaken
by the violator to correct the situation. NERC or the Regional Entity will be instructed in their
consideration of these factors by the text of Paragraphs 24 and 25 of the FERC Policy
Statement on Enforcement. As they deem warranted, NERC or the Regional Entity may
reduce the violator’s Penalty consistent with the cited sections of the FERC policy.
4.3.4

Degree and Quality of Cooperation in Violation Investigation and
Remedial Action
NERC or the Regional Entity shall consider the degree and quality of the violator’s
cooperation with NERC or the Regional Entity in the investigation of the violation and any
remedial action arising from it. NERC or the Regional Entity will be instructed in making
their determination on this by the text of Paragraphs 26 and 27 of the FERC Policy Statement
on Enforcement. NERC or the Regional Entity may adjust the violator’s Penalty as they deem
warranted commensurate with the cited sections of the FERC policy statement. This may
result in an increase, a decrease or no change to the Penalty.
4.3.5 Presence and Quality of Compliance Program
NERC or the Regional Entity shall consider the presence and quality of the violator’s
compliance program. NERC or the Regional Entity will be instructed in making their
determination on this factor by the text of Paragraphs 22 and 23 of the FERC Policy
Statement on Enforcement. As they deem warranted, NERC or the Regional Entity may
reduce the violator’s Penalty consistent with the cited sections of the FERC policy.
Consistent with the FERC policy NERC or the Regional Entity may not increase a violator’s
Penalty specifically on the grounds that the violator has no program or a poor quality
program.
4.3.6 Violation Concealment
Two bulleted points under Paragraph 20 of the FERC Policy Statement on Enforcement
highlight misrepresentation of material facts and resistance or impediment to inquiry of a
violation. When determining a Penalty NERC or the Regional Entity shall consider any
concealment or attempt to conceal the violation, or information needed to investigate the
violation, on the part of the violator. If the violator concealed or attempted to conceal, some
significant increase to the Penalty shall be considered; doubling of the Penalty otherwise
determined is suggested. Conduct of this nature on more than one occasion regarding one
violation, or with respect to more than one violation, should incur an even larger increase to
the Penalty otherwise determined.
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Determination of Monetary Penalties

4.3.7 Intentional Violation
Another bulleted point under Paragraph 20 of the FERC Policy Statement on Enforcement
highlights offenses as willful action by a violator. When determining a Penalty NERC or the
Regional Entity shall consider if the violator intentionally violated without just cause; i.e., for
purposes other than a demonstrably good faith effort to avoid a significant and greater threat
to the immediate reliability of the Bulk Power System. If the violator engaged in such
conduct, some significant increase to the Penalty shall be considered; doubling of the Penalty
otherwise determined is suggested. If conduct of this nature has been detected on more than
one occasion, NERC or the Regional Entity should assess an even larger increase to the
Penalty otherwise determined.
NERC or the Regional Entity will consider violations attributable to an economic choice to
violate as intentional violations. Consistent with the FERC Policy Statement on Enforcement
any Penalty issued involving conduct of this manner shall as a minimum disgorge any profits
or economic benefits acquired as a consequence of the behavior, whenever and to the extent
that they can be determined or reasonably estimated.
4.3.8 Extenuating Circumstances
NERC or the Regional Entity will consider if there are extenuating circumstances regarding
the violation that justify reduction or elimination of the Penalty otherwise determined.
Consideration of adjusting a Penalty for this factor would be inconsistent with NERC or the
Regional Entity increasing a Penalty after consideration of any other factor included in this
section of these guidelines, such as intentional violation without justifiable cause or
concealment or attempt to conceal.
4.4
Setting of the Final Penalty Amount
The Adjusted Penalty Amount determined in Step 2 may be reviewed in light of the violator’s
financial ability to pay the Penalty. Also, if the violation was an economic choice, NERC or the
Regional Entity will reconfirm that the Penalty set will disgorge any unjust profits or economic
benefits. At the conclusion of this review the Final Penalty Amount will be set.
4.4.1 Violator’s Financial Ability to Pay12
At the written request of the violator NERC or the Regional Entity will review the Penalty
determined in Step 2 in light of relevant, verifiable information that the violator provides
regarding their financial ability to pay. At the conclusion of this review NERC or the
Regional Entity may:
1. Reduce the Penalty payable to an amount that NERC or the Regional Entity, as
applicable, deems the violator has the financial ability to pay, or;
2. Excuse the Penalty amount payable, or;
3. Sustain the Penalty amount determined in Step 2.
Where the Penalty amount has been reduced or excused, NERC or the Regional Entity shall
consider the assessment of appropriate non-monetary sanction(s) as a substitute or an
alternative for the Penalty amount that has been excused or by which the Penalty has been
reduced.

12

NERC anticipates that this will be the primary vehicle for addressing the ability to pay of “not-for-profit” and
other similar organizations.
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Determination of Non-Monetary Sanctions

4.4.2 Reconfirmation of Disgorgement of Unjust Profit or Gain
Notwithstanding the application of any other consideration or factor applicable to the
determination of a just and reasonable Penalty for the violation, if the violation in question
involved an economic choice to violate NERC or the Regional Entity shall reconfirm that the
Penalty set meets the requirements set forth in Parts 3.15 and 3.16 of Section 3 of this
document.

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Determination of Non-Monetary Sanctions

5. Determination of Non-Monetary Sanctions
The imposition of sanctions is not bounded to monetary Penalties. Non-monetary sanctions applied must
be applied with the objective of promoting reliability and compliance with the Reliability Standards.
Non-monetary sanctions may include, but not be limited to, the following:
a. Limitations on activities, functions, or operations
b. Placing an entity on a reliability watch list composed of major violators

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Remedial Action

6. Remedial Action Directives
6.1
Definition and Anticipated Use
Remedial Action Directives are directives that may be issued to a Bulk Power System owner,
operator, or user to resolve an Alleged Violation of a Reliability Standard by addressing conditions,
practices, or any other relevant action or activity that is immediately necessary to terminate or correct
to protect the reliability of the Bulk Power System from an imminent threat. A Remedial Action
Directive will be issued when NERC or the Regional Entity identifies an Alleged Violation of a
Reliability Standard that must be corrected immediately to protect the reliability of the Bulk Power
System from the imminent threat that NERC or the Regional Entity has identified.
NERC or the Regional Entity will generally employ Remedial Action Directives where they deem it
necessary to clearly specify minimum corrective actions that the subject of the Remedial Action
Directive must take; additionally or alternatively a Remedial Action Directive may clearly specify
timelines within which the Registered Entity must take specified actions, complete specified tasks, or
achieve specified outcomes. Also, to the extent NERC or the Regional Entity is authorized to do so, a
Remedial Action Directive may communicate Penalties, sanctions, or further Remedial Action
Directives that may be imposed should the specific Remedial Action Directive not be complied with
by those to whom it has been issued. As a rule of thumb, Remedial Action Directives will be of use to
NERC or the Regional Entity whenever any significant combination of specificity, clarity, or time is
of the essence to address a threat to the reliability of the Bulk Power System brought on by lack of or
inadequate compliance to the Reliability Standards.
6.2
Compliance Requirements
In the United States, the Commission has concluded that owners, operators, or users of the Bulk
Power System must comply with Remedial Action Directives issued to them by NERC or a Regional
Entity. Noncompliance with a Remedial Action Directive may result in a substantially increased
Penalty or sanction.
Remedial Action Directives issued by NERC or the Regional Entity will include a deadline by which
time the owner, operator, or user must complete requirements set out in the Remedial Action
Directive, and by which time the Registered Entity must demonstrate compliance to the Remedial
Action Directive to NERC or the Regional Entity that issued it. Failure or refusal to meet the
requirements or deadlines set out in a Remedial Action Directive may itself result in further Remedial
Action Directives or significantly increased Penalties or sanctions by NERC or the Regional Entity.
6.3
No Obligation to Issue
NERC or the Regional Entity may, but is not obligated, to issue Remedial Action Directives. Lack of
being issued a Remedial Action Directive does not relieve a Bulk Power System owner, operator, or
user from any responsibilities they otherwise have to comply or maintain compliance with
Requirements of the Reliability Standards. Remedial Action Directives will be used by NERC or the
Regional Entities only as they deem warranted, when they deem warranted.
6.4
Scope of Application
The scope of Remedial Action Directives issued by NERC or the Regional Entity will be limited to
conditions, practices, or any other relevant actions or activities resulting in noncompliance, or that
NERC or the Regional Entity considers at significant risk of becoming noncompliant, to
Requirements of the Reliability Standards, and that present an imminent threat to the reliability of the
Bulk Power System. However, beyond merely directing compliance or improved compliance with
Reliability Standards’ Requirements, where NERC or the Regional Entity is authorized to do so, the
Remedial Action Directive may also stipulate how compliance or the improvement to compliance is
to be achieved.
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Remedial Action

6.5
Availability
In the United States, the Commission has interpreted the Federal Power Act to authorize the NERC or
the Regional Entity can issue a Remedial Action Directive prior to completion of the confirmation
review of a probable violation, or prior to the determination of a Penalty or sanction for that violation.
The Commission also concluded it is not necessary for NERC or the Regional Entity to acquire the
Commission’s or other regulators’ approval prior to issuing Remedial Action Directives.
Accordingly, NERC or the Regional Entity may issue Remedial Action Directives to Registered
Entities in the United States whenever they deem it necessary or otherwise warranted to do so. Also,
NERC or the Regional Entity may issue Remedial Action Directives to Registered Entities in the
United States regarding a violation that is immediately necessary to terminate or correct to protect the
reliability of the Bulk Power System from an imminent threat, irrespective of whether that violation is
ultimately verified or dismissed by NERC or the Regional Entity’s investigation of the violation.
6.6
No Impact on Confirmation of Violation, or Penalties or Sanctions
Remedial Action Directives issued regarding a violation, in particular any costs incurred by the
violator to comply with any such Remedial Action Directive, will not be considered when reviewing
whether the aggregate of any Penalties and sanctions levied for that violation bear a reasonable
relation to the seriousness of the violation. Also, any Remedial Action Directives issued with respect
to a violation will not influence the outcome of the confirmation review of that violation nor the
determination of Penalties or sanctions for that violation; ordering a violator to correct what needs
correcting anyway is no grounds for dispelling a violation nor reducing or eliminating a Penalty or
sanction that would otherwise be determined appropriate for the violator for that violation.
6.7
Types of Remedial Actions
NERC or the Regional Entities may issue Remedial Action Directives to correct compliance with
NERC or Regional Reliability Standards and reduce or eliminate imminent threats to the reliability of
the Bulk Power System. Examples of Remedial Action Directives include:
a. Specifying operating or planning criteria, limits, or limitations
b. Requiring specific system studies
c. Defining operating practices or guidelines
d. Requiring confirmation of data, practices, or procedures through inspection testing or other
methods
e. Requiring specific training for personnel
f.

Requiring development of specific operating plans

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Appendix A

Appendix A: Base Penalty Amount Table
The following lists the Base Penalty amounts corresponding to combinations of Violation Risk Factor and
Violation Severity Level.

Violation Severity Level
Violation
Risk
Factor

Lower
Range Limits
Low
High

Moderate
Range Limits
Low
High

High
Range Limits
Low
High

Severe
Range Limits
Low
High

Lower

$1,000

$3,000

$2,000

$7,500

$3,000

$15,000

$5,000

$25,000

Medium

$2,000

$30,000

$4,000

$100,000

$6,000

$200,000

$10,000

$335,000

High

$4,000

$125,000

$8,000

$300,000

$12,000

$625,000

$20,000

$1,000,000

NOTE: This table describes the amount of Penalty that could be applied for each day that a violation
continues, subject to the considerations of Section 3.21 regarding frequency and duration of violations.

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PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 6A

REVISED APPENDIX 5B OF THE RULES OF PROCEDURE,
STATEMENT OF COMPLIANCE REGISTRY CRITERIA
CLEAN VERSION

Proposed Revisions 1-9-2012
[Incorporates revisions filed with
FERC on November 29, 2011]

Appendix 5B

Statement of Compliance Registry Criteria

Revision 5.0 — Approved: NERC Board of Trustees July 30, 2008

Effective: October 16, 2008

Statement of Compliance Registry Criteria
(Revision 5.0)
Summary
Since becoming the Electric Reliability Organization (ERO), NERC has initiated a program to
identify candidate organizations for its Compliance Registry. The program, conducted by NERC
and the Regional Entities1, will also confirm the functions and information now on file for
currently-registered organizations. NERC and the Regional Entities have the obligation to
identify and register all entities that meet the criteria for inclusion in the Compliance Registry, as
further explained in the balance of this document.
This document describes how NERC will identify organizations that may be candidates for
Registration and assign them to the Compliance Registry.
Organizations will be responsible to register and to comply with approved Reliability Standards
to the extent that they are owners, operators, and users of the Bulk Power System, perform a
function listed in the functional types identified in Section II of this document, and are material
to the Reliable Operation of the interconnected Bulk Power System as defined by the criteria and
notes set forth in this document. NERC will apply the following principles to the Compliance
Registry:
•

In order to carry out its responsibilities related to enforcement of Reliability
Standards, NERC must identify the owners, operators, and users of the Bulk Power
System who have a material impact2 on the Bulk Power System through a
Compliance Registry. NERC and the Regional Entities will make their best efforts to
identify all owners, users and operators who have a material reliability impact on the
Bulk Power System in order to develop a complete and current Compliance Registry
list. The Compliance Registry will be updated as required and maintained on an ongoing basis.

•

Organizations listed in the Compliance Registry are responsible and will be
monitored for compliance with applicable mandatory Reliability Standards. They
will be subject to NERC's and the Regional Entities' Compliance Monitoring and
Enforcement Programs.

1

The term “Regional Entities” includes Cross-Border Regional Entities.
The criteria for determining whether an entity will be placed on the Compliance Registry are set forth in the
balance of this document. At any time a person may recommend in writing, with supporting reasons, to the Director
of Compliance that an organization be added to or removed from the Compliance Registry, pursuant to NERC ROP
501.1.3.5.
2

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

•

NERC and Regional Entities will not monitor nor hold those not in the Compliance
Registry responsible for compliance with the Reliability Standards. An entity which
is not initially placed on the Compliance Registry, but which is identified
subsequently as having a material reliability impact, will be added to the Compliance
Registry. Such entity will not be subject to a sanction or Penalty by NERC or the
Regional Entity for actions or inactions prior to being placed on the Compliance
Registry, but may be required to comply with a Remedial Action Directive or
Mitigation Plan in order to become compliant with applicable Reliability Standards.
After such entity has been placed on the Compliance Registry, it shall be responsible
for complying with Reliability Standards and may be subject to sanctions or Penalties
as well as any Remedial Action Directives and Mitigation Plans required by the
Regional Entities or NERC for future violations, including any failure to follow a
Remedial Action Directive or Mitigation Plan to become compliant with Reliability
Standards.

•

Required compliance by a given organization with the Reliability Standards will
begin the later of (i) inclusion of that organization in the Compliance Registry and (ii)
approval by the Applicable Governmental Authority of mandatory Reliability
Standards applicable to the Registered Entity.

Entities responsible for funding NERC and the Regional Entities have been identified in the
budget documents filed with FERC. Presence on or absence from the Compliance Registry has
no bearing on an entity’s independent responsibility for funding NERC and the Regional
Entities.
Background
In 2005, NERC and the Regional Entities conducted a voluntary organization registration
program limited to Balancing Authorities, Planning Authorities, regional reliability
organizations, Reliability Coordinators, Transmission Operators, and Transmission Planners.
The list of the entities that were registered constitutes what NERC considered at that time as its
Compliance Registry.
NERC has recently initiated a broader program to identify additional organizations potentially
eligible to be included in the Compliance Registry and to confirm the information of
organizations currently on file. NERC believes this is a prudent activity at this time because:
•

As of July 20, 2006, NERC was certified as the ERO created for the U.S. by the Energy
Policy Act of 2005 (EPAct) and FERC Order 672. NERC has also filed with Canadian
authorities for similar recognition in their respective jurisdictions.

•

FERC’s Order 672 directs that owners, operators and users of the Bulk Power System
shall be registered with the ERO and the appropriate Regional Entities.

•

As the ERO, NERC has filed its current Reliability Standards with FERC and with
Canadian authorities. A s accepted and approved by FERC and appropriate Canadian
authorities, the Reliability Standards are no longer voluntary, and organizations that do
not fully comply with them may face Penalties or other sanctions determined and levied
by NERC or the Regional Entities.

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

2

•

NERC’s Reliability Standards include compliance Requirements for additional reliability
function types beyond the six types registered by earlier registration programs.

•

Based on selection as the ERO, the extension and expansion of NERC’s current
Registration program3 is the means by which NERC and the Regional Entities will plan,
manage and execute Reliability Standard compliance oversight of owners, operators, and
users of the Bulk Power System.

•

Organizations listed in the Compliance Registry are subject to NERC’s and the Regional
Entities’ Compliance Monitoring and Enforcement Programs.

Statement of Issue
As the ERO, NERC intends to comprehensively and thoroughly protect the reliability of the grid.
To support this goal NERC will include in its Compliance Registry each entity that NERC
concludes can materially impact the reliability of the Bulk Power System. However, the
potential costs and effort of ensuring that every organization potentially within the scope of
“owner, operator, and user of the Bulk Power System” becomes registered while ignoring their
impact upon reliability, would be disproportionate to the improvement in reliability that would
reasonably be anticipated from doing so.
NERC wishes to identify as many organizations as possible that may need to be listed in its
Compliance Registry. Identifying these organizations is necessary and prudent at this time for the
purpose of determining resource needs, both at the NERC and Regional Entity level, and to
begin the process of communication with these entities regarding their potential responsibilities
and obligations. NERC and the Regional Entities believe that primary candidate entities can be
identified at this time, while other entities can be identified later, as and when needed. Selection
principles and criteria for the identification of these initial entities are required. This list will
become the “Initial Non-binding Organization Registration List”. With FERC having made the
approved Reliability Standards enforceable, this list becomes the NERC Compliance Registry.
Resolution
NERC and the Regional Entities have identified two principles they believe are key to the entity
selection process. These are:
1. There needs to be consistency between Regions and across the continent with respect to
which entities are registered, and;
2. Any entity reasonably deemed material to the reliability of the Bulk Bower System will
be registered, irrespective of other considerations.
To address the second principle the Regional Entities, working with NERC, will identify and
register any entity they deem material to the reliability of the Bulk Power System.
In order to promote consistency, NERC and the Regional Entities intend to use the following
criteria as the basis for determining whether particular entities should be identified as candidates

3

See: NERC ERO Application; Exhibit C; Section 500 – Organization Registration and Certification.

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

3

for Registration. All organizations meeting or exceeding the criteria will be identified as
candidates.
The following four groups of criteria (Sections I-IV) plus the statements in Section V will
provide guidance regarding an entity’s Registration status:
• Section I determines if the entity is an owner, operator, or user of the Bulk Power System
and, hence, a candidate for organization Registration.
• Section II uses NERC’s current functional type definitions to provide an initial
determination of the functional types for which the entities identified in Section I should
be considered for Registration.
• Section III lists the criteria regarding smaller entities; these criteria can be used to forego
the Registration of entities that were selected to be considered for Registration pursuant
to Sections I and II and, if circumstances change, for later removing entities from the
Registration list that no longer meet the relevant criteria.
• Section IV — additional criteria for joint Registration. Joint Registration criteria may be
used by joint action agencies, generation and transmission cooperatives and other entities
which agree upon a clear division of compliance responsibility for Reliability Standards
by written agreement. Pursuant to FERC’s directive in paragraph 107 of Order No. 693,
rules pertaining to joint Registration and Joint Registration Organizations will now be
found in Sections 501 and 507 of the NERC Rules of Procedure.
I.

Entities that use, own or operate Elements of the Bulk Electric System as established by
NERC’s approved definition of Bulk Electric System below are (i) owners, operators, and
users of the Bulk Power System and (ii) candidates for Registration:
“Bulk Electric System” or “BES” means unless modified by the lists shown below, all
Transmission Elements operated at 100 kV or higher and Real Power and Reactive Power
resources connected at 100 kV or higher. This does not include facilities used in the local
distribution of electric energy.
Inclusions:
•
•

•
•

•

I1 - Transformers with the primary terminal and at least one secondary terminal
operated at 100 kV or higher unless excluded under Exclusion E1 or E3.
I2 - Generating resource(s) with gross individual nameplate rating greater than 20
MVA or gross plant/facility aggregate nameplate rating greater than 75 MVA
including the generator terminals through the high-side of the step-up transformer(s)
connected at a voltage of 100 kV or above.
I3 - Blackstart Resources identified in the Transmission Operator’s restoration plan.
I4 - Dispersed power producing resources with aggregate capacity greater than 75
MVA (gross aggregate nameplate rating) utilizing a system designed primarily for
aggregating capacity, connected at a common point at a voltage of 100 kV or above.
I5 –Static or dynamic devices (excluding generators) dedicated to supplying or
absorbing Reactive Power that are connected at 100 kV or higher, or through a

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

4

dedicated transformer with a high-side voltage of 100 kV or higher, or through a
transformer that is designated in Inclusion I1.
Exclusions:
•

E1 - Radial systems: A group of contiguous transmission Elements that emanates
from a single point of connection of 100 kV or higher and:
a) Only serves Load. Or,
b) Only includes generation resources, not identified in Inclusion I3, with an
aggregate capacity less than or equal to 75 MVA (gross nameplate rating). Or,
c) Where the radial system serves Load and includes generation resources, not
identified in Inclusion I3, with an aggregate capacity of non-retail generation less
than or equal to 75 MVA (gross nameplate rating).
Note – A normally open switching device between radial systems, as depicted on prints
or one-line diagrams for example, does not affect this exclusion.
• E2 - A generating unit or multiple generating units on the customer’s side of the
retail meter that serve all or part of the retail Load with electric energy if: (i) the net
capacity provided to the BES does not exceed 75 MVA, and (ii) standby, back-up, and
maintenance power services are provided to the generating unit or multiple
generating units or to the retail Load by a Balancing Authority, or provided pursuant
to a binding obligation with a Generator Owner or Generator Operator, or under
terms approved by the applicable regulatory authority.
• E3 - Local networks (LN): A group of contiguous transmission Elements operated at
or above 100 kV but less than 300 kV that distribute power to Load rather than
transfer bulk power across the interconnected system. LN’s emanate from multiple
points of connection at 100 kV or higher to improve the level of service to retail
customer Load and not to accommodate bulk power transfer across the
interconnected system. The LN is characterized by all of the following:
a) Limits on connected generation: The LN and its underlying Elements do not
include generation resources identified in Inclusion I3 and do not have an
aggregate capacity of non-retail generation greater than 75 MVA (gross nameplate
rating);
b) Power flows only into the LN and the LN does not transfer energy originating
outside the LN for delivery through the LN; and
c) Not part of a Flowgate or transfer path: The LN does not contain a monitored
Facility of a permanent Flowgate in the Eastern Interconnection, a major transfer
path within the Western Interconnection, or a comparable monitored Facility in the
ERCOT or Quebec Interconnections, and is not a monitored Facility included in an
Interconnection Reliability Operating Limit (IROL).
• E4 – Reactive Power devices owned and operated by the retail customer solely for its
own use.

Note - Elements may be included or excluded on a case-by-case basis through the Rules of
Procedure exception process.

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

5

II.

Entities identified in Part I above will be categorized as Registration candidates who may
be subject to Registration under one or more appropriate Functional Entity types based on a
comparison of the functions the entity normally performs against the following function
type definitions:

Function Type

Acronym

Definition/Discussion

Balancing
Authority

BA

The responsible entity that integrates resource plans
ahead of time, maintains Load-interchange-generation
balance within a Balancing Authority Area, and supports
Interconnection frequency in real-time.

Distribution
Provider

DP

Provides and operates the “wires” between the
transmission system and the end-use customer. For those
end-use customers who are served at transmission
voltages, the Transmission Owner also serves as the
Distribution Provider. Thus, the Distribution Provider is
not defined by a specific voltage, but rather as
performing the distribution function at any voltage.

Generator
Operator

GOP

The entity that operates generating unit(s) and performs
the functions of supplying energy and Interconnected
Operations Services.

Generator Owner

GO

Entity that owns and maintains generating units.

Interchange
Authority

IA

Load-Serving
Entity

LSE

The responsible entity that authorizes implementation
of valid and balanced Interchange Schedules between
Balancing Authority Areas, and ensures communication
of Interchange information for reliability assessment
purposes.
Secures energy and Transmission Service (and related
Interconnected Operations Services) to serve the
electrical demand and energy requirements of its end-use
customers.

Planning
Authority

PA

The responsible entity that coordinates and integrates
transmission Facilities and service plans, resource plans,
and Protection Systems.

PurchasingSelling Entity

PSE

The entity that purchases, or sells, and takes title to,
energy, capacity, and Interconnected Operations
Services. PSE may be affiliated or unaffiliated
merchants and may or may not own generating Facilities.

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

6

Function Type

Acronym

Definition/Discussion

Reliability
Coordinator

RC

The entity that is the highest level of authority who is
responsible for the Reliable Operation of the Bulk
Electric System, has the Wide Area view of the Bulk
Electric System, and has the operating tools, processes
and procedures, including the authority to prevent or
mitigate emergency operating situations in both next-day
analysis and real-time operations. The Reliability
Coordinator has the purview that is broad enough to
enable the calculation of Interconnection Reliability
Operating Limits, which may be based on the operating
parameters of transmission systems beyond any
Transmission Operator’s vision.

Reserve Sharing
Group

RSG

A group whose members consist of two or more
Balancing Authorities that collectively maintain,
allocate, and supply operating reserves required for each
Balancing Authority’s use in recovering from
contingencies within the group. Scheduling energy from
an Adjacent Balancing Authority to aid recovery need
not constitute reserve sharing provided the transaction is
ramped in over a period the supplying party could
reasonably be expected to load generation in (e.g., ten
minutes). If the transaction is ramped in quicker, (e.g.,
between zero and ten minutes), then, for the purposes of
disturbance control performance, the areas become a
Reserve Sharing Group.

Resource
Planner

RP

The entity that develops a long-term (generally one year
and beyond) plan for the resource adequacy of specific
Loads (customer demand and energy requirements)
within a Planning Authority area.

Transmission
Owner

TO

The entity that owns and maintains transmission
Facilities.

Transmission
Operator

TOP

The entity responsible for the reliability of its local
transmission system and operates or directs the
operations of the transmission Facilities.

Transmission
Planner

TP

The entity that develops a long-term (generally one year
and beyond) plan for the reliability (adequacy) of the
interconnected bulk electric transmission systems within
its portion of the Planning Authority area.

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

7

Function Type

Acronym

Definition/Discussion

Transmission
Service Provider

TSP

The entity that administers the transmission tariff and
provides Transmission Service to Transmission
Customers under applicable Transmission Service
agreements.

III. Entities identified in Part II above as being subject to Registration as an LSE, DP, GO,
GOP, TO, or TOP should be excluded from the Compliance Registry for these functions if
they do not meet any of the criteria listed below:
III (a) Load-Serving Entity:
III.a.1

Load-Serving Entity peak Load is > 25 MW and is directly connected to
the Bulk Power (>100 kV) System, or;

III.a.2

Load-Serving Entity is designated as the responsible entity for Facilities
that are part of a required underfrequency Load shedding (UFLS) program
designed, installed, and operated for the protection of the Bulk Power
System, or;

III.a.3

Load-Serving Entity is designated as the responsible entity for Facilities
that are part of a required undervoltage Load shedding (UVLS) program
designed, installed, and operated for the protection of the Bulk Power
System.
[Exclusion: A Load-Serving Entity will not be registered based on these
criteria if responsibilities for compliance with approved NERC Reliability
Standards or associated Requirements including reporting have been
transferred by written agreement to another entity that has registered for
the appropriate function for the transferred responsibilities, such as a
Load-Serving Entity, Balancing Authority, Transmission Operator,
generation and transmission cooperative or joint action agency as
described in Sections 501 and 507 of the NERC Rules of Procedure.]

III.a.4

Distribution Providers registered under the criteria in III.b.1 or III.b.2 will
be registered as a Load Serving Entity (LSE) for all Load directly
connected to their distribution facilities.
[Exclusion: A Distribution Provider will not be registered based on this
criterion if responsibilities for compliance with approved NERC
Reliability Standards or associated Requirements including reporting
have been transferred by written agreement to another entity that has
registered for the appropriate function for the transferred responsibilities,
such as a Load-Serving Entity, Balancing Authority, Transmission
Operator, generation and transmission cooperative, or joint action agency
as described in Sections 501 and 507 of the NERC Rules of Procedure.]

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

8

III(b) Distribution Provider:
III.b.1

Distribution Provider system serving >25 MW of peak Load that is
directly connected to the Bulk Power System.
[Exclusion: A Distribution Provider will not be registered based on this
criterion if responsibilities for compliance with approved NERC
Reliability Standards or associated Requirements including reporting
have been transferred by written agreement to another entity that has
registered for the appropriate function for the transferred responsibilities,
such as a Load-Serving Entity, Balancing Authority, Transmission
Operator, generation and transmission cooperative, or joint action
agency as described in Sections 501 and 507 of the NERC Rules of
Procedure.] or;

III.b.2

Distribution Provider is the responsible entity that owns, controls, or
operates Facilities that are part of any of the following Protection Systems
or programs designed, installed, and operated for the protection of the
Bulk Power System:
• a required UFLS program.
• a required UVLS program.
• a required Special Protection System.
• a required transmission Protection System.
[Exclusion: A Distribution Provider will not be registered based on these
criteria if responsibilities for compliance with approved NERC Reliability
Standards or associated Requirements including reporting have been
transferred by written agreement to another entity that has registered for
the appropriate function for the transferred responsibilities, such as a
Load-Serving Entity, Balancing Authority, Transmission Operator,
generation and transmission cooperative, or joint action agency as
described in Sections 501 and 507 of the NERC Rules of Procedure.]

III(c) Generator Owner/Operator:
III.c.1

Individual generating unit > 20 MVA (gross nameplate rating) and is
directly connected to the Bulk Power System, or;

III.c.2

Generating plant/facility > 75 MVA (gross aggregate nameplate rating) or
when the entity has responsibility for any facility consisting of one or
more units that are connected to the Bulk Power System at a common bus
with total generation above 75 MVA gross nameplate rating, or;

III.c.3

Any generator, regardless of size, that is a Blackstart Resource material to
and designated as part of a Transmission Operator entity’s restoration
plan, or;

III.c.4

Any generator, regardless of size, that is material to the reliability of the
Bulk Power System.
[Exclusions:

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

9

A Generator Owner/Operator will not be registered based on these
criteria if responsibilities for compliance with approved NERC Reliability
Standards or associated Requirements including reporting have been
transferred by written agreement to another entity that has registered for
the appropriate function for the transferred responsibilities, such as a
Load-Serving Entity, generation and transmission cooperative or joint
action agency as described in Sections 501 and 507 of the NERC Rules of
Procedure.
As a general matter, a customer-owned or operated generator/generation
that serves all or part of retail Load with electric energy on the customer’s
side of the retail meter may be excluded as a candidate for Registration
based on these criteria if (i) the net capacity provided to the Bulk Power
System does not exceed the criteria above or the Regional Entity otherwise
determines the generator is not material to the Bulk Power System and (ii)
standby, back-up and maintenance power services are provided to the
generator or to the retail Load pursuant to a binding obligation with
another Generator Owner/Operator or under terms approved by the local
regulatory authority or the Federal Energy Regulatory Commission, as
applicable.]
III(d) Transmission Owner/Operator:
III.d.1

An entity that owns/operates an integrated transmission Element
associated with the Bulk Power System 100 kV and above, or lower
voltage as defined by the Regional Entity necessary to provide for the
Reliable Operation of the interconnected transmission grid; or

III.d.2

An entity that owns/operates a transmission Element below 100 kV
associated with a Facility that is included on a critical Facilities list that is
defined by the Regional Entity.
[Exclusion: A Transmission Owner/Operator will not be registered based
on these criteria if responsibilities for compliance with approved NERC
Reliability Standards or associated Requirements including reporting
have been transferred by written agreement to another entity that has
registered for the appropriate function for the transferred responsibilities,
such as a Load-Serving Entity, generation and transmission cooperative
or joint action agency as described in Sections 501 and 507 of the NERC
Rules of Procedure.

IV. Joint Registration Organization and applicable Member Registration.
Pursuant to FERC’s directive in paragraph 107 of Order No. 693, NERC’s rules
pertaining to joint Registrations and Joint Registration Organizations are now found in
Section 501 and 507 of the NERC Rules of Procedure.
V.

If NERC or a Regional Entity encounters an organization that is not listed in the
Compliance Registry, but which should be subject to the Reliability Standards, NERC or

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

10

the Regional Entity is obligated and will add that organization to the Compliance Registry,
subject to that organization’s right to challenge as provided in Section 500 of NERC’s
Rules of Procedure and as described in Note 3 below.
Notes to the above Criteria
1. The above are general criteria only. The Regional Entity considering Registration of an
organization not meeting (e.g., smaller in size than) the criteria may propose Registration
of that organization if the Regional Entity believes and can reasonably demonstrate4 that
the organization is a Bulk Power System owner, or operates, or uses Bulk Power System
assets, and is material to the reliability of the Bulk Power System. Similarly, the
Regional Entity may exclude an organization that meets the criteria described above as a
candidate for Registration if it believes and can reasonably demonstrate to NERC that the
Bulk Power System owner, operator, or user does not have a material impact on the
reliability of the Bulk Power System.
2. An organization not identified using the criteria, but wishing to be registered, may
request that it be registered. For further information refer to: NERC Rules of Procedure,
Section 500 – Organization Registration and Certification; Part 1.3.
3. An organization may challenge its Registration within the Compliance Registry. NERC
or the Regional Entity will provide the organization with all information necessary to
timely challenge that determination including notice of the deadline for contesting the
determination and the relevant procedures to be followed as described in the NERC Rules
of Procedure; Section 500 – Organization Registration and Certification.
4. If an entity is part of a class of entities excluded based on the criteria above as
individually being unlikely to have a material impact on the reliability of the Bulk Power
System, but that in aggregate have been demonstrated to have such an impact it may be
registered for applicable Reliability Standards and Requirements irrespective of other
considerations.

4

The reasonableness of any such demonstration will be subject to review and remand by NERC itself, or by any
Applicable Governmental Authority.
Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

11

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 6B

REVISED APPENDIX 5B OF THE RULES OF PROCEDURE,
STATEMENT OF COMPLIANCE REGISTRY CRITERIA
REDLINED VERSION

Proposed Revisions 1-9-2012
[Incorporates revisions filed with
FERC on November 29, 2011]

Appendix 5B

Statement of Compliance Registry Criteria

Revision 5.0 — Approved: NERC Board of Trustees July 30, 2008

Effective: October 16, 2008

Statement of Compliance Registry Criteria
(Revision 5.0)
Summary
Since becoming the Electric Reliability Organization (ERO), NERC has initiated a program to
identify candidate organizations for its Compliance Registry. The program, conducted by NERC
and the Regional Entities1, will also confirm the functions and information now on file for
currently-registered organizations. NERC and the Regional Entities have the obligation to
identify and register all entities that meet the criteria for inclusion in the Compliance Registry, as
further explained in the balance of this document.
This document describes how NERC will identify organizations that may be candidates for
Registration and assign them to the Compliance Registry.
Organizations will be responsible to register and to comply with approved Reliability Standards
to the extent that they are owners, operators, and users of the Bulk Power System, perform a
function listed in the functional types identified in Section II of this document, and are material
to the Reliable Operation of the interconnected Bulk Power System as defined by the criteria and
notes set forth in this document. NERC will apply the following principles to the Compliance
Registry:
•

In order to carry out its responsibilities related to enforcement of Reliability
Standards, NERC must identify the owners, operators, and users of the Bulk Power
System who have a material impact2 on the Bulk Power System through a
Compliance Registry. NERC and the Regional Entities will make their best efforts to
identify all owners, users and operators who have a material reliability impact on the
Bulk Power System in order to develop a complete and current Compliance Registry
list. The Compliance Registry will be updated as required and maintained on an ongoing basis.

•

Organizations listed in the Compliance Registry are responsible and will be
monitored for compliance with applicable mandatory Reliability Standards. They
will be subject to NERC's and the Regional Entities' Compliance Monitoring and
Enforcement Programs.

1

The term “Regional Entities” includes Cross-Border Regional Entities.
The criteria for determining whether an entity will be placed on the Compliance Registry are set forth in the
balance of this document. At any time a person may recommend in writing, with supporting reasons, to the Director
of Compliance that an organization be added to or removed from the Compliance Registry, pursuant to NERC ROP
501.1.3.5.
2

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

•

NERC and Regional Entities will not monitor nor hold those not in the Compliance
Registry responsible for compliance with the Reliability Standards. An entity which
is not initially placed on the Compliance Registry, but which is identified
subsequently as having a material reliability impact, will be added to the Compliance
Registry. Such entity will not be subject to a sanction or Penalty by NERC or the
Regional Entity for actions or inactions prior to being placed on the Compliance
Registry, but may be required to comply with a Remedial Action Directive or
Mitigation Plan in order to become compliant with applicable Reliability Standards.
After such entity has been placed on the Compliance Registry, it shall be responsible
for complying with Reliability Standards and may be subject to sanctions or Penalties
as well as any Remedial Action Directives and Mitigation Plans required by the
Regional Entities or NERC for future violations, including any failure to follow a
Remedial Action Directive or Mitigation Plan to become compliant with Reliability
Standards.

•

Required compliance by a given organization with the Reliability Standards will
begin the later of (i) inclusion of that organization in the Compliance Registry and (ii)
approval by the Applicable Governmental Authority of mandatory Reliability
Standards applicable to the Registered Entity.

Entities responsible for funding NERC and the Regional Entities have been identified in the
budget documents filed with FERC. Presence on or absence from the Compliance Registry has
no bearing on an entity’s independent responsibility for funding NERC and the Regional
Entities.
Background
In 2005, NERC and the Regional Entities conducted a voluntary organization registration
program limited to Balancing Authorities, Planning Authorities, regional reliability
organizations, Reliability Coordinators, Transmission Operators, and Transmission Planners.
The list of the entities that were registered constitutes what NERC considered at that time as its
Compliance Registry.
NERC has recently initiated a broader program to identify additional organizations potentially
eligible to be included in the Compliance Registry and to confirm the information of
organizations currently on file. NERC believes this is a prudent activity at this time because:
•

As of July 20, 2006, NERC was certified as the ERO created for the U.S. by the Energy
Policy Act of 2005 (EPAct) and FERC Order 672. NERC has also filed with Canadian
authorities for similar recognition in their respective jurisdictions.

•

FERC’s Order 672 directs that owners, operators and users of the Bulk Power System
shall be registered with the ERO and the appropriate Regional Entities.

•

As the ERO, NERC has filed its current Reliability Standards with FERC and with
Canadian authorities. A s accepted and approved by FERC and appropriate Canadian
authorities, the Reliability Standards are no longer voluntary, and organizations that do
not fully comply with them may face Penalties or other sanctions determined and levied
by NERC or the Regional Entities.

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

2

•

NERC’s Reliability Standards include compliance Requirements for additional reliability
function types beyond the six types registered by earlier registration programs.

•

Based on selection as the ERO, the extension and expansion of NERC’s current
Registration program3 is the means by which NERC and the Regional Entities will plan,
manage and execute Reliability Standard compliance oversight of owners, operators, and
users of the Bulk Power System.

•

Organizations listed in the Compliance Registry are subject to NERC’s and the Regional
Entities’ Compliance Monitoring and Enforcement Programs.

Statement of Issue
As the ERO, NERC intends to comprehensively and thoroughly protect the reliability of the grid.
To support this goal NERC will include in its Compliance Registry each entity that NERC
concludes can materially impact the reliability of the Bulk Power System. However, the
potential costs and effort of ensuring that every organization potentially within the scope of
“owner, operator, and user of the Bulk Power System” becomes registered while ignoring their
impact upon reliability, would be disproportionate to the improvement in reliability that would
reasonably be anticipated from doing so.
NERC wishes to identify as many organizations as possible that may need to be listed in its
Compliance Registry. Identifying these organizations is necessary and prudent at this time for the
purpose of determining resource needs, both at the NERC and Regional Entity level, and to
begin the process of communication with these entities regarding their potential responsibilities
and obligations. NERC and the Regional Entities believe that primary candidate entities can be
identified at this time, while other entities can be identified later, as and when needed. Selection
principles and criteria for the identification of these initial entities are required. This list will
become the “Initial Non-binding Organization Registration List”. With FERC having made the
approved Reliability Standards enforceable, this list becomes the NERC Compliance Registry.
Resolution
NERC and the Regional Entities have identified two principles they believe are key to the entity
selection process. These are:
1. There needs to be consistency between Regions and across the continent with respect to
which entities are registered, and;
2. Any entity reasonably deemed material to the reliability of the Bulk Bower System will
be registered, irrespective of other considerations.
To address the second principle the Regional Entities, working with NERC, will identify and
register any entity they deem material to the reliability of the Bulk Power System.
In order to promote consistency, NERC and the Regional Entities intend to use the following
criteria as the basis for determining whether particular entities should be identified as candidates

3

See: NERC ERO Application; Exhibit C; Section 500 – Organization Registration and Certification.

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

3

for Registration. All organizations meeting or exceeding the criteria will be identified as
candidates.
The following four groups of criteria (Sections I-IV) plus the statements in Section V will
provide guidance regarding an entity’s Registration status:
• Section I determines if the entity is an owner, operator, or user of the Bulk Power System
and, hence, a candidate for organization Registration.
• Section II uses NERC’s current functional type definitions to provide an initial
determination of the functional types for which the entities identified in Section I should
be considered for Registration.
• Section III lists the criteria regarding smaller entities; these criteria can be used to forego
the Registration of entities that were selected to be considered for Registration pursuant
to Sections I and II and, if circumstances change, for later removing entities from the
Registration list that no longer meet the relevant criteria.
• Section IV — additional criteria for joint Registration. Joint Registration criteria may be
used by joint action agencies, generation and transmission cooperatives and other entities
which agree upon a clear division of compliance responsibility for Reliability Standards
by written agreement. Pursuant to FERC’s directive in paragraph 107 of Order No. 693,
rules pertaining to joint Registration and Joint Registration Organizations will now be
found in Sections 501 and 507 of the NERC Rules of Procedure.
I.

Entities that use, own or operate Elements of the Bulk Electric System as established by
NERC’s approved definition of Bulk Electric System below are (i) owners, operators, and
users of the Bulk Power System and (ii) candidates for Registration:
“Bulk Electric System” or “BES” means unless modified by the lists shown below, all
Transmission Elements operated at 100 kV or higher and Real Power and Reactive Power
resources connected at 100 kV or higher. This does not include facilities used in the local
distribution of electric energy.
Inclusions:
•
•

•
•

•

I1 - Transformers with the primary terminal and at least one secondary terminal
operated at 100 kV or higher unless excluded under Exclusion E1 or E3.
I2 - Generating resource(s) with gross individual nameplate rating greater than 20
MVA or gross plant/facility aggregate nameplate rating greater than 75 MVA
including the generator terminals through the high-side of the step-up transformer(s)
connected at a voltage of 100 kV or above.
I3 - Blackstart Resources identified in the Transmission Operator’s restoration plan.
I4 - Dispersed power producing resources with aggregate capacity greater than 75
MVA (gross aggregate nameplate rating) utilizing a system designed primarily for
aggregating capacity, connected at a common point at a voltage of 100 kV or above.
I5 –Static or dynamic devices (excluding generators) dedicated to supplying or
absorbing Reactive Power that are connected at 100 kV or higher, or through a

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

4

dedicated transformer with a high-side voltage of 100 kV or higher, or through a
transformer that is designated in Inclusion I1.
Exclusions:
•

E1 - Radial systems: A group of contiguous transmission Elements that emanates
from a single point of connection of 100 kV or higher and:
a) Only serves Load. Or,
b) Only includes generation resources, not identified in Inclusion I3, with an
aggregate capacity less than or equal to 75 MVA (gross nameplate rating). Or,
c) Where the radial system serves Load and includes generation resources, not
identified in Inclusion I3, with an aggregate capacity of non-retail generation less
than or equal to 75 MVA (gross nameplate rating).
Note – A normally open switching device between radial systems, as depicted on prints
or one-line diagrams for example, does not affect this exclusion.
• E2 - A generating unit or multiple generating units on the customer’s side of the
retail meter that serve all or part of the retail Load with electric energy if: (i) the net
capacity provided to the BES does not exceed 75 MVA, and (ii) standby, back-up, and
maintenance power services are provided to the generating unit or multiple
generating units or to the retail Load by a Balancing Authority, or provided pursuant
to a binding obligation with a Generator Owner or Generator Operator, or under
terms approved by the applicable regulatory authority.
• E3 - Local networks (LN): A group of contiguous transmission Elements operated at
or above 100 kV but less than 300 kV that distribute power to Load rather than
transfer bulk power across the interconnected system. LN’s emanate from multiple
points of connection at 100 kV or higher to improve the level of service to retail
customer Load and not to accommodate bulk power transfer across the
interconnected system. The LN is characterized by all of the following:
a) Limits on connected generation: The LN and its underlying Elements do not
include generation resources identified in Inclusion I3 and do not have an
aggregate capacity of non-retail generation greater than 75 MVA (gross nameplate
rating);
b) Power flows only into the LN and the LN does not transfer energy originating
outside the LN for delivery through the LN; and
c) Not part of a Flowgate or transfer path: The LN does not contain a monitored
Facility of a permanent Flowgate in the Eastern Interconnection, a major transfer
path within the Western Interconnection, or a comparable monitored Facility in the
ERCOT or Quebec Interconnections, and is not a monitored Facility included in an
Interconnection Reliability Operating Limit (IROL).
• E4 – Reactive Power devices owned and operated by the retail customer solely for its
own use.
Note - Elements may be included or excluded on a case-by-case basis through the Rules of
Procedure exception process.“As defined by the Regional Entity, the electrical generation
resources, transmission lines, interconnections with neighboring systems, and associated
Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

5

equipment, generally operated at voltages of 100 kV or higher. Radial transmission
facilities serving only load with one transmission source are generally not included in this
definition.4”

II.

Entities identified in Part I above will be categorized as Registration candidates who may
be subject to Registration under one or more appropriate Functional Entity types based on a
comparison of the functions the entity normally performs against the following function
type definitions:

Function Type

Acronym

Definition/Discussion

Balancing
Authority

BA

The responsible entity that integrates resource plans
ahead of time, maintains Loadload-interchangegeneration balance within a Balancing Authority Area,
and supports Interconnection frequency in real-time.

Distribution
Provider

DP

Provides and operates the “wires” between the
transmission system and the end-use customer. For those
end-use customers who are served at transmission
voltages, the Transmission Owner also serves as the
Distribution Provider. Thus, the Distribution Provider is
not defined by a specific voltage, but rather as
performing the distribution function at any voltage.

Generator
Operator

GOP

The entity that operates generating unit(s) and performs
the functions of supplying energy and Interconnected
Operations Services.

Generator Owner

GO

Entity that owns and maintains generating units.

Interchange
Authority

IA

Load-Serving
Entity

LSE

The responsible entity that authorizes implementation
of valid and balanced Interchange Schedules between
Balancing Authority Areas, and ensures communication
of Interchange information for reliability assessment
purposes.
Secures energy and Transmission Service (and related
Interconnected Operations Services) to serve the
electrical demand and energy requirements of its end-use
customers.

4

However, ownership of radial transmission Facilities intended to be covered by the vegetation management
standard (applicable to transmission lines 200 kV and above) would be included in this definition.
Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

6

Function Type

Acronym

Definition/Discussion

Planning
Authority

PA

The responsible entity that coordinates and integrates
transmission Facilities and service plans, resource plans,
and Protection Systems.

PurchasingSelling Entity

PSE

The entity that purchases, or sells, and takes title to,
energy, capacity, and Interconnected Operations
Services. PSE may be affiliated or unaffiliated
merchants and may or may not own generating Facilities.

Reliability
Coordinator

RC

The entity that is the highest level of authority who is
responsible for the Reliable Operation of the Bulk
Electric System, has the Wide Area view of the Bulk
Electric System, and has the operating tools, processes
and procedures, including the authority to prevent or
mitigate emergency operating situations in both next-day
analysis and real-time operations. The Reliability
Coordinator has the purview that is broad enough to
enable the calculation of Interconnection Reliability
Operating Limits, which may be based on the operating
parameters of transmission systems beyond any
Transmission Operator’s vision.

Reserve Sharing
Group

RSG

A group whose members consist of two or more
Balancing Authorities that collectively maintain,
allocate, and supply operating reserves required for each
Balancing Authority’s use in recovering from
contingencies within the group. Scheduling energy from
an Adjacent Balancing Authority to aid recovery need
not constitute reserve sharing provided the transaction is
ramped in over a period the supplying party could
reasonably be expected to load generation in (e.g., ten
minutes). If the transaction is ramped in quicker, (e.g.,
between zero and ten minutes), then, for the purposes of
disturbance control performance, the areas become a
Reserve Sharing Group.

Resource
Planner

RP

The entity that develops a long-term (generally one year
and beyond) plan for the resource adequacy of specific
Loadsloads (customer demand and energy requirements)
within a Planning Authority area.

Transmission
Owner

TO

The entity that owns and maintains transmission
Facilities.

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

7

Function Type

Acronym

Definition/Discussion

Transmission
Operator

TOP

The entity responsible for the reliability of its local
transmission system and operates or directs the
operations of the transmission Facilities.

Transmission
Planner

TP

The entity that develops a long-term (generally one year
and beyond) plan for the reliability (adequacy) of the
interconnected bulk electric transmission systems within
its portion of the Planning Authority area.

Transmission
Service Provider

TSP

The entity that administers the transmission tariff and
provides Transmission Service to Transmission
Customers under applicable Transmission Service
agreements.

III. Entities identified in Part II above as being subject to Registration as an LSE, DP, GO,
GOP, TO, or TOP should be excluded from the Compliance Registry for these functions if
they do not meet any of the criteria listed below:
III (a) Load-Serving Entity:
III.a.1

Load-Serving Entity peak Loadload is > 25 MW and is directly connected
to the Bulk Power (>100 kV) System, or;

III.a.2

Load-Serving Entity is designated as the responsible entity for Facilities
that are part of a required underfrequency Loadload shedding (UFLS)
program designed, installed, and operated for the protection of the Bulk
Power System, or;

III.a.3

Load-Serving Entity is designated as the responsible entity for Facilities
that are part of a required undervoltage Loadload shedding (UVLS)
program designed, installed, and operated for the protection of the Bulk
Power System.
[Exclusion: A Load-Serving Entity will not be registered based on these
criteria if responsibilities for compliance with approved NERC Reliability
Standards or associated Requirements including reporting have been
transferred by written agreement to another entity that has registered for
the appropriate function for the transferred responsibilities, such as a
Load-Serving Entity, Balancing Authority, Transmission Operator,
generation and transmission cooperative or joint action agency as
described in Sections 501 and 507 of the NERC Rules of Procedure.]

III.a.4

Distribution Providers registered under the criteria in III.b.1 or III.b.2 will
be registered as a Load Serving Entity (LSE) for all Loadload directly
connected to their distribution facilities.

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

8

[Exclusion: A Distribution Provider will not be registered based on this
criterion if responsibilities for compliance with approved NERC
Reliability Standards or associated Requirements including reporting
have been transferred by written agreement to another entity that has
registered for the appropriate function for the transferred responsibilities,
such as a Load-Serving Entity, Balancing Authority, Transmission
Operator, generation and transmission cooperative, or joint action agency
as described in Sections 501 and 507 of the NERC Rules of Procedure.]
III(b) Distribution Provider:
III.b.1

Distribution Provider system serving >25 MW of peak Loadload that is
directly connected to the Bulk Power System.
[Exclusion: A Distribution Provider will not be registered based on this
criterion if responsibilities for compliance with approved NERC
Reliability Standards or associated Requirements including reporting
have been transferred by written agreement to another entity that has
registered for the appropriate function for the transferred responsibilities,
such as a Load-Serving Entity, Balancing Authority, Transmission
Operator, generation and transmission cooperative, or joint action
agency as described in Sections 501 and 507 of the NERC Rules of
Procedure.] or;

III.b.2

Distribution Provider is the responsible entity that owns, controls, or
operates Facilities that are part of any of the following Protection Systems
or programs designed, installed, and operated for the protection of the
Bulk Power System:
• a required UFLS program.
• a required UVLS program.
• a required Special Protection System.
• a required transmission Protection System.
[Exclusion: A Distribution Provider will not be registered based on these
criteria if responsibilities for compliance with approved NERC Reliability
Standards or associated Requirements including reporting have been
transferred by written agreement to another entity that has registered for
the appropriate function for the transferred responsibilities, such as a
Load-Serving Entity, Balancing Authority, Transmission Operator,
generation and transmission cooperative, or joint action agency as
described in Sections 501 and 507 of the NERC Rules of Procedure.]

III(c) Generator Owner/Operator:
III.c.1

Individual generating unit > 20 MVA (gross nameplate rating) and is
directly connected to the Bulk Power System, or;

III.c.2

Generating plant/facility > 75 MVA (gross aggregate nameplate rating) or
when the entity has responsibility for any facility consisting of one or

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

9

more units that are connected to the Bulk Power System at a common bus
with total generation above 75 MVA gross nameplate rating, or;
III.c.3

Any generator, regardless of size, that is a Blackstart Resource material to
and designated as part of a Transmission Operator entity’s restoration
plan, or;

III.c.4

Any generator, regardless of size, that is material to the reliability of the
Bulk Power System.
[Exclusions:
A Generator Owner/Operator will not be registered based on these
criteria if responsibilities for compliance with approved NERC Reliability
Standards or associated Requirements including reporting have been
transferred by written agreement to another entity that has registered for
the appropriate function for the transferred responsibilities, such as a
Load-Serving Entity, generation and transmission cooperative or joint
action agency as described in Sections 501 and 507 of the NERC Rules of
Procedure.
As a general matter, a customer-owned or operated generator/generation
that serves all or part of retail Load load with electric energy on the
customer’s side of the retail meter may be excluded as a candidate for
Registration based on these criteria if (i) the net capacity provided to the
Bulk Power System does not exceed the criteria above or the Regional
Entity otherwise determines the generator is not material to the Bulk
Power System and (ii) standby, back-up and maintenance power services
are provided to the generator or to the retail Loadload pursuant to a
binding obligation with another Generator Owner/Operator or under
terms approved by the local regulatory authority or the Federal Energy
Regulatory Commission, as applicable.]

III(d) Transmission Owner/Operator:
III.d.1

An entity that owns/operates an integrated transmission Element
associated with the Bulk Power System 100 kV and above, or lower
voltage as defined by the Regional Entity necessary to provide for the
Reliable Operation of the interconnected transmission grid; or

III.d.2

An entity that owns/operates a transmission Element below 100 kV
associated with a Facility that is included on a critical Facilities list that is
defined by the Regional Entity.
[Exclusion: A Transmission Owner/Operator will not be registered based
on these criteria if responsibilities for compliance with approved NERC
Reliability Standards or associated Requirements including reporting
have been transferred by written agreement to another entity that has
registered for the appropriate function for the transferred responsibilities,
such as a Load-Serving Entity, generation and transmission cooperative

Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

10

or joint action agency as described in Sections 501 and 507 of the NERC
Rules of Procedure.
IV. Joint Registration Organization and applicable Member Registration.
Pursuant to FERC’s directive in paragraph 107 of Order No. 693, NERC’s rules
pertaining to joint Registrations and Joint Registration Organizations are now found in
Section 501 and 507 of the NERC Rules of Procedure.
V.

If NERC or a Regional Entity encounters an organization that is not listed in the
Compliance Registry, but which should be subject to the Reliability Standards, NERC or
the Regional Entity is obligated and will add that organization to the Compliance Registry,
subject to that organization’s right to challenge as provided in Section 500 of NERC’s
Rules of Procedure and as described in Note 3 below.

Notes to the above Criteria
1. The above are general criteria only. The Regional Entity considering Registration of an
organization not meeting (e.g., smaller in size than) the criteria may propose Registration
of that organization if the Regional Entity believes and can reasonably demonstrate5 that
the organization is a Bulk Power System owner, or operates, or uses Bulk Power System
assets, and is material to the reliability of the Bulk Power System. Similarly, the
Regional Entity may exclude an organization that meets the criteria described above as a
candidate for Registration if it believes and can reasonably demonstrate to NERC that the
Bulk Power System owner, operator, or user does not have a material impact on the
reliability of the Bulk Power System.
2. An organization not identified using the criteria, but wishing to be registered, may
request that it be registered. For further information refer to: NERC Rules of Procedure,
Section 500 – Organization Registration and Certification; Part 1.3.
3. An organization may challenge its Registration within the Compliance Registry. NERC
or the Regional Entity will provide the organization with all information necessary to
timely challenge that determination including notice of the deadline for contesting the
determination and the relevant procedures to be followed as described in the NERC Rules
of Procedure; Section 500 – Organization Registration and Certification.
4. If an entity is part of a class of entities excluded based on the criteria above as
individually being unlikely to have a material impact on the reliability of the Bulk Power
System, but that in aggregate have been demonstrated to have such an impact it may be
registered for applicable Reliability Standards and Requirements irrespective of other
considerations.

5

The reasonableness of any such demonstration will be subject to review and remand by NERC itself, or by any
Applicable Governmental Authority.
Appendix 5B — Statement of Compliance Registry Criteria
Rev. 5.0, (October 16, 2008)

11

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 7A

REVISED APPENDIX 6 OF THE RULES OF PROCEDURE,
SYSTEM OPERATOR CERTIFICATION PROGRAM MANUAL
CLEAN VERSION

Proposed Revisions 1-9-2012
[Incorporates revisions filed with
FERC on November 29, 2011]

System Operator Certification

Program Manual
August 2006
Approved by the Personnel Certification Governance Committee
Approved by the NERC Board of Trustees
May 2006

North American Electric Reliability Council
Updated: August 14, 2006

Program Manual Changes

Program Manual Changes
No.

Date

Section

Page

Description

Version

1
2
3
4
5

05/2005
02/2006
06/2006
06/2006
08/2006

All
All
I and II
All
III

All
All
4, 17
All
16

Initial white paper expanded SOC Program to
include CE hours
Program Manual
Fees
CEH to CE hours
Training Providers retaining documentation

0
1
1.1
1.1
1

System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: June 14, 2006

ii

Table of Contents

Table of Contents
Program Manual Changes .........................................................................................................................ii
Executive Summary .................................................................................................................................... 1
Section I — Certification Examinations ................................................................................................... 2
Overview .................................................................................................................................................. 2
Earning a Credential ................................................................................................................................. 2
Examinations........................................................................................................................................ 2
Applying for Certification Examinations ............................................................................................. 3
Eligibility Period .................................................................................................................................. 3
Fees ...................................................................................................................................................... 4
Scheduling an Examination.................................................................................................................. 4
Examination Content Outline............................................................................................................... 4
Day of the Examination........................................................................................................................ 5
Testing Center Requirements ............................................................................................................... 6
Cancellations and No-shows .................................................................................................................... 7
Minimum Time Between Examinations................................................................................................... 7
Special Accommodations/Disabilities ...................................................................................................... 7
Withdrawal from Examination Process .................................................................................................... 7
Examination Change Request................................................................................................................... 8
Results and Awarding of Certificates ....................................................................................................... 8
System Operator Certificate Numbering Convention............................................................................... 9
Credential Designations ....................................................................................................................... 9
Confirmation of Credential to Third Parties............................................................................................. 9
Section II — Credential Maintenance..................................................................................................... 10
Overview ................................................................................................................................................ 10
When to Start Accumulating CE Hours.................................................................................................. 11
Specifics of the Credential Maintenance Program ................................................................................. 11
Certificate ............................................................................................................................................... 12
Deficits of CE Hours for Credential Holders ......................................................................................... 12
Carry-Over Hours ................................................................................................................................... 13
Reporting of CE Hours Earned by Certified System Operators ............................................................. 13
Application for Credential Maintenance ................................................................................................ 13
Procedure for applying for Credential Maintenance .......................................................................... 13
Hardship Clause...................................................................................................................................... 14
Changing Certification Levels................................................................................................................ 14
Transition Plan — 5-year Program to 3-year Program........................................................................... 15
Section III — Program Rules................................................................................................................... 16
Rules for NERC-Certified System Operator .......................................................................................... 16
Recognized Learning Activities ......................................................................................................... 16
Provider Access to Database .............................................................................................................. 16
System Operator Access to Database................................................................................................. 16
Retain Documentation........................................................................................................................ 16
Learning Activity Credit Only Once Per Year ................................................................................... 16
Learning Activity Approved Status Revoked after CE Hours Granted.............................................. 16
Instructor Credits................................................................................................................................ 17
Treatment of Disputes Between Certified System Operator and Providers ....................................... 17
Fees .................................................................................................................................................... 17
Section IV — Dispute Resolution ............................................................................................................ 18
Section V — Disciplinary Action ............................................................................................................. 20
Glossary ..................................................................................................................................................... 23
Appendix A — Recognized Operator Training Topics ......................................................................... 25
System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

iii

Table of Contents

Executive Summary
Maintaining the reliability of the Bulk Electric System through implementation of the Reliability
Standards requires skilled, trained and qualified system operators. The System Operator
Certification Program provides the mechanism to ensure system operators are provided the
education and training necessary to obtain the essential knowledge and skills and are therefore
qualified to operate the Bulk Electric System.
The System Operator Certification Program provides the framework for the examinations used to
obtain initial Certification in one of four NERC Credentials: transmission operator, balancing
and interchange operator, balancing, interchange and transmission operator, and reliability
operator. A system operator Credential is a personal Credential issued to a person for
successfully passing a NERC system operator Certification exam. The Credential is maintained
by accumulating a specified number of Continuing Education Hours within a specified period of
time. The program will allow system operators to maintain their Credential through continuing
education rather than to recertify by retaking an examination.
The NERC Personnel Certification Governance Committee (PCGC) is the governing body that
establishes the policies, sets fees, and monitors the performance of the System Operator
Certification Program. As program administrator, NERC maintains databases, records, and
applications, collects fees, maintains contracts with vendors, and provides reports on system
operator Certification related activities. The PCGC is responsible for ensuring the program is
not-for-profit and financially sound, and annually reviews the program to ensure that it is
adequately funded.

System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

1

Section I — Certification Examinations

Section I — Certification Examinations
Overview
The System Operator Certification Program awards Certification Credentials to those individuals
who demonstrate that they have attained sufficient knowledge relating to NERC Reliability
Standards as well as the basic principles of Bulk Power System operations by passing one of four
specialty examinations. A certificate is issued to a candidate who successfully completes an
examination. Certificates issued prior to the implementation of the new Continuing Education
Hours requirement will be valid for five years. Certificates issued after the implementation of
this requirement will be valid for three years.
The members of the Examination Working Group (EWG) represent each of the specialty areas
tested in the examinations. The EWG develops the examinations under the guidance of a
psychometric consultant. The examinations are based on content outlines that were developed
through a job analysis. Prior to being used in the scoring process, each question is ‘piloted’ (not
scored) for one full examination cycle (eighteen months), and the performance of each question
is continually tracked. The direct involvement of system operators, supervisors, and trainers in
the examination development process will remain a primary requirement of future NERC system
operator Certification examinations.

Earning a Credential
Examinations
There are four specialty examinations: reliability operator, balancing and interchange operator,
transmission operator, and balancing, interchange, and transmission operator. Each of the
examinations has its own content outline that can be accessed from the Program’s web page.
The specifics of the individual examinations can be obtained from the table below. The
individual content outlines for each of the specialty examinations can be obtained by clicking on
the name of the exam.

Total
Questions

Scored
Questions

Passing Score
(# of answers
correct)

Passing Score
(% of answers
correct)

Reliability operator Certification
examination

150

125

93

74.4

Balancing, interchange, and
transmission operator Certification
examination

150

125

93

74.4

Transmission operator Certification
examination

125

100

76

76

Balancing and interchange operator
Certification examination

125

100

76

76

Examination Title

System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

2

Section I — Certification Examinations

Applying for Certification Examinations
1.

You must first establish a NERC.net user account. Once you are registered, you can access
the on-line application form.
If you do not have a NERC.net user account, please click here
(https://soc.nerc.net/registration/default.aspx) to set up your free account.
If you already have a NERC.net user account, please click here
(https://soc.nerc.net/default.aspx) to sign-in to your NERC.net user account to access the
on-line examination application form.
a.
If you have forgotten your user name or password, contact the NERC office at phone
number (609) 452-8060 (Mon–Fri, 8:00 a.m.–4:00 p.m. Eastern).
Select Exam Application Form
Select the examination you wish to take then click SUBMIT
You may submit your payment either by selecting credit card (VISA or MasterCard only)
or invoice for check payments. A copy of the invoice and check or money order must be
mailed to NERC to complete your examination application process.
a.

2.

3.
4.
5.

North American Electric Reliability Corporation
System Operator Certification Program
116-390 Village Boulevard
Princeton, New Jersey 08540-5731
Applications are accepted year round. Allow two weeks for the processing of your application
and receipt of notification that you are approved to take the examination.
An application is considered complete and processed only when all required information is
provided and fees are received. After the application is processed, the authorization-to-test
(ATT) letter containing the assigned ATT number is sent to each eligible candidate by e-mail
followed by regular mail.
Eligibility Period
Eligibility to take the examination remains in effect for one year from the date the ATT number
is issued. Candidates are encouraged to schedule an appointment to sit for the examination
promptly. If a candidate fails to schedule and take the examination during the one-year
eligibility period, the candidate shall forfeit all payments made to NERC. Candidates who fail to
take the examination within the one-year eligibility must submit a new application and pay the
full fee to be considered for eligibility again.

System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

3

Section I — Certification Examinations

Fees
Fee Schedule
Application to test

$350

Application to retest

$350

Application to withdraw

$50

Bad check/credit

$25

**All funds shall be payable in U.S. dollars.
Before scheduling an examination, please do the following:
ƒ Review all parts of this Program Manual.
ƒ Complete and submit the application to NERC, along with the appropriate fee.
ƒ Receive an ATT letter containing the assigned ATT number by e-mail and regular mail
from NERC declaring that you are eligible to take the examination. The letter will also
provide instructions on how you may arrange the location, date, and time of your
examination. The ATT number will be needed when you contact Prometric to schedule
your test appointment.
Scheduling an Examination
NERC will send you an ATT letter by e-mail and regular mail with instructions about the
identification items to bring with you on the day of the examination. To select your examination
location, date, and time go to the Prometric website at http://www.prometric.com. All attempts
should be made to schedule your examination as soon as possible because testing center
appointments are in high demand by other professions. Waiting to schedule your appointment
may significantly limit the locations, dates, and times available. Examinations may be
administered on any Monday through Saturday. Examinations may be taken on any day that
accommodates your schedule and where and when examination space is available.
During the scheduling process, you will be required to confirm your ATT number and your first
and last name. You will be advised of available testing locations, dates, and times.
Note: When you schedule your test date, you will receive a confirmation number from
Prometric. Please retain this number, as it will be useful should you have to use Prometric’s
automated cancellation system or if there is a conflict with the test center appointment.
Prometric will not mail you a confirmation notice.
Examination Content Outline
The computer-based examination consists of objective, multiple-choice questions. The questions
are based on the published Content Outline for each of the NERC system operator Certification
examinations.

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Day of the Examination
Time at Testing Center — Plan to arrive at the testing center at least thirty minutes early to sign
in. You should allocate at least four hours to accommodate the total time you might be at the
testing center. This includes:
Examination Time Allocation
Examination Stages

Time Allocation

Administration & Review of Candidate
Identification

30 minutes

Computer-Based Tutorial

15 minutes

Examination

2 hours & 45 minutes

Post-Examination Survey

15 minutes

Total Time to be Allocated

3 hours & 45 minutes

Computer Familiarization — A fifteen-minute tutorial on operating instructions for the
computer-based examination will be provided before the start of each examination. The tutorial
is self-explanatory, and no prior computer knowledge is needed. You may bypass this feature if
you wish (not recommended).
Computer-based testing allows you to skip questions, mark, and return to them at a later time.
During the examination, you may change your answer to any question. A clock is on the screen
at all times indicating the time remaining. Before exiting the examination, the computer will
indicate any question(s) you have marked for review or those that remain unanswered.
Post-Examination Survey — At the completion of the examination, you will be invited to
complete a brief questionnaire on your reactions to the examination experience and the quality of
the testing center staff and services. This is also your opportunity to comment on the content of
the examination and to challenge any particular examination questions or answers.
Comments — Comments on the examination process or questions will be collected in the postexamination survey. All comments will be forwarded to NERC.

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Updated: August 14, 2006

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Testing Center Requirements
Required Methods of Identification — You will be required to show two forms of
identification before being admitted to the examination. You will be required to show at least
one primary form of identification and either another primary or a secondary form of
identification.
ƒ Primary identification — Primary identification is a government-issued form of
identification and must have both your picture and your signature on it. Some examples
of primary identification are: a driver’s license (if it has both your picture and your
signature), a passport, or a military ID.
ƒ Secondary identification — Secondary identification must have either your picture or
your signature or both. Acceptable forms of secondary ID are: a second governmentissued ID as above, or an employment ID, or a credit card or debit card.
Identification(s) that have been altered or damaged will not be accepted at the Prometric Test
Center. If there is any discrepancy between the name on the identification presented to the
test center staff and the NERC registration, the candidate will not be admitted to test and will
be marked as a no-show. All no-shows forfeit all funds paid – no refunds are granted to noshows.
Testing Center Regulations
ƒ Candidates who arrive late for the examination might not be seated for the examination,
depending on the criteria established by that testing center. Late arrivals that are not
permitted to take the examination will be considered a no-show and must reapply and pay
the full test fee to take the examination.
ƒ No reference materials, calculators, or recording equipment may be taken into the
examination. Candidates will be provided a keyed locker to store personal items while
taking the examination.
ƒ No test materials, documents, notes, or scratch paper of any sort may be taken from the
examination.
ƒ Visitors are not permitted during the examination.
ƒ Testing center staff is instructed to answer questions about testing procedures only. They
cannot respond to inquiries regarding the examination’s content.
ƒ During the examination, candidates may use the rest rooms for a biological break;
however, the examination clock will continue running during such times.
ƒ Candidates may not leave the testing center until they have finished the examination.
ƒ Smoking is not permitted in any testing center.
ƒ Any candidate giving or receiving assistance, or making a disturbance, will be required to
turn in their examination materials, exit the examination room, and leave the testing
center. Your test will be scored whether you have completed it or not. The disciplinary
action procedure will be initiated upon notification by Prometric to NERC that such
activity had occurred.
ƒ Any instances of cheating, or attempts to impersonate another candidate, will be dealt
with through the disciplinary action procedure.
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Cancellations and No-shows
You may cancel and reschedule an examination appointment either by calling Prometric at the
toll free number listed in your ATT letter or through their website (http://www.prometric.com).
Your request to cancel must be no later than noon, local test center time, two days (Monday–
Saturday excluding local holidays) before the examination date. You may reschedule the
examination date within your period of eligibility without paying an additional fee. If you are
late in canceling your examination appointment, do not appear for it, or arrive late, you will be
considered a no-show. All no-shows will have to reapply to take the examination and pay the
full test fee. Refunds will not be issued to no-shows.

Minimum Time Between Examinations
Candidates who fail the examination must wait 42 days from the date of the failed examination
to retest. Candidates who pass one of the NERC system operator Certification examinations may
take the examination thirty-six months after the date they were last certified (this only applies to
those certificates valid for five years that were issued prior to the implementation of Continuing
Education Hours as a means of Credential Maintenance).

Special Accommodations/Disabilities
Allowance will be made for all documented requests for special testing conditions. Applicants
must notify NERC by e-mail or telephone. The Certification coordinator will contact the
applicant with further instructions. Disability requests must be supported by a letter (original
copy) from a recognized health care provider and be signed by a physician or psychologist. All
other requests must be similarly supported. NERC will review each request and provide
appropriate accommodations. The decision will be included in the notice of eligibility/
registration approval sent to the applicant.
Note: All testing centers are in compliance with the regulations governing the Americans with
Disabilities Act (ADA).

Withdrawal from Examination Process
As described in the Eligibility Period section of this Program Manual, the eligibility period is
one year from the date the ATT number is issued. If a candidate wishes to withdraw from the
process within the stated period for any reason, they must complete the candidate withdrawal
request on the system operator Certification website on or before the last eligibility day.
Candidates who submit the request within the time period will be reimbursed for the fees
submitted to NERC less the withdrawal fee in effect at the time of the application. Failure to
properly withdraw will result in the candidate forfeiting all submitted fees.
If you have already scheduled an appointment with Prometric to take the exam, you must first
cancel that Prometric appointment or you will be charged a no-show fee.

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To access the Exam Withdrawal
On the System Operator Certification Program homepage, logon to your NERC.net account:
ƒ Enter User name and Password
ƒ Click on Logon
ƒ Click on Exam Withdrawal
ƒ Select the exam you are registered to take and from which you wish to withdraw, then
click on Submit

Examination Change Request
If a candidate wishes to change the examination (i.e., from BI to TO, or from RC to BIT, etc.)
that they are registered to take, they must use the Program’s website. An examination change
request will not change the candidate’s eligibility period. The eligibility period will remain valid
for one year from the date that the original ATT number was issued. This change request must
be submitted at least thirty days prior to the expiration of the candidate's eligibility period.
To access the Examination Change
On the System Operator Certification Program homepage, logon to your NERC.net account:
ƒ Enter User Name and Password
ƒ Click on Logon
ƒ Click on Exam Change
ƒ Select the exam for which you are authorized then click on Submit
ƒ Select the desired exam from the drop-down list, then click on Submit
You will be issued a new ATT number with the original expiration date. After receiving your
new ATT you must schedule/reschedule an appointment with Prometric to take the exam.

Results and Awarding of Certificates
Candidates can view pass/fail results on the computer screen when the examination is
terminated. Before exiting the Prometric Testing Center, a copy of this display will be provided.
This is an unofficial summary of the examination.
After grading and analysis of the examination results, NERC will mail an official summary.
This will take about ten to twelve weeks. The official summary will include the grade achieved
and the percentage of correctly answered questions in each content outline category.
Candidates who pass the examination will receive the appropriate NERC-certified system
operator certificate based on the examination taken and signed by the President of NERC. The
date on the certificate will be the day the candidate took the examination.

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System Operator Certificate Numbering Convention
Numbering certificates for certified system operators follows a specific convention. There have
been two numbering conventions used since the start of the program.
The original Credential, issued from 1998 into 2002, was the NERC certified system operator.
These certificates were assigned the letter N followed by four digits indicating the year the
candidate registered, followed by a four digit sequential number.
Example: N19980109 = NERC certified system operator that registered in 1998 and was
the 109th system operator registered in the program.
When the specialty Credentials were implemented in late 2002, a new numbering convention
was implemented. The new numbering convention consists of a two-letter designation of the
Credential type, followed by six digits that indicate year and month the Credential was awarded,
followed by a three digit sequential number in that month.
Example: RA200306109 = NERC certified reliability operator certified in June of 2003
and was the 109th system operator certified in that month.
Credential Designations
N/RA/RC
BT
BA
TO

Reliability operator
Combined balancing and interchange/transmission operator
Balancing and interchange operator
Transmission operator

Confirmation of Credential to Third Parties
NERC will confirm to an employer that an individual holds a valid NERC system operator
certificate (including releasing the certificate number and the issuance date) in response to a
written request, on the employer’s letterhead (or e-mail), providing the name of the individual.
NERC will release the certificate numbers and issuance dates for individuals holding a current
NERC system operator certificate to the Regional Entity Compliance Staff or designated agents
of those Regional Entities in which an individual’s employer operates in response to a written
request, submitted on organization letterhead (or e-mail), that provides the names of the
individuals for whom information is sought. No further information will be provided.
NERC will confirm to an employment search firm, or a potential employer, whether an
individual holds a valid NERC system operator certificate (including releasing the certificate
number and the issuance date) if the search firm has a release from the individual. No further
information will be provided.

System Operator Certification Program Manual—Final
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Updated: August 14, 2006

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Section I — Certification Examinations

Section II — Credential Maintenance
Effective Date: October 1, 2006

Overview
The System Operator Certification Program incorporates a requirement to use Continuing
Education Hours (CE Hours) to maintain a Credential that is valid for three years. Successfully
passing an examination earns a Credential and a certificate that is valid for three years.
Accumulation of the proper number and type of CE Hours from NERC-approved learning
activities within that three-year period maintains the validity of that Credential for the next three
years. A new certificate is issued indicating the new expiration date.
The program provides that:
1.
System operators seeking to obtain a Credential will have to pass an examination to earn a
Credential.
2.
A certificate, valid for three years, will be issued to successful candidates.
3.
A certified system operator must accumulate a minimum number of CE Hours, in specific
training topics, before their certificate expires to maintain their Credential. The minimum
number of CE Hours is based on each Credential:
a. 200 CE Hours for reliability operator
b. 160 CE Hours for balancing, interchange, and transmission operator
c. 140 CE Hours for balancing and interchange operator
d. 140 CE Hours for transmission operator
4.
A minimum of 30 CE Hours must focus on content and/or implementation of NERC
Reliability Standards.
5.
A minimum of 30 CE Hours must be in simulations (i.e., table-top exercises, training
simulators, emergency drills, practice emergency procedures, restoration, blackstart, etc.).
6.
CE Hours can concurrently count for both NERC Reliability Standards and simulations but
will only be counted once for the total CE Hours requirement.
a. For example: A one-hour simulation learning activity that focuses on NERC
Standards can count towards the requirements for both NERC Reliability Standards
and simulation. However, the Credential holder will only be awarded a total of one
CE Hour toward the total CE Hours requirement. In other words, the CE Hours will
not be double counted.
7.
Retaking the examination is not an option for Credential Maintenance.
8.
If a certified system operator does not accumulate enough CE Hours to maintain their
current Credential prior to the certificate expiration date, their Credential will be Suspended
for a maximum of one year. At the end of the suspension period, their Credential will be
Revoked.
9.
If, prior to the end of the one-year suspension, the certified system operator accumulates the
proper number and type of CE Hours, their Credential will be reinstated with the original
expiration date (three years after the previous expiration date).
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10.

A system operator with a Revoked Credential will have to pass an examination to become
certified.

When to Start Accumulating CE Hours
CE Hours earned (date of learning activity) in the six months prior to the implementation date
will be recognized if they are earned from an approved learning activity that meets the
Certification program requirements. Each learning activity will have to be approved for use for
Credential Maintenance prior to the CE Hours being issued.

Specifics of the Credential Maintenance Program
Certified system operators are required to accumulate CE Hours through the NERC Continuing
Education Program in recognized training topics for Credential Maintenance. See Appendix A
for the list of recognized training topics. Described below are the requirements for each of the
four Credentials:
Transmission Operator Certification
To maintain a valid transmission operator Credential, system operators must earn 140 CE Hours
within the 3-year period preceding the expiration date of their certificate.
The 140 CE Hours must include:
• A minimum of 30 CE Hours must focus on content and/or implementation of NERC
Reliability Standards.
• A minimum of 30 CE Hours must utilize simulations (i.e., table-top exercises,
dispatcher/operator training simulators, emergency drills, or practice emergency
procedures, restoration, blackstart or other reliability-based scenarios).
Balancing and Interchange Operator Certification
To maintain a valid balancing and interchange operator Credential, system operators must earn
140 CE Hours within the 3-year period preceding the expiration date of their certificate.
The 140 CE Hours must include:
• A minimum of 30 CE Hours must focus on content and/or implementation of NERC
Reliability Standards.
• A minimum of 30 CE Hours must utilize simulations (i.e., table-top exercises,
dispatcher/operator training simulators, emergency drills, or practice emergency
procedures, restoration, blackstart or other reliability-based scenarios).
Balancing, Interchange, and Transmission Operator Certification
To maintain a valid balancing, interchange, and transmission operator Credential, system
operators must earn 160 CE Hours within the 3-year period preceding the expiration date of
their certificate.
The 160 CE Hours must include:
• A minimum of 30 CE Hours must focus on content and/or implementation of NERC
Reliability Standards.
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Section II — Credential Maintenance

•

A minimum of 30 CE Hours must utilize simulations (i.e., table-top exercises,
dispatcher/operator training simulators, emergency drills, or practice emergency
procedures, restoration, blackstart or other reliability-based scenarios).

Reliability Operator Certification
To maintain a valid reliability operator credential, system operators must earn 200 CE Hours
within the three-year period preceding the expiration date of their certificate.
The 200 CE Hours must include:
• A minimum of 30 CE Hours must focus on content and/or implementation of NERC
Reliability Standards.
• A minimum of 30 CE Hours must utilize simulations (i.e., table-top exercises,
dispatcher/operator training simulators, emergency drills, or practice emergency
procedures, restoration, blackstart or other reliability-based scenarios).

Certificate
System operators that have: 1) completed the Credential Maintenance application, 2) satisfied the
CE Hours requirements, and 3) paid the required fee will be issued a certificate valid for three
years.

Deficits of CE Hours for Credential Holders
The Credential of a certified system operator who does not accumulate the required number and
balance of CE Hours within the three-year period will be Suspended. A system operator with a
Suspended certificate cannot perform any task that requires an operator to be NERC-certified.
The system operator with a Suspended Credential will have up to twelve months to acquire the
necessary CE Hours.
During the time of suspension, the original anniversary date will be maintained. Therefore,
should the system operator accumulate the required number of CE Hours within the twelvemonth suspension period, they will be issued a certificate that will be valid for three years from
the previous expiration date. The system operator will be required to accumulate the required
number of CE Hours prior to the current expiration date.
At the end of the twelve-month suspension period, if the system operator has not accumulated
the required number of CE Hours, the Credential will be Revoked and all CE Hours earned will
be forfeited. After a Credential is Revoked, the system operator will be required to pass an
examination to become certified.
For example, a system operator whose Credential expires on July 31, 2009 does not accumulate
the required number of CE Hours prior to that date:
1. The Credential will be Suspended on August 1, 2009.
2. If the system operator then accumulates and submits the required number of CE Hours by
March 1, 2010, the Credential will be reinstated on March 1, 2010, and will be valid until
July 31, 2012.
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Section II — Credential Maintenance

3. The system operator will have to accumulate the required number of CE Hours prior to

July 31, 2012 or the Credential will be Suspended again.
4. CE Hours previously used to maintain the Credential cannot be reused for Credential
Maintenance.
5. A record of the suspension between August 1, 2009 and March 1, 2010 will be
maintained.

Carry-Over Hours
For all Credentials, up to 30 CE Hours accumulated in the six months prior to the certificate
expiration date and not used for Credential Maintenance may be carried over to the next threeyear period.
CE Hours will be allocated on a first-in, first-out basis. In other words, CE Hours from a
learning activity occurring first according to the calendar will be used to satisfy the CE Hours
requirement first and continuing sequentially by the date of the learning activities.

Reporting of CE Hours Earned by Certified System Operators
Normally, the Providers will make the submittals of electronically into the NERC system
operator Certification database. However, should some conflict occur, the certified system
operator must be able to submit proof of having acquired the necessary CE Hours from the
Continuing Education Program Provider’s approved learning activities.
System operators will be able to track their status/progress towards maintaining their Credential
through the NERC system operator Certification website. Certified system operators should
review their CE Hours records at least 90 days before their certificate expiration date to allow
sufficient time to acquire CE Hours prior to the system operator’s certificate expiration date
should there be a deficit.
If a Provider does not submit the CE Hours, the certified system operator must submit proof of
sufficient CE Hours to the NERC Manager of Personnel Certification no less than 30 days before
the system operator’s certificate expiration date. NERC staff may be able to process/resolve
discrepancies in Credential holder CE Hours records in less than 30 days; however, submissions
received at NERC within the 30-day window may not be credited to the system operator’s
account in time to prevent the Credential from being Suspended. Suspended Credentials based
on incomplete data will be reinstated retroactively once proof of completion is verified.
For system operators who meet the CE Hours requirements, and upon receipt of an application
and necessary fees, NERC will issue a new certificate with an expiration date three years from
the previous expiration date (a new certificate will be mailed to the address on record).

Application for Credential Maintenance
Procedure for applying for Credential Maintenance
Application procedure will be completed after the software is developed.
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Section II — Credential Maintenance

Hardship Clause
It is understood that, due to unforeseen events and extenuating circumstances, a certified system
operator may be unable to accumulate the necessary CE Hours in the time frame required by the
Program to maintain the Credential. In such an event, an individual must submit a written
request containing a thorough explanation of the circumstance and supporting information to:
Manager–Personnel Certification
NERC
116-390 Village Boulevard
Princeton, New Jersey 08540
The PCGC retains the right to invoke this hardship clause and deviate from the Program rules, as
it deems appropriate, to address such events or circumstances. Examples of extenuating
circumstances would include, but not limited to, extended military service, extended illness of
the system operator or within the system operator’s immediate family, or system operator
temporary disability that results in an extended period of time away from work.

Changing Certification Levels
Certified system operators that want to transition to a lower Credential can do so. Many system
operators hold a reliability operator Credential but are not working in a reliability operator
capacity. Those certified system operators could easily transition to a Credential that more
closely matches the work they perform without taking an examination. However, system
operators currently holding a transmission operator or balancing and interchange operator
Credential will have to pass an examination to move to a higher Credential such as the combined
balancing, interchange, and transmission operator Credential or the reliability operator
Credential.
A certified system operator can change the type of their Credential by indicating their desire on
their Credential Maintenance application. A system operator has the following options:
To change a Credential from:
•
•
•
•
•

Balancing and interchange operator to any other NERC Credential: the system operator
must pass the examination for that Credential.
Transmission operator to any other NERC Credential: the system operator must pass the
examination for that Credential.
Balancing, interchange, and transmission operator to reliability operator: the system
operator must pass the examination for that Credential.
Reliability operator to any other NERC Credential: the system operator must submit the
proper number and type of CE Hours for the new Credential.
Balancing, interchange, and transmission operator to transmission operator or balancing
and interchange operator: the system operator must submit proper number and type of CE
Hours for the new Credential.

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Transition Plan — 5-year Program to 3-year Program
A certified system operator whose certificate expires during the first three years after
implementation of this Program has the option to either accumulate the required number of CE
Hours according to the rules stated previously or pass the examination for the desired Credential.
Certified system operators who accumulate the required number and balance of CE Hours will
receive a certificate that will be valid for three years from the expiration date on their current
certificate. System operators who pass an examination will receive a certificate valid for three
years from the date they pass the examination.
Certified system operators whose certificate expires after the third anniversary of the
implementation of this Program, must accumulate the required number of CE Hours prior to the
expiration date of their certificate regardless of the issuance date of their certificate.

System Operator Certification Program Manual—Final
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Updated: August 14, 2006

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Section III — Program Rules

Section III — Program Rules
Rules for NERC-Certified System Operator
Recognized Learning Activities
CE Hours will be recognized for Credential Maintenance only for training topics/learning
activities listed in Appendix A and where Providers have complied with the Continuing
Education Program rules.
Provider Access to Database
Providers will be able to access the database to upload certified system operator CE Hours
activity. The process for doing this will be determined after the database is developed.
System Operator Access to Database
Certified system operators will be able to access the database to track their CE Hour activity.
The process for doing this will be determined after the database is developed.
Retain Documentation
The certified system operator is responsible for retaining appropriate documentation for proof of
Credential Maintenance. Documentation includes:
• Name and contact information of the Provider
• Title and identification number of the learning activity and description of its content
• Date(s) of the learning activity
• Location (if applicable)
• Number and type of CE Hours
• System operator’s NERC certificate number
Providers shall retain comparable documentation. Electronic forms of documentation are
acceptable.
Learning Activity Credit Only Once Per Year
CE Hours for a particular course or learning activity will not be recognized for Credential
Maintenance more than once a year based on the Credential anniversary. (i.e., during the twelvemonth period preceding the system operator’s Credential anniversary)
Exception: CE Hours for courses dealing with emergency operations will be recognized no more
than two times per year based on the Credential anniversary. (i.e., during the 12-month period
preceding the system operator’s Credential anniversary)
Learning Activity Approved Status Revoked after CE Hours Granted
CE Hours granted for a course or learning activity that had been approved for Credential
Maintenance will still be recognized if, subsequent to the system operator attending the course or
learning activity, the approved status is Revoked.
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Section III — Program Rules

Instructor Credits
For those instructors who are also certified system operators, 1.0 CE Hour for each CE Hours of
a learning activity delivered will be recognized towards the instructor’s system operator
Credential Maintenance. CE Hours for a particular course or learning activity will not be
recognized for Credential Maintenance more than once a year based on the Credential
anniversary. (i.e., during the twelve-month period preceding the system operator’s Credential
anniversary)
Exception: CE Hours for courses dealing with emergency operations will be recognized no more
than two times per year based on the Credential anniversary. (i.e., during the twelve-month
period preceding the system operator’s Credential anniversary)
Treatment of Disputes Between Certified System Operator and Providers
Disputes between a Provider and a certified system operator must be resolved between the
Provider and the certified system operator. NERC will not become involved in resolving the
dispute. Additionally, it is the obligation of the certified system operator to periodically review
their CE Hours’ records in the NERC system operator Certification database and to maintain
their own training records to provide proof that CE Hour requirements have been achieved.
Fees
Fee Schedule**
Application to test

$350

Application to maintain or change
Credential using CE Hours

$350

Application to retest

$350

Application to withdraw

$50

Bad check/credit application

$25

**All funds must be payable in U.S. dollars.
The Program must be financially independent as well as not-for-profit. The on-going expenses
to develop and maintain the examinations and the management and administrative costs
associated with both the examination process and Credential Maintenance necessitate these fees.
These fees will be periodically reviewed and adjusted accordingly.

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Updated: August 14, 2006

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Section IV — Dispute Resolution

Section IV — Dispute Resolution
1. Applicability
Any dispute arising under the NERC agreement establishing a NERC System Operator
Certification Program or from the establishment of any NERC rules, policies, or procedures
dealing with any segment of the Certification process shall be subject to the NERC system
operator certification dispute resolution process (hereafter called the “Process”). The Process is
for the use of persons who hold an operator Certification or persons wishing to be certified to
dispute the validity of the examination, the content of the test, the content outlines, or the
registration process. The Process is not for trainers or certified persons disputing CE Hours.
2. Dispute Resolution Process
The dispute resolution process consists of three steps.
a. NERC System Operator Certification Program Staff
The first step in the process is for the person with a dispute to contact the NERC System
Operator Certification Program staff. Contact may be made by a phone call or e-mail to
the program staff. This first step can usually resolve the issues without further actions. It
is expected that most disputes will be resolved at this step.
Any dispute that requires resolution will first be brought to the NERC System Operator
Certification Program staff. Should the issue(s) not be resolved to the satisfaction of the
parties involved, the issue can be brought to the Personnel Certification Governance
Committee (PCGC) Dispute Resolution Task Force.
b. Personnel Certification Governance Dispute Resolution Task Force
If the NERC staff did not resolve the issue(s) to the satisfaction of the parties involved, a
written request should be submitted to the chairman of the PCGC through NERC staff
explaining the issue(s) and requesting further action. Upon receipt of the letter, the
PCGC chairman will present the request to the PCGC Dispute Resolution Task Force for
action. This task force consists of three current members of the PCGC. The PCGC
Dispute Resolution Task Force will investigate and consider the issue(s) presented and
make a decision. This decision will then be communicated to the submitting party, the
PCGC chairman, and the NERC staff within 45 calendar days of receipt of the request.
If a French-Canadian or Mexican party raises a dispute, the PCGC shall appoint a
French-Canadian speaking or Spanish-speaking interpreter, respectively, as requested.
c. Personnel Certification Governance Committee
If the PCGC Dispute Resolution Task Force’s decision did not resolve the issue(s) to the
satisfaction of the parties involved, the final step in the process is for the issue(s) to be
brought before the PCGC. The disputing party shall submit a written request to the
PCGC chairman through NERC staff requesting that the issue(s) be brought before the

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Section IV — Dispute Resolution

PCGC for resolution. The chairman shall see that the necessary documents and related
data are provided to the PCGC members as soon as practicable. The PCGC will then
meet or conference to discuss the issue(s) and make their decision within 60 calendar
days of the chairman’s receipt of the request. The decision will be provided to the person
bringing the issue(s) and the NERC staff. The PCGC is the governing body of the
Certification Program and its decision is final.
3. Process Expenses
All individual expenses associated with the Process, including salaries, meetings, or consultant
fees, shall be the responsibility of the individual parties incurring the expense.
4. Decision Process
Robert’s Rules of Order shall be used as a standard of conduct for the Process. A simple
majority vote of the members present will decide all issues. The vote will be taken in a closed
session. No one on the PCGC may participate in the dispute resolution process, other than as a
party or witness, if he or she has an interest in the particular matter.
A stipulation of invoking the appeals process is that the entity requesting the appeal agrees that
neither NERC (its Members, Board of Trustees, committees, subcommittees, and staff), any
person assisting in the appeals process, nor any company employing a person assisting in the
appeals process, shall be liable, and they shall be held harmless against the consequences of or
any action or inaction or of any agreement reached in resolution of the dispute or any failure to
reach agreement as a result of the appeals proceeding. This “hold harmless” clause does not
extend to matters constituting gross negligence, intentional misconduct, or a breach of
confidentiality.

System Operator Certification Program Manual—Final
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Updated: August 14, 2006

19

Section V — Disciplinary Action

Section V — Disciplinary Action
1.

Purpose

This disciplinary action procedure is necessary to protect the integrity of the system operator
Credential. Should an individual act in a manner that is inconsistent with expectations, this
procedure describes the process to investigate and take action necessary to protect the Credential.
2.

Grounds for Action

The following shall serve as grounds for disciplinary action:
a.

Willful, gross, and/or repeated violation of the NERC Reliability Standards as
determined by a NERC investigation.
i. Both the organization and the certified system operator are bound by the NERC
Reliability Standards. If a certified system operator, either in concert with the
organization or on his or her own initiative, performs a willful, gross, and/or
repeated violation of the NERC Reliability Standards, he or she is liable for those
actions and disciplinary actions may be taken against him or her.

b.

Willful, gross, and/or repeated negligence in performing the duties of a certified
system operator as determined by a NERC investigation.

c.

Intentional misrepresentation of information provided on a NERC application for a
system operator Certification exam or to maintain a system operator Credential using
CE Hours.

d.

Intentional misrepresentation of identification in the exam process.
i. This includes, but is not limited to, a person identifying himself or herself as
another person to obtain Certification for the other person.

e.

Any form of cheating during a Certification exam.
i. This includes, but is not limited to, bringing unauthorized reference material in
the form of notes, crib sheets, or other methods of cheating into the testing center.

f.
3.

A certified system operator’s admission to or conviction of any felony or
misdemeanor directly related to their duties as a system operator.

Hearing and Appeals Process

Upon report to NERC of a candidate’s or certified system operator’s alleged misconduct, the
NERC Personnel Certification Governance Committee (PCGC) Credential Review Task Force
will convene for the determination of facts. An individual, government agency, or other
investigating authority can file reports.
Unless the task force initially determines that the report of alleged misconduct is without merit,
the candidate or certified system operator will be given the right to notice of the allegation. A
hearing will be held and the charged candidate or certified system operator will be given an
opportunity to be heard and present further relevant information. The task force may seek out
information from other involved parties. The hearing will not be open to the public, but it will be
System Operator Certification Program Manual—Final
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Updated: August 14, 2006

20

Section V — Disciplinary Action

open to the charged candidate or certified system operator and his or her representative. The task
force will deliberate in a closed session, but the task force cannot receive any evidence during
the closed session that was not developed during the course of the hearing. The task force’s
decision will be unanimous and will be in writing with inclusion of the facts and reasons for the
decision. The task force’s written decision will be delivered to the PCGC and by certified post to
the charged candidate or certified system operator. In the event that the task force is unable to
reach a unanimous decision, the matter shall be brought to the full committee for a decision.
The task force’s decision will be one of the below:
a.

No Action
Allegation of misconduct was determined to be unsubstantiated or inconsequential to
the Credential.

b.

Probation
A letter will be sent from NERC to the offender specifying:
i. The length of time of the probationary period (to be determined by the PCGC).
(a) Credential will remain valid during the probationary period.
(b) The probationary period does not affect the expiration date of the current
certificate.
ii. During the probationary period, a subsequent offense of misconduct, as
determined through the same process as described above, may be cause for more
serious consequences.
(a) Extension of Probation,
(b) Revocation for cause, or
(c) Termination of Credential.

c.

Revoke for Cause
A letter will be sent from NERC to the offender specifying:
i. The length of time of the revocation period (to be determined by the PCGC).
(a) Credential is no longer valid.
(b) Successfully passing an exam will be required to become certified.
(c) An exam will not be authorized until the revocation period expires.

d.

Termination of Credential
A letter will be sent from NERC to the offender specifying:
i. Permanent removal of Credential.

4.

Appeal Process

The decision of the task force may be appealed using the NERC system operator certification
dispute resolution process.

System Operator Certification Program Manual—Final
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Updated: August 14, 2006

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Section V — Disciplinary Action

5.

Credential Review Task Force

The Credential Review Task Force shall be comprised of three active members of the PCGC
assigned by the Chairman of the PCGC on an ad hoc basis. No one on the Credential Review
Task Force may have an interest in the particular matter.
The task force will meet in a venue determined by the task force chairman.
If a French-Canadian or Mexican party raises a dispute, the PCGC shall appoint a FrenchCanadian speaking or Spanish-speaking interpreter, respectively, as requested.

System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

22

Glossary

Glossary
Capitalized terms used in this Appendix shall have the definitions set forth in Appendix 2 of the
Rules of Procedure. For convenience of reference, definitions used in this Appendix are also set
forth below:
G01.

Continuing Education Hour or CE Hour: Sixty minutes of participation in a group,
independent study, or self-study learning activity as approved by the NERC Continuing
Education Program.

G02.

Continuing Education Program Provider or Provider: The individual or organization
offering a learning activity to participants and maintaining documentation required by
these criteria.

G03.

Certification: An official recognition that indicates the recipient has passed a NERC
exam or completed a specified number of Continuing Education Hours.

G04.

Credential: NERC designation that indicates the level of qualification achieved (i.e.,
reliability operator; balancing, interchange, and transmission operator; balancing and
interchange operator; and transmission operator).

G05.

Credential Maintenance: Meet NERC CE Hours’ requirements to maintain a valid
NERC-issued system operator Credential.

G06.

NERC-Approved Learning Activity: Training that maintains or improves professional
competence and has been approved by NERC for use in its Continuing Education
Program.

G07.

Probation: A step in the disciplinary process during which the certificate is still valid.
During the probationary period, a subsequent offense of misconduct, as determined
through the same process as described above, may be cause for more serious
consequences.

G08.

Revoked: A NERC certificate which has been Suspended for more than twelve months.
While in this state, a certificate holder can not perform any task that requires an operator
to be NERC-certified. The certificate holder will be required to pass an exam to be
certified again. Any CE Hours accumulated prior to or during the revocation period will
not be counted towards Credential Maintenance.

G09.

Revoke for Cause: A step in the disciplinary process during which the certificate is no
longer valid and requiring successfully passing an exam to become certified. However,
an exam will not be authorized until the revocation period expires. CE Hours earned
before or during this revocation period will not be counted for maintaining a Credential.

G10.

Suspended: Certificate status due to an insufficient number of CE Hours being
submitted prior to the expiration of a certificate. While in this state, a certificate holder
can not perform any task that requires an operator to be NERC-certified.

G11.

Termination of Credential: A step in the disciplinary process whereby a Credential is
permanently Revoked.

System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

23

Appendix A

G12.

Type of CE Hours: NERC-Approved Learning Activity covering topics from Appendix
A, NERC Reliability Standards and/or simulations for which there is a minimum
requirement for Credential Maintenance.

System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

24

Appendix A

Appendix A — Recognized Operator Training Topics
1. Basic Concepts
a. Basic electricity including capacitance, inductance, impedance, Real and Reactive Power
b. Single phase & three phase power systems
c. Transmission line and transformer characteristics
d. Substation layouts including the advantages and disadvantages of substation bus schemes
2. Production & Transfer of Electric Energy
a. How generators produce electricity
b. Types of generators including advantages and disadvantages of each type
c. Economic operation of generators
d. Real and Reactive Power flow
3. System Protection
a. Transmission line, transformer, and bus protection principles
b. Generator protection principles
c. Types of relays used in different protection schemes
d. The role of communication systems in system protection
4. Interconnected Power System Operations
a. Voltage control
b. Frequency control
c. Power system stability
d. Facility outage response
e. Automatic generator control (AGC) including the different modes of AGC
f. Extra high voltage (EHV) operation
g. Energy accounting
h. Inadvertent energy
5. Emergency Operations
a. Loss of generation resource
b. Operating reserves
c. Contingency reserves
d. Line loading relief
e. Loop flow
f. Load shedding
g. Voltage and reactive flows during emergencies
h. Loss of critical transmission facilities
6. Power System Restoration
a. Restoration philosophies
b. Facility restoration
c. Blackstart restoration
d. Load shedding
e. Under-frequency Load shedding
f. Under-voltage Load shedding

System Operator Certification Program Manual—Final
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Updated: August 14, 2006

25

Appendix A

7. Market Operations
a. Standards of conduct
b. Tariffs
c. Transmission reservations and transmission priorities
d. Transaction tagging
8. Tools
a. Supervisory control and data acquisition
b. Automatic generation control application
c. Power flow application
d. State estimator application
e. Contingency analysis application
f. P-V curves
g. Load forecasting application
h. Energy accounting application
i. OASIS application
j. E-Tag application
k. Voice and data communication systems
9. Operator Awareness
a. Identifying loss of facilities
b. Recognizing loss of communication facilities
c. Recognizing telemetry problems
d. Recognizing and identifying contingency problems
e. Communication with appropriate entities including the Reliability Coordinator
10. Policies & Procedures
a. NERC Reliability Standards
b. ISO/RTO operational and emergency policies and procedures
c. Regional operational and emergency policies and procedures
d. Local & company specific policies and procedures
e. Emergency operating plans
f. Line loading relief procedures
g. Physical and cyber sabotage procedures
h. Outage management and switching procedures
11. NERC Reliability Standards
a. Application and/or implementation of NERC Reliability Standards

System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

26

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 7B

REVISED APPENDIX 6 OF THE RULES OF PROCEDURE,
SYSTEM OPERATOR CERTIFICATION PROGRAM MANUAL
REDLINED VERSION

Proposed Revisions 1-9-2012
[Incorporates revisions filed with
FERC on November 29, 2011]

System Operator Certification

Program Manual
August 2006
Approved by the Personnel Certification Governance Committee
Approved by the NERC Board of Trustees
May 2006

North American Electric Reliability Council
Updated: August 14, 2006

Program Manual Changes

Program Manual Changes
No.

Date

Section

Page

Description

Version

1
2
3
4
5

05/2005
02/2006
06/2006
06/2006
08/2006

All
All
I and II
All
III

All
All
4, 17
All
16

Initial white paper expanded SOC Program to
include CE hours
Program Manual
Fees
CEH to CE hours
Training Providers retaining documentation

0
1
1.1
1.1
1

System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: June 14, 2006

ii

Table of Contents

Table of Contents
Program Manual Changes .........................................................................................................................ii
Executive Summary .................................................................................................................................... 1
Section I — Certification Examinations ................................................................................................... 2
Overview .................................................................................................................................................. 2
Earning a Credential ................................................................................................................................. 2
Examinations........................................................................................................................................ 2
Applying for Certification Examinations ............................................................................................. 3
Eligibility Period .................................................................................................................................. 3
Fees ...................................................................................................................................................... 4
Scheduling an Examination.................................................................................................................. 4
Examination Content Outline............................................................................................................... 4
Day of the Examination........................................................................................................................ 5
Testing Center Requirements ............................................................................................................... 6
Cancellations and No-shows .................................................................................................................... 7
Minimum Time Between Examinations................................................................................................... 7
Special Accommodations/Disabilities ...................................................................................................... 7
Withdrawal from Examination Process .................................................................................................... 7
Examination Change Request................................................................................................................... 8
Results and Awarding of Certificates ....................................................................................................... 8
System Operator Certificate Numbering Convention............................................................................... 9
Credential Designations ....................................................................................................................... 9
Confirmation of Credential to Third Parties............................................................................................. 9
Section II — Credential Maintenance..................................................................................................... 10
Overview ................................................................................................................................................ 10
When to Start Accumulating CE Hours.................................................................................................. 11
Specifics of the Credential Maintenance Program ................................................................................. 11
Certificate ............................................................................................................................................... 12
Deficits of CE Hours for Credential Holders ......................................................................................... 12
Carry-Over Hours ................................................................................................................................... 13
Reporting of CE Hours Earned by Certified System Operators ............................................................. 13
Application for Credential Maintenance ................................................................................................ 13
Procedure for applying for Credential Maintenance .......................................................................... 13
Hardship Clause...................................................................................................................................... 14
Changing Certification Levels................................................................................................................ 14
Transition Plan — 5-year Program to 3-year Program........................................................................... 15
Section III — Program Rules................................................................................................................... 16
Rules for NERC-Certified System Operator .......................................................................................... 16
Recognized Learning Activities ......................................................................................................... 16
Provider Access to Database .............................................................................................................. 16
System Operator Access to Database................................................................................................. 16
Retain Documentation........................................................................................................................ 16
Learning Activity Credit Only Once Per Year ................................................................................... 16
Learning Activity Approved Status Revoked after CE Hours Granted.............................................. 16
Instructor Credits................................................................................................................................ 17
Treatment of Disputes Between Certified System Operator and Providers ....................................... 17
Fees .................................................................................................................................................... 17
Section IV — Dispute Resolution ............................................................................................................ 18
Section V — Disciplinary Action ............................................................................................................. 20
Glossary ..................................................................................................................................................... 23
Appendix A — Recognized Operator Training Topics ......................................................................... 25
System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

iii

Table of Contents

Executive Summary
Maintaining the reliability of the Bulk Electric System through implementation of the Reliability
Standards requires skilled, trained and qualified system operators. The System Operator
Certification Program provides the mechanism to ensure system operators are provided the
education and training necessary to obtain the essential knowledge and skills and are therefore
qualified to operate the Bulk Electric System.
The System Operator Certification Program provides the framework for the examinations used to
obtain initial Certification in one of four NERC Credentials: transmission operator, balancing
and interchange operator, balancing, interchange and transmission operator, and reliability
operator. A system operator Credential is a personal Credential issued to a person for
successfully passing a NERC system operator Certification exam. The Credential is maintained
by accumulating a specified number of Continuing Education Hours within a specified period of
time. The program will allow system operators to maintain their Credential through continuing
education rather than to recertify by retaking an examination.
The NERC Personnel Certification Governance Committee (PCGC) is the governing body that
establishes the policies, sets fees, and monitors the performance of the System Operator
Certification Program. As program administrator, NERC maintains databases, records, and
applications, collects fees, maintains contracts with vendors, and provides reports on system
operator Certification related activities. The PCGC is responsible for ensuring the program is
not-for-profit and financially sound, and annually reviews the program to ensure that it is
adequately funded.

System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

1

Section I — Certification Examinations

Section I — Certification Examinations
Overview
The System Operator Certification Program awards Certification Credentials to those individuals
who demonstrate that they have attained sufficient knowledge relating to NERC Reliability
Standards as well as the basic principles of Bulk Power System operations by passing one of four
specialty examinations. A certificate is issued to a candidate who successfully completes an
examination. Certificates issued prior to the implementation of the new Continuing Education
Hours requirement will be valid for five years. Certificates issued after the implementation of
this requirement will be valid for three years.
The members of the Examination Working Group (EWG) represent each of the specialty areas
tested in the examinations. The EWG develops the examinations under the guidance of a
psychometric consultant. The examinations are based on content outlines that were developed
through a job analysis. Prior to being used in the scoring process, each question is ‘piloted’ (not
scored) for one full examination cycle (eighteen months), and the performance of each question
is continually tracked. The direct involvement of system operators, supervisors, and trainers in
the examination development process will remain a primary requirement of future NERC system
operator Certification examinations.

Earning a Credential
Examinations
There are four specialty examinations: reliability operator, balancing and interchange operator,
transmission operator, and balancing, interchange, and transmission operator. Each of the
examinations has its own content outline that can be accessed from the Program’s web page.
The specifics of the individual examinations can be obtained from the table below. The
individual content outlines for each of the specialty examinations can be obtained by clicking on
the name of the exam.

Total
Questions

Scored
Questions

Passing Score
(# of answers
correct)

Passing Score
(% of answers
correct)

Reliability operator Certification
examination

150

125

93

74.4

Balancing, interchange, and
transmission operator Certification
examination

150

125

93

74.4

Transmission operator Certification
examination

125

100

76

76

Balancing and interchange operator
Certification examination

125

100

76

76

Examination Title

System Operator Certification Program Manual—Final
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Updated: August 14, 2006

2

Section I — Certification Examinations

Applying for Certification Examinations
1.

You must first establish a NERC.net user account. Once you are registered, you can access
the on-line application form.
If you do not have a NERC.net user account, please click here
(https://soc.nerc.net/registration/default.aspx) to set up your free account.
If you already have a NERC.net user account, please click here
(https://soc.nerc.net/default.aspx) to sign-in to your NERC.net user account to access the
on-line examination application form.
a.
If you have forgotten your user name or password, contact the NERC office at phone
number (609) 452-8060 (Mon–Fri, 8:00 a.m.–4:00 p.m. Eastern).
Select Exam Application Form
Select the examination you wish to take then click SUBMIT
You may submit your payment either by selecting credit card (VISA or MasterCard only)
or invoice for check payments. A copy of the invoice and check or money order must be
mailed to NERC to complete your examination application process.
a.

2.

3.
4.
5.

North American Electric Reliability Corporation
System Operator Certification Program
116-390 Village Boulevard
Princeton, New Jersey 08540-5731
Applications are accepted year round. Allow two weeks for the processing of your application
and receipt of notification that you are approved to take the examination.
An application is considered complete and processed only when all required information is
provided and fees are received. After the application is processed, the authorization-to-test
(ATT) letter containing the assigned ATT number is sent to each eligible candidate by e-mail
followed by regular mail.
Eligibility Period
Eligibility to take the examination remains in effect for one year from the date the ATT number
is issued. Candidates are encouraged to schedule an appointment to sit for the examination
promptly. If a candidate fails to schedule and take the examination during the one-year
eligibility period, the candidate shall forfeit all payments made to NERC. Candidates who fail to
take the examination within the one-year eligibility must submit a new application and pay the
full fee to be considered for eligibility again.

System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

3

Section I — Certification Examinations

Fees
Fee Schedule
Application to test

$350

Application to retest

$350

Application to withdraw

$50

Bad check/credit

$25

**All funds shall be payable in U.S. dollars.
Before scheduling an examination, please do the following:
ƒ Review all parts of this Program Manual.
ƒ Complete and submit the application to NERC, along with the appropriate fee.
ƒ Receive an ATT letter containing the assigned ATT number by e-mail and regular mail
from NERC declaring that you are eligible to take the examination. The letter will also
provide instructions on how you may arrange the location, date, and time of your
examination. The ATT number will be needed when you contact Prometric to schedule
your test appointment.
Scheduling an Examination
NERC will send you an ATT letter by e-mail and regular mail with instructions about the
identification items to bring with you on the day of the examination. To select your examination
location, date, and time go to the Prometric website at http://www.prometric.com. All attempts
should be made to schedule your examination as soon as possible because testing center
appointments are in high demand by other professions. Waiting to schedule your appointment
may significantly limit the locations, dates, and times available. Examinations may be
administered on any Monday through Saturday. Examinations may be taken on any day that
accommodates your schedule and where and when examination space is available.
During the scheduling process, you will be required to confirm your ATT number and your first
and last name. You will be advised of available testing locations, dates, and times.
Note: When you schedule your test date, you will receive a confirmation number from
Prometric. Please retain this number, as it will be useful should you have to use Prometric’s
automated cancellation system or if there is a conflict with the test center appointment.
Prometric will not mail you a confirmation notice.
Examination Content Outline
The computer-based examination consists of objective, multiple-choice questions. The questions
are based on the published Content Outline for each of the NERC system operator Certification
examinations.

System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

4

Section I — Certification Examinations

Day of the Examination
Time at Testing Center — Plan to arrive at the testing center at least thirty minutes early to sign
in. You should allocate at least four hours to accommodate the total time you might be at the
testing center. This includes:
Examination Time Allocation
Examination Stages

Time Allocation

Administration & Review of Candidate
Identification

30 minutes

Computer-Based Tutorial

15 minutes

Examination

2 hours & 45 minutes

Post-Examination Survey

15 minutes

Total Time to be Allocated

3 hours & 45 minutes

Computer Familiarization — A fifteen-minute tutorial on operating instructions for the
computer-based examination will be provided before the start of each examination. The tutorial
is self-explanatory, and no prior computer knowledge is needed. You may bypass this feature if
you wish (not recommended).
Computer-based testing allows you to skip questions, mark, and return to them at a later time.
During the examination, you may change your answer to any question. A clock is on the screen
at all times indicating the time remaining. Before exiting the examination, the computer will
indicate any question(s) you have marked for review or those that remain unanswered.
Post-Examination Survey — At the completion of the examination, you will be invited to
complete a brief questionnaire on your reactions to the examination experience and the quality of
the testing center staff and services. This is also your opportunity to comment on the content of
the examination and to challenge any particular examination questions or answers.
Comments — Comments on the examination process or questions will be collected in the postexamination survey. All comments will be forwarded to NERC.

System Operator Certification Program Manual—Final
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Updated: August 14, 2006

5

Section I — Certification Examinations

Testing Center Requirements
Required Methods of Identification — You will be required to show two forms of
identification before being admitted to the examination. You will be required to show at least
one primary form of identification and either another primary or a secondary form of
identification.
ƒ Primary identification — Primary identification is a government-issued form of
identification and must have both your picture and your signature on it. Some examples
of primary identification are: a driver’s license (if it has both your picture and your
signature), a passport, or a military ID.
ƒ Secondary identification — Secondary identification must have either your picture or
your signature or both. Acceptable forms of secondary ID are: a second governmentissued ID as above, or an employment ID, or a credit card or debit card.
Identification(s) that have been altered or damaged will not be accepted at the Prometric Test
Center. If there is any discrepancy between the name on the identification presented to the
test center staff and the NERC registration, the candidate will not be admitted to test and will
be marked as a no-show. All no-shows forfeit all funds paid – no refunds are granted to noshows.
Testing Center Regulations
ƒ Candidates who arrive late for the examination might not be seated for the examination,
depending on the criteria established by that testing center. Late arrivals that are not
permitted to take the examination will be considered a no-show and must reapply and pay
the full test fee to take the examination.
ƒ No reference materials, calculators, or recording equipment may be taken into the
examination. Candidates will be provided a keyed locker to store personal items while
taking the examination.
ƒ No test materials, documents, notes, or scratch paper of any sort may be taken from the
examination.
ƒ Visitors are not permitted during the examination.
ƒ Testing center staff is instructed to answer questions about testing procedures only. They
cannot respond to inquiries regarding the examination’s content.
ƒ During the examination, candidates may use the rest rooms for a biological break;
however, the examination clock will continue running during such times.
ƒ Candidates may not leave the testing center until they have finished the examination.
ƒ Smoking is not permitted in any testing center.
ƒ Any candidate giving or receiving assistance, or making a disturbance, will be required to
turn in their examination materials, exit the examination room, and leave the testing
center. Your test will be scored whether you have completed it or not. The disciplinary
action procedure will be initiated upon notification by Prometric to NERC that such
activity had occurred.
ƒ Any instances of cheating, or attempts to impersonate another candidate, will be dealt
with through the disciplinary action procedure.
System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

6

Section I — Certification Examinations

Cancellations and No-shows
You may cancel and reschedule an examination appointment either by calling Prometric at the
toll free number listed in your ATT letter or through their website (http://www.prometric.com).
Your request to cancel must be no later than noon, local test center time, two days (Monday–
Saturday excluding local holidays) before the examination date. You may reschedule the
examination date within your period of eligibility without paying an additional fee. If you are
late in canceling your examination appointment, do not appear for it, or arrive late, you will be
considered a no-show. All no-shows will have to reapply to take the examination and pay the
full test fee. Refunds will not be issued to no-shows.

Minimum Time Between Examinations
Candidates who fail the examination must wait 42 days from the date of the failed examination
to retest. Candidates who pass one of the NERC system operator Certification examinations may
take the examination thirty-six months after the date they were last certified (this only applies to
those certificates valid for five years that were issued prior to the implementation of Continuing
Education Hours as a means of Credential Maintenance).

Special Accommodations/Disabilities
Allowance will be made for all documented requests for special testing conditions. Applicants
must notify NERC by e-mail or telephone. The Certification coordinator will contact the
applicant with further instructions. Disability requests must be supported by a letter (original
copy) from a recognized health care provider and be signed by a physician or psychologist. All
other requests must be similarly supported. NERC will review each request and provide
appropriate accommodations. The decision will be included in the notice of eligibility/
registration approval sent to the applicant.
Note: All testing centers are in compliance with the regulations governing the Americans with
Disabilities Act (ADA).

Withdrawal from Examination Process
As described in the Eligibility Period section of this Program Manual, the eligibility period is
one year from the date the ATT number is issued. If a candidate wishes to withdraw from the
process within the stated period for any reason, they must complete the candidate withdrawal
request on the system operator Certification website on or before the last eligibility day.
Candidates who submit the request within the time period will be reimbursed for the fees
submitted to NERC less the withdrawal fee in effect at the time of the application. Failure to
properly withdraw will result in the candidate forfeiting all submitted fees.
If you have already scheduled an appointment with Prometric to take the exam, you must first
cancel that Prometric appointment or you will be charged a no-show fee.

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Section I — Certification Examinations

To access the Exam Withdrawal
On the System Operator Certification Program homepage, logon to your NERC.net account:
ƒ Enter User name and Password
ƒ Click on Logon
ƒ Click on Exam Withdrawal
ƒ Select the exam you are registered to take and from which you wish to withdraw, then
click on Submit

Examination Change Request
If a candidate wishes to change the examination (i.e., from BI to TO, or from RC to BIT, etc.)
that they are registered to take, they must use the Program’s website. An examination change
request will not change the candidate’s eligibility period. The eligibility period will remain valid
for one year from the date that the original ATT number was issued. This change request must
be submitted at least thirty days prior to the expiration of the candidate's eligibility period.
To access the Examination Change
On the System Operator Certification Program homepage, logon to your NERC.net account:
ƒ Enter User Name and Password
ƒ Click on Logon
ƒ Click on Exam Change
ƒ Select the exam for which you are authorized then click on Submit
ƒ Select the desired exam from the drop-down list, then click on Submit
You will be issued a new ATT number with the original expiration date. After receiving your
new ATT you must schedule/reschedule an appointment with Prometric to take the exam.

Results and Awarding of Certificates
Candidates can view pass/fail results on the computer screen when the examination is
terminated. Before exiting the Prometric Testing Center, a copy of this display will be provided.
This is an unofficial summary of the examination.
After grading and analysis of the examination results, NERC will mail an official summary.
This will take about ten to twelve weeks. The official summary will include the grade achieved
and the percentage of correctly answered questions in each content outline category.
Candidates who pass the examination will receive the appropriate NERC-certified system
operator certificate based on the examination taken and signed by the President of NERC. The
date on the certificate will be the day the candidate took the examination.

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System Operator Certificate Numbering Convention
Numbering certificates for certified system operators follows a specific convention. There have
been two numbering conventions used since the start of the program.
The original Credential, issued from 1998 into 2002, was the NERC certified system operator.
These certificates were assigned the letter N followed by four digits indicating the year the
candidate registered, followed by a four digit sequential number.
Example: N19980109 = NERC certified system operator that registered in 1998 and was
the 109th system operator registered in the program.
When the specialty Credentials were implemented in late 2002, a new numbering convention
was implemented. The new numbering convention consists of a two-letter designation of the
Credential type, followed by six digits that indicate year and month the Credential was awarded,
followed by a three digit sequential number in that month.
Example: RA200306109 = NERC certified reliability operator certified in June of 2003
and was the 109th system operator certified in that month.
Credential Designations
N/RA/RC
BT
BA
TO

Reliability operator
Combined balancing and interchange/transmission operator
Balancing and interchange operator
Transmission operator

Confirmation of Credential to Third Parties
NERC will confirm to an employer that an individual holds a valid NERC system operator
certificate (including releasing the certificate number and the issuance date) in response to a
written request, on the employer’s letterhead (or e-mail), providing the name of the individual.
NERC will release the certificate numbers and issuance dates for individuals holding a current
NERC system operator certificate to the Regional Entity Compliance Staff or designated agents
of those Regional Entities in which an individual’s employer operates in response to a written
request, submitted on organization letterhead (or e-mail), that provides the names of the
individuals for whom information is sought. No further information will be provided.
NERC will confirm to an employment search firm, or a potential employer, whether an
individual holds a valid NERC system operator certificate (including releasing the certificate
number and the issuance date) if the search firm has a release from the individual. No further
information will be provided.

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Updated: August 14, 2006

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Section I — Certification Examinations

Section II — Credential Maintenance
Effective Date: October 1, 2006

Overview
The System Operator Certification Program incorporates a requirement to use Continuing
Education Hours (CE Hours) to maintain a Credential that is valid for three years. Successfully
passing an examination earns a Credential and a certificate that is valid for three years.
Accumulation of the proper number and type of CE Hours from NERC-approved learning
activities within that three-year period maintains the validity of that Credential for the next three
years. A new certificate is issued indicating the new expiration date.
The program provides that:
1.
System operators seeking to obtain a Credential will have to pass an examination to earn a
Credential.
2.
A certificate, valid for three years, will be issued to successful candidates.
3.
A certified system operator must accumulate a minimum number of CE Hours, in specific
training topics, before their certificate expires to maintain their Credential. The minimum
number of CE Hours is based on each Credential:
a. 200 CE Hours for reliability operator
b. 160 CE Hours for balancing, interchange, and transmission operator
c. 140 CE Hours for balancing and interchange operator
d. 140 CE Hours for transmission operator
4.
A minimum of 30 CE Hours must focus on content and/or implementation of NERC
Reliability Standards.
5.
A minimum of 30 CE Hours must be in simulations (i.e., table-top exercises, training
simulators, emergency drills, practice emergency procedures, restoration, blackstart, etc.).
6.
CE Hours can concurrently count for both NERC Reliability Standards and simulations but
will only be counted once for the total CE Hours requirement.
a. For example: A one-hour simulation learning activity that focuses on NERC
Standards can count towards the requirements for both NERC Reliability Standards
and simulation. However, the Credential holder will only be awarded a total of one
CE Hour toward the total CE Hours requirement. In other words, the CE Hours will
not be double counted.
7.
Retaking the examination is not an option for Credential Maintenance.
8.
If a certified system operator does not accumulate enough CE Hours to maintain their
current Credential prior to the certificate expiration date, their Credential will be Suspended
for a maximum of one year. At the end of the suspension period, their Credential will be
Revoked.
9.
If, prior to the end of the one-year suspension, the certified system operator accumulates the
proper number and type of CE Hours, their Credential will be reinstated with the original
expiration date (three years after the previous expiration date).
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10.

A system operator with a Revoked Credential will have to pass an examination to become
certified.

When to Start Accumulating CE Hours
CE Hours earned (date of learning activity) in the six months prior to the implementation date
will be recognized if they are earned from an approved learning activity that meets the
Certification program requirements. Each learning activity will have to be approved for use for
Credential Maintenance prior to the CE Hours being issued.

Specifics of the Credential Maintenance Program
Certified system operators are required to accumulate CE Hours through the NERC Continuing
Education Program in recognized training topics for Credential Maintenance. See Appendix A
for the list of recognized training topics. Described below are the requirements for each of the
four Credentials:
Transmission Operator Certification
To maintain a valid transmission operator Credential, system operators must earn 140 CE Hours
within the 3-year period preceding the expiration date of their certificate.
The 140 CE Hours must include:
• A minimum of 30 CE Hours must focus on content and/or implementation of NERC
Reliability Standards.
• A minimum of 30 CE Hours must utilize simulations (i.e., table-top exercises,
dispatcher/operator training simulators, emergency drills, or practice emergency
procedures, restoration, blackstart or other reliability-based scenarios).
Balancing and Interchange Operator Certification
To maintain a valid balancing and interchange operator Credential, system operators must earn
140 CE Hours within the 3-year period preceding the expiration date of their certificate.
The 140 CE Hours must include:
• A minimum of 30 CE Hours must focus on content and/or implementation of NERC
Reliability Standards.
• A minimum of 30 CE Hours must utilize simulations (i.e., table-top exercises,
dispatcher/operator training simulators, emergency drills, or practice emergency
procedures, restoration, blackstart or other reliability-based scenarios).
Balancing, Interchange, and Transmission Operator Certification
To maintain a valid balancing, interchange, and transmission operator Credential, system
operators must earn 160 CE Hours within the 3-year period preceding the expiration date of
their certificate.
The 160 CE Hours must include:
• A minimum of 30 CE Hours must focus on content and/or implementation of NERC
Reliability Standards.
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Section II — Credential Maintenance

•

A minimum of 30 CE Hours must utilize simulations (i.e., table-top exercises,
dispatcher/operator training simulators, emergency drills, or practice emergency
procedures, restoration, blackstart or other reliability-based scenarios).

Reliability Operator Certification
To maintain a valid reliability operator credential, system operators must earn 200 CE Hours
within the three-year period preceding the expiration date of their certificate.
The 200 CE Hours must include:
• A minimum of 30 CE Hours must focus on content and/or implementation of NERC
Reliability Standards.
• A minimum of 30 CE Hours must utilize simulations (i.e., table-top exercises,
dispatcher/operator training simulators, emergency drills, or practice emergency
procedures, restoration, blackstart or other reliability-based scenarios).

Certificate
System operators that have: 1) completed the Credential Maintenance application, 2) satisfied the
CE Hours requirements, and 3) paid the required fee will be issued a certificate valid for three
years.

Deficits of CE Hours for Credential Holders
The Credential of a certified system operator who does not accumulate the required number and
balance of CE Hours within the three-year period will be Suspended. A system operator with a
Suspended certificate cannot perform any task that requires an operator to be NERC-certified.
The system operator with a Suspended Credential will have up to twelve months to acquire the
necessary CE Hours.
During the time of suspension, the original anniversary date will be maintained. Therefore,
should the system operator accumulate the required number of CE Hours within the twelvemonth suspension period, they will be issued a certificate that will be valid for three years from
the previous expiration date. The system operator will be required to accumulate the required
number of CE Hours prior to the current expiration date.
At the end of the twelve-month suspension period, if the system operator has not accumulated
the required number of CE Hours, the Credential will be Revoked and all CE Hours earned will
be forfeited. After a Credential is Revoked, the system operator will be required to pass an
examination to become certified.
For example, a system operator whose Credential expires on July 31, 2009 does not accumulate
the required number of CE Hours prior to that date:
1. The Credential will be Suspended on August 1, 2009.
2. If the system operator then accumulates and submits the required number of CE Hours by
March 1, 2010, the Credential will be reinstated on March 1, 2010, and will be valid until
July 31, 2012.
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Section II — Credential Maintenance

3. The system operator will have to accumulate the required number of CE Hours prior to

July 31, 2012 or the Credential will be Suspended again.
4. CE Hours previously used to maintain the Credential cannot be reused for Credential
Maintenance.
5. A record of the suspension between August 1, 2009 and March 1, 2010 will be
maintained.

Carry-Over Hours
For all Credentials, up to 30 CE Hours accumulated in the six months prior to the certificate
expiration date and not used for Credential Maintenance may be carried over to the next threeyear period.
CE Hours will be allocated on a first-in, first-out basis. In other words, CE Hours from a
learning activity occurring first according to the calendar will be used to satisfy the CE Hours
requirement first and continuing sequentially by the date of the learning activities.

Reporting of CE Hours Earned by Certified System Operators
Normally, the Providers will make the submittals of electronically into the NERC system
operator Certification database. However, should some conflict occur, the certified system
operator must be able to submit proof of having acquired the necessary CE Hours from the
Continuing Education Program Provider’s approved learning activities.
System operators will be able to track their status/progress towards maintaining their Credential
through the NERC system operator Certification website. Certified system operators should
review their CE Hours records at least 90 days before their certificate expiration date to allow
sufficient time to acquire CE Hours prior to the system operator’s certificate expiration date
should there be a deficit.
If a Provider does not submit the CE Hours, the certified system operator must submit proof of
sufficient CE Hours to the NERC Manager of Personnel Certification no less than 30 days before
the system operator’s certificate expiration date. NERC staff may be able to process/resolve
discrepancies in Credential holder CE Hours records in less than 30 days; however, submissions
received at NERC within the 30-day window may not be credited to the system operator’s
account in time to prevent the Credential from being Suspended. Suspended Credentials based
on incomplete data will be reinstated retroactively once proof of completion is verified.
For system operators who meet the CE Hours requirements, and upon receipt of an application
and necessary fees, NERC will issue a new certificate with an expiration date three years from
the previous expiration date (a new certificate will be mailed to the address on record).

Application for Credential Maintenance
Procedure for applying for Credential Maintenance
Application procedure will be completed after the software is developed.
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Section II — Credential Maintenance

Hardship Clause
It is understood that, due to unforeseen events and extenuating circumstances, a certified system
operator may be unable to accumulate the necessary CE Hours in the time frame required by the
Program to maintain the Credential. In such an event, an individual must submit a written
request containing a thorough explanation of the circumstance and supporting information to:
Manager–Personnel Certification
NERC
116-390 Village Boulevard
Princeton, New Jersey 08540
The PCGC retains the right to invoke this hardship clause and deviate from the Program rules, as
it deems appropriate, to address such events or circumstances. Examples of extenuating
circumstances would include, but not limited to, extended military service, extended illness of
the system operator or within the system operator’s immediate family, or system operator
temporary disability that results in an extended period of time away from work.

Changing Certification Levels
Certified system operators that want to transition to a lower Credential can do so. Many system
operators hold a reliability operator Credential but are not working in a reliability operator
capacity. Those certified system operators could easily transition to a Credential that more
closely matches the work they perform without taking an examination. However, system
operators currently holding a transmission operator or balancing and interchange operator
Credential will have to pass an examination to move to a higher Credential such as the combined
balancing, interchange, and transmission operator Credential or the reliability operator
Credential.
A certified system operator can change the type of their Credential by indicating their desire on
their Credential Maintenance application. A system operator has the following options:
To change a Credential from:
•
•
•
•
•

Balancing and interchange operator to any other NERC Credential: the system operator
must pass the examination for that Credential.
Transmission operator to any other NERC Credential: the system operator must pass the
examination for that Credential.
Balancing, interchange, and transmission operator to reliability operator: the system
operator must pass the examination for that Credential.
Reliability operator to any other NERC Credential: the system operator must submit the
proper number and type of CE Hours for the new Credential.
Balancing, interchange, and transmission operator to transmission operator or balancing
and interchange operator: the system operator must submit proper number and type of CE
Hours for the new Credential.

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Section II — Credential Maintenance

Transition Plan — 5-year Program to 3-year Program
A certified system operator whose certificate expires during the first three years after
implementation of this Program has the option to either accumulate the required number of CE
Hours according to the rules stated previously or pass the examination for the desired Credential.
Certified system operators who accumulate the required number and balance of CE Hours will
receive a certificate that will be valid for three years from the expiration date on their current
certificate. System operators who pass an examination will receive a certificate valid for three
years from the date they pass the examination.
Certified system operators whose certificate expires after the third anniversary of the
implementation of this Program, must accumulate the required number of CE Hours prior to the
expiration date of their certificate regardless of the issuance date of their certificate.

System Operator Certification Program Manual—Final
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Section III — Program Rules

Section III — Program Rules
Rules for NERC-Certified System Operator
Recognized Learning Activities
CE Hours will be recognized for Credential Maintenance only for training topics/learning
activities listed in Appendix A and where Providers have complied with the Continuing
Education Program rules.
Provider Access to Database
Providers will be able to access the database to upload certified system operator CE Hours
activity. The process for doing this will be determined after the database is developed.
System Operator Access to Database
Certified system operators will be able to access the database to track their CE Hour activity.
The process for doing this will be determined after the database is developed.
Retain Documentation
The certified system operator is responsible for retaining appropriate documentation for proof of
Credential Maintenance. Documentation includes:
• Name and contact information of the Provider
• Title and identification number of the learning activity and description of its content
• Date(s) of the learning activity
• Location (if applicable)
• Number and type of CE Hours
• System operator’s NERC certificate number
Providers shall retain comparable documentation. Electronic forms of documentation are
acceptable.
Learning Activity Credit Only Once Per Year
CE Hours for a particular course or learning activity will not be recognized for Credential
Maintenance more than once a year based on the Credential anniversary. (i.e., during the twelvemonth period preceding the system operator’s Credential anniversary)
Exception: CE Hours for courses dealing with emergency operations will be recognized no more
than two times per year based on the Credential anniversary. (i.e., during the 12-month period
preceding the system operator’s Credential anniversary)
Learning Activity Approved Status Revoked after CE Hours Granted
CE Hours granted for a course or learning activity that had been approved for Credential
Maintenance will still be recognized if, subsequent to the system operator attending the course or
learning activity, the approved status is Revoked.
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Section III — Program Rules

Instructor Credits
For those instructors who are also certified system operators, 1.0 CE Hour for each CE Hours of
a learning activity delivered will be recognized towards the instructor’s system operator
Credential Maintenance. CE Hours for a particular course or learning activity will not be
recognized for Credential Maintenance more than once a year based on the Credential
anniversary. (i.e., during the twelve-month period preceding the system operator’s Credential
anniversary)
Exception: CE Hours for courses dealing with emergency operations will be recognized no more
than two times per year based on the Credential anniversary. (i.e., during the twelve-month
period preceding the system operator’s Credential anniversary)
Treatment of Disputes Between Certified System Operator and Providers
Disputes between a Provider and a certified system operator must be resolved between the
Provider and the certified system operator. NERC will not become involved in resolving the
dispute. Additionally, it is the obligation of the certified system operator to periodically review
their CE Hours’ records in the NERC system operator Certification database and to maintain
their own training records to provide proof that CE Hour requirements have been achieved.
Fees
Fee Schedule**
Application to test

$350

Application to maintain or change
Credential using CE Hours

$350

Application to retest

$350

Application to withdraw

$50

Bad check/credit application

$25

**All funds must be payable in U.S. dollars.
The Program must be financially independent as well as not-for-profit. The on-going expenses
to develop and maintain the examinations and the management and administrative costs
associated with both the examination process and Credential Maintenance necessitate these fees.
These fees will be periodically reviewed and adjusted accordingly.

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Section IV — Dispute Resolution

Section IV — Dispute Resolution
1. Applicability
Any dispute arising under the NERC agreement establishing a NERC System Operator
Certification Program or from the establishment of any NERC rules, policies, or procedures
dealing with any segment of the Certification process shall be subject to the NERC system
operator certification dispute resolution process (hereafter called the “Process”). The Process is
for the use of persons who hold an operator Certification or persons wishing to be certified to
dispute the validity of the examination, the content of the test, the content outlines, or the
registration process. The Process is not for trainers or certified persons disputing CE Hours.
2. Dispute Resolution Process
The dispute resolution process consists of three steps.
a. NERC System Operator Certification Program Staff
The first step in the process is for the person with a dispute to contact the NERC System
Operator Certification Program staff. Contact may be made by a phone call or e-mail to
the program staff. This first step can usually resolve the issues without further actions. It
is expected that most disputes will be resolved at this step.
Any dispute that requires resolution will first be brought to the NERC System Operator
Certification Program staff. Should the issue(s) not be resolved to the satisfaction of the
parties involved, the issue can be brought to the Personnel Certification Governance
Committee (PCGC) Dispute Resolution Task Force.
b. Personnel Certification Governance Dispute Resolution Task Force
If the NERC staff did not resolve the issue(s) to the satisfaction of the parties involved, a
written request should be submitted to the chairman of the PCGC through NERC staff
explaining the issue(s) and requesting further action. Upon receipt of the letter, the
PCGC chairman will present the request to the PCGC Dispute Resolution Task Force for
action. This task force consists of three current members of the PCGC. The PCGC
Dispute Resolution Task Force will investigate and consider the issue(s) presented and
make a decision. This decision will then be communicated to the submitting party, the
PCGC chairman, and the NERC staff within 45 calendar days of receipt of the request.
If a French-Canadian or Mexican party raises a dispute, the PCGC shall appoint a
French-Canadian speaking or Spanish-speaking interpreter, respectively, as requested.
c. Personnel Certification Governance Committee
If the PCGC Dispute Resolution Task Force’s decision did not resolve the issue(s) to the
satisfaction of the parties involved, the final step in the process is for the issue(s) to be
brought before the PCGC. The disputing party shall submit a written request to the
PCGC chairman through NERC staff requesting that the issue(s) be brought before the

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Section IV — Dispute Resolution

PCGC for resolution. The chairman shall see that the necessary documents and related
data are provided to the PCGC members as soon as practicable. The PCGC will then
meet or conference to discuss the issue(s) and make their decision within 60 calendar
days of the chairman’s receipt of the request. The decision will be provided to the person
bringing the issue(s) and the NERC staff. The PCGC is the governing body of the
Certification Program and its decision is final.
3. Process Expenses
All individual expenses associated with the Process, including salaries, meetings, or consultant
fees, shall be the responsibility of the individual parties incurring the expense.
4. Decision Process
Robert’s Rules of Order shall be used as a standard of conduct for the Process. A simple
majority vote of the members present will decide all issues. The vote will be taken in a closed
session. No one on the PCGC may participate in the dispute resolution process, other than as a
party or witness, if he or she has an interest in the particular matter.
A stipulation of invoking the appeals process is that the entity requesting the appeal agrees that
neither NERC (its Members, Board of Trustees, committees, subcommittees, and staff), any
person assisting in the appeals process, nor any company employing a person assisting in the
appeals process, shall be liable, and they shall be held harmless against the consequences of or
any action or inaction or of any agreement reached in resolution of the dispute or any failure to
reach agreement as a result of the appeals proceeding. This “hold harmless” clause does not
extend to matters constituting gross negligence, intentional misconduct, or a breach of
confidentiality.

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Updated: August 14, 2006

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Section V — Disciplinary Action

Section V — Disciplinary Action
1.

Purpose

This disciplinary action procedure is necessary to protect the integrity of the system operator
Credential. Should an individual act in a manner that is inconsistent with expectations, this
procedure describes the process to investigate and take action necessary to protect the Credential.
2.

Grounds for Action

The following shall serve as grounds for disciplinary action:
a.

Willful, gross, and/or repeated violation of the NERC Reliability Standards as
determined by a NERC investigation.
i. Both the organization and the certified system operator are bound by the NERC
Reliability Standards. If a certified system operator, either in concert with the
organization or on his or her own initiative, performs a willful, gross, and/or
repeated violation of the NERC Reliability Standards, he or she is liable for those
actions and disciplinary actions may be taken against him or her.

b.

Willful, gross, and/or repeated negligence in performing the duties of a certified
system operator as determined by a NERC investigation.

c.

Intentional misrepresentation of information provided on a NERC application for a
system operator Certification exam or to maintain a system operator Credential using
CE Hours.

d.

Intentional misrepresentation of identification in the exam process.
i. This includes, but is not limited to, a person identifying himself or herself as
another person to obtain Certification for the other person.

e.

Any form of cheating during a Certification exam.
i. This includes, but is not limited to, bringing unauthorized reference material in
the form of notes, crib sheets, or other methods of cheating into the testing center.

f.
3.

A certified system operator’s admission to or conviction of any felony or
misdemeanor directly related to their duties as a system operator.

Hearing and Appeals Process

Upon report to NERC of a candidate’s or certified system operator’s alleged misconduct, the
NERC Personnel Certification Governance Committee (PCGC) Credential Review Task Force
will convene for the determination of facts. An individual, government agency, or other
investigating authority can file reports.
Unless the task force initially determines that the report of alleged misconduct is without merit,
the candidate or certified system operator will be given the right to notice of the allegation. A
hearing will be held and the charged candidate or certified system operator will be given an
opportunity to be heard and present further relevant information. The task force may seek out
information from other involved parties. The hearing will not be open to the public, but it will be
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Section V — Disciplinary Action

open to the charged candidate or certified system operator and his or her representative. The task
force will deliberate in a closed session, but the task force cannot receive any evidence during
the closed session that was not developed during the course of the hearing. The task force’s
decision will be unanimous and will be in writing with inclusion of the facts and reasons for the
decision. The task force’s written decision will be delivered to the PCGC and by certified post to
the charged candidate or certified system operator. In the event that the task force is unable to
reach a unanimous decision, the matter shall be brought to the full committee for a decision.
The task force’s decision will be one of the below:
a.

No Action
Allegation of misconduct was determined to be unsubstantiated or inconsequential to
the Credential.

b.

Probation
A letter will be sent from NERC to the offender specifying:
i. The length of time of the probationary period (to be determined by the PCGC).
(a) Credential will remain valid during the probationary period.
(b) The probationary period does not affect the expiration date of the current
certificate.
ii. During the probationary period, a subsequent offense of misconduct, as
determined through the same process as described above, may be cause for more
serious consequences.
(a) Extension of Probation,
(b) Revocation for cause, or
(c) Termination of Credential.

c.

Revoke for Cause
A letter will be sent from NERC to the offender specifying:
i. The length of time of the revocation period (to be determined by the PCGC).
(a) Credential is no longer valid.
(b) Successfully passing an exam will be required to become certified.
(c) An exam will not be authorized until the revocation period expires.

d.

Termination of Credential
A letter will be sent from NERC to the offender specifying:
i. Permanent removal of Credential.

4.

Appeal Process

The decision of the task force may be appealed using the NERC system operator certification
dispute resolution process.

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Section V — Disciplinary Action

5.

Credential Review Task Force

The Credential Review Task Force shall be comprised of three active members of the PCGC
assigned by the Chairman of the PCGC on an ad hoc basis. No one on the Credential Review
Task Force may have an interest in the particular matter.
The task force will meet in a venue determined by the task force chairman.
If a French-Canadian or Mexican party raises a dispute, the PCGC shall appoint a FrenchCanadian speaking or Spanish-speaking interpreter, respectively, as requested.

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Glossary

Glossary
Capitalized terms used in this Appendix shall have the definitions set forth in Appendix 2 of the
Rules of Procedure. For convenience of reference, definitions used in this Appendix are also set
forth below:
G01.

Continuing Education Hour or CE Hour: Sixty minutes of participation in a group,
independent study, or self-study learning activity as approved by the NERC Continuing
Education Program.

G02.

Continuing Education Program Provider or Provider: The individual or organization
offering a learning activity to participants and maintaining documentation required by
these criteria.

G03.

Certification: An official recognition that indicates the recipient has passed a NERC
exam or completed a specified number of Continuing Education Hours.

G04.

Credential: NERC designation that indicates the level of qualification achieved (i.e.,
reliability operator; balancing, interchange, and transmission operator; balancing and
interchange operator; and transmission operator).

G05.

Credential Maintenance: Meet NERC CE Hours’ requirements to maintain a valid
NERC-issued system operator Credential.

G06.

NERC-Approved Learning Activity: Training that maintains or improves professional
competence and has been approved by NERC for use in its Continuing Education
Program.

G07.

Probation: A step in the disciplinary process during which the certificate is still valid.
During the probationary period, a subsequent offense of misconduct, as determined
through the same process as described above, may be cause for more serious
consequences.

G08.

Revoked: A NERC certificate which has been Suspended for more than twelve months.
While in this state, a certificate holder can not perform any task that requires an operator
to be NERC-certified. The certificate holder will be required to pass an exam to be
certified again. Any CE Hours accumulated prior to or during the revocation period will
not be counted towards Credential Maintenance.

G09.

Revoke for Cause: A step in the disciplinary process during which the certificate is no
longer valid and requiring successfully passing an exam to become certified. However,
an exam will not be authorized until the revocation period expires. CE Hours earned
before or during this revocation period will not be counted for maintaining a Credential.

G10.

Suspended: Certificate status due to an insufficient number of CE Hours being
submitted prior to the expiration of a certificate. While in this state, a certificate holder
can not perform any task that requires an operator to be NERC-certified.

G11.

Termination of Credential: A step in the disciplinary process whereby a Credential is
permanently Revoked.

System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

23

Appendix A

G12.

Type of CE Hours: NERC-Approved Learning Activity covering topics from Appendix
A, NERC Reliability Standards and/or simulations for which there is a minimum
requirement for Credential Maintenance.

System Operator Certification Program Manual—Final
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Updated: August 14, 2006

24

Appendix A

Appendix A — Recognized Operator Training Topics
1. Basic Concepts
a. Basic electricity including capacitance, inductance, impedance, Real and Reactive Power
real and reactive power
b. Single phase & three phase power systems
c. Transmission line and transformer characteristics
d. Substation layouts including the advantages and disadvantages of substation bus schemes
2. Production & Transfer of Electric Energy
a. How generators produce electricity
b. Types of generators including advantages and disadvantages of each type
c. Economic operation of generators
d. Real and Reactive Power reactive power flow
3. System Protection
a. Transmission line, transformer, and bus protection principles
b. Generator protection principles
c. Types of relays used in different protection schemes
d. The role of communication systems in system protection
4. Interconnected Power System Operations
a. Voltage control
b. Frequency control
c. Power system stability
d. Facility outage response
e. Automatic generator control (AGC) including the different modes of AGC
f. Extra high voltage (EHV) operation
g. Energy accounting
h. Inadvertent energy
5. Emergency Operations
a. Loss of generation resource
b. Operating reserves
c. Contingency reserves
d. Line loading relief
e. Loop flow
f. Load shedding
g. Voltage and reactive flows during emergencies
h. Loss of critical transmission facilities
6. Power System Restoration
a. Restoration philosophies
b. Facility restoration
c. Blackstart restoration
d. Load shedding
e. Under-frequency Loadload shedding
f. Under-voltage Loadload shedding
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Updated: August 14, 2006

25

Appendix A

7. Market Operations
a. Standards of conduct
b. Tariffs
c. Transmission reservations and transmission priorities
d. Transaction tagging
8. Tools
a. Supervisory control and data acquisition
b. Automatic generation control application
c. Power flow application
d. State estimator application
e. Contingency analysis application
f. P-V curves
g. Load forecasting application
h. Energy accounting application
i. OASIS application
j. E-Tag application
k. Voice and data communication systems
9. Operator Awareness
a. Identifying loss of facilities
b. Recognizing loss of communication facilities
c. Recognizing telemetry problems
d. Recognizing and identifying contingency problems
e. Communication with appropriate entities including the Reliability Coordinator
10. Policies & Procedures
a. NERC Reliability Standards
b. ISO/RTO operational and emergency policies and procedures
c. Regional operational and emergency policies and procedures
d. Local & company specific policies and procedures
e. Emergency operating plans
f. Line loading relief procedures
g. Physical and cyber sabotage procedures
h. Outage management and switching procedures
11. NERC Reliability Standards
a. Application and/or implementation of NERC Reliability Standards

System Operator Certification Program Manual—Final
Approved by NERC Board: October 10, 2006
Updated: August 14, 2006

26

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 8A

REVISED APPENDIX 8 OF THE RULES OF PROCEDURE,
NERC BLACKOUT AND DISTURBANCE RESPONSE PROCEDURES
CLEAN VERSION

Appendix 8

Proposed Revisions 1-9-2012
[Incorporates revisions filed with
FERC on November 29, 2011]

NERC Blackout and Disturbance
Response Procedures

Effective October 18, 2007

North American Electric Reliability Corporation
NERC Blackout and Disturbance Response Procedures
1

NERC Blackout and Disturbance Response Procedures
Introduction

NERC, through its professional staff and the Regional Entities and their members, provide the
best source of technical and managerial expertise for responding to major events that affect the
Bulk Power System.
NERC’s role following a blackout or other major Bulk Electric System disturbance or
emergency is to provide leadership, coordination, technical expertise, and assistance to the
industry in responding to the event. Working closely with the Regional Entities and Reliability
Coordinators, NERC will coordinate efforts among industry participants, and with state, federal,
and provincial governments in the United States and Canada to support the industry’s response.
When responding to any event where physical or cyber security is suspected as a cause or
contributing factor to an event, NERC will immediately notify appropriate government agencies
and coordinate its analysis with them.
During the conduct of some NERC-level analyses, assistance may be needed from government
agencies. Collaborative analysis with certain government agencies may be appropriate in some
cases; e.g., collaborating with the Nuclear Regulatory Commission technical staff when a system
event involves a nuclear unit. This assistance could include: authority to require data reporting
from affected or involved parties; communications with other agencies of government; analyses
related to possible criminal or terrorist involvement in the event; resources for initial data
gathering immediately after the event; authority to call meetings of affected or involved parties;
and technical and analytical resources for studies. If a federal or multi-national government
analysis is called for, government agencies should work in primarily an oversight and support
role, in close coordination with the NERC analysis.
It is critical to establish, up front, a clear delineation of roles, responsibilities, and coordination
requirements among industry and government for the analysis and reporting of findings,
conclusions, and recommendations related to major blackouts, disturbances, or other
emergencies affecting the Bulk Power System.
Depending on the severity and of the event and the area impacted, the event analysis may be
conducted either by NERC or by the impacted Regional Entity. If the analysis is conducted by
the Regional Entity, NERC staff, at least one member of the NERC Event Analysis Working
Group (in addition to the Event Analysis Working Group member from the impacted Regional
Entity), and other appropriate technical experts from the NERC community will participate as
members of the Regional Entity analysis team.
A Regional Entity may request NERC to elevate an analysis to a NERC-level. In such cases, all
team responsibilities will shift to NERC, and the Regional Entity may continue to participate in
the analysis on appropriate teams.
These procedures do not represent a “cookbook” to be followed blindly. They provide a
framework to guide NERC’s response to events that may have multiregional, national, or
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

1

international implications. Experienced industry leadership would still be required to tailor the
response to the specific circumstances of the event.
Responding to major blackouts and other system disturbances can be divided into four phases:
1. situation assessment and communications;
2. situation tracking and communications;
3. data collection, investigation, analysis and reporting; and
4. follow-up on recommendations.
Phase 1 ⎯ Situation Assessment and Communications

NERC’s primary roles in Phase 1 are to:
• conduct an initial situation assessment;
• call for the collection of and analyze necessary initial data and information for the event;
• assist the Regional Entity-lead analysis with determining the need for supplemental
technical expertise from the NERC community;
• issue initial findings, conclusions, and recommendations;
• maintain detailed data records (not subject to Freedom of Information Act);
• assist government agencies in criminal analyses when relevant;
• provide technical expertise for modeling and analyzing the event; and
• follow up on recommendations.
While conducting its initial situation assessment, NERC will make an early determination as to
whether the cause of the event may be related to physical or cyber security, and communicate as
appropriate with government agencies.
Notice of a event is typically received by the NERC Electricity Sector Information Sharing and
Analysis Center (ESISAC) person on duty and relayed to other appropriate NERC personnel.1
NERC performs an initial situation assessment by contacting the appropriate Reliability
Coordinator(s), and makes a decision on whether to activate its crisis communications plan. At
the initial stage in gathering information about an incident, it is critical to minimize interference
with Bulk Electric System operators who are in the process of restoring the system. To minimize
interference with their work, NERC, in its capacity as the ESISAC, should serve as the primary
communications link with government agencies.
The ESISAC Concept of Operations (ConOps) specifies the operations plan, communications
procedures, and logistics NERC will follow during normal conditions, emergencies, and national
security special events. The ConOps includes the primary points of contact (24x7) for the
Federal Energy Regulatory Commission, U.S. Department of Energy, U.S. Department of
Homeland Security, U.S. Nuclear Regulatory Commission, and Public Safety and Emergency
Preparedness Canada.
It is important that during these early hours the ESISAC, in coordination with government
agencies, determine whether this event was caused by the actions of criminal or terrorist parties.
The results of this criminal assessment are essential to operators because if there is a possibility
that the “attack” is still ongoing, restoration and response actions would need to be tailored to
1

NERC maintains 24x7 contact information for its key personnel to facilitate such contacts.
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

2

these circumstances. If NERC and government agencies deem it necessary for further criminal
analyses, NERC will issue a formal notice to affected systems to retain all relevant information
gathered during this and subsequent phases of an analysis.
The specific criteria for reporting disturbances and other events are described in NERC
Reliability Standard EOP-004-1. These criteria and procedures are intended to provide a
common basis for consistent reporting of abnormal system conditions and events that occur in
North America. All entities responsible for the reliability of Bulk Power Systems in North
America must ensure that sufficient information is submitted to NERC within the time frame
required. Reliability Coordinators will use the Reliability Coordinator Information System
(RCIS) as the primary method of communications to NERC. The ESISAC duty person is
responsible for monitoring the RCIS for such notifications.
Depending on the scope and magnitude of the event, NERC will issue media advisories through
its crisis communications plan.
Phase 2 ⎯ Situation Tracking and Communications

Based on the nature and severity of the event, in Phase 2 NERC will continue to track progress in
restoring the Bulk Power System and service to customers, and keep industry, government
agencies, and the public informed. The most important thing to recognize in this phase is that
the primary focus of Reliability Coordinators and Transmission Operators is the prompt
restoration of the Bulk Electric System. NERC will coordinate requests by government agencies
for information from Reliability Coordinators and Transmission Operators, and serve as a
conduit and coordinator between industry and government for regular status reports on the
restoration.
As events continue, NERC will determine whether a detailed analysis of the event should be
conducted, and start to identify manpower requirements, data collection and retention
requirements, and at what level the analysis should be conducted. If the event is localized within
a Region, NERC will participate in the event analysis of the Regional Entity.
Phase 3 ⎯ Data Collection, Investigation, Analysis, and Reporting

Based on the scope, magnitude, and impact of an event, during Phase 3 NERC may:
1. perform an overview analysis of system and generator response;
2. rely on one of its Regional Entities to conduct the analysis and monitor the analysis
results;
3. work with a Regional Entity in its analysis; or
4. conduct a NERC-level analysis.
The NERC CEO will decide, based on the initial situation assessment and consultation with the
NERC technical committee officers2, if a NERC-level analysis is warranted. If a NERC-level
analysis is to be conducted, the NERC CEO will appoint the Director of Events Analysis and
Information Exchange to lead the analysis and assemble a high-level technical steering group to
provide guidance and support throughout the analysis.

2

NERC will maintain a list of 24x7 contact information for its technical committee officers.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

3

NERC reserves the right to elevate or augment an analysis performed by a Regional Entity
pending the results of the Regional Entity analysis. Additional requests for analyses or
supporting data may be made by NERC at any time in the investigation process.
A Regional Entity may request NERC to elevate an analysis to a NERC-level. In such cases, all
team responsibilities will shift to NERC, and the Regional Entity may continue to participate in
the analysis on appropriate teams.
If the analysis is to be led by one of the Regional Entities, a member of the NERC staff, at least
one member of the NERC Event Analysis Working Group (in addition to an Event Analysis
Working Group member from the impacted Regional Entity), and other appropriate technical
experts from the NERC community will participate as a triage team. The triage team will
participate as members of the Regional Entity analysis team. The triage team will also will assist
the Regional Entity with determining if additional technical expertise from the NERC
community are needed for the analysis.
For NERC-level analyses, the first task of the Director of Events Analysis and Information
Exchange would be to identify what technical and other resources and data would be needed
from staff, the industry, and government, and to issue those requests immediately. This task will
include identification of any special managerial, forensic, or engineering skills needed for the
analysis. Secondly, the Director of Events Analysis and Information Exchange must issue
requests for those resources and information. Third, the Director of Events Analysis and
Information Exchange must organize the teams that will conduct and report on the analysis.
The teams needed for a particular analysis will vary with the nature and scope of the event.
Attachment A describes the typical teams that would be required for a NERC-level analysis, and
Attachment B provides suggested guidelines for the NERC-level analysis team scopes.
Individuals that participate on these teams will be expected to sign an appropriate confidentiality
agreement. NERC uses a standard (pro forma) confidentiality agreement (Attachment C) for
participants in event analyses, which it will adapt for specific analyses.
The Blackout and Disturbance Analysis Objectives, Approach, Schedule, and Status (Attachment
D) and Guidelines for NERC Reports on Blackouts and Disturbances (Attachment E) are used to
guide and manage analysis and reporting on major blackouts and disturbances.
A NERC-level analysis will comprise (a) collecting pertinent event data; (b) constructing a
detailed sequence of events leading to and triggering the disturbance; (c) assembling system
models and data and conducting detailed system analysis to simulate pre- and post-event
conditions; and (d) issuing findings, conclusions, and recommendations. The details of these
four phases of the analysis are:
a. Collecting Pertinent Event Data

•

Collect all pertinent event logs, disturbance recorders, operator transcripts, and other
system data.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

4

b. Detailed Sequence of Events

•
•

Construct a detailed sequence of events leading to and triggering the event.
Reconcile event logs, disturbance recorders, operator transcripts, and other system
data to create an accurate sequence of events.
Enter and preserve all data in a secure data warehouse.

c. Detailed System Analysis

•
•

•
•
•

Assess the sequence of events to determine critical times for study.
Assemble the necessary system models and data from Regional Entity and operating
entities to accurately model (with power flow and dynamic simulations) the pre-event
conditions.3 Determine pre-event conditions at critical times prior to event initiation,
including an assessment of reliability margins in the pre-event time frame.
Analyze data from phasor measurement units, high-speed data recorders, digital fault
recorders, digital relays, and system relay targets.4
Analyze generator and Load performance, including underfrequency and
undervoltage relay actions.
Use the model information and sequence of events to dynamically model the trigger
events and the outage sequence. Identify the system phenomena that propagated the
failure. Provide graphical results showing the nature of the cascade. Conduct
additional analyses as initial findings identify the need for further study.

d. Findings, Conclusions, and Recommendations

•
•
•
•
•
•
•
•

Identify and assess failures contributing to the event, including possible instability
conditions, system protection mis-operations, generator actions, etc.
Either identify or rule out man-made/criminal cyber or physical attacks on the electric
system.
Determine if the system was being operated within equipment and system design
criteria at the time of the outage.
Assess the qualifications, training, SCADA/EMS tools, and communications
available to system operators and Reliability Coordinators, and how effective these
were leading up to and during the event.
Assess the adequacy of communications system and communications among system
operators.
Identify any issues regarding maintenance or equipment conditions that may have
contributed to the outage.
Determine whether system restoration procedures were available and adequate.
Identify any issues that caused unexpected delays in the restoration of generators and
Loads.
Identify the root causes5 and contributing factors of the Cascading outage.

3

NERC is developing standards for data and model validation that will facilitate modeling activities in future
blackout analyses.
4
NERC is developing standards for dynamic monitoring equipment and the deployment of such equipment at
critical locations in the Bulk Electric System.
5
NERC will rely on root cause analysis experts, both from within the industry and outside consultants, to conduct
these analyses.
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

5

•
•
•

Recommend actions to prevent Cascading outages in the future and to improve
system reliability.
Determine whether the system is adequately designed.
All compliance issues will be referred to the NERC Director of Compliance.

Phase 4 ⎯ Follow-up on Recommendations

For Phase 4 NERC and the Regional Entities will follow up on specific recommendations
coming from all analyses, whether done at the Regional Entity or NERC level. In certain cases,
where government agencies have taken a direct role in the analysis, reports will be made to those
agencies on progress in addressing the recommendations.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

6

Attachment A
Typical Team Assignments for Analysis of Blackouts or Disturbances6
Fact-Finding Teams

•
•
•
•
•
•

Physical and/or cyber security (if needed)
On-site interviews
System data collection (frequency, voltages, generation and Loads)7
System protection and control information
System restoration
Coordination with Regional Entity teams

Assessment and Analysis Teams

•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

Performance of generation and transmission Protection Systems
Frequency analysis
Equipment maintenance
SCADA/EMS/Tools
Operator training
Reliability Standards compliance
System planning
System operation
System restoration
Root cause analysis
System simulation
Interregional coordination
Vegetation management
Recommendations for future actions
Security and law enforcement liaison

Data Management Teams

•
•
•
•

Data requests
Data collection
Data warehouse – entry, logging, retention, and maintenance8
Data release9

Report Writing Teams

•
•
•

6

Text
Graphics
Presentations

The analysis team leader will specify the tasks required of each team.
Standard forms and procedures for the collection of data and information will be adapted for particular
circumstances.
8
Experience with data warehousing and access procedures gained during the investigation of the August 2003
blackout will be used in future investigations.
9
Data release procedures will prevent inappropriate disclosure of information.
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007
1
7

Communications Teams

•
•
•

Press releases
Interface with government agencies
Interviews

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

2

Attachment B

NERC Blackout and Disturbance Response Procedures
Guidelines for Analysis Team Scopes
Each blackout or disturbance is unique and will therefore demand a customized approach to its
analysis. The following guidelines for analysis team scopes are suggestive rather than definitive.
Not all the teams listed may be needed for a particular analysis.
Data Requests and Management — This team organizes large volumes of raw data and
value-added information produced by analysts in support of the blackout analysis into a data
warehouse. The team issues data requests from affected entities, catalogs and stores all data
received, and provides secure and confidential access to teams and personnel supporting the
analysis. The team serves as the single point for issuing data requests, receiving and storing
data, and managing data queries by the analysts, and is responsible for assuring consistency,
security, and confidentiality of the data and minimizing redundant data requests.
Sequence of Events — A precise, accurate sequence of events is a building block for all
other aspects of the analysis, and is a starting point for the root cause analysis. It is the basis for
developing computer models to simulate system conditions and evaluate steady state and
stability conditions in the period leading to blackout. The sequence of events is the foundation
of facts upon which all other aspects of the analysis can proceed.
System Modeling and Simulation Analysis — System modeling and simulation allows
the investigators to replicate system conditions leading up to the blackout. While the sequence
of events provides a precise description of discrete events, it does not describe the overall state of
the electric system and how close it was to various steady state, voltage stability, and power
angle stability limits. An accurate computer model of the system, benchmarked to actual
conditions at selected critical times, allows analysts to conduct a series of sensitivity studies to
determine if the system was stable and within limits at each point in time leading up to the
blackout, and at what point the system became unstable. It also allows analysts to test different
solutions to prevent Cascading. Although it is not possible recreate the entire blackout sequence,
simulation methods will reveal the mode(s) of failure initiating the blackout and propagating
through the system.
Root Cause Analysis — Root cause analysis guides the overall analysis process by providing
a systematic approach to evaluating root causes and contributing factors leading to the blackout
or disturbance. This team works closely with the technical analysis teams and draws on other
data sources as needed to record verified facts regarding conditions and actions (or inactions)
that contributed to the blackout or disturbance. The root cause analysis guides the overall
analysis by indicating areas requiring further inquiry and other areas that may be of interest
regarding lessons learned, but are not causal to the blackout. Root cause analysis enables the
analysis process develop a factual record leading to logical and defensible conclusions in the
final report regarding the causes of the blackout.
Operations Tools, SCADA/EMS, Communications, and Operations Planning —
This team will assess the observability of the electric system to operators and Reliability
Coordinators, and the availability and effectiveness of operational (real-time and day-ahead)
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

1

reliability assessment tools, including redundancy of views and the ability to observe the “big
picture” regarding Bulk Electric System conditions. The team also investigates the operating
practices and effectiveness of those practices of operating entities and Reliability Coordinators in
the affected area. This team investigates all aspects of the blackout related to operator and
Reliability Coordinator knowledge of system conditions, action or inactions, and
communications.
Frequency/ACE — This team will analyze potential frequency anomalies that may have
occurred, as compared to typical interconnection operations, to determine if there were any
unusual issues with control performance and frequency and any effects they may have had
related to the blackout.
System Planning, Design, and Studies — This team will analyze the responsibilities,
procedures, and design criteria used in setting System Operating Limits, and compare them to
good utility practice. The team will review the actual limits in effect on day of the blackout and
whether these limits were being observed. The team will review voltage schedules and guides,
and reactive management practices in the affected areas, including use of static and dynamic
reactive reserves. The team will analyze the tagged and scheduled transactions to determine if
inter-regional transfer limits were understood and observed. The team will analyze system
planning and design studies completed in the affected areas to determine if operating conditions
were consistent with the assumptions of those studies and whether the planning and design
studies were sufficient and effective.
Transmission System Performance, Protection, Control, Maintenance, and
Damage — This team investigates the causes of all transmission Facility automatic operations
(trips and reclosures) leading up to the blackout on all Facilities greater than 100 kV. This
review includes relay protection and remedial action schemes, identifying the cause of each
operation, and any misoperations that may have occurred. The team also assesses transmission
Facility maintenance practices in the affected area as compared to good utility practice and
identifies any transmission equipment that was damaged in any way as a result of the blackout.
The team will assess transmission line rating practices and the impact that ambient temperature
and wind speeds had on the transmission line performance in terms of the design temperature of
the transmission conductors. The team shall report any patterns and conclusions regarding what
caused transmission Facilities to trip; why the blackout extended as far as it did and not further
into other systems; why the transmission separated where it did; any misoperations and the effect
those misoperations had on the blackout; and any transmission equipment damage. The team
will also report on the transmission Facility maintenance practices of entities in the affected area
compared to good utility practice. Vegetation management practices are excluded here and
covered in a different team.
Generator Performance, Protection, Controls, Maintenance and Damage — This
team will investigate the cause of generator trips for all generators with a 10 MW or greater
nameplate rating leading to and through the end of the blackout. The review shall include the
cause for the generator trips, relay targets, unit power runbacks, and voltage/Reactive Power
excursions. The team shall report any generator equipment that was damaged as a result of the
blackout. The team shall report on patterns and conclusions regarding what caused generation
Facilities to trip. The team shall identify any unexpected performance anomalies or unexplained
events. The team shall assess generator maintenance practices in the affected area as compared
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

2

to good utility practice. The team will analyze the coordination of generator under-frequency
settings with transmission settings, such as under-frequency Load shedding. The team will
gather and analyze data on affected nuclear units and work with the Nuclear Regulatory
Commission to address nuclear unit issues.
Vegetation/ROW — This team investigates the practices of transmission Facility owners in the
affected areas for vegetation management and ROW maintenance. These practices will be
compared with accepted utility practices in general, and with NERC Reliability Standards. The
team will evaluate whether the affected parties were within their defined procedures at the time
of the blackout and will investigate historical patterns in the area related to outages caused by
contact with vegetation.
Analysis Process and Procedures Review — This team will review the process and
procedures used in the analysis of the blackout, make recommendations for improvement, and
develop recommendations for appropriate processes, procedures, forms, etc. to guide and
expedite future analyses including coordination and cooperation between NERC, its Regional
Entities, and government agencies.
Restoration Review — All entities operating portions of the Bulk Electric System in North
America are required by NERC Reliability Standards to maintain system restoration plans and
black start plans, and Reliability Coordinators are required to coordinate the implementation of
those plans. This team will review the appropriateness and effectiveness of the restoration plans
implemented and the effectiveness of the coordination of these plans.
NERC and RE Standards/Procedures and Compliance — This team reviews the
adequacy of NERC Reliability Standards, Regional Reliability Standards and Regional Entity
procedures, and the Compliance Monitoring and Enforcement Program to address issues leading
to the blackout. The team also reviews the compliance of the affected operating entities with
Reliability Standards. For less significant event analyses, this team may not be needed.
However, all compliance issues will be referred to the NERC Director of Compliance.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

3

Attachment C

NERC CONFIDENTIALITY AGREEMENT
FOR
ANALYSIS OF BLACKOUTS AND DISTURBANCES

This Confidentiality Agreement (“Agreement”), dated _______________, is between the
North American Electric Reliability Corporation (“NERC”), and
____________________________________________________________________, a member
of the NERC Event Analysis Team (“Team Member”)(collectively referred to as “Parties”).
WHEREAS, NERC is conducting an analysis of the power event that occurred in
__________________________ on ___________________ and related matters (“Event”); and
WHEREAS, NERC has established a team to carry out that analysis (“Event Analysis

Team”); and
WHEREAS, in order for the Event Analysis Team to fulfill its objectives, it is necessary
for the Event Analysis Team have access to confidential or business sensitive information from
operating entities within the _______________ and to be able to conduct open and unconstrained
discussions among team members,

The Parties therefore agree as follows:
1.
The term “Event Analysis Information” means all information related in any way
to the Event that operating entities within the ____________________ or their representatives
have furnished or are furnishing to NERC in connection with NERC’s analysis of the Event,
whether furnished before or after the date of this Agreement, whether tangible or intangible, and
in whatever form or medium provided (including, without limitation, oral communications), as
well as all information generated by the Event Analysis Team or its representatives that contains,
reflects or is derived from the furnished Event Analysis Information; provided, however, the
term “Event Analysis Information” shall not include information that (i) is or becomes generally
available to the public other than as a result of acts by the undersigned Parties or anyone to
whom the undersigned Parties supply the Information, or (ii) is known to or acquired by the
Team Member separate from receiving the information from the Event Analysis Team.
2.
The Team Member understands and agrees that the Event Analysis Information is
being made available solely for purposes of the Event Analysis and that the Event Analysis
Information shall not be used in any manner to further the commercial interests of any person or
entity. The Team Member further understands and agrees that he or she will not disclose Event
Analysis Information to any person who has not signed this Agreement except as such disclosure
may be required by law or judicial or regulatory order.
3.
If Team Member’s employing organization has signed the NERC Confidentiality
Agreement for Electric System Security Data (“NERC Security Data Agreement”), paragraph 2
shall not be deemed to prohibit Team Member from disclosing Event Analysis Information to
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

1

other employees of that organization, but only to the extent that “security data” as defined in the
NERC Security Data Agreement is shared within the organization.
4.
The Parties expressly agree that Event Analysis Information shall otherwise only
be disclosed through official releases and reports as authorized by NERC.
5.
It shall not be a violation of the NERC Confidentiality Agreement for Electric
System Security Data for a Reliability Coordinator to furnish Event Analysis Information to an
Event Analysis Team Member who has signed this Agreement.
6.
This Agreement shall be for sole benefit of the parties hereto. This Agreement
may be modified or waived only by a separate writing signed by the Parties. If any clause or
provision of this Agreement is illegal, or unenforceable, then it is the intention of the Parties
hereto that the remainder of this Agreement shall not be affected thereby, and it is also the
intention of the Parties that in lieu of each clause or provision that is illegal, invalid or
unenforceable, there be added as part of this Agreement a clause or provision as similar in terms
to such illegal, invalid or unenforceable clause or provision as may be possible and be legal,
valid and enforceable. This Agreement will be governed and construed in accordance with the
laws of the State of New Jersey, except for any choice of law requirement that otherwise may
apply the law from another jurisdiction.
7.
This Agreement shall have a term of two (2) years from the date hereof, except
that the obligations of paragraphs 2, 3, and 4 shall continue for five (5) years from the date
hereof.
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
By: _____________________________________
Printed: _________________________________
Title: ___________________________________

NERC EVENT ANALYSIS TEAM MEMBER
Signed: ___________________________________
Printed: ___________________________________

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

2

Attachment D

NERC Blackout and Disturbance Analysis Objectives, Analysis Approach,
Schedule, and Status
Analysis Objective
Pre-Event Conditions
1. What was the precursor
sequence of events leading to
the event?

Analysis Approach
•
•
•
•

2.

3.

What time frames are relevant
for pre-event assessment of
system conditions? What
points in time should be used
to establish a baseline set of
study conditions when the
system was last known to be
stable and within normal
operating criteria?
What models and data can best
simulate system conditions
prior to and during the event?
What is the relevant scope of
the system for detailed study
(what is considered the
boundary of the study system
and what is considered
neighboring or external
systems?)

•

•

•

•
•
•
•

Schedule

Status

Assemble data/alarm logs and time-stamped
sequence information.
Develop and maintain an expanding database
of log and time-stamped sequence
information.
Develop a precursor sequence of high-level,
events relevant to, and leading to event
initiation.
Reconcile the precursor sequence of events
with those emerging from Regional Entities,
RTOs, and operating entities.
Referencing precursor sequence of events,
determine relevant times to develop base case
conditions (stable and within normal
operating criteria).
Verify relevant time horizons and availability
of system data at those times with Regional
Entities, RTOs, and operating entities.

Identify up-to-date power system model(s)
appropriate for powerflow and transient and
dynamic simulations (determine if detailed
eastern Interconnection model is needed or
multi-regional model(s) are needed.
Identify what models are available in
Regional Entities, RTOs, and operating
entities.
Identify who will actually perform power
flow, transient and dynamic simulations; hire
contractor(s) as needed.
Identify and assemble data required for these
models.
Develop and maintain a system data
repository.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

1

Analysis Objective
4.

What system conditions
existed in the precursor time
horizon leading up to the event
(at the times identified in 1.)?

Analysis Approach
•

•

•
•

5.

Were there any prior-existing
abnormalities, instabilities,
reliability criteria violations, or
reliability issues in the
precursor sequence time
horizon? Prior to event
initiation were there any latent
instability conditions that
would suggest the system was
at risk? Were the precursor
conditions ones that had been
previously studied by the
entities involved? Were there
adequate reserves with
effective distribution? Were
planned outages effectively
coordinated?
Blackout Sequence of Events
6. What was the sequence of
system events leading to and
directly triggering the
blackout?

•
•
•
•
•
•

•

•
•

Schedule

Status

Obtain and manage data for powerflow:
system configuration, planned and unplanned
outages, unit commitment and dispatch,
interchange schedules, congestion conditions,
reserves, Loads, state estimator snapshots,
deratings and limitations, frequency, etc.
Identify who will maintain and run powerflow
simulations.
Work with Regional Entities, RTOs, and
operating entities to develop powerflow cases
defining the base conditions for each relevant
time, ensuring the powerflows model each
critical juncture leading up to the event.
Identify and review results of additional
studies completed by Reliability Coordinators,
RTOs and operating entities.
Assess the powerflow results with respect to
steady state operating criteria (was the system
within all known limits at each precursor
time)?
Work with Regional Entities, RTOs, and
operating entities to obtain and manage
transient and dynamic models for simulations.
Identify who will conduct transient and
dynamic simulations and if external
contractor(s) are required.
Conduct transient and dynamic simulations at
each of the precursor study times.
Assess the stability of the system at each of
these times and identify any latent reliability
issues prior to blackout initiation.
Consider creating a visual map of system
conditions.
Document the limitations and assumptions of
simulations affecting the certainty of the
simulation results.
Evaluate data logs, fault recorder data
disturbance recorder data, and synchro-phasor
measurement to establish a detailed sequence
of events that initiated the event.
Identify the sequence of events that directly
led to the event.
Review and reconcile these trigger events
with Regional Entities, RTOs, and operating
entity analyses.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

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Analysis Objective
7.

What was the sequence of
events during the event?

Analysis Approach
•
•
•

What was the cause of the
event in terms of electrical
conditions and other related
events? Generally describe
any system breakups,
islanding, etc. Were there
conditions of voltage or
frequency collapse, or unstable
oscillations? Was the sequence
strictly a sequential “domino”
effect of Facility trips? What
were the system conditions
(snapshots) at key points
during the event?
9. Why did the event extend as
far as it did? What arrested the
event from extending further
into other systems?
10. How did affected non-nuclear
generators respond during the
event? Were trips as expected
and required by procedures and
standards? Did non-nuclear
generators remain connected
and support the power system
in the manner they should
have? Did any generator
action, generator control
functions, or generator
protection systems contribute
to the event?
11. How did nuclear generators
respond leading up to and
during the blackout? Were
trips as expected and required
by procedures and standards?
Were there any nuclear safety
issues identified?
12. What was the sequence and
amount of Load lost? What
directly caused Load loss (e.g.
under-frequency Load shed,
loss of transmission source,
voltage collapse, relay actions,
under/over frequency
protection or stalls, etc.)

•

8.

•

•
•
•

•

•

•

•

•
•
•

Schedule

Status

Evaluate logs and disturbance recorder data to
establish sequence during the blackout. (The
event sequence may follow multiple tracks.)
Review and reconcile this sequence with those
constructed by Regional Entities, RTOs, and
operating entities.
Consider developing 3-D, time-lapse
visualization of the blackout (U. of Minnesota
and/or U. of Wisconsin).
Assess triggering sequence and blackout
sequence to establish the causes for the
blackout in terms of electrical conditions and
events.
Select key points in sequence for simulation
that are relevant for study and that can be
accurately modeled. (It may not be possible
to reconcile data sufficiently to recreate
system conditions during the blackout.)
To the extent possible, conduct simulations
and assess results at each point during the
blackout.
Review and reconcile results with Regional
Entities, and operating entities.
Using advanced analysis techniques, assess
where and why the event was arrested.

Prepare a table of affected generators and
actions they made leading up to and during the
event, including time-stamped unit trips,
relays initiating unit trips, MW and MVar
outputs, voltages, and frequency, etc.
Analyze the automatic (including relay trips)
and operator-initiated actions of non-nuclear
generators to determine whether actions were
correct under the conditions or not.
Reconcile non-nuclear generator data and
analysis with that of the Regional Entities,
RTOs, and operating entities.
Work with NRC to develop a table of
sequence of actions and issues regarding
affected nuclear generators (both ones that
tripped and those that did not).
Refer nuclear issues to NRC for analysis,
assisting in their analyses where appropriate.
Work Regional Entities, RTOs, and operating
entities to develop a description of Load
lost/impacted, by area.
Analyze and report the cause for Load loss in
each area.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

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Analysis Objective

Analysis Approach

13. How did system protection and •
automated controls operate
during the event? Did they
operate correctly or not?
•

14. Was any equipment damaged
during the event?

•
•

15. Did SCADA/EMS and data
communications systems
operate correctly during the
event? What problems were
noted?
Reliability Standards/Procedures
16. What NERC Reliability
Standards were applicable to
the event? What violations
occurred? Were NERC
Reliability Standards and
policies sufficient?
17. What Regional Reliability
Standards were applicable to
the event? What violations
occurred? Were Regional
Reliability Standards and
Regional Entity policies
sufficient?
18. Were any special operating
procedures or other operating
guidelines in effect and being
observed leading up to the
event? Were these procedures
sufficient?
19. What other RTO, Transmission
Owner, CA procedures were
applicable? What violations
occurred? Were the
procedures sufficient?
Maintenance
20. Are there any indications that
maintenance of transmission or
generation Facilities may have
contributed to the event?

•
•

•

Compliance Staff review NERC Reliability
Standards relevant to the event and perform a
compliance review.

•

Request Regional Entities to review applicable
Regional Reliability Standards and report
compliance with those Regional Reliability
Standards during the event.

•

Review and analyze loop flow procedures with
involved Regional Entities and companies, and
report analysis results.

•

Request RTOs, Transmission Owners, CAs to
review applicable Reliability Standards and
compliance with existing reliability procedures
and Reliability Standards during the event, and
report results.

•

Assess whether equipment or maintenance
issues (e.g. tree trimming) contributed to the
blackout and investigate specifics in areas of
concern.
Review Regional Entity assessments of
maintenance issues that may have contributed
to the event.

•

Schedule

Status

Assess each automatic trip of a transmission or
generator Facility for proper or improper relay
actions.
Assemble and review Regional Entity and
operating entity reviews of logs, disturbance
reports, and relay targets/logs and reconcile
with NERC data.
Request information from Regional Entities,
and companies on equipment damage, as
appropriate.
Assess any transmission or generation
Facilities sustaining damage during the event,
and extent of damage.
Request information from Regional Entities,
and companies.
Identify and analyze any problems with
SCADA/EMS and data communications at
regional and company levels.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

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Personnel, Procedures, and
Communications
21. What conditions were
operators and Reliability
Coordinators aware of leading
up to and during the event?
What information did they
have to warn them of unsafe
system conditions? What
problems or concerns did they
have? What did they observe
during the event? Were human
errors made that contributed to
the event? If there were, what
were the causes of the errors?
22. Were lines of authority clearly
understood and respected in the
time leading up to and during
the event, as well as during the
restoration period?
23. What communications
occurred among operating
entities?
24. What were the qualifications
(including Certification status)
and training of all operating
personnel involved in the event
and their supervisors?
25. Was the role and performance
of the Reliability Coordinators
as expected?

•
•
•

•
•
•
•
•
•
•
•
•
•

System Restoration
26. Were blackstart and restoration
procedures available and
adequate in each area? Were
they followed and were they
adequate to the restoration
task? Were pre-defined
authorities respected during the
restoration?
27. What issues were encountered
in the restoration that created
unexpected challenges or
delays? What lessons were
learned in the restoration (both
things that went well and
things that did not).

•
•

•

•

Develop an interview guide to address
procedural and operational issues.
Conduct onsite interviews with operating
personnel and Reliability Coordinators
involved.
Analyze interview data to corroborate with
technical data and report conclusions.

Identify critical instructions given and
evaluate results.
Review documentation and effectiveness of
assignments of operating and reliability
authorities.
Review voice communications logs.
Evaluate logs relevant to the blackout and
identify key interactions. Report conclusions.
Request Certification status of all operating
personnel from involved operating entities.
Conduct onsite review of training materials
and records.
Conduct onsite review of operating procedures
and tools
Review the adequacy of reliability plans for
the affected Regional Entities.
Review the actions of the affected Reliability
Coordinators to determine if they performed
according to plans.
Assess whether inter-area communications
were effective, both at the control area and
Reliability Coordinator levels.
Onsite audit of blackstart and restoration
procedures and plans.
Analyze whether the plans and procedures
were used and whether they were sufficient for
this outage.

Solicit information from operating entities and
Regional Entities regarding unexpected
challenges and delays in restoration, and
lessons learned.
Analyze what worked well and what did not in
the restoration.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

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System Planning and Design
28. Were the conditions leading up
to the event within the design
and planning criteria for the
transmission systems involved?
Conclusions and
Recommendations
29. From a technical perspective,
what are the root causes of this
event? What additional
technical factors contributed to
making the event possible?
30. What are the significant
findings and lessons learned
resulting from the analysis
regarding technical failures
leading to the event? What
actions are recommended to
avoid similar future events and
improve Bulk Electric System
reliability? What issues may
be inconclusive and require
future analysis?
31. Final Report

•

Request Transmission Owners and Regional
Entities involved to report any violations of
design or planning criteria prior to or leading
up to the blackout.

•

Conduct a root cause analysis on the findings
and data. Categorize results as “root cause” or
“contributing factor”. Focus on technical
aspects.

•

Draft report of significant findings, lessons
learned, and recommendations.

•

Prepare and coordinate publication of final
report.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

6

Attachment E

Guidelines for NERC Reports on Blackouts and Disturbances10
Introduction and Purpose
Executive Summary of Blackout or Disturbance
Conclusions & Recommendations
Actions to Minimize the Possibility of Future Blackouts and Disturbances
Detailed Analysis of Event
1. Sequence of Events

1.1. Sequence of transmission and generation events
1.1.1. Reasons for each trip
1.1.2. Sequence of loss of Load
1.1.3. Description of Cascading and islanding
2. System Modeling

2.1. Model and assumptions
2.1.1. Equipment ratings and limits
2.1.2. Steady state, system dynamics, and other analyses
2.1.3. Degree of simulation success
2.1.4. Simulation results
2.1.5. Conclusions and lessons learned
2.2. Pre-event Conditions
2.2.1. Load levels
2.2.1.1.Forecast vs. Actual
2.2.1.2.Comparison with planning and operational models
2.2.2. Generation dispatch
2.2.2.1.Forecast vs. actual
2.2.2.2.Comparison with day ahead studies
2.2.2.3.Reporting of scheduled and forced outages
2.2.3. Reserve capacity
2.2.3.1.Location of MW reserves
2.2.3.2.Planned vs. actual
2.2.4. Transmission configurations
2.2.4.1.Planned vs. actual
2.2.4.2.Comparison with day ahead studies
2.2.4.3.Reporting of scheduled and forced outages

10

Each blackout or disturbance is unique and will therefore demand a customized approach to its
investigation and reporting. These guidelines for NERC reports are suggestive rather than
definitive. Not all investigations and reports will require covering all of these topics.
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

1

2.2.5. Interregional transactions
2.2.5.1.Calculated transfer limits
2.2.5.2.Basis for limits – thermal, voltage, and stability
2.2.5.3.Seasonal assessments – Assumptions vs. actual
2.2.5.4.Actual schedules vs. Tagged schedules
2.2.5.4.1. AIE Survey
2.2.5.4.2. Tag Survey
2.2.6. System voltages (profile) and reactive supplies
2.2.6.1.Coordination of reactive supplies and voltage schedules
2.2.6.2.Reactive supply with power transfers
2.3. Event Key Parameters
2.3.1. System voltages (profile) and reactive supplies
2.3.2. Power flows and equipment loadings
2.3.3. System dynamic effects
3. Transmission system performance

3.1.
3.2.
3.3.
3.4.

Equipment ratings
Protective relay actions
Equipment maintenance
Equipment damage

4. Generator performance

4.1. Generator control actions
4.2. Generator protection
4.2.1. Underfrequency
4.2.2. Overspeed
4.2.3. Excitation systems
4.2.4. Other systems
4.3. Equipment maintenance
4.4. Equipment protection
4.5. Dynamic effects of generators
5. System frequency

5.1. Frequency excursions – pre event
5.1.1. Analysis of frequency anomalies
5.1.2. Effect of time error correction
5.2. Frequency analysis of the event
5.2.1. Remaining interconnection
5.2.2. Islands remaining
6. Operations

6.1. Operational visibility and actions
6.1.1. Reliability Coordinators
6.1.1.1.Delegation and authority
6.1.1.2.Monitoring capabilities
6.1.1.2.1. Scope of coverage and system visibility
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

2

6.1.1.2.2. Monitoring tools
6.1.1.2.3. Data availability and use
6.1.1.3.Operations planning capability
6.1.1.3.1. Operational planning tools
6.1.1.3.2. Coordination
6.1.1.4.Operating procedures
6.1.1.4.1. Emergency operations
6.1.1.4.2. Loss of monitoring system or components
6.1.1.4.3. Communication procedures
6.1.1.5.Operating qualifications and training
6.1.1.5.1. Qualification of operators
6.1.1.5.2. Training provided
6.1.1.5.3. Simulation of emergencies
6.1.2. Transmission Operators
6.1.2.1.Authority to take action
6.1.2.2.Monitoring capabilities
6.1.2.2.1. Scope of coverage and system visibility
6.1.2.2.2. Monitoring tools
6.1.2.2.3. Data availability and use
6.1.2.3.Operations planning capability
6.1.2.3.1. Operational planning tools
6.1.2.3.2. Coordination
6.1.2.4.Operating procedures
6.1.2.4.1. Emergency operations
6.1.2.4.2. Loss of monitoring system or components
6.1.2.4.3. Communication procedures
6.1.2.5.Operating qualifications and training
6.1.2.5.1. Qualification of operators
6.1.2.5.2. Training provided
6.1.2.5.3. Simulation of emergencies
7. System Planning and Design

7.1. Establishing operating limits
7.1.1. Responsibility for setting limits
7.1.2. ATC and TTC calculations
7.1.3. Planning studies
7.1.3.1.·Wide-Area simultaneous transfer limits
7.1.3.1.1. Determination of limits
7.1.3.1.2. Monitoring of limits
7.1.3.1.3. Basis for limits – thermal, voltage, and stability
7.1.3.1.4. Regional Entity assessments
7.1.3.1.5. Other system studies in affected areas
7.1.3.2.Reactive planning
7.1.3.2.1. Reactive reserve planning
7.1.3.2.2. Active vs. static resources
7.1.3.2.3. Voltage stability analysis
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

3

7.1.3.3.Regional Criteria and/or NERC Reliability Standards used for
planning
7.1.3.3.1. Compliance to these planning Regional Criteria and/or
Reliability Standards
8. Reliability Standards and Compliance

8.1. Audits
8.1.1. Reliability Coordinators
8.1.1.1.Previous audits and results
8.1.1.1.1. Compliance with NERC Reliability Standards
8.1.1.2.Updated findings based on analysis
8.1.1.3.Post blackout audit results and findings
8.1.1.4.Recommendations for future audits
8.1.2. Balancing Authorities
8.1.2.1.Regional Entity audits
8.1.2.1.1. Compliance with NERC Reliability Standards and Regional
Reliability Standards
8.1.2.2.Updated findings based on analysis
8.1.2.3.Post blackout audit results and findings
8.1.2.4.Recommendations for future audits
8.2. Regional Criteria and/or NERC Reliability Standards used for operations
8.2.1. Compliance to these operating Regional Criteria and/or Reliability
Standards
8.3. Reliability Standards
8.3.1. Improvements needed
8.3.2. Potential new Reliability Standards
9. Actions to Minimize the Possibility of Future Widespread Events

9.1.
9.2.
9.3.
9.4.
9.5.
9.6.

Reliability Standards and compliance to Reliability Standards
Availability of planned Facilities as scheduled
Automatic Load shedding programs
Controlled separation and islanding
Improved data collection and system monitoring
Studies of impacts of severe events

10. Restoration of Service

10.1.
Restoration procedures
10.1.1. RTOs and ISOs
10.1.2. Transmission Operators
10.1.3. Generator Operators
10.1.4. Distribution Providers
10.2.
Restoring service
10.2.1. Transmission line restoration
10.2.1.1. Within control area/ISO/RTO
10.2.1.2. Interarea tie lines
10.2.1.3. Impediments and other issues
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

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10.2.2. Generation restoration
10.2.2.1. Utility-owned generation
10.2.2.2. Independent generation
10.2.2.3. Fuel supply adequacy
10.2.2.4. Fossil units
10.2.2.5. Nuclear units
10.2.2.6. Capacity reserves
10.2.2.7. Coordination with transmission
10.2.2.8. Coordination with Load and other generation
10.2.2.9. Impediments and other issues
10.2.3. Coordination and communications
10.2.3.1. Within control area/ISO/RTO
10.2.3.2. With outside control areas/ISOs/RTOs
10.2.3.3. Wide-Area coverage
10.2.3.4. Impediments and other issues
10.3.
Review of restoration procedures
10.3.1. Time to restore customers
10.3.2. Need for modifications
10.3.3. Availability of procedures to necessary participants
10.3.4. Need for training and practice drills
10.3.5. Comparison with other control areas/ISOs/RTOs
11. Analysis Process

11.1.
Description of process
11.1.1. Organization
11.1.2. Coordination with US-Canada task force
11.1.3. Coordination with Regional Entities and RTOs
11.1.4. Recommended process improvements
11.1.4.1. Use for other events – near misses, etc.
11.2.
Data management
11.2.1. Data collection processes
11.2.1.1. Data request process
11.2.1.2. Data forms used
11.2.2. Data received
11.2.2.1. Quality and usefulness of data
11.2.3. Data warehousing
11.2.3.1. Data warehouse structure
11.2.3.2. Accessibility of data
11.2.4. Data forms and process for future analyses

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

5

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 8B

REVISED APPENDIX 3D OF THE RULES OF PROCEDURE
NERC BLACKOUT AND DISTURBANCE RESPONSE PROCEDURES
REDLINED VERSION

Appendix 8

Proposed Revisions 1-9-2012
[Incorporates revisions filed with
FERC on November 29, 2011]

NERC Blackout and Disturbance
Response Procedures

Effective October 18, 2007

North American Electric Reliability Corporation
NERC Blackout and Disturbance Response Procedures
1

NERC Blackout and Disturbance Response Procedures
Introduction

NERC, through its professional staff and the Regional Entities and their members, provide the
best source of technical and managerial expertise for responding to major events that affect the
Bulk Power System.
NERC’s role following a blackout or other major Bulk Electric System disturbance or
emergency is to provide leadership, coordination, technical expertise, and assistance to the
industry in responding to the event. Working closely with the Regional Entities and Reliability
Coordinators, NERC will coordinate efforts among industry participants, and with state, federal,
and provincial governments in the United States and Canada to support the industry’s response.
When responding to any event where physical or cyber security is suspected as a cause or
contributing factor to an event, NERC will immediately notify appropriate government agencies
and coordinate its analysis with them.
During the conduct of some NERC-level analyses, assistance may be needed from government
agencies. Collaborative analysis with certain government agencies may be appropriate in some
cases; e.g., collaborating with the Nuclear Regulatory Commission technical staff when a system
event involves a nuclear unit. This assistance could include: authority to require data reporting
from affected or involved parties; communications with other agencies of government; analyses
related to possible criminal or terrorist involvement in the event; resources for initial data
gathering immediately after the event; authority to call meetings of affected or involved parties;
and technical and analytical resources for studies. If a federal or multi-national government
analysis is called for, government agencies should work in primarily an oversight and support
role, in close coordination with the NERC analysis.
It is critical to establish, up front, a clear delineation of roles, responsibilities, and coordination
requirements among industry and government for the analysis and reporting of findings,
conclusions, and recommendations related to major blackouts, disturbances, or other
emergencies affecting the Bulk Power System.
Depending on the severity and of the event and the area impacted, the event analysis may be
conducted either by NERC or by the impacted Regional Entity. If the analysis is conducted by
the Regional Entity, NERC staff, at least one member of the NERC Event Analysis Working
Group (in addition to the Event Analysis Working Group member from the impacted Regional
Entity), and other appropriate technical experts from the NERC community will participate as
members of the Regional Entity analysis team.
A Regional Entity may request NERC to elevate an analysis to a NERC-level. In such cases, all
team responsibilities will shift to NERC, and the Regional Entity may continue to participate in
the analysis on appropriate teams.
These procedures do not represent a “cookbook” to be followed blindly. They provide a
framework to guide NERC’s response to events that may have multiregional, national, or
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

1

international implications. Experienced industry leadership would still be required to tailor the
response to the specific circumstances of the event.
Responding to major blackouts and other system disturbances can be divided into four phases:
1. situation assessment and communications;
2. situation tracking and communications;
3. data collection, investigation, analysis and reporting; and
4. follow-up on recommendations.
Phase 1 ⎯ Situation Assessment and Communications

NERC’s primary roles in Phase 1 are to:
• conduct an initial situation assessment;
• call for the collection of and analyze necessary initial data and information for the event;
• assist the Regional Entity-lead analysis with determining the need for supplemental
technical expertise from the NERC community;
• issue initial findings, conclusions, and recommendations;
• maintain detailed data records (not subject to Freedom of Information Act);
• assist government agencies in criminal analyses when relevant;
• provide technical expertise for modeling and analyzing the event; and
• follow up on recommendations.
While conducting its initial situation assessment, NERC will make an early determination as to
whether the cause of the event may be related to physical or cyber security, and communicate as
appropriate with government agencies.
Notice of a event is typically received by the NERC Electricity Sector Information Sharing and
Analysis Center (ESISAC) person on duty and relayed to other appropriate NERC personnel.1
NERC performs an initial situation assessment by contacting the appropriate Reliability
Coordinator(s), and makes a decision on whether to activate its crisis communications plan. At
the initial stage in gathering information about an incident, it is critical to minimize interference
with Bulk Electric System operators who are in the process of restoring the system. To minimize
interference with their work, NERC, in its capacity as the ESISAC, should serve as the primary
communications link with government agencies.
The ESISAC Concept of Operations (ConOps) specifies the operations plan, communications
procedures, and logistics NERC will follow during normal conditions, emergencies, and national
security special events. The ConOps includes the primary points of contact (24x7) for the
Federal Energy Regulatory Commission, U.S. Department of Energy, U.S. Department of
Homeland Security, U.S. Nuclear Regulatory Commission, and Public Safety and Emergency
Preparedness Canada.
It is important that during these early hours the ESISAC, in coordination with government
agencies, determine whether this event was caused by the actions of criminal or terrorist parties.
The results of this criminal assessment are essential to operators because if there is a possibility
that the “attack” is still ongoing, restoration and response actions would need to be tailored to
1

NERC maintains 24x7 contact information for its key personnel to facilitate such contacts.
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

2

these circumstances. If NERC and government agencies deem it necessary for further criminal
analyses, NERC will issue a formal notice to affected systems to retain all relevant information
gathered during this and subsequent phases of an analysis.
The specific criteria for reporting disturbances and other events are described in NERC
Reliability Standard EOP-004-1. These criteria and procedures are intended to provide a
common basis for consistent reporting of abnormal system conditions and events that occur in
North America. All entities responsible for the reliability of Bulk Power Systems in North
America must ensure that sufficient information is submitted to NERC within the time frame
required. Reliability Coordinators will use the Reliability Coordinator Information System
(RCIS) as the primary method of communications to NERC. The ESISAC duty person is
responsible for monitoring the RCIS for such notifications.
Depending on the scope and magnitude of the event, NERC will issue media advisories through
its crisis communications plan.
Phase 2 ⎯ Situation Tracking and Communications

Based on the nature and severity of the event, in Phase 2 NERC will continue to track progress in
restoring the Bulk Power System and service to customers, and keep industry, government
agencies, and the public informed. The most important thing to recognize in this phase is that
the primary focus of Reliability Coordinators and Transmission Operators is the prompt
restoration of the Bulk Electric System. NERC will coordinate requests by government agencies
for information from Reliability Coordinators and Transmission Operators, and serve as a
conduit and coordinator between industry and government for regular status reports on the
restoration.
As events continue, NERC will determine whether a detailed analysis of the event should be
conducted, and start to identify manpower requirements, data collection and retention
requirements, and at what level the analysis should be conducted. If the event is localized within
a Region, NERC will participate in the event analysis of the Regional Entity.
Phase 3 ⎯ Data Collection, Investigation, Analysis, and Reporting

Based on the scope, magnitude, and impact of an event, during Phase 3 NERC may:
1. perform an overview analysis of system and generator response;
2. rely on one of its Regional Entities to conduct the analysis and monitor the analysis
results;
3. work with a Regional Entity in its analysis; or
4. conduct a NERC-level analysis.
The NERC CEO will decide, based on the initial situation assessment and consultation with the
NERC technical committee officers2, if a NERC-level analysis is warranted. If a NERC-level
analysis is to be conducted, the NERC CEO will appoint the Director of Events Analysis and
Information Exchange to lead the analysis and assemble a high-level technical steering group to
provide guidance and support throughout the analysis.

2

NERC will maintain a list of 24x7 contact information for its technical committee officers.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

3

NERC reserves the right to elevate or augment an analysis performed by a Regional Entity
pending the results of the Regional Entity analysis. Additional requests for analyses or
supporting data may be made by NERC at any time in the investigation process.
A Regional Entity may request NERC to elevate an analysis to a NERC-level. In such cases, all
team responsibilities will shift to NERC, and the Regional Entity may continue to participate in
the analysis on appropriate teams.
If the analysis is to be led by one of the Regional Entities, a member of the NERC staff, at least
one member of the NERC Event Analysis Working Group (in addition to an Event Analysis
Working Group member from the impacted Regional Entity), and other appropriate technical
experts from the NERC community will participate as a triage team. The triage team will
participate as members of the Regional Entity analysis team. The triage team will also will assist
the Regional Entity with determining if additional technical expertise from the NERC
community are needed for the analysis.
For NERC-level analyses, the first task of the Director of Events Analysis and Information
Exchange would be to identify what technical and other resources and data would be needed
from staff, the industry, and government, and to issue those requests immediately. This task will
include identification of any special managerial, forensic, or engineering skills needed for the
analysis. Secondly, the Director of Events Analysis and Information Exchange must issue
requests for those resources and information. Third, the Director of Events Analysis and
Information Exchange must organize the teams that will conduct and report on the analysis.
The teams needed for a particular analysis will vary with the nature and scope of the event.
Attachment A describes the typical teams that would be required for a NERC-level analysis, and
Attachment B provides suggested guidelines for the NERC-level analysis team scopes.
Individuals that participate on these teams will be expected to sign an appropriate confidentiality
agreement. NERC uses a standard (pro forma) confidentiality agreement (Attachment C) for
participants in event analyses, which it will adapt for specific analyses.
The Blackout and Disturbance Analysis Objectives, Approach, Schedule, and Status (Attachment
D) and Guidelines for NERC Reports on Blackouts and Disturbances (Attachment E) are used to
guide and manage analysis and reporting on major blackouts and disturbances.
A NERC-level analysis will comprise (a) collecting pertinent event data; (b) constructing a
detailed sequence of events leading to and triggering the disturbance; (c) assembling system
models and data and conducting detailed system analysis to simulate pre- and post-event
conditions; and (d) issuing findings, conclusions, and recommendations. The details of these
four phases of the analysis are:
a. Collecting Pertinent Event Data

•

Collect all pertinent event logs, disturbance recorders, operator transcripts, and other
system data.

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b. Detailed Sequence of Events

•
•

Construct a detailed sequence of events leading to and triggering the event.
Reconcile event logs, disturbance recorders, operator transcripts, and other system
data to create an accurate sequence of events.
Enter and preserve all data in a secure data warehouse.

c. Detailed System Analysis

•
•

•
•
•

Assess the sequence of events to determine critical times for study.
Assemble the necessary system models and data from Regional Entity and operating
entities to accurately model (with power flow and dynamic simulations) the pre-event
conditions.3 Determine pre-event conditions at critical times prior to event initiation,
including an assessment of reliability margins in the pre-event time frame.
Analyze data from phasor measurement units, high-speed data recorders, digital fault
recorders, digital relays, and system relay targets.4
Analyze generator and Loadload performance, including underfrequency and
undervoltage relay actions.
Use the model information and sequence of events to dynamically model the trigger
events and the outage sequence. Identify the system phenomena that propagated the
failure. Provide graphical results showing the nature of the cascade. Conduct
additional analyses as initial findings identify the need for further study.

d. Findings, Conclusions, and Recommendations

•
•
•
•
•
•
•
•

Identify and assess failures contributing to the event, including possible instability
conditions, system protection mis-operations, generator actions, etc.
Either identify or rule out man-made/criminal cyber or physical attacks on the electric
system.
Determine if the system was being operated within equipment and system design
criteria at the time of the outage.
Assess the qualifications, training, SCADA/EMS tools, and communications
available to system operators and Reliability Coordinators, and how effective these
were leading up to and during the event.
Assess the adequacy of communications system and communications among system
operators.
Identify any issues regarding maintenance or equipment conditions that may have
contributed to the outage.
Determine whether system restoration procedures were available and adequate.
Identify any issues that caused unexpected delays in the restoration of generators and
Loadsloads.
Identify the root causes5 and contributing factors of the Cascading outage.

3

NERC is developing standards for data and model validation that will facilitate modeling activities in future
blackout analyses.
4
NERC is developing standards for dynamic monitoring equipment and the deployment of such equipment at
critical locations in the Bulk Electric System.
5
NERC will rely on root cause analysis experts, both from within the industry and outside consultants, to conduct
these analyses.
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

5

•
•
•

Recommend actions to prevent Cascading outages in the future and to improve
system reliability.
Determine whether the system is adequately designed.
All compliance issues will be referred to the NERC Director of Compliance.

Phase 4 ⎯ Follow-up on Recommendations

For Phase 4 NERC and the Regional Entities will follow up on specific recommendations
coming from all analyses, whether done at the Regional Entity or NERC level. In certain cases,
where government agencies have taken a direct role in the analysis, reports will be made to those
agencies on progress in addressing the recommendations.

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Attachment A
Typical Team Assignments for Analysis of Blackouts or Disturbances6
Fact-Finding Teams

•
•
•
•
•
•

Physical and/or cyber security (if needed)
On-site interviews
System data collection (frequency, voltages, generation and Loads loads)7
System protection and control information
System restoration
Coordination with Regional Entity teams

Assessment and Analysis Teams

•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

Performance of generation and transmission Protection Systems
Frequency analysis
Equipment maintenance
SCADA/EMS/Tools
Operator training
Reliability Standards compliance
System planning
System operation
System restoration
Root cause analysis
System simulation
Interregional coordination
Vegetation management
Recommendations for future actions
Security and law enforcement liaison

Data Management Teams

•
•
•
•

Data requests
Data collection
Data warehouse – entry, logging, retention, and maintenance8
Data release9

Report Writing Teams

•
•
•

6

Text
Graphics
Presentations

The analysis team leader will specify the tasks required of each team.
Standard forms and procedures for the collection of data and information will be adapted for particular
circumstances.
8
Experience with data warehousing and access procedures gained during the investigation of the August 2003
blackout will be used in future investigations.
9
Data release procedures will prevent inappropriate disclosure of information.
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007
1
7

Communications Teams

•
•
•

Press releases
Interface with government agencies
Interviews

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

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Attachment B

NERC Blackout and Disturbance Response Procedures
Guidelines for Analysis Team Scopes
Each blackout or disturbance is unique and will therefore demand a customized approach to its
analysis. The following guidelines for analysis team scopes are suggestive rather than definitive.
Not all the teams listed may be needed for a particular analysis.
Data Requests and Management — This team organizes large volumes of raw data and
value-added information produced by analysts in support of the blackout analysis into a data
warehouse. The team issues data requests from affected entities, catalogs and stores all data
received, and provides secure and confidential access to teams and personnel supporting the
analysis. The team serves as the single point for issuing data requests, receiving and storing
data, and managing data queries by the analysts, and is responsible for assuring consistency,
security, and confidentiality of the data and minimizing redundant data requests.
Sequence of Events — A precise, accurate sequence of events is a building block for all
other aspects of the analysis, and is a starting point for the root cause analysis. It is the basis for
developing computer models to simulate system conditions and evaluate steady state and
stability conditions in the period leading to blackout. The sequence of events is the foundation
of facts upon which all other aspects of the analysis can proceed.
System Modeling and Simulation Analysis — System modeling and simulation allows
the investigators to replicate system conditions leading up to the blackout. While the sequence
of events provides a precise description of discrete events, it does not describe the overall state of
the electric system and how close it was to various steady state, voltage stability, and power
angle stability limits. An accurate computer model of the system, benchmarked to actual
conditions at selected critical times, allows analysts to conduct a series of sensitivity studies to
determine if the system was stable and within limits at each point in time leading up to the
blackout, and at what point the system became unstable. It also allows analysts to test different
solutions to prevent Cascading. Although it is not possible recreate the entire blackout sequence,
simulation methods will reveal the mode(s) of failure initiating the blackout and propagating
through the system.
Root Cause Analysis — Root cause analysis guides the overall analysis process by providing
a systematic approach to evaluating root causes and contributing factors leading to the blackout
or disturbance. This team works closely with the technical analysis teams and draws on other
data sources as needed to record verified facts regarding conditions and actions (or inactions)
that contributed to the blackout or disturbance. The root cause analysis guides the overall
analysis by indicating areas requiring further inquiry and other areas that may be of interest
regarding lessons learned, but are not causal to the blackout. Root cause analysis enables the
analysis process develop a factual record leading to logical and defensible conclusions in the
final report regarding the causes of the blackout.
Operations Tools, SCADA/EMS, Communications, and Operations Planning —
This team will assess the observability of the electric system to operators and Reliability
Coordinators, and the availability and effectiveness of operational (real-time and day-ahead)
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

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reliability assessment tools, including redundancy of views and the ability to observe the “big
picture” regarding Bulk Electric System conditions. The team also investigates the operating
practices and effectiveness of those practices of operating entities and Reliability Coordinators in
the affected area. This team investigates all aspects of the blackout related to operator and
Reliability Coordinator knowledge of system conditions, action or inactions, and
communications.
Frequency/ACE — This team will analyze potential frequency anomalies that may have
occurred, as compared to typical interconnection operations, to determine if there were any
unusual issues with control performance and frequency and any effects they may have had
related to the blackout.
System Planning, Design, and Studies — This team will analyze the responsibilities,
procedures, and design criteria used in setting System Operating Limits, and compare them to
good utility practice. The team will review the actual limits in effect on day of the blackout and
whether these limits were being observed. The team will review voltage schedules and guides,
and reactive management practices in the affected areas, including use of static and dynamic
reactive reserves. The team will analyze the tagged and scheduled transactions to determine if
inter-regional transfer limits were understood and observed. The team will analyze system
planning and design studies completed in the affected areas to determine if operating conditions
were consistent with the assumptions of those studies and whether the planning and design
studies were sufficient and effective.
Transmission System Performance, Protection, Control, Maintenance, and
Damage — This team investigates the causes of all transmission Facility automatic operations
(trips and reclosures) leading up to the blackout on all Facilities greater than 100 kV. This
review includes relay protection and remedial action schemes, identifying the cause of each
operation, and any misoperations that may have occurred. The team also assesses transmission
Facility maintenance practices in the affected area as compared to good utility practice and
identifies any transmission equipment that was damaged in any way as a result of the blackout.
The team will assess transmission line rating practices and the impact that ambient temperature
and wind speeds had on the transmission line performance in terms of the design temperature of
the transmission conductors. The team shall report any patterns and conclusions regarding what
caused transmission Facilities to trip; why the blackout extended as far as it did and not further
into other systems; why the transmission separated where it did; any misoperations and the effect
those misoperations had on the blackout; and any transmission equipment damage. The team
will also report on the transmission Facility maintenance practices of entities in the affected area
compared to good utility practice. Vegetation management practices are excluded here and
covered in a different team.
Generator Performance, Protection, Controls, Maintenance and Damage — This
team will investigate the cause of generator trips for all generators with a 10 MW or greater
nameplate rating leading to and through the end of the blackout. The review shall include the
cause for the generator trips, relay targets, unit power runbacks, and voltage/Reactive
Powerreactive power excursions. The team shall report any generator equipment that was
damaged as a result of the blackout. The team shall report on patterns and conclusions regarding
what caused generation Facilities to trip. The team shall identify any unexpected performance
anomalies or unexplained events. The team shall assess generator maintenance practices in the
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

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affected area as compared to good utility practice. The team will analyze the coordination of
generator under-frequency settings with transmission settings, such as under-frequency Loadload
shedding. The team will gather and analyze data on affected nuclear units and work with the
Nuclear Regulatory Commission to address nuclear unit issues.
Vegetation/ROW — This team investigates the practices of transmission Facility owners in the
affected areas for vegetation management and ROW maintenance. These practices will be
compared with accepted utility practices in general, and with NERC Reliability Standards. The
team will evaluate whether the affected parties were within their defined procedures at the time
of the blackout and will investigate historical patterns in the area related to outages caused by
contact with vegetation.
Analysis Process and Procedures Review — This team will review the process and
procedures used in the analysis of the blackout, make recommendations for improvement, and
develop recommendations for appropriate processes, procedures, forms, etc. to guide and
expedite future analyses including coordination and cooperation between NERC, its Regional
Entities, and government agencies.
Restoration Review — All entities operating portions of the Bulk Electric System in North
America are required by NERC Reliability Standards to maintain system restoration plans and
black start plans, and Reliability Coordinators are required to coordinate the implementation of
those plans. This team will review the appropriateness and effectiveness of the restoration plans
implemented and the effectiveness of the coordination of these plans.
NERC and RE Standards/Procedures and Compliance — This team reviews the
adequacy of NERC Reliability Standards, Regional Reliability Standards and Regional Entity
procedures, and the Compliance Monitoring and Enforcement Program to address issues leading
to the blackout. The team also reviews the compliance of the affected operating entities with
Reliability Standards. For less significant event analyses, this team may not be needed.
However, all compliance issues will be referred to the NERC Director of Compliance.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

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Attachment C

NERC CONFIDENTIALITY AGREEMENT
FOR
ANALYSIS OF BLACKOUTS AND DISTURBANCES

This Confidentiality Agreement (“Agreement”), dated _______________, is between the
North American Electric Reliability Corporation (“NERC”), and
____________________________________________________________________, a member
of the NERC Event Analysis Team (“Team Member”)(collectively referred to as “Parties”).
WHEREAS, NERC is conducting an analysis of the power event that occurred in
__________________________ on ___________________ and related matters (“Event”); and
WHEREAS, NERC has established a team to carry out that analysis (“Event Analysis

Team”); and
WHEREAS, in order for the Event Analysis Team to fulfill its objectives, it is necessary
for the Event Analysis Team have access to confidential or business sensitive information from
operating entities within the _______________ and to be able to conduct open and unconstrained
discussions among team members,

The Parties therefore agree as follows:
1.
The term “Event Analysis Information” means all information related in any way
to the Event that operating entities within the ____________________ or their representatives
have furnished or are furnishing to NERC in connection with NERC’s analysis of the Event,
whether furnished before or after the date of this Agreement, whether tangible or intangible, and
in whatever form or medium provided (including, without limitation, oral communications), as
well as all information generated by the Event Analysis Team or its representatives that contains,
reflects or is derived from the furnished Event Analysis Information; provided, however, the
term “Event Analysis Information” shall not include information that (i) is or becomes generally
available to the public other than as a result of acts by the undersigned Parties or anyone to
whom the undersigned Parties supply the Information, or (ii) is known to or acquired by the
Team Member separate from receiving the information from the Event Analysis Team.
2.
The Team Member understands and agrees that the Event Analysis Information is
being made available solely for purposes of the Event Analysis and that the Event Analysis
Information shall not be used in any manner to further the commercial interests of any person or
entity. The Team Member further understands and agrees that he or she will not disclose Event
Analysis Information to any person who has not signed this Agreement except as such disclosure
may be required by law or judicial or regulatory order.
3.
If Team Member’s employing organization has signed the NERC Confidentiality
Agreement for Electric System Security Data (“NERC Security Data Agreement”), paragraph 2
shall not be deemed to prohibit Team Member from disclosing Event Analysis Information to
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

1

other employees of that organization, but only to the extent that “security data” as defined in the
NERC Security Data Agreement is shared within the organization.
4.
The Parties expressly agree that Event Analysis Information shall otherwise only
be disclosed through official releases and reports as authorized by NERC.
5.
It shall not be a violation of the NERC Confidentiality Agreement for Electric
System Security Data for a Reliability Coordinator to furnish Event Analysis Information to an
Event Analysis Team Member who has signed this Agreement.
6.
This Agreement shall be for sole benefit of the parties hereto. This Agreement
may be modified or waived only by a separate writing signed by the Parties. If any clause or
provision of this Agreement is illegal, or unenforceable, then it is the intention of the Parties
hereto that the remainder of this Agreement shall not be affected thereby, and it is also the
intention of the Parties that in lieu of each clause or provision that is illegal, invalid or
unenforceable, there be added as part of this Agreement a clause or provision as similar in terms
to such illegal, invalid or unenforceable clause or provision as may be possible and be legal,
valid and enforceable. This Agreement will be governed and construed in accordance with the
laws of the State of New Jersey, except for any choice of law requirement that otherwise may
apply the law from another jurisdiction.
7.
This Agreement shall have a term of two (2) years from the date hereof, except
that the obligations of paragraphs 2, 3, and 4 shall continue for five (5) years from the date
hereof.
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
By: _____________________________________
Printed: _________________________________
Title: ___________________________________

NERC EVENT ANALYSIS TEAM MEMBER
Signed: ___________________________________
Printed: ___________________________________

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

2

Attachment D

NERC Blackout and Disturbance Analysis Objectives, Analysis Approach,
Schedule, and Status
Analysis Objective
Pre-Event Conditions
1. What was the precursor
sequence of events leading to
the event?

Analysis Approach
•
•
•
•

2.

3.

What time frames are relevant
for pre-event assessment of
system conditions? What
points in time should be used
to establish a baseline set of
study conditions when the
system was last known to be
stable and within normal
operating criteria?
What models and data can best
simulate system conditions
prior to and during the event?
What is the relevant scope of
the system for detailed study
(what is considered the
boundary of the study system
and what is considered
neighboring or external
systems?)

•

•

•

•
•
•
•

Schedule

Status

Assemble data/alarm logs and time-stamped
sequence information.
Develop and maintain an expanding database
of log and time-stamped sequence
information.
Develop a precursor sequence of high-level,
events relevant to, and leading to event
initiation.
Reconcile the precursor sequence of events
with those emerging from Regional Entities,
RTOs, and operating entities.
Referencing precursor sequence of events,
determine relevant times to develop base case
conditions (stable and within normal
operating criteria).
Verify relevant time horizons and availability
of system data at those times with Regional
Entities, RTOs, and operating entities.

Identify up-to-date power system model(s)
appropriate for powerflow and transient and
dynamic simulations (determine if detailed
eastern Interconnection model is needed or
multi-regional model(s) are needed.
Identify what models are available in
Regional Entities, RTOs, and operating
entities.
Identify who will actually perform power
flow, transient and dynamic simulations; hire
contractor(s) as needed.
Identify and assemble data required for these
models.
Develop and maintain a system data
repository.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

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Analysis Objective
4.

What system conditions
existed in the precursor time
horizon leading up to the event
(at the times identified in 1.)?

Analysis Approach
•

•

•
•

5.

Were there any prior-existing
abnormalities, instabilities,
reliability criteria violations, or
reliability issues in the
precursor sequence time
horizon? Prior to event
initiation were there any latent
instability conditions that
would suggest the system was
at risk? Were the precursor
conditions ones that had been
previously studied by the
entities involved? Were there
adequate reserves with
effective distribution? Were
planned outages effectively
coordinated?
Blackout Sequence of Events
6. What was the sequence of
system events leading to and
directly triggering the
blackout?

•
•
•
•
•
•

•

•
•

Schedule

Status

Obtain and manage data for powerflow:
system configuration, planned and unplanned
outages, unit commitment and dispatch,
interchange schedules, congestion conditions,
reserves, Loadsloads, state estimator
snapshots, deratings and limitations,
frequency, etc. Identify who will maintain
and run powerflow simulations.
Work with Regional Entities, RTOs, and
operating entities to develop powerflow cases
defining the base conditions for each relevant
time, ensuring the powerflows model each
critical juncture leading up to the event.
Identify and review results of additional
studies completed by Reliability Coordinators,
RTOs and operating entities.
Assess the powerflow results with respect to
steady state operating criteria (was the system
within all known limits at each precursor
time)?
Work with Regional Entities, RTOs, and
operating entities to obtain and manage
transient and dynamic models for simulations.
Identify who will conduct transient and
dynamic simulations and if external
contractor(s) are required.
Conduct transient and dynamic simulations at
each of the precursor study times.
Assess the stability of the system at each of
these times and identify any latent reliability
issues prior to blackout initiation.
Consider creating a visual map of system
conditions.
Document the limitations and assumptions of
simulations affecting the certainty of the
simulation results.
Evaluate data logs, fault recorder data
disturbance recorder data, and synchro-phasor
measurement to establish a detailed sequence
of events that initiated the event.
Identify the sequence of events that directly
led to the event.
Review and reconcile these trigger events
with Regional Entities, RTOs, and operating
entity analyses.

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Analysis Objective
7.

What was the sequence of
events during the event?

Analysis Approach
•
•
•

Schedule

What was the cause of the
•
event in terms of electrical
conditions and other related
events? Generally describe
any system breakups,
•
islanding, etc. Were there
conditions of voltage or
frequency collapse, or unstable
oscillations? Was the sequence
strictly a sequential “domino”
•
effect of Facility trips? What
were the system conditions
(snapshots) at key points
•
during the event?
9. Why did the event extend as
•
far as it did? What arrested the
event from extending further
into other systems?
10. How did affected non-nuclear
• Prepare a table of affected generators and
generators respond during the
actions they made leading up to and during the
event? Were trips as expected
event, including time-stamped unit trips,
and required by procedures and
relays initiating unit trips, MW and MVar
standards? Did non-nuclear
outputs, voltages, and frequency, etc.
generators remain connected
• Analyze the automatic (including relay trips)
and support the power system
and operator-initiated actions of non-nuclear
in the manner they should
generators to determine whether actions were
have? Did any generator
correct under the conditions or not.
action, generator control
• Reconcile non-nuclear generator data and
functions, or generator
analysis with that of the Regional Entities,
protection systems contribute
RTOs, and operating entities.
to the event?
11. How did nuclear generators
• Work with NRC to develop a table of
respond leading up to and
sequence of actions and issues regarding
during the blackout? Were
affected nuclear generators (both ones that
trips as expected and required
tripped and those that did not).
by procedures and standards?
• Refer nuclear issues to NRC for analysis,
Were there any nuclear safety
assisting in their analyses where appropriate.
issues identified?
12. What was the sequence and
• Work Regional Entities, RTOs, and operating
amount of Loadload lost?
entities to develop a description of Loadload
What directly caused Loadload
lost/impacted, by area.
loss (e.g. under-frequency
• Analyze and report the cause for Loadload
Loadload shed, loss of
loss in each area.
transmission source, voltage
collapse, relay actions,
under/over frequency
protection or stalls, etc.)
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007
8.

Status

Evaluate logs and disturbance recorder data to
establish sequence during the blackout. (The
event sequence may follow multiple tracks.)
Review and reconcile this sequence with those
constructed by Regional Entities, RTOs, and
operating entities.
Consider developing 3-D, time-lapse
visualization of the blackout (U. of Minnesota
and/or U. of Wisconsin).
Assess triggering sequence and blackout
sequence to establish the causes for the
blackout in terms of electrical conditions and
events.
Select key points in sequence for simulation
that are relevant for study and that can be
accurately modeled. (It may not be possible
to reconcile data sufficiently to recreate
system conditions during the blackout.)
To the extent possible, conduct simulations
and assess results at each point during the
blackout.
Review and reconcile results with Regional
Entities, and operating entities.
Using advanced analysis techniques, assess
where and why the event was arrested.

3

Analysis Objective

Analysis Approach

13. How did system protection and •
automated controls operate
during the event? Did they
operate correctly or not?
•

14. Was any equipment damaged
during the event?

•
•

15. Did SCADA/EMS and data
communications systems
operate correctly during the
event? What problems were
noted?
Reliability Standards/Procedures
16. What NERC Reliability
Standards were applicable to
the event? What violations
occurred? Were NERC
Reliability Standards and
policies sufficient?
17. What Regional Reliability
Standards were applicable to
the event? What violations
occurred? Were Regional
Reliability Standards and
Regional Entity policies
sufficient?
18. Were any special operating
procedures or other operating
guidelines in effect and being
observed leading up to the
event? Were these procedures
sufficient?
19. What other RTO, Transmission
Owner, CA procedures were
applicable? What violations
occurred? Were the
procedures sufficient?
Maintenance
20. Are there any indications that
maintenance of transmission or
generation Facilities may have
contributed to the event?

•
•

•

Compliance Staff review NERC Reliability
Standards relevant to the event and perform a
compliance review.

•

Request Regional Entities to review applicable
Regional Reliability Standards and report
compliance with those Regional Reliability
Standards during the event.

•

Review and analyze loop flow procedures with
involved Regional Entities and companies, and
report analysis results.

•

Request RTOs, Transmission Owners, CAs to
review applicable Reliability Standards and
compliance with existing reliability procedures
and Reliability Standards during the event, and
report results.

•

Assess whether equipment or maintenance
issues (e.g. tree trimming) contributed to the
blackout and investigate specifics in areas of
concern.
Review Regional Entity assessments of
maintenance issues that may have contributed
to the event.

•

Schedule

Status

Assess each automatic trip of a transmission or
generator Facility for proper or improper relay
actions.
Assemble and review Regional Entity and
operating entity reviews of logs, disturbance
reports, and relay targets/logs and reconcile
with NERC data.
Request information from Regional Entities,
and companies on equipment damage, as
appropriate.
Assess any transmission or generation
Facilities sustaining damage during the event,
and extent of damage.
Request information from Regional Entities,
and companies.
Identify and analyze any problems with
SCADA/EMS and data communications at
regional and company levels.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

4

Personnel, Procedures, and
Communications
21. What conditions were
operators and Reliability
Coordinators aware of leading
up to and during the event?
What information did they
have to warn them of unsafe
system conditions? What
problems or concerns did they
have? What did they observe
during the event? Were human
errors made that contributed to
the event? If there were, what
were the causes of the errors?
22. Were lines of authority clearly
understood and respected in the
time leading up to and during
the event, as well as during the
restoration period?
23. What communications
occurred among operating
entities?
24. What were the qualifications
(including Certification status)
and training of all operating
personnel involved in the event
and their supervisors?
25. Was the role and performance
of the Reliability Coordinators
as expected?

•
•
•

•
•
•
•
•
•
•
•
•
•

System Restoration
26. Were blackstart and restoration
procedures available and
adequate in each area? Were
they followed and were they
adequate to the restoration
task? Were pre-defined
authorities respected during the
restoration?
27. What issues were encountered
in the restoration that created
unexpected challenges or
delays? What lessons were
learned in the restoration (both
things that went well and
things that did not).

•
•

•

•

Develop an interview guide to address
procedural and operational issues.
Conduct onsite interviews with operating
personnel and Reliability Coordinators
involved.
Analyze interview data to corroborate with
technical data and report conclusions.

Identify critical instructions given and
evaluate results.
Review documentation and effectiveness of
assignments of operating and reliability
authorities.
Review voice communications logs.
Evaluate logs relevant to the blackout and
identify key interactions. Report conclusions.
Request Certification status of all operating
personnel from involved operating entities.
Conduct onsite review of training materials
and records.
Conduct onsite review of operating procedures
and tools
Review the adequacy of reliability plans for
the affected Regional Entities.
Review the actions of the affected Reliability
Coordinators to determine if they performed
according to plans.
Assess whether inter-area communications
were effective, both at the control area and
Reliability Coordinator levels.
Onsite audit of blackstart and restoration
procedures and plans.
Analyze whether the plans and procedures
were used and whether they were sufficient for
this outage.

Solicit information from operating entities and
Regional Entities regarding unexpected
challenges and delays in restoration, and
lessons learned.
Analyze what worked well and what did not in
the restoration.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

5

System Planning and Design
28. Were the conditions leading up
to the event within the design
and planning criteria for the
transmission systems involved?
Conclusions and
Recommendations
29. From a technical perspective,
what are the root causes of this
event? What additional
technical factors contributed to
making the event possible?
30. What are the significant
findings and lessons learned
resulting from the analysis
regarding technical failures
leading to the event? What
actions are recommended to
avoid similar future events and
improve Bulk Electric System
reliability? What issues may
be inconclusive and require
future analysis?
31. Final Report

•

Request Transmission Owners and Regional
Entities involved to report any violations of
design or planning criteria prior to or leading
up to the blackout.

•

Conduct a root cause analysis on the findings
and data. Categorize results as “root cause” or
“contributing factor”. Focus on technical
aspects.

•

Draft report of significant findings, lessons
learned, and recommendations.

•

Prepare and coordinate publication of final
report.

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

6

Attachment E

Guidelines for NERC Reports on Blackouts and Disturbances10
Introduction and Purpose
Executive Summary of Blackout or Disturbance
Conclusions & Recommendations
Actions to Minimize the Possibility of Future Blackouts and Disturbances
Detailed Analysis of Event
1. Sequence of Events

1.1. Sequence of transmission and generation events
1.1.1. Reasons for each trip
1.1.2. Sequence of loss of Loadload
1.1.3. Description of Cascading and islanding
2. System Modeling

2.1. Model and assumptions
2.1.1. Equipment ratings and limits
2.1.2. Steady state, system dynamics, and other analyses
2.1.3. Degree of simulation success
2.1.4. Simulation results
2.1.5. Conclusions and lessons learned
2.2. Pre-event Conditions
2.2.1. Load levels
2.2.1.1.Forecast vs. Actual
2.2.1.2.Comparison with planning and operational models
2.2.2. Generation dispatch
2.2.2.1.Forecast vs. actual
2.2.2.2.Comparison with day ahead studies
2.2.2.3.Reporting of scheduled and forced outages
2.2.3. Reserve capacity
2.2.3.1.Location of MW reserves
2.2.3.2.Planned vs. actual
2.2.4. Transmission configurations
2.2.4.1.Planned vs. actual
2.2.4.2.Comparison with day ahead studies
2.2.4.3.Reporting of scheduled and forced outages

10

Each blackout or disturbance is unique and will therefore demand a customized approach to its
investigation and reporting. These guidelines for NERC reports are suggestive rather than
definitive. Not all investigations and reports will require covering all of these topics.
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

1

2.2.5. Interregional transactions
2.2.5.1.Calculated transfer limits
2.2.5.2.Basis for limits – thermal, voltage, and stability
2.2.5.3.Seasonal assessments – Assumptions vs. actual
2.2.5.4.Actual schedules vs. Tagged schedules
2.2.5.4.1. AIE Survey
2.2.5.4.2. Tag Survey
2.2.6. System voltages (profile) and reactive supplies
2.2.6.1.Coordination of reactive supplies and voltage schedules
2.2.6.2.Reactive supply with power transfers
2.3. Event Key Parameters
2.3.1. System voltages (profile) and reactive supplies
2.3.2. Power flows and equipment loadings
2.3.3. System dynamic effects
3. Transmission system performance

3.1.
3.2.
3.3.
3.4.

Equipment ratings
Protective relay actions
Equipment maintenance
Equipment damage

4. Generator performance

4.1. Generator control actions
4.2. Generator protection
4.2.1. Underfrequency
4.2.2. Overspeed
4.2.3. Excitation systems
4.2.4. Other systems
4.3. Equipment maintenance
4.4. Equipment protection
4.5. Dynamic effects of generators
5. System frequency

5.1. Frequency excursions – pre event
5.1.1. Analysis of frequency anomalies
5.1.2. Effect of time error correction
5.2. Frequency analysis of the event
5.2.1. Remaining interconnection
5.2.2. Islands remaining
6. Operations

6.1. Operational visibility and actions
6.1.1. Reliability Coordinators
6.1.1.1.Delegation and authority
6.1.1.2.Monitoring capabilities
6.1.1.2.1. Scope of coverage and system visibility
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

2

6.1.1.2.2. Monitoring tools
6.1.1.2.3. Data availability and use
6.1.1.3.Operations planning capability
6.1.1.3.1. Operational planning tools
6.1.1.3.2. Coordination
6.1.1.4.Operating procedures
6.1.1.4.1. Emergency operations
6.1.1.4.2. Loss of monitoring system or components
6.1.1.4.3. Communication procedures
6.1.1.5.Operating qualifications and training
6.1.1.5.1. Qualification of operators
6.1.1.5.2. Training provided
6.1.1.5.3. Simulation of emergencies
6.1.2. Transmission Operators
6.1.2.1.Authority to take action
6.1.2.2.Monitoring capabilities
6.1.2.2.1. Scope of coverage and system visibility
6.1.2.2.2. Monitoring tools
6.1.2.2.3. Data availability and use
6.1.2.3.Operations planning capability
6.1.2.3.1. Operational planning tools
6.1.2.3.2. Coordination
6.1.2.4.Operating procedures
6.1.2.4.1. Emergency operations
6.1.2.4.2. Loss of monitoring system or components
6.1.2.4.3. Communication procedures
6.1.2.5.Operating qualifications and training
6.1.2.5.1. Qualification of operators
6.1.2.5.2. Training provided
6.1.2.5.3. Simulation of emergencies
7. System Planning and Design

7.1. Establishing operating limits
7.1.1. Responsibility for setting limits
7.1.2. ATC and TTC calculations
7.1.3. Planning studies
7.1.3.1.·Wide-Area simultaneous transfer limits
7.1.3.1.1. Determination of limits
7.1.3.1.2. Monitoring of limits
7.1.3.1.3. Basis for limits – thermal, voltage, and stability
7.1.3.1.4. Regional Entity assessments
7.1.3.1.5. Other system studies in affected areas
7.1.3.2.Reactive planning
7.1.3.2.1. Reactive reserve planning
7.1.3.2.2. Active vs. static resources
7.1.3.2.3. Voltage stability analysis
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

3

7.1.3.3.Regional Criteria and/or NERC Reliability Standards used for
planning
7.1.3.3.1. Compliance to these planning Regional Criteria and/or
Reliability Standards
8. Reliability Standards and Compliance

8.1. Audits
8.1.1. Reliability Coordinators
8.1.1.1.Previous audits and results
8.1.1.1.1. Compliance with NERC Reliability Standards
8.1.1.2.Updated findings based on analysis
8.1.1.3.Post blackout audit results and findings
8.1.1.4.Recommendations for future audits
8.1.2. Balancing Authorities
8.1.2.1.Regional Entity audits
8.1.2.1.1. Compliance with NERC Reliability Standards and Regional
Reliability Standards
8.1.2.2.Updated findings based on analysis
8.1.2.3.Post blackout audit results and findings
8.1.2.4.Recommendations for future audits
8.2. Regional Criteria and/or NERC Reliability Standards used for operations
8.2.1. Compliance to these operating Regional Criteria and/or Reliability
Standards
8.3. Reliability Standards
8.3.1. Improvements needed
8.3.2. Potential new Reliability Standards
9. Actions to Minimize the Possibility of Future Widespread Events

9.1.
9.2.
9.3.
9.4.
9.5.
9.6.

Reliability Standards and compliance to Reliability Standards
Availability of planned Facilities as scheduled
Automatic Loadload shedding programs
Controlled separation and islanding
Improved data collection and system monitoring
Studies of impacts of severe events

10. Restoration of Service

10.1.
Restoration procedures
10.1.1. RTOs and ISOs
10.1.2. Transmission Operators
10.1.3. Generator Operators
10.1.4. Distribution Providers
10.2.
Restoring service
10.2.1. Transmission line restoration
10.2.1.1. Within control area/ISO/RTO
10.2.1.2. Interarea tie lines
10.2.1.3. Impediments and other issues
NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

4

10.2.2. Generation restoration
10.2.2.1. Utility-owned generation
10.2.2.2. Independent generation
10.2.2.3. Fuel supply adequacy
10.2.2.4. Fossil units
10.2.2.5. Nuclear units
10.2.2.6. Capacity reserves
10.2.2.7. Coordination with transmission
10.2.2.8. Coordination with Loadload and other generation
10.2.2.9. Impediments and other issues
10.2.3. Coordination and communications
10.2.3.1. Within control area/ISO/RTO
10.2.3.2. With outside control areas/ISOs/RTOs
10.2.3.3. Wide-Area coverage
10.2.3.4. Impediments and other issues
10.3.
Review of restoration procedures
10.3.1. Time to restore customers
10.3.2. Need for modifications
10.3.3. Availability of procedures to necessary participants
10.3.4. Need for training and practice drills
10.3.5. Comparison with other control areas/ISOs/RTOs
11. Analysis Process

11.1.
Description of process
11.1.1. Organization
11.1.2. Coordination with US-Canada task force
11.1.3. Coordination with Regional Entities and RTOs
11.1.4. Recommended process improvements
11.1.4.1. Use for other events – near misses, etc.
11.2.
Data management
11.2.1. Data collection processes
11.2.1.1. Data request process
11.2.1.2. Data forms used
11.2.2. Data received
11.2.2.1. Quality and usefulness of data
11.2.3. Data warehousing
11.2.3.1. Data warehouse structure
11.2.3.2. Accessibility of data
11.2.4. Data forms and process for future analyses

NERC Blackout and Disturbance Response Procedures – Effective October 18, 2007

5

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF REVISIONS TO ITS RULES OF PROCEDURE
TO ADOPT A BULK ELECTRIC SYSTEM EXCEPTION PROCEDURE

ATTACHMENT 9

“THE DEVELOPMENT PROCESS AND BASIS FOR THE RoP TEAM’S
RECOMMENDED PROVISIONS – HOW STAKEHOLDER COMMENTS WERE
CONSIDERED AND ADDRESSED”
PREPARED BY THE BES RULES OF PROCEDURE TEAM

The development process and basis for the RoP Team’s
recommended provisions--including how stakeholder comments were
considered and addressed
Background
On November 18, 2010, the Federal Energy Regulatory Commission (“FERC” or the
“Commission”) issued an Order (No. 743) directing NERC to revise the definition of Bulk Electric
System to address the Commission’s technical and other concerns as identified in the Order.
Concurrent with the development of the revised Bulk Electric System definition, NERC was also
directed to develop a process for granting specific facilities exemptions from the Bulk Electric
System definition. FERC subsequently clarified certain aspects of its directives in Order No.
743-A.
The goal of the combined efforts was to develop a definition and exemption process sufficient to
ensure that all facilities necessary for operating an interconnected electric transmission network
are included in the bulk electric system under Section 215 authority. In the Orders, the
Commission described in large part its technical and other concerns as:




Inconsistencies and ambiguities exist across 8 regions with respect to the
definition of the Bulk Electric System
A backstop review process does not exist for resolving such inconsistencies and
ambiguities
Facilities exist that could significantly affect reliability but that because of
inconsistencies in the definition are not subject to mandatory reliability rules, and
thus the ERO lacks authority to require such entities to mitigate reliability risks

Through Orders 743 and 743-A the Commission proposed to:





Eliminate regional discretion
Maintain a bright-line definition of the Bulk Electric System as including facilities
operating at 100kV and above
Establish an exemption process and criteria that was NERC developed and
FERC approved

NERC was given the latitude to develop a solution as effective as or more effective than the
Commission’s proposal in the Order.
Executive Summary
A team of industry stakeholders1, with participation from NERC and regional staff, was assigned
the task2 to develop a process for granting exceptions to the definition of the Bulk Electric
System. This Rules of Procedure (or “RoP”) team was to coordinate closely with the standards
                                                            
1

 The RoP roster is listed at:  http://www.nerc.com/docs/standards/dt/BESROP_ROSTER_08312011.pdf . The team 
was selected from stakeholder names submitted for participation on the Project 2010‐017, standard drafting team 
to bring a good mixture of technical, policy, and industry views.   
2
 Standards Announcement: Bulk Electric System Definition Revision Status ‐  
http://www.nerc.com/docs/standards/dt/Project_2010-17_Standards_Announcement_040611.pdf 

1 
 

development efforts of the drafting team and, through stakeholder participation, propose a
modification to the NERC Rules of Procedure that could be filed with the Commission for
approval in response to the directives in Orders 743 and 743-A.
Believing that the set of electrical elements that comprise the Bulk Electric System generally will
be appropriately determined through a hierarchical application of the newly proposed definition
which includes detailed inclusions and exclusions to provide additional bright-line specificity
beyond just the originally proposed 100kV threshold, the team expects that a practical
exceptions process for specific facilities mischaracterized by the definition should be less
frequently invoked and therefore less burdensome administratively than was envisioned by the
Commission’s original proposal for exemptions from a more broad-brush 100kV approach.3 The
exceptions process is intended to be consistent, repeatable, and verifiable while allowing
sufficient flexibility for circumstances specific to each case to dictate the proper outcome in the
interest of reliability.
Interested stakeholders were provided multiple opportunities to participate in the development of
the process through open meetings as well as extensive use of e-mail,4 web postings,5 and
informational and question-and-answer presentations held jointly with the definition drafting
team6. Members of the Rules of Procedure team worked with Canadian entities to address
consistent treatment of transmission lines that cross the border to address FERC’s stated
concerns and to alleviate Canadian concerns about a "one-size-fits-all" approach.
Several process attributes considered by the team during development were:







Maintain the exemption for facilities used in the local distribution of electric energy as
well as radial facilities
The exception procedure including the criteria7 for allowing exceptions should be clear,
objective, transparent, and uniformly applicable
The process should allow any registered entity to utilize the process to seek an
exception either for its own facilities or for others’ facilities with respect to which it has
ERO-related reliability responsibilities
NERC should be the ultimate decision-maker in order to retain facility-by-facility
oversight of the objective and uniform application of the exception criteria
The process should provide a procedure for revoking a previously granted exception if a
facility no longer qualifies for such special treatment
The records of all exception requests should be ready-for-audit by Commission staff

                                                            
3

Revision to Electric Reliability Organization Definition of Bulk Electric System, Notice of Proposed
Rulemaking, 75 FR 14097 (Mar. 24, 2010), FERC Stats. & Regs. ¶ 32,654 (2010).
4
The RoP e-mail distribution list was combined with the Project 2010-017 drafting team roster and any
interested participant was allowed to join a “plus” list that was used extensively.
5
A project team webpage was created and hyperlinked to the standards under development webpage for
information.
6
The NERC Members Representatives Committee was briefed on several occasions throughout 2011,
two joint NERC Webinars with Q&A were presented, and one joint presentation at a NERC Standards
workshop.
7
The leadership of the BES Definition SDT and of the Rules of Procedure team met with the leadership of
the Standards Program and the Standards Committee and determined that the BES Definition SDT would
assume responsibility for working with stakeholders to identify what evidence will be needed to support a
request for an exception to the BES definition.
 

2 
 

Several significant issues were identified during the development of the process that needed to
be addressed. The issues were not considered to be intractable nor threatening to reliability,
but nonetheless were important to the stakeholders. The issues generally fell into the following
categories:








Who is eligible to initiate and/or participate in the process by which an Exception
is granted? What is the role of state regulators?
What should be the scope of the Elements that can be contained in a single
Request?
Should an entity unable to determine the status of an element by applying the
bright line BES definition be able to obtain a determination of its status through
the exception process?
What is the appropriate balance between allowing open access to the process
and ensuring administrative time is spent analyzing and processing valid,
permissible requests?
What is the appropriate balance between facility-by-facility case-specific flexibility
and an appropriate level of consistency, respecting the varied roles and proper
exercise of discretion by each participant?
How transparent should the process be? Should entities other than the Regional
Entity, NERC, FERC, or Canadian Provincial authorities be allowed access to
facility-specific Exception-related information filed by an entity?
What should be the status for compliance purposes of an Element during the
pendency of the request?

Summary of the Development Process
The Rules of Procedure Exceptions process was developed through stakeholder participation
as described in the executive summary. Additionally, interested stakeholders were asked to
provide feedback on the proposed amendments through a special electronic comment form on
two separate occasions.
A 30 day posting for comment was held from May 10, 2011 through June 10, 2011, in
conjunction with the first posting of the draft definition. There were 70 sets of comments on this
first posting, including comments from more than 176 different people from approximately 131
companies representing 10 of the 10 Industry Segments.
After considering all comments received from the first posting, the team made substantial
revisions to the proposed amendments, and a second posting with a 45-day public comment
period was conducted from September 13, 2011 through October 27, 2011, in conjunction with
the second posting and initial ballot of the draft definition. There were 72 sets of comments on
this second posting, including comments from more than 134 different people from
approximately 86 companies representing 9 of the 10 Industry Segments.
After consideration of this second set of comments, the Rules of Procedure team made further
revisions, mostly to clarify and fine-tune the process. Many of the comments received
expressed concerns about the outside edges of the process which represented a worst-case
scenario. While such a scenario certainly must be considered, it is important to note that such
provisions were included in the exception process in order to anticipate situations that might be
encountered occasionally or even infrequently during the administration of the process (e.g.,
uncorrectable insufficiencies in the form of a Request ), but that most requests are not expected
3 
 

to present such situations and therefore will be processed to a definitive conclusion in fewer
steps but still in a fair, efficient and effective manner. Additional information may be found at:
http://www.nerc.com/filez/standards/Rules_of_Procedure-BES.html
Some commenters noted, with appreciation, that the development process for these
amendments offered them more opportunity for review and comment than has traditionally been
available for revisions to the Rules of Procedure. Additionally, commenters expressed that
communication outreach efforts by the team such as through webinars was very helpful. The
RoP team also has benefited from the additional input afforded by the two-step process.
Proposal
The RoP Team believes that the proposed process establishes a fair and efficient resolution to
a majority of the Exception Requests that will be presented, yet provides the necessary
processes to address special circumstances that may arise in the process of arriving at a
technically sound determination. In essence, in most circumstances, the process is a fairly
simple and direct process of discrete steps:
1. An entity applies the definition to an element, but nonetheless believes that an
element should either be included in or excluded from the Bulk Electric System
contrary to its characterization by the definition, and therefore submits an
Exception Request to the region where the Element is located.
2. The region receives the request, and
a. The region conducts an initial screening looking for three items to
determine if it is a valid request for processing:
 Is the request from an eligible submitter?
 Is the request for an exception to the Definition?
 Is the required information provided with the request?
If the initial answer to each question is yes, the request is moved forward
to a substantive review. If not, the submitter has an opportunity to fix the
request before the region rejects the request as deficient.
b. The region substantively evaluates the request and makes a
recommendation to NERC.
3. NERC reviews the request and all information developed at the regional level,
and either approves or disapproves the exception request.
4. The Entity either accepts or appeals NERC’s decision.
Additional checks and balances exist to address special situations, such as when a region itself
submits an Exception Request or when a region either intends to reject a request as insufficient
or recommend to NERC that an exception request be denied. In such circumstances, measures
to give extra consideration to the submitter’s or owner’s position necessarily create additional
levels of complexity, but they also provide important safeguards to ensure the best technical
result for reliability.
The RoP team believes the proposed amendments represent a process that:
 Balances the need for effective and efficient reliability administration with due
process and clarity of expectations.
 Is consistent, repeatable, and verifiable.
 Supports consistent treatment of transmission lines that cross international borders.
 Helps alleviate concerns about a “one-size fits all” approach.
 Allowed commenters to raise and address a number of their substantive concerns.
4 
 

Consideration of Comments
Effective and efficient reliability administration vs. due process and clarity of expectations
Commenters were divided on how successfully the proposed procedure achieves this balance
and on what procedural elements need to be added or should be eliminated. The RoP Team
wishes to emphasize that the industry, the regions, and NERC each have responsibilities under
the proposed process, and while these responsibilities do revolve around the processing of a
single request, they are distinct and different steps that are discrete and manageable. The
process sets a framework by which entities exercise their responsibilities together to effectively
analyze a request and produce a technically justified conclusion. Where specific work-product
or deliverables are detailed in the process, it is done to ensure consistency. It is expected that
each participant in the process use its discretion where appropriate to maximize the efficiency
and effectiveness of its individual obligations in the process.
A two-stage review (screening and substantive review) is included to ensure that requests are
appropriately submitted prior to accepting them into the process of detailed technical review. In
practice, a properly submitted request will flow through the initial review and on into substantive
review without delay, and the minor administrative action of screening is more than
counterbalanced by the time and resource savings gained by focusing technical work only on
those requests that are complete and ready for substantive review. The process should not
result in properly submitted exception requests being denied a technical review, and in the
unlikely case of an improper rejection on arbitrary grounds, a process exists for a submitter to
turn to NERC, which can direct the substantive review of a request.
Status of an Element for compliance purposes
There continues to be a desire among some commenters for a reduction in the exposure to
compliance monitoring and enforcement activities during the pendency of exception requests.
The RoP team notes that the Commission has already addressed this issue8 and the team has
provided a mechanism for ongoing transition issues to be identified and addressed in
consultation with the Regional Entity as necessary in the exceptions process.
The concept of “commercial operations” was included in section 10.2(a) to provide a reference
point in future time from which to judge exception requests for newly planned but not yet
constructed elements. In addition, although the BES definition implementation plan proposes a
24 month implementation period for application of the definition, Section 10.2(b) addresses the
circumstance where an exception request is not resolved by the end of the “bright line”
implementation period. The intent of both provisions is that for a new element (or for one which
is not currently within the BES for compliance) which would be included under the new
definition, if the owner believes it should be granted an exception from inclusion, the request for
that exception should be submitted in sufficient time prior to its being placed into service (or
                                                            
8

From Order No. 743:
132. While the Commission is sensitive to commenters’ concerns regarding non‐compliance during the transition 
period, the Commission will not provide a trial period, as we declined to do in Order No. 693, with respect to those 
facilities that are subject to Commission‐approved Reliability Standards for the first time. We expect that the 
transition periods will be long enough for exemption requests to be processed and to allow entities to bring newly‐
included facilities into compliance prior to the mandatory enforcement date. Additionally, the ERO and Regional 
Entities may exercise their enforcement discretion during the transition period. 

5 
 

prior to the end of the implementation period) that a decision can be reached, a negative
decision can be mitigated, and the element brought into compliance without requiring what
might have been unnecessary compliance expenses to be incurred in advance.
Some commenters expressed concern about a situation in which a new standard requirement
could begin to apply to an element that was the subject of an exception request, thereby
causing the owner to incur additional compliance costs. The team declined to address this case
because the standards development process allows significant opportunity to address
applicability and effective dates, and this is not unlike the situation already addressed by the
Commission in Order 693 concerning the transition to ERO enforcement of mandatory reliability
standards generally.
Composition and selection of panels of experts
The composition and selection of panels of experts at different points in the process was
questioned by some commenters, and the RoP team has made some clarifying adjustments in
its proposed procedure. The composition and selection of the regional-level Technical Review
Panel (in section 5.3) was adjusted from a minimum of 5 to a minimum of 3 in order to allow for
more efficient utilization of technical resources. A minimum of three persons was still
considered necessary in order to allow the possibility of a minority view to be expressed without
grid-locking the panel. Additionally, the RoP team gave the Regional Entity senior executive
(President, General Manager, CEO, etc.) the authority to appoint the technical review panel
without being constrained to particular membership criteria as long as technical expertise and
independence is honored. For example, the regional executives may collectively choose, for
consistency and peer collaboration, to assign the role of the Technical Review Panel to a group
made up of other regional staff responsible for processing another region’s individual regional
exception requests. Such a group also could provide a standing pool of peer experts providing
this service to each region and promote consistent recommendations to NERC. The intent is
that the Technical Review Panel will render an independent opinion on any request for which
the region intends to issue a Rejection or a recommendation of disapproval. Such an opinion
would be part of the record for NERC to consider in its evaluation, so a staff member of the RE
that is making the recommendation should not be a member of the panel reviewing their own
recommendation or rejection.
Region acting as a Submitting Entity
In response to a variety of comments expressing concern and some confusion over the situation
in which the region was itself submitting an exception request, the RoP provided additional
detail regarding those elements of the procedure at the regional level that would continue to be
applicable in order to protect the owner’s due process, enable the development of a complete
factual record for NERC’s evaluation, and allow the expertise and distinct roles the region and
NERC each have in processing exception requests to be followed.
Transparency and participation in the process
Several commenters expressed concern about the appropriate degree of transparency in the
process, especially when an exception decision might become precedence for decisions made
on later requests --- including requests in other regions. Some commenters even expressed an
interest in allowing expanded participation by third parties (such as state regulators, trade
associations, neighboring utilities, etc.) in the processing of individual exception requests.

6 
 

The RoP team continues to believe that the exception process should be one based on the
technical reliability issues of the specific case presented and that consistency in application of
the process is most enhanced by having a single decision-making entity, NERC, whose
expertise is in electric reliability. As stated before9, the RoP Team believes that if there were no
limitation on interventions, the exception process may not be effective and efficient and could be
lengthy. To establish a procedure that encouraged or even only invited multi-party filings would
unduly complicate the process without any concomitant benefit in reliability.
The team specifically provided that (1) detailed notice of any request would be provided to every
Registered Entity with reliability oversight obligation for the Element subject to the Request and
(2) general information about the request will be publicly posted. The RoP team believes that it
has achieved sufficient balance between the protection of CEII and other confidential
information and the need to have a process as transparent as possible to ensure consistency.
The RoP Team believes that third parties (including state regulatory agencies) will have
adequate opportunity to provide comments regarding the request without formally participating
in the process.
In response to comments about access to the record, the RoP team clarified that the Submitting
Entity or Owner will have access to the information upon which NERC’s final decision is based
and otherwise ensured that a full record will be created and maintained for later audit and/or
appeal.
Inability to provide supporting information
A comment was received regarding the ability of a submitting entity to obtain and provide the
Section III, Required Information to support its request. The procedure is designed such that
the submitting entity has the burden to establish a compelling argument that an element should
be considered in or out of the BES contrary to the definition because the element is or is not, as
the case may be, necessary for the reliable operation of the interconnected transmission
network. However, the RoP Team concurs with the response used by the SDT pertaining to the
concept of a base case and what to do if there is difficulty gaining access to needed data to
support an Exception Request:
In response to the comment about an appropriate Base Case, the SDT expects
the entity seeking an exception to supply an appropriate base case that the
Regional Entity will acknowledge as appropriate. Not indicating the explicit types
of studies or base cases to be provided and how to interpret the information in
the application process does not fail to provide a basis for the Regional Entity to
determine what constitutes an acceptable submittal.
The SDT recommends that each submitting entity work with its Regional Entity to
resolve issues with information availability or access and, in the event such
information is not available, whether suitable replacement data is acceptable.
The SDT further recommends that where information is unavailable, the
submitting entity state such in the comment area and provide the reason for this
unavailability. This will signal the Regional Entity that an issue concerning
information availability will need to be resolved as part of the review process.
                                                            
9

 Consideration of Comments located at: http://www.nerc.com/docs/standards/sar/Project_2010‐
17_BES_ROP_Consideration_of_Comments.pdf 

7 
 

Consistency of results
Several commenters expressed concern with the consistency of the exceptions process, largely
because of the heavy involvement of regions in performing a substantive review and issuing a
recommendation. However, Order 743 recognized that differences properly may exist across
North America with respect to a particular type of element and its effect on reliable operations,
and directed the ERO to develop an exceptions process at least in part to address such
differences.
The RoP team considered that not only how an element is connected to the bulk power system
but also how it’s use impacts reliable operation. To a large extent, therefore, the Detailed
information to Support an Exception Request can best be evaluated in context and
developed at a regional level. Such regionally developed information then will be used along
with its separate engineering judgment by a single decider (NERC) to arrive at a technically
sound determination. Undoubtedly, clarity and effectiveness of the process will improve with
use. The RoP Team concurs with the SDT revisions to Section III of the Detailed information
to Support an Exception Request and notes their response to comments regarding concerns
that there may be insufficient technical or other criteria to determine whether varying results are
arbitrary or based on meaningful distinctions.
The SDT understands the concerns raised by the commenters in not receiving
hard and fast [technical] guidance on this issue. The SDT would like nothing
better than to be able to provide a simple continent-wide resolution to this matter.
However, after many hours of discussion and an initial attempt at doing so, it has
become obvious to the SDT that the simple answer that so many desire is not
achievable. If the SDT could have come up with the simple answer, it would have
been supplied within the bright-line. The SDT would also like to point out to the
commenters that it directly solicited assistance in this matter in the first posting of
the criteria and received very little in the form of substantive comments.
There are so many individual variables that will apply to specific cases that there
is no way to cover everything up front. There are always going to be extenuating
circumstances that will influence decisions on individual cases. One could take
this statement to say that the regional discretion hasn’t been removed from the
process as dictated in the Order. However, the SDT disagrees with this position.
The exception request form has to be taken in concert with the changes to the
ERO Rules of Procedure and looked at as a single package. When one looks at
the rules being formulated for the exception process, it becomes clear that the
role of the Regional Entity has been drastically reduced in the proposed revision.
The role of the Regional Entity is now one of reviewing the submittal for
completion and making a recommendation to the ERO Panel...Moreover,
Appendix 5C of the proposed NERC Rules of Procedure, provides NERC the
option to remand the request to the Regional Entity with the mandate to process
the exception if it finds the Regional Entity erred in rejecting or disapproving the
exception request.
On the other side of this equation, one could make an argument that the
Regional Entity has no basis for what constitutes an acceptable submittal.
Commenters point out that the explicit types of studies to be provided and how to
interpret the information aren’t shown in the request process. The SDT again
points to the variations that will abound in the requests as negating any hard and
8 
 

fast rules in this regard. However, one is not dealing with amateurs here. This is
not something that hasn’t been handled before by either party and there is a
great deal of professional experience involved on both the submitter’s and the
Regional Entity’s side of this equation. Having viewed the request details, the
SDT believes that both sides can quickly arrive at a resolution as to what
information needs to be supplied for the submittal to travel upward to the ERO
Panel for adjudication.
Now, the commenters could point to lack of direction being supplied to the ERO
Panel as to specific guidelines for them to follow in making their decision. The
SDT re-iterates the problem with providing such hard and fast rules. There are
just too many variables to take into account. Providing concrete guidelines is
going to tie the hands of the ERO Panel and inevitably result in bad decisions
being made. The SDT also refers the commenters to Appendix 5C of the
proposed NERC Rules of Procedure, Section 3.1 where the basic premise on
evaluating an exception request must be based on whether the Elements are
necessary for the reliable operation of the interconnected transmission system.
Further, reliable operation is defined in the Rules of Procedure as operating the
elements of the bulk power system within equipment and electric system thermal,
voltage, and stability limits so that instability, uncontrolled separation, or
cascading failures of such system will not occur as a result of a sudden
disturbance, including a cyber security incident, or unanticipated failure of system
elements. The SDT firmly believes that the technical prowess of the ERO Panel,
the visibility of the process, and the experience gained by having this same panel
review multiple requests will result in an equitable, transparent, and consistent
approach to the problem. The SDT would also point out that there are options for
a submitting entity to pursue that are outlined in the proposed ERO Rules of
Procedure changes if they feel that an improper decision has been made on their
submittal.
The RoP team also notes that the draft SAR for Phase II of this Project 2010-017 calls for a
review of the process after 12 months of experience. If at that time, experience has shown that
additional elements have been consistently useful factors, they can be added as additional
detail to the process.
The SDT believes that this time period will allow industry to see if the process is
working correctly and to suggest changes to the process based on actual realworld experience and not just on suppositions of what may occur in the future.
Given the complexity of the technical aspects of this problem and the filing
deadline that the SDT is working under for Phase I of this project, the SDT
believes that it has developed a fair and equitable method of approaching this
difficult problem.
Start-up issues
The RoP team suggests that NERC and the regions develop and share with the industry, as
needed, some guideline and tools to help them administrate the Exception Process during startup. This should include regular reporting of exceptions considered and either approved or
disapproved, with as much detail as appropriate for public posting. It should be understood,
however, that the outcome of what may be perceived to be similar requests may be different
due to the specific operating facts and circumstances involved, and BES reliability remains the
final goal of the whole process.
9 
 

Some commenters requested that the Exception Process be postponed until Phase II of the
definition process has been concluded. The RoP team does not agree and recommends to
move forward with the proposed Exception Process in coordination with the implementation of
the revised definition. The only alternative would appear to be to apply the Definition without any
exceptions for some period of time, which would result in unnecessary inclusions and
undesirable exclusions of elements from the BES, neither of which would benefit reliability.
In response to comments suggesting procedures for the tracking of Exceptions as they are
processed, the RoP team believes this to be an administrative matter for NERC and the regions
to address.
Recertification of Exceptions
Some question was raised regarding the frequency with which an Exception which has been
granted must be recertified, with some commenters proposing 3 or 5 years rather than the 2
years in the proposed procedure. The continued application of an exception to a facility for
which an exception is no longer warranted could have negative effects on reliability, so a shorter
rather than longer time between reviews seems warranted. Moreover, the certification process
being proposed on this schedule is more of an information update than anything especially
onerous. Only if NERC obtains information suggesting the Exception may no longer be
appropriate is a more detailed substantive review conducted.
Consistency with existing procedures
Some commenters expressed a concern about consistency with the existing NERC RoP.
However, in drafting the exception process, the team leveraged existing administrative rules
where possible. Particularly, the appeals process is drafted to parallel the appeals process for
PRC-023 in Section 1702. This process efficiency takes advantage of existing industry time and
resources expended in understanding and commenting on an administrative process and
increases the predictability and consistency of NERC procedures. The team also notes that the
Exception Process may be amended as appropriate upon the adoption of any related changes
elsewhere in the Rules of Procedure or in the Definition or the Detailed information to
Support an Exception Request, whether under Phase II of the standards development project
2010-017 or thereafter.
Consider the whole record
Some commenters requested that the expression “No single piece of evidence should be
dispositive” should be removed from the description of NERC’s consideration of the request.
The RoP Team agreed and changed the wording consistent with the SDT comments to allow an
entity to submit any additional information it feels relevant. Because the definition provides
bright-line threshold criteria for exclusions and inclusions, the exception process will likely use a
blend of quantitative and qualitative thresholds encompassed in engineering judgment to arrive
at a determination. With respect to the jurisdictional boundary between distribution and
transmission, the team notes that Rules of Procedure at Section 314 already addresses
Conflicts with Statutes, Regulations, and Orders and that the exception process should focus on
facilities necessary for the reliable operation of the interconnected bulk-power system.
 
Lines that cross international borders

10 
 

The RoP team adopted new language in Section 1.2 that we believe address the stated
concerns.
Conclusion
The RoP team believes the process as proposed will enable fair yet efficient and effective
determinations with respect to requests that specific elements be excepted from application of
the BES Definition. In order to accomplish this, we believe the procedure needs to be approved
and put into place concurrently with the effective date of the new definition, with sufficient lead
time before compliance obligations are imposed on newly included elements to allow exception
requests properly and thoroughly to be considered. The two year implementation period
proposed by the SDT seems to be sufficient in most cases to allow industry participants to
identify possible exceptions and prepare requests and for the regions and NERC to follow the
procedure proposed here to completion.
The exception procedure proposed here is not intended to be a frequently utilized method for
determining the status of great numbers of elements or facilities across the country. Nor should
it need to be in light of the detailed Inclusions and Exclusions that are part of the Bulk Electric
System definition, which should clearly and appropriately serve to characterize the vast majority
of elements and facilities. Only the tough cases will need to be reviewed through this process,
and it is for those tough cases that the procedure has been designed to provide sufficient
procedural detail to be consistent, repeatable and verifiable, yet also to allow the flexibility to
evaluate the technical issues presented by each request in context. Opinions can and do differ
regarding the best balance between the countervailing interests in a speedy, decisive process
(which may risk over-simplicity) and full consideration of sometimes complex technical issues
(which may risk unnecessarily expanding steps and slowing down the process), but the RoP
team believes its proposal presents a framework in which those requests that can be decided
straightforwardly will be decided quickly and efficiently but those more difficult requests can
receive the attention they need and deserve in order to reach the best decision for reliability.
 

11