New Rules Would Require Independent Generators to Help Maintain Grid Reliability

New Rules Would Require Independent Generators to Help Maintain Grid Reliability

November 01, 2006
The Federal Energy Regulatory Commission proposed in late October to approve 83 “reliability standards” proposed by the North American Electric Reliability Corporation — called NERC — for maintaining reliability of the US electricity grid.

The new reliability standards will go into effect in June 2007. FERC and regional reliability councils are urging that users of the bulk power system commence compliance immediately on a voluntary basis.

The new standards apply not only to regulated utilities, but also to independent generators.

Any comments about the new standard are due at FERC by early February.

Background

Congress directed in the Energy Policy Act in August 2005 that more attention be paid to reliability of the grid. It did so in response to the cascading blackout that affected large portions of the central and eastern United States and Canada two years earlier and threw more than 50 million customers representing 61,800 megawatts of electric load into darkness. Review of the incident indicated that violation of NERC’s then-voluntary standards was one of the primary causes of the blackout. The Energy Policy Act added a new section 215 to the Federal Power Act to establish mandatory and enforceable reliability standards. On February 3, 2006, the Federal Energy Regulatory Commission certified NERC as the electric reliability organization responsible for developing and enforcing mandatory reliability standards, subject to FERC review and approval.

NERC is, in turn, authorized to delegate authority to regional entities for the purpose of proposing reliability standards to NERC and enforcing approved reliability standards. The regional entities are the existing regional reliability councils —- namely the Electric Reliability Council of Texas, Inc. (ERCOT), the Florida Reliability Coordinating Council (FRCC), the Midwest Reliability Organization (MRO), the Northeast Power Coordinating Council (NPCC), the Reliability First Corporation (RFC), the SERC Reliability Corporation (SERC), the Southwest Power Pool, Inc. (SPP) and the Western Electricity Coordinating Council (WECC).

Many of these standards impose obligations on operators of generating plants, as well as on transmission system operators, balancing authorities and regional planning agencies.

This article focuses on how the proposed rule will affect independent generators in the continental US (including ERCOT), which is the area covered by the proposed rules.

New Standards

The new legislation and the FERC rules obligate all users, owners and operators of the bulk power system in the continental United States to comply with the FERC-approved reliability standards, and they subject such users to severe penalties for non-compliance. FERC analogized its proposals to requirements that commercial airliners be maintained pursuant to established standards. Rather than establishing an “outcome-based” standard that would punish airlines for plane crashes after the fact, there are specific standards for maintenance procedures, frequency of testing and qualification of personnel conducting the maintenance. FERC said it expects NERC to include proactive requirements in its proposed reliability standards.

The following are highlights of the proposed rules that apply to power plants.

NERC proposed limiting applicability of the reliability standards to plants whose capacity reaches specified power thresholds: for example, generators with a capacity of 20 megawatts or greater, or transmission facilities energized at 200 kV or greater. FERC questioned this blanket rule, on the ground that there may be instances where a smaller entity’s compliance is critical to maintaining reliability, and it invited further comments on this topic.

Similarly, FERC rejected a NERC proposal to limit the definition of the bulk power system governed by the reliability standards to exclude radial transmission facilities serving load with one transmission source, citing concerns that, for example, the 239 cables connecting Mirant’s Potomac river plant to Washington, DC would not be included; similarly, the NERC proposal to establish a 200 kV threshold would exclude the New York City 138 kV system.

FERC rejected the NERC proposal to require all generators to provide automatic generation control capabilities, noting that not all generation resources can be operated with such controls, and in other instances the controls are not economically feasible.

The NERC proposal includes a group of reliability standards, the critical infrastructure protection group, which is aimed at reporting occurrences of sabotage to the proper authorities and establishing security for critical cyber assets. Regarding sabotage, NERC proposed that every generator operator, as well as each reliability coordinator, balancing authority and load-serving entity must have procedures for making its operating personnel aware of sabotage events and procedures for communicating information about sabotage events to the appropriate parties in the interconnection. In addition, generators must provide operating personnel with guidelines for reporting disturbances arising from sabotage events, and must establish communications contacts with applicable government officials. FERC directed NERC to modify its standards to identify agencies such as the Federal Bureau of Investigation or the Department of Homeland Security on a protocol for reporting sabotage.

Regarding telecommunications requirements, NERC proposed to establish such requirements for specific operating entities, to establish English as the common language to be used by operating personnel and to set policy for using the NERCNET telecommunications system. FERC noted that the NERC proposal would not apply to generators, which could create problems, for example, during a black start when normal communications are disrupted. In such circumstances, it would be crucial that generator operators have effective communications with transmission operators, balancing authorities and reliability coordinators.

During capacity or energy emergencies, balancing authorities must have the authority to bring all necessary generation on line, communicate the energy or capacity shortage to the reliability coordinators and coordinate with other balancing

authorities. FERC proposed to adopt the NERC rule that would impose these requirements, but also to extend it to cover transmission emergencies. FERC agreed with concerns expressed that the transmission loading relief method is inappropriate for addressing transmission emergencies, as it is not fast or predictable enough to use in situations in which an operating security limit is close to or actually being violated.
When the electric grid has suffered an outage, there must be a plan for system restoration. The NERC proposed standard requires that transmission operators verify that black start units can perform as required and that simulation or testing be performed at least once every five years. FERC adopted this proposal in its proposed rules.

The next NERC proposal relevant to generators requires of generation facility owners, as well as transmission facility owners, distribution providers, load-serving entities, transmission planners and planning authorities that each assess the impact of integrating generation, transmission and end-user facilities into the interconnected transmission system. FERC adopted this requirement, as amended by a FERC staff proposal to require that evaluations of system performance be conducted under both normal and contingency conditions.

NERC proposed a facility ratings methodology standard, that would require each transmission and generation facility owner to develop a facility rating methodology based on manufacturing data, design criteria, ambient conditions, operating limitations and other such assumptions. The methodology would be made available to reliability coordinators and other responsible parties in the areas where the facility is located. FERC adopted the proposal, rejecting its staff criticism that the standard did not impose uniform standards, on the ground that it is appropriate to use input variables, such as ambient temperatures in Texas as compared to Maine.

A key aspect of the FERC proposed rules deals with training requirements for operating personnel. NERC proposed to require each transmission operator and balancing authority to provide training to all operating personnel who occupy positions of primary responsibility for real-time operation of the bulk power system or who are directly responsible for complying with the NERC reliability standards. Noting that deficient training contributed to the August 2003 blackout, FERC proposes to expand the training requirements to include generator operators. It also proposes to require NERC to develop a new training reliability standard for all personnel who may directly affect the reliable operation of the bulk power system and for those who have responsibility for compliance with the reliability standards.

Similarly, FERC augmented the NERC proposed requirement for system operators, and others with primary responsibility for real-time operations to use NERC-certified staff in these positions, by imposing the same requirement on generator operators.

Protection and control systems are designed to detect and isolate a faulty element from the system, so as to limit the spread of system disturbances and prevent damage to protected elements. The NERC reliability standards on this subject apply to generator owners and operators, as well as transmission operators and regional reliability organizations. These standards are intended to ensure coordination of protection and control systems among operating entities by requiring transmission and generator operators to notify appropriate entities of relay or equipment failures that could affect system reliability. FERC approved this standard as mandatory and enforceable.

NERC proposes to require generators of greater than 50 megawatts and transmission providers with systems greater than 100 kV to provide outage information so as to permit coordination of planned outages. FERC modified the thresholds to include any facility below the proposed thresholds that, in the opinion of the transmission operator, balancing authority or reliability coordinator, would have a direct impact on the operation of the bulk power system. Also, FERC proposes to require that notice of scheduled outages be given well in advance, to ensure reliability and accuracy of calculations.

The reliability standards include a requirement that transmission operators monitor and control voltage levels, reactive flows and reactive resources. They also require a generator operator to provide operating data to its transmission operator and to maintain generator field excitation at proper levels.

Finally, NERC and the regional entities are obligated to monitor compliance with the reliability standards and are empowered to direct violators to comply with the standards and impose penalties for violations, subject to review by the FERC. Although not discussed in the FERC proposed rulemaking proceeding, the Energy Policy Act requires any person who violates part II of the Federal Power Act (which includes the new reliability standards provision) to be subject to a civil penalty of up to $1 million for each day that the violation continues. This is certainly a strong incentive for users of the bulk power system to comply with the new rules.