An Effective Model for Regulation An Effective Model for Regulation - - PowerPoint PPT Presentation

An Effective Model for Regulation An Effective Model for Regulation An Effective Model for Regulation An Effective Model for Regulation

• f Bulk Power System Reliability
• f Bulk Power System Reliability

Gerry Cauley P id t d CEO President and CEO

Gerry Cauley President and CEO

ERO Five Key Success Factors ERO Five Key Success Factors

President and CEO

• Risk-based approach with reliability

performance measurably improving performance measurably improving

• Reliability-learning, self-correcting industry
• Culture of compliance, enforcement backstop
• Commitment to security/resilience of grid
• Commitment to security/resilience of grid
• Positive relationships and reputation
• Leading expert organization for grid reliability
• Trusted leader and advocate for reliability
• Effective relations with U.S. and Canadian authorities

ERO is a Unique Form of Regulation ERO is a Unique Form of Regulation

Different than purely government or self Different than purely government or self-regulation regulation p y g p y g g

• Unique industry perspective

Unique industry perspective

• Real-time interconnectedness of power systems

C t f li bl i ff t ll

• Cost of unreliable service affects all
• Active industry involvement in solving problems
• Unique regulatory model
• Independent board governance at ERO

p g

• Mandatory standards set by industry
• Rigorous monitoring/audit program

Rigorous monitoring/audit program

• Oversight by U.S. and Canadian authorities

Reliability Risk Management Concepts Reliability Risk Management Concepts

Sample Historical Data with Sample Historical Data with Actual Events

4.50 3.50 4.00 2003 Eastern Interconnection Blackout

1996 Western – August 10 1989 Quebec – Solar Geomagnetic Disturbance 10)

2.50 3.00

2008 South Florida Log Base 1

1.50 2.00

2007 – August 4 Disturbance 2007 – August 25 Disturbance Gloss=5 units Tloss=4 circuits Severity (

1.00 0.00 0.10 0.20 0.30 0.40 0.50

C l ti N li d O /Y Cumulative Normalized Occurrences/Year

NERC CEO Current Risk Priorities NERC CEO Current Risk Priorities

• Misoperations of relay and controls systems

Misoperations of relay and controls systems

• Human errors by field personnel
• Ambiguous, incomplete voice communications
• Right-of-way maintenance and clearances

g y

• Changing resource mix
• Integration of new technologies
• High impact, low frequency events

g p , q y

Gerry Cauley President and CEO

Reliability Standards Reliability Standards

President and CEO

• CIP-002 determining cyber critical assets
• Process changes to address standards directives
• Results – based standards

Results based standards

• Standards process timeliness and accountability
• Process improvements
• Governance
• Standards clarifications and interpretations

Gerry Cauley President and CEO

FERC March 2010 Orders on Standards FERC March 2010 Orders on Standards

President and CEO

• Success of July FERC technical conference

S ifi di ti d l ki

• Specific directives, proposed rulemakings:
• BAL-003 frequency response 1% of peak load
• TPL-002 primary relay protection failure must be

included in first contingency

• TPL-002 no load curtailment for first contingency
• BAL-004 time error correction required
• 100 kV standard for bulk electric system

Gerry Cauley President and CEO

Compliance Compliance

President and CEO

• Compliance program alignment

Compliance operations: work with regions on consistency

• Compliance operations: work with regions on consistency,

transparency, compliance culture

• Enforcement: process violations, settlements, mitigation plans

Enforcement: process violations, settlements, mitigation plans

• Risk-based approaches

Ri k d i f it i ( dit ) d f t

• Risk drivers for monitoring (audits) and enforcement
• Penalties, remediation, record proportional to seriousness

Eff ti i ti t t li t b h i / lt

• Effective incentives to promote compliant behaviors/culture
• Transparency of process and expectations
• Timeliness, efficiency, and proportionality

Gerry Cauley President and CEO

Compliance Case Load Trend Compliance Case Load Trend

President and CEO

3000 2000 2500 ns 1500 2000 mber of Violation 500 1000 Nu A-09 S-09 O-09 N-09 D-09 J-10 F-10 M-10 A-10 M-10 J-10 J-10 A-10 Month and Year Active NERC Work UnMitigated Mitigated

September 3, 2010

10

Gerry Cauley President and CEO

Violation In/Out Trend Violation In/Out Trend

President and CEO

800

BOTCC Approves Omnibus Filing

500 600 700

• ns

Omnibus Filing made at FERC

300 400 500 umber of Violatio 100 200 Nu A-09 S-09 O-09 N-09 D-09 J-10 F-10 M-10 A-10 M-10 J-10 J-10 A-10 Month and Year Violations Received BOTCC Approved + Dismissed Dismissed + Violations Closed Violations Received BOTCC Approved + Dismissed Dismissed + Violations Closed

September 3, 2010

11

Gerry Cauley President and CEO

Deem Dates from August 2010 Violations Deem Dates from August 2010 Violations (242 Violations) (242 Violations)

President and CEO

( ) ( )

60 70

Nearly one third deemed to have started in June 2007 (legacy compliance

50 ions

All 35 violations were All 31 violations were (legacy compliance issues)

30 40 Number of Violati

CIP-002 thru CIP- 009 All 31 violations were CIP-002 thru CIP- 009

10 20 N

15 of 17 violations were CIP-002 thru CIP-009

J-07 J-07 A-07 S-07 O-07 N-07 D-07 J-08 F-08 M-08 A-08 M-08 J-08 J-08 A-08 S-08 O-08 N-08 D-08 J-09 F-09 M-09 A-09 M-09 J-09 J-09 A-09 S-09 O-09 N-09 D-09 J-10 F-10 M-10 A-10 M-10 J-10 J-10 A-10

September 3, 2010

12

Month and Year of Deem Date

Gerry Cauley President and CEO

CIP versus Non CIP versus Non-

• CIP Violation Trend

CIP Violation Trend

President and CEO

180 200 120 140 160

• ns

80 100 120 Number of Violatio 20 40 60 N 20 F-09 M-09 A-09 M-09 J-09 J-09 A-09 S-09 O-09 N-09 D-09 J-10 F-10 M-10 A-10 M-10 J-10 J-10 A-10 Month and Year of Violation Submission

September 3, 2010

13

Non-CIP Violations CIP Violations

Gerry Cauley President and CEO

Mitigation Status Mitigation Status

President and CEO

900 600 700 800 ions 300 400 500 Number of Violati 100 200 300 N A-09 S-09 O-09 N-09 D-09 J-10 F-10 M-10 A-10 M-10 J-10 J-10 A-09 Month and Year Region Awaiting MP (A) Entity Implementation (E) MP Validated Complete (G)

September 3, 2010

14

Region Awaiting MP (A) Entity Implementation (E) MP Validated Complete (G)

Gerry Cauley President and CEO

Event Analysis and Investigations Event Analysis and Investigations

President and CEO

• Process-driven event review

Process driven event review

• Screening and triage

Wh t h d?

What happened? Why (root cause)?

• What happened?
• Why did it happen (root cause analysis)?

Compliance gaps?

• Lessons learned made transparent
• Regions and registered entities part of process

g g p p and key to success

• Learning, self-correcting industry

g g y

• Correct incentives

Gerry Cauley President and CEO

Critical Infrastructure Resilience Critical Infrastructure Resilience

President and CEO

• Multifaceted approach to mitigate risk

Multifaceted approach to mitigate risk

• Protection measures for critical assets

R id d i t iti ti

• Rapid response and impact mitigation
• Preparedness and recovery
• Long-term design, hardening solutions
• Develop government interface to produce

p g p actionable information for industry

• Communicate results to government and public

Communicate results to government and public

Gerry Cauley President and CEO

Recent Alerts Recent Alerts

President and CEO

• Aurora

Aurora

• Stuxnet
• Right-of-way clearances

Gerry Cauley President and CEO

Contributions Needed from Industry Contributions Needed from Industry

President and CEO

• Bright-line criteria for critical assets

Bright line criteria for critical assets

• Delivery of priority, results-based standards
• Strive for compliance excellence (lean in)
• Engage in event analysis and lessons learned

g g y

• Promote/support risk-based, learning approach
• CEO/executive engagement