Proposed Revisions Seek to Approve North American Electric Reliability Organization's Definition of Bulk Electric System
This post was written by Amy Koch
The Federal Energy Regulatory Energy Commission (FERC ) has issued a notice of proposed rulemaking regarding the North American Electric Reliability Corporation's (NERC) proposed modifications to the definition of "bulk electric system" and proposed a process to evaluate whether specific facilities should, or should not be, included as part of the "bulk power system." FERC is proposing to approve NERC's plans.
NERC's proposal is the result of Order No. 743, where FERC instructed NERC to revise its definition of the term "bulk electric system" to ensure that the definition encompasses all facilities necessary for the operation of an interconnected transmission network, and to address certain technical and policy concerns -- including inconsistencies in application among the Regional Entities and lack of NERC or FERC oversight. In Order No. 743, FERC stated that the best way to address these concerns is to eliminate the Regional Entities' discretion to define what comprises the "bulk electric system" with a bright line threshold that includes all facilities operated at or above 100 kV except defined radial facilities, and to adopt an exemption process and criteria for removing facilities from NERC's authority that are not necessary for operating the interconnected transmission network. This proposed rule will likely raise regulatory challenges and costs for electric generator and some industries.
"Bulk Electric System" Redefined
The new proposed "core" definition of "bulk electric system" would include:
Unless modified by the [inclusion and exclusion] 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.
As noted, this proposed definition would eliminate regional discretion and establish a clear, bright-line based on a 100kV threshold. Essentially, it would place within NERC's purview, “all Transmission Elements operated at 100 kV or above, and all Real Power and Reactive Power resources connected at 100 kV or above,” while establishing an express exclusion for facilities used in the local distribution of electrical energy. (NOPR at Para. 15)
While the current definition includes the phrase “associated equipment,” and the revised definition does not -- “associated equipment” is included in the revised definition by the use of the term “Transmission Elements” included in the revised "core" definition. The proposed revised NERC Glossary would define “Transmission” as “[a]n interconnected group of lines and associated equipment for the movement or transfer of electric energy between points of supply and points at which it is transformed for delivery to customers or is delivered to other electric systems.” It would define “Elements” as, “[a]ny 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.” (NOPR at para. 16)
Inclusions to the "Core" Definition
As part of the revised definition, NERC developed inclusions and exclusions to the "core" definition. The inclusions address five specific facility configurations:
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 from the "Core" Definition
Four exclusions identify facility configurations that would not be included in the definition of the "bulk electric system" -- generally radial systems, behind-the-meter generation, and local networks that distribute power to load:
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.
Rules of Procedure Exception (or Inclusion) Process
Order No. 743 required NERC to develop a set of technical criteria to use in addressing requests for exceptions to the definition of the "bulk electric system." Instead, NERC developed a common set of data and information that could be used by the Regional Entities and NERC to evaluate exception requests. NERC proposes a "Detailed Information Form" that would contain the common set of data that entities seeking an exception must submit with every exception request. In addition, an applicant would be expected to submit all relevant data, studies and other information that supports its exception request. Further, the Regional Entity and NERC could ask an applicant to provide other data and studies in addition to the Detailed Information Form.
The exception (or as the case may be, inclusion) process would have three steps:
- If the entity believes that the element, contrary to its characterization based on the definition, should either be treated, or not be treated, as part of the "bulk electric system," the entity may submit an exception request to the Regional Entity in which the element is located.
- The Regional Entity would screen the request to determine whether the application meets the filing criteria and, if so, would make a recommendation to NERC whether to approve or deny the request.
- The NERC President would decide whether to approve or deny the exception request after considering the opinion of a NERC review panel.
If the entity does not agree with the NERC President’s decision, it may appeal the decision to the NERC Board of Trustees Compliance Committee, which is the final arbiter of the request. If a Regional Entity denies the exception request based on the initial screening, but the applicant believes the exception request is proper and complete, the applicant may appeal the rejection directly to NERC. (NOPR at para. 40)
It should be noted that only a Regional Entity may submit an exception request for the inclusion in the "bulk electric system" of an element owned by an owner that is not a registered entity. (NOPR at Para 42)
FERC does seek comment on several issues, generally involving the application of the "core" definition to specific types of facilities and equipment and how some of the inclusions and exclusions will be applied by NERC, Regional Entities and users, owners and operators. It specifically seeks comment, inter alia, on whether NERC's proposal adequately differentiates between local distribution and transmission facilities in an objective, consistent, and transparent manner and whether the proposed changes to the NERC Rules of Procedure are sufficient over the long-term. FERC's analysis is particularly worth reviewing for the specific comments it is soliciting on the proposed inclusions and exceptions.
Comment Deadline and Proposed Effective Date
Comments on the NOPR will be due 60 days after publication in the Federal Register.
If approved, the proposed revision to the definition of "bulk electric system" would be effective at the beginning of the second calendar quarter after the applicable regulatory approval (FERC is not the sole regulatory authority over NERC) is obtained, or where no regulatory approval is required, at the beginning of the second calendar quarter of its adoption by the NERC Board. Compliance obligations for all newly identified "Elements" would begin 24 months after the applicable effective date of the revised definition.