Risk-Based Registration(RBR)
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1 Risk-Based Registration(RBR) Webinar Terry Brinker, Manager of Registration Services, NERC Pete Heidrich, Manager of Standards & Registration, FRCC December 17, 2015
2 Overview Risk-Based Registration (RBR) Update NERC-led Review Panel Materiality assessment Registration matters LSE Funding Compliance matters Q & A 2
3 RBR Update 3
4 RBR Update FERC approves LSE removal on October 15, 2015 LSE removal from the NCR began November 16, 2015 Notification letters specify LSEs are still responsible party for funding Functional model is not being modified; LSEs will remain 4
5 NERC-led Review Panel 5
6 NERC-led Review Panel NERC ROP Section 500 Organization and Registration and Certification Section NERC shall establish a NERC-led, centralized review panel, comprised of a NERC lead with Regional Entity participants, in accordance with Appendix 5A, Organization Registration and Organization Certification Manual, Section III.D and Appendix 5B, Statement of Compliance Registry Criteria. 6
7 NERC-led Review Panel Registration Matters for Review All requests for deactivation of, or decisions not to register, an entity that meets Sections I through IV of the Registry Criteria or requests to add an entity that does not meet (i.e., falls below) Sections I through IV of the Registry Criteria Disputes regarding the application of Sections I through IV of the Registration Criteria and requests for a sub-set list of applicable Reliability Standards (which may specify the Requirements/sub-Requirements) will be sent to NERC 7
8 NERC-led Review Panel Validation Criteria Complete the NERC-led Review request form NERC will respond to the requester within 10 days of receipt of request Materiality Assessment Panel Members The panel will typically be organized with the following members: o NERC - Manager, Registration Services o NERC - Engineer, Registration and Certification o Eight (8) Regional Entity Representatives Meeting Schedule Will meet on an as-needed basis Regional Entity panel members will be required to recuse themselves from agenda items from their respective region 8
9 NERC-led Review Panel Review Panel Requirements The timelines as outlined in Appendix 5A Section III shall be adhered to. The NERC-led review panel will render its decision within 60 days of the final submission to the panel. NERC may extend timelines for good cause shown Approval of Registration Review Qualifies for deactivation or not to register To be added to the NCR even though it does not meet the Registry Criteria Dispute regarding the application of the Registration Criteria is resolved Qualifies for a subset list of applicable Reliability Standards 9
10 NERC-led Review Panel Disapproval Listed any key contra indicating facts and circumstances leading to the conclusion that the Entity in the NERC-led Review Request does not have sufficient basis for the request A summary listing will be posted on the NERC Registration website providing the following information: (1) Entity name; (2) NCR number; (3) Date NERC-led Panel decision was made; (4) Conclusion summary of the NERC-led Review Panel (Does or does not (1) qualify for deactivation or not to register; (1.1) to be added to the NCR even though it does not meet the Registry Criteria; (2) dispute regarding the application of the Registration Criteria is resolved; (3) qualify for a subset list of applicable Reliability Standards.) 10
11 NERC-led Review Panel Review Panel Determinations Within 21 days of receipt of the determination, the entity can appeal the decision to the NERC Board of Trustees Compliance Committee (BOTCC) If an entity is accepted for reduced set of standards, FERC will be notified of the determination and has 60 days to determine if an official Commission review is warranted NERC will post the results of the determination to the NERC Registration website 11
12 Materiality Assessment 12
13 Materiality Assessment Opportunity for the registered entities to further evaluate whether the entity has a material impact on the Bulk Electric System (BES) The expectation is that an entity would utilize the existing processes to determine their registration status prior to seeking any potential relief through a materiality assessment Application of the BES definition o If the entity believes the BES Element is not necessary for the reliable operation BES Exceptions Process ROP Appendix 5C Candidates for Registration o Registry Criteria ROP Appendix 5B 13
14 Materiality Assessment Registered Entity believes that the Functional Registrations are not appropriate and seeks relief through either: De-registration, De-activation, or Implementation of a subset list of Standards/Requirements for the applicable registered functions A Materiality Assessment may be conducted with the results subject to evaluation by the applicable Regional Entity and the NERC-led Review Panel 14
15 Materiality Assessment The Registered Entity bears the burden of proof with respect to the Materiality Assessment. The NERC-led Review Panel: Will take into account several considerations to evaluate Materiality Assessments May request additional information if the initial submittal does not include sufficient information to evaluate the assessment At the request of the NERC-Led Review Panel, the evaluation of Materiality Assessments may require some level of system analysis by the Regional Entity in addition to the information provided by the registered entity 15
16 Materiality Assessment Considerations for Evaluations: Unique characteristics (system topology, critical loads or facilities, or facilities associated with a major metropolitan area) Real-time authoritative control of BES Elements Identified in the emergency operation plans and/or restoration plans Normal operation, misoperation or malicious use of: o BES Elements, o Cyber Assets, or o Protection Systems Aggregate effect of eliminating Functional Registrations and/or reducing the compliance obligations 16
17 Materiality Assessment Considerations for Evaluations (cont.): In order to ensure a consistent approach to assessing materiality, a nonexclusive set of factors for consideration are presented in: o Appendix 5B of the ERO Rules of Procedure: Statement of Compliance Registry Criteria, and o NERC Risk-Based Registration Implementation Guidance document This only a subset of factors for consideration 17
18 Materiality Assessment The NERC-led Review Panel may take one of the following actions if the panel believes based on a valid Materiality Assessment that reasonably demonstrates that the entity does not have a material impact on the reliability of the BES: De-registration, De-activation, or Implementation of a subset list of Standards/Requirements for the applicable registered functions All decisions must be made in accordance Appendix 5A and 5B to the NERC Rules of Procedure 18
19 Registration Matters 19
20 LSE Funding Funding Authority NERC Rules of Procedure Sections 1102, 1106 and 5B NERC By-laws Federal Power Act Section
21 LSE Funding NERC and Regional Entity Billing and Collections NERC shall request the Regional Entities to identify all Load-Serving Entities 3 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. 5B Presence on or absence from the Compliance Registry has no bearing on an entity s independent responsibility for funding NERC and the Regional Entities. 21
22 Compliance NERC ROP Section 400 Compliance Enforcement Section 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. 22
23 23
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