FERC Approves New Extreme Cold Weather Reliability Standards
On February 16, 2023, the Federal Energy Regulatory Commission ("FERC") approved[1] two new extreme cold weather Reliability Standards proposed by the North American Electric Reliability Corporation ("NERC"): EOP-011-3 (Emergency Operations) and EOP-012-1 (Extreme Cold Weather Preparedness and Operations) – together referred to as the "Proposed Reliability Standards" in this advisory.
The Proposed Reliability Standards stem from a Joint Staff report on the February 2021 cold weather outages in Texas and certain other southern states (the "Report").[2] The Report recommended adoption of additional measures to mitigate the reliability risks of cold weather events, including freeze protection measures, enhanced weather preparedness plans, annual training, and coordination of load shedding.[3]
Background
The Report concluded that the February 2021 cold weather event was the largest controlled firm load shed event (often referred to as rolling or rotating blackouts) in U.S. history[4] and provided an assessment of the event and recommendations including Reliability Standard enhancements to improve extreme cold weather operations, preparedness, and coordination.[5] On October 28, 2022, NERC filed a petition seeking approval on an expedited basis of Reliability Standards EOP-011-3 and EOP-012-1, the Reliability Standards' associated violation risk factors and violation severity levels, three newly defined terms (Extreme Cold Weather Temperature, Generator Cold Weather Critical Component, and Generator Cold Weather Reliability Event), NERC's proposed implementation plan, and the retirement of currently approved EOP-011-2.[6] NERC stated that the Proposed Reliability Standards contain new and revised requirements to advance the reliability of the Bulk-Power System ("BPS") through the implementation of freeze protection measures, enhanced weather preparedness plans, annual training, and the coordination of manual and automatic load shed.[7]
Proposed Reliability Standards
EOP-011-3 (Emergency Operations)
The purpose of Proposed Reliability Standard EOP-011-3 is to ensure that each transmission operator implements plans to mitigate operating emergencies and that such plans are coordinated within the reliability coordinator area.[8] Particularly, EOP-011-3 addresses a key component of the Report, which recommends that the circuits used for manual load shed be separated from the circuits used for automatic load shed or for critical loads.[9]
EOP-012-1 (Extreme Cold Weather Preparedness and Operations)
EOP-012-1 has seven requirements intended to ensure that each generator owner develops and implements plans to alleviate the reliability effects of extreme cold weather on its generating units.[10] Requirements R1 and R2 address a generator owner's obligation to implement freeze protection measures on its applicable units to provide them with the capability to operate at the Extreme Cold Weather Temperature for the unit's location.[11] Requirement R7 requires generator owners to implement corrective action plans developed pursuant to Requirements R2, R4, or R6, or explain in a declaration why they are not implementing corrective actions due to technical, commercial, or operational constraints.[12]
The Order
In the Order, FERC approved the Proposed Reliability Standards. With regard to EOP-011-3, FERC found that NERC's proposal enhances reliability by improving how transmission operators account for the overlap of manual load shed and automatic load shed in their emergency operating plans while also addressing the need to minimize the use of manual load shed that could further exacerbate emergencies and threaten system reliability.[13] On EOP-012-1, FERC found that the proposal bolsters the reliable operation of the BPS by requiring generator owners to implement freeze protection measures, develop enhanced cold weather preparedness plans, implement annual training, draft and implement corrective action plans to address freezing issues, and provide certain cold weather operating parameters to reliability coordinators, transmission operators, as well as balancing authorities for use in their analyses and planning.[14]
Modifications (EOP-012-1)
While FERC approved EOP-102-1 in the Order, it directed that NERC consider and develop further modifications to the wording of the EOP to address certain ambiguities in the standard. For example, FERC was concerned that the "uncertainty created by the proposed technical, commercial, or operational constraint provisions in Requirements R1 and R7" may allow entities to benefit financially by avoiding the purpose of the Reliability Standard altogether.[15] FERC was also concerned that a generator owner may make determinations without informing planning and operational entities (i.e., the reliability coordinator or balancing authority) that are expecting the reliable operation of the generating unit to its Extreme Cold Weather Temperature.[16] As a result, FERC directed NERC to develop and submit modifications to EOP-012-1 Requirements R1 and R7 to "include auditable criteria on permissible constraints and to identify the appropriate entity that would receive the generator owners' constraint declarations under EOP-012-1 Requirements R1 and R7.[17]
Definition of Extreme Cold Weather Temperature
FERC held that the use of the new term "Extreme Cold Weather Temperature," defined in EOP-012-1, to establish a specific level of required freeze protection for resources is a "significant improvement over the current cold weather Reliability Standards, which contain no minimum temperature operating requirements."[18] To assess the adequacy of the newly developed cold weather definition; however, FERC directed NERC to assess annual and event-based data submittals.[19]
Corrective Action Plan Deadlines
While Requirement R7 of EOP-012-1 mandates that a generator owner implement each corrective action plan developed pursuant to Requirements R2, R4, or R6, or "explain in a declaration why corrective actions are not being implemented due to any technical, commercial, or operational constraint as defined by the Generator Owner,"[20] it does not include a deadline for completion of the implementation of such plans. Hence, FERC directed NERC to include in EOP-012-1 a deadline or maximum period for the implementation completion of corrective action plans.[21]
Technical Matters
To address its concerns over potential protracted implementation periods for EOP-012-1, FERC directed NERC to revise EOP-012-1 "to require a shorter implementation period and staggered implementation for unit(s) in a generator owner's fleet."[22] FERC also directed NERC to modify the Standard to clarify EOP-012-1 Requirement R1 "to ensure that generators that are technically incapable of operating for 12 continuous hours. . . are not excluded from complying with the Standard."[23]
FERC expressed further concern with the one-hour continuous operations requirement in EOP-012-1 Requirement R2, stating that it is too short to adequately meet the purpose of the Standard to ensure generating units "mitigate the reliability impacts of extreme cold weather."[24] Hence, FERC directed NERC to modify the one-hour continuous operations requirement of Reliability Standard EOP-012-1.
Annual and Event-Based Data Submittals
Lastly, FERC opined that additional data and analysis are necessary to address the uncertainty created by the proposed technical, commercial, or operational constraint provisions of EOP-012-1. As a result, FERC directed NERC to work with FERC staff to develop and submit a plan explaining how it will gather data and submit an analysis that will allow FERC to understand the efficacy of and monitor the ongoing risk posed by: (a) the proposed technical, commercial, or operational constraint provisions in EOP-012-1; and (b) actual performance of freeze protection measures during future extreme cold weather events.[25] With regard to the proposed technical, commercial, or operational constraint provisions in EOP-012-1, Requirements R1, R6, and R7, FERC directed NERC to work with FERC staff on the details of timing and what to include in its plan, which, at a minimum, should include collection of data regarding: (c) the generating units that have declared constraints under EOP-012-1 and the megawatts of generation that they represent, organized by fuel type; and (d) the megawatts of generation for which declarations have been made for each type of constraint (technical, commercial, or operational), organized by fuel type.[26]
Implementation
FERC directed NERC to submit the above modifications to the Reliability Standards and plans no later than 12 months after the issuance of the Order. To provide FERC with an ongoing assessment of the risk to the BPS, FERC directed NERC to submit an annual informational filing to FERC beginning 12 months after the mandatory and enforceable date of the EOP-012-1. The informational filing should include an analysis of the efficacy of the requirements of EOP-012-1 based on the data collected.
Implications
NERC explained that the Proposed Reliability Standards are phase one of a two-phase standard development project to develop, draft, and revise the extreme cold weather Reliability Standards due to the extensive scope and demonstrated urgency of new and improved cold weather Reliability Standards. Given the importance of these Reliability Standards, and in light of the 2021 event, it is highly likely that FERC will continue to emphasize the efficient implementation of the Reliability Standards given the expected increased frequency of extreme weather events, especially in the winter months.
[1] N. Am. Elec. Reliability Corp.,182 FERC ¶ 61,094 (2023) (the "Order").
[2] FERC, NERC, and Regional Entity Staff, The February 2021 Cold Weather Outages in Texas and the South-Central United States, at 189 (Nov. 16, 2021).
[3] Order at P 13.
[4] Per the Report, over 4.5 million people lost power and at least 210 people lost their lives during the event.
[5] Order at P 13 citing Report at 184-212.
[6] Order at P 15 citing NERC Petition at 1-2.
[7] Id.
[8] Id. at P 16.
[9] Id.
[10] Id. at P 18.
[11] Id. at P 19. Requirements R3 and R5 require generator owners to implement cold weather preparedness plans (Requirement R3) and train their personnel on that plan annually (Requirement R5). Id. at P 20. Requirement R4 requires the generator owner to review its Extreme Cold Weather Temperature calculation, cold weather preparedness plan(s), and freeze protection measures every five years to determine if changes or updates are warranted. Requirement R6 mandates that each generator owner experiencing an outage, failure to start, or derate due to freezing conditions develop a corrective action plan to address the identified causes. Id. at P 21.
[12] Order at P 21.
[13] Id. at P 35.
[14] Id. at P 36.
[15] Id. at P 64.
[16] Id.
[17] Id. at P 66.
[18] Id. at P 72.
[19] Id. at P 74. FERC also directed NERC to ensure that EOP-012-1 is adequately addressing reliability concerns related to generator owner constraint declarations and the adequacy of the newly developed extreme cold weather definition. FERC directed NERC to work with FERC staff to submit a plan no later than 12 months after the date of issuance of the Order on how it will collect and assess data periodically to monitor the implementation of the new requirements for generator owners. Id. at PP 93-94.
[20] Id. at P 75, NERC Petition at 43.
[21] Id. at P 79.
[22] Id. at P 88.
[23] Id. at P 89.
[24] Id. at P 90, NERC Petition at 29.
[25] Order at P 94.
[26] Id. at P 95. Additional data includes: (c) the rationale(s) for each declaration; (d) the megawatts of generation within the generation owner/operator's fleet currently capable of operating at each unit's Extreme Cold Weather Temperature; (e) the projected megawatts for which the generator owner/operator expects to complete corrective action plans for each year; (f) the projected megawatts for which the generator owner/operator expects to implement corrective action plans for each year; and (g) the megawatts of generating units identified as "similar equipment" to which the generator owner has determined that the cause(s) for the Generator Cold Weather Reliability Event are also applicable, under R6, while also identifying any similar equipment that will receive a declaration.