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Power & Pipes

FERC, CFTC, and State Energy Law Developments

On July 19, 2011, following a lengthy consideration of the smart grid interoperability standards proposed By the National Institute of Standards and Technology (NIST), FERC terminated its consideration of the five “families” of proposed interoperability standards, concluding that there was a lack of consensus regarding the standards.

NIST had initiated the development of smart grid interoperability standards following the Energy Independency and Security Act of 2007 (EISA). Under the EISA, if FERC is satisfied that there is “sufficient consensus” surrounding the standards developed and proposed By NIST, FERC must institute a rulemaking to adopt those standards and protocols “necessary to insure smart-grid functionality and interoperability.” Last fall, NIST filed the results of its work on smart grid interoperability standards with FERC. FERC then held two technical conferences and asked for comments from industry stakeholders on the NIST proposal.

Following this process, FERC concluded that there is insufficient consensus to adopt the proposed standards at this time, pointing to “nearly unanimous” comments from the industry regarding cyber security concerns and the potential unintended consequences from adopting such standards too soon. For these reasons, FERC stated that it would not institute a rulemaking proceeding regarding the proposed smart grid interoperability standards.

Nevertheless, FERC reiterated its support for the NIST process, and urged stakeholders to actively participate in NIST’s work on smart grid interoperability standards, particularly in those areas related to cyber security.