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Power & Pipes

FERC, CFTC, and State Energy Law Developments

On June 13, 2013, FERC approved a one-year extension for utilities to prepare to implement the new definition of the “bulk electric system” (BES). As a result of this order, the new BES definition approved By FERC in Order No. 773 will not go in effect until July 1, 2014.

The revised BES definition defines the scope of the utility assets that must comply with mandatory Reliability Standards. It will bring into scope new assets, while potentially excluding other assets that had been subject to Reliability Standards in the past. The recently revised definition was to become effective on July 1, 2013; however, the North American Electric Reliability Corporation (NERC) and various utilities petitioned FERC to provide an additional year before the new definition becomes effective. FERC granted that request, finding that the additional year will allow NERC sufficient time to revise the definition again. Waiting until the definition is revised will allow the industry to avoid a situation where utilities would reevaluate the same assets again after NERC submits additional revisions to address directives from FERC in Order No. 773. For example, there was concern that, under the definition originally scheduled to be implemented this year, utilities would bring certain assets within the scope of Reliability Standards compliance just to exclude them again in a year when a newly revised version of the BES definition goes into effect to reflect FERC’s recent directives.

To ensure that the revised definition will indeed become effective on July 1, 2014, FERC directed NERC to file revisions to the BES definition addressing FERC’s directives By the end of 2013. According to FERC, that will provide it sufficient time to act on the filing while still retaining a July 1, 2014 effective date. FERC noted that it does not anticipate granting any further extensions.