April 26, 2013 British Columbia Utilities Commission · April 26, 2013 British Columbia Utilities...

April 26, 2013 Via Email Original via mail

Commission Secretary BC Utilities Commission Sixth Floor, 900 Howe Street, Box 250 Vancouver, BC V6Z 2N3 Attention: Ms. Erica M. Hamilton, Commission Secretary Dear Ms. Hamilton: Re: Project No. 3698595 / R-72-12

British Columbia Utilities Commission – An Inquiry into Potential Adjustments for the British Columbia Mandatory Reliability Standards (BC MRS) Program (the Inquiry)

FortisBC Inc. Responses to Information Requests

Pursuant to British Columbia Utilities Commission (BCUC or the Commission) Order R-10-13, which amended the Regulatory Timetable with respect to the above noted Inquiry, please find enclosed FortisBC Inc.’s (FortisBC or the Company) responses to the following Information Requests:

1. BCUC Information Request No. 1 to Straw-Dog #1;



4. British Columbia Hydro and Power Authority (BC Hydro) Information Request No. 1 to FortisBC; and

5. Association of Major Power Customers of BC (AMPC) Information Request No. 1 to FortisBC.

FortisBC Inc. Suite 100 - 1975 Springfield Road Kelowna, BC V1Y 7V7 Ph: (250) 717-0890 Fax: 1-866-335-6295 [email protected] www.fortisbc.com

Dennis Swanson Director, Regulatory Affairs

C18-8

mailto:[email protected]

markhuds

MRS Inquiry

April 26, 2013 British Columbia Utilities Commission An Inquiry into Potential Adjustments for the BC MRS Program

With respect to the Commission’s IRs dated March 28, 2013, the Commission wrote:

The following Information Requests (IRs) are open to all Registered Interveners and all Registered Interveners are invited to respond to some or all of these IRs. Where a specific Intervener is cited specifically in the text of an IR question, the specified Intervener is required to respond, while other Interveners may respond. [emphasis added]

FortisBC has provided responses to all IRs that were specifically directed to the Company and has also responded to a number of the remaining IRs.

All of which is respectfully submitted.

Sincerely, FORTISBC INC. Original signed: Dennis Swanson Director, Regulatory Affairs

British Columbia Utilities Commission (BCUC or the Commission) An Inquiry into potential adjustments to the British Columbia Mandatory Reliability

Standards (BC MRS) Program – Project No. 3698595/R-72-12

Submission Date: April 26, 2013

FortisBC Inc. (FortisBC or the Company) Response to BCUC Information Request (IR) No. 1 to Straw-Dog #1 (SD-1)

Page 1

1.0 Reference: Potential for NERC’s Bulk Electric System (BES) Definition to be 1 incorporated into the BC MRS Program 2

Exhibit: C14-3, AMPC p. 5 Sec. C.1 3

AMPC states “[a]s a result of Order 773, uncertainty regarding the substance and the 4 timing of FERC action has been resolved and the desirability of moving quickly has 5 increased.” 6

1.1 Noting that: 7

(a) FERC Order No. 773, approving the new NERC BES Definition in the US 8 on December 20, 2012, included directives to NERC relating to 9 implementation of Exclusions E1 and E3; 10

(b) a variety of requests for clarification or rehearing, or both, were submitted 11 to FERC in response to Order No. 773; 12

(c) FERC has issued a further Order granting “rehearing for further 13 consideration of Order No. 773 re Revisions to Electric Reliability 14 Organization, Definition of Bulk Electric System and Rules of Procedure 15 under RM12-6 et al.” on February 19, 2013; and 16

(d) all above-referenced materials as posted at http://elibrary.ferc.gov (search 17 under docket RM12-6). 18

What impact might the pending rehearing of Order No. 773 have for adoption of 19 the new BES Definition in BC? 20

21

Response: 22

No response. 23

24 25

2.0 Reference: Potential for NERC’s BES Definition to be incorporated into the BC 26 MRS Program 27

Exhibit: C14-3, AMPC p. 6 Sec. C.1 28

The Utilities Commission Act (UCA) provides in s. 125.2 that: 29

(8) A reliability standard adopted under subsection (6) applies to every 30

(a) prescribed owner, operator and direct user of the bulk power system, and 31





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(b) prescribed generator and distributor of electricity. 1

(9) Subsection (8) applies to a person prescribed for the purposes of that subsection 2 despite any exemption issued to the person under section 22 or 88 (3). 3

(10) The commission may make orders providing for the administration of adopted 4 reliability standards. 5

(10.1) Without limiting subsection (10), section 43 (1) (a) and (b) (i) applies to a person 6 to whom a reliability standard adopted under subsection (6) of this section 7 applies, as though the person were a public utility. 8

AMPC states “[t]he statutory mechanics of implementing the new BES definition are 9 relatively straightforward: the MRS Regulation must be changed to amend the ‘bulk 10 power system’ definition and to provide the BCUC with the power to create exceptions to 11 who reliability standards apply to (i.e., enabling the inclusion/exclusion process proposed 12 for the BC Rules of Procedure). A draft amended regulation which demonstrates the 13 ease with which this objective can be achieved is attached for discussion purposes. 14

The draft generally incorporates the language of FERC into the existing MRS 15 Regulation. The draft also drops the concept of a Direct User from the existing 16 regulation because it is not used by FERC and is redundant and confusing. Under the 17 new BES, responsibility for facilities used by a Direct User will appropriately fall on the 18 owner or operator of the Transmission Element used to provide service to the Direct 19 User.” 20

The interplay between the MRS Regulation, the BES Definition and the exception 21 process suggests a number of questions. 22

2.1 If definitions for “direct user,” “generator” and “distributor” were removed as 23 appears to be suggested in the draft amendments to the MRS Regulation 24 submitted with AMPC’s comments, how would those classes of entities be 25 “prescribed” as required by UCA s. 125.2(8)? 26

27

Response: 28

FortisBC believes that the definitions for “Direct User”, “Generator” and “Distributor” should be 29 prescribed by regulation as contemplated by UCA section 125.2(8). 30

31 32

2.2 To what extent would it be helpful for the Commission’s Rules of Procedure for 33 Reliability Standards in British Columbia to incorporate a Statement of 34





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Compliance Registry Criteria similar to that used at NERC (Appendix 5C to the 1 NERC Rules of Procedure found at http://www.nerc.com/page.php?cid=1|8|169)? 2

3

Response: 4

A Statement of Compliance Registry Criteria, as part of the Rules of Procedure, would be a 5 helpful resource for an entity. However, there is a new document issued by NERC dated March 6 5, 2013, in particular at Appendix 5B – Statement of Compliance Registry Criteria. A link is 7 provided below. 8

http://www.nerc.com/files/Appendix_5B_RegistrationCriteria_20130305.pdf 9

10 11

2.3 To what extent could definitions or details presently included in the MRS 12 Regulation be contained instead in a BC-specific Statement of Compliance 13 Registry Criteria? 14

15

Response: 16

Please refer to the Company’s response to BCUC SD-1 IR 2.1. 17

18 19

2.4 To what extent is the NERC Statement of Compliance Registry Criteria 20 consistent or inconsistent with the new NERC BES Definition and exception 21 processes, or no longer appropriate as a result of the new NERC BES Definition 22 and exception processes? 23

24

Response: 25


27 28

2.5 To what extent would it be necessary or appropriate for the MRS Regulation to 29 specifically empower the Commission to adopt such a Statement of Compliance 30 Registry Criteria, or provide for such a Statement of Compliance Registry Criteria 31

http://www.nerc.com/files/Appendix_5B_RegistrationCriteria_20130305.pdf





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to be adopted or incorporated by reference as and when submitted by the 1 Commission and approved by the Lieutenant Governor in Council or responsible 2 Minister? 3

4

Response: 5

FortisBC believes that it would be appropriate for the MRS Regulation to empower the 6 Commission to adopt, administer and adjust a Statement of Compliance Registry Criteria. 7

8 9

2.6 To what extent would it be necessary or appropriate for the MRS Regulation to 10 specifically empower the Commission to administer and make adjustments to the 11 Statement of Compliance Registry Criteria over time as changes are made to the 12 BES Definition or the exception processes? 13

14

Response: 15


17 18

2.7 To what extent would materiality considerations in such a Statement of 19 Compliance Registry Criteria be fully incorporated already in an Exception 20 Request? If so, how? If not, why not? 21

22

Response: 23

Materiality considerations will be incorporated in the administration of the Exception process, 24 however, the Registry Criteria will also, inherently, reflect and supplement the standards of 25 materiality evidenced in an Exception request. 26

27 28

2.8 To what extent might adopting a Statement of Compliance Registry Criteria 29 permit or support increased flexibility in the administration of the BC MRS 30 Program? 31





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1

Response: 2

A Statement of Compliance Registry Criteria would be a helpful resource in the administration of 3 the BC MRS Program. 4

5 6

2.9 Adjustments are made to the NERC Rules of Procedure from time to time (for 7 example changes to the NERC Rules of Procedure approved in FERC’s 20 Dec 8 2012 Order at http://www.ferc.gov/whats-new/comm-meet/2012/122012/E-7.pdf), 9 and NERC’s Statement of Compliance Registry Criteria as part of the NERC 10 Rules of Procedure may continue to evolve with the new BES Definition (as 11 indicated in NERC presentations, including for example at slide 4 of NERC’s 12 October 2012 webinar presentation on a BES Definition Guidance document 13 [available at 14 http://www.nerc.com/files/bes_definition_guidance_document_webinar_201210115 8_final_wjk.pdf], or as agenda item 4 “Discuss any needed changes to the ERO 16 Statement of Compliance Registry Criteria due to the Revised BES Definition" in 17 respect of NERC’s Phase 2 BES Definition work [available at 18 http://www.nerc.com/docs/standards/dt/Agenda_Project_2010-19 17_DBES_SDT_February_19-21,_2013.pdf]). 20

To what extent would Commission consideration of comparable adjustments for 21 a Statement of Compliance Registry Criteria in BC support continuous 22 improvement of the BC MRS Program? 23

24

Response: 25

Please refer to FortisBC’s responses to BCUC SD-1 IRs 2.5 and 2.2.. 26

27 28





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Exhibit C14-3, AMPC p. 6 Sec. C.1 3

AMPC states “[u]nder the new BES, responsibility for facilities used by a Direct User will 4 appropriately fall on the owner or operator of the Transmission Element used to provide 5 service to the Direct User.” 6

3.1 Would AMPC please explain in detail how this conclusion is reached, and the 7 extent to which the statement would be true (or not) in all circumstances? Please 8 provide an example. 9

10

Response: 11

No response. 12

13 14


Exhibit C4-2, Teck Metals Ltd., p. 1 Sec. 1.1 17

Teck Metals Ltd. (Teck) states “[i]t should be considered that BC have a definition for the 18 Bulk Electric System that makes sense for the situation in BC. This would then 19 adequately reflect the fact that we only have one Balancing Authority (BA) in BC as 20 opposed to multiple BA’s (both small and large) in the US. For example the generation 21 inclusion of anything >20 MVA may be material to a small BA, however it is debatable as 22 to whether this would be the case to the BC BES and BA.” 23

4.1 Is Teck suggesting that the current definition in the MRS Regulation should 24 remain and the new BES definition not be adopted in BC? 25

26

Response: 27

No response. 28

29 30

4.2 Alternatively, is Teck suggesting that neither definition “makes sense for the 31 situation in BC”? Please explain your response. 32





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1

Response: 2

No response. 3

4 5


Exhibit C18-3, FortisBC, p. 2, # 7 8

FortisBC states that in their opinion, “the terms ’Bulk Power System’ (‘BPS’) and ’Bulk 9 Electric System’ should not be used interchangeably. Mandatory Reliability Standards 10 are intended to be applicable to the Bulk Electric System but not necessarily applicable 11 to the Bulk Power System because the BPS reaches farther than those facilities included 12 in the BES. NERC issued a memorandum on April 10, 2012 explaining the difference 13 between the BPS and the BES. As the standards making body does differentiate 14 between these two terms, there may be issues in terminology moving forward within BC 15 if no such distinction is made. Therefore, the BCUC’s recommendation to the 16 government should address the distinction between the terms ’Bulk Power System’ and 17 ’Bulk Electrical System.’” 18

5.1 Given the NERC April 10, 2012 memorandum is in relation to jurisdictional 19 differences in the US, to what extent is this relevant in BC? 20 (http://www.nerc.com/files/Final_BES_vs%20_BPS_Memo_20120410.pdf) 21

22

Response: 23

For consistency, FortisBC believes that BC should use the NERC definitions of BPS and BES. 24

25 26

5.2 To what extent would this present a concern in practice in BC, particularly 27 considering the context of the new BES definition’s inclusion/exclusion principles 28 that extend to local distribution? 29

30

Response: 31

For consistency, FortisBC believes that BC should use the NERC definitions of BPS and BES. 32





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1 2

6.0 Reference: Transition to the New BES Definition 3

Exhibit C14-3, AMPC, p. 2 Sec. A 4

Exhibit C4-2, Teck, p. 1 Sec. 1.2 5

AMPC suggests to “[s]treamline the proposed de-registration process so that, subject to 6 a 30 day notice period, if a current Registered Entity states, with reasons, that it is no 7 longer a Registered Entity under the new BES definition, it ceases to be one – unless 8 the Administrator formally objects to the Entity’s assertion during the notice period. 9 Ideally no administrative steps such as audits would be taken against an exiting Entity 10 during the 30 notice period.” 11

Teck states “[t]he exclusion process proposed for entities that are already registered 12 appears to be overly onerous. In most cases, the existing registered entities voluntarily 13 registered based on the BES definition that was provided and in effect at that time. The 14 entities should also be allowed to deregister on the same basis. If an entity chose to 15 deregister the administrator could object to the deregistration, within a specified time 16 period, and provide the entity with evidence as to the material reliability effects.” 17

6.1 What is the estimated number of deregistrations AMPC, Teck and other 18 Interveners expect, and over what time period would the bulk of deregistration be 19 expected to be proposed? For example, would a large number of deregistrations 20 be pursued at the same time, as soon as the new BES Definition and exception 21 processes become effective? 22

23

Response: 24

FortisBC is unable to estimate the number of deregistrations that might occur. 25

26 27

6.2 Given that an orderly transition to the new BES Definition and exception 28 processes would be expected to provide assurance that reliability would not be 29 inadvertently compromised, how and to what extent would the Interveners’ 30 suggestions provide for such an orderly transition, particularly for an initial 31 transition period? Please provide details. 32

33

Response: 34





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No response. 1

2 3

6.3 Given the limited resources that the Commission may have for considering a 4 large number of concurrent deregistrations, how would a 30-day period as 5 suggested by AMPC be reasonably observed in practice in the transition period? 6

7

Response: 8

No response. 9

10 11

6.4 To what extent might a 30-day period be more appropriately considered after a 12 24 month initial transition period in which a large number of deregistrations might 13 be expected to be proposed? 14

15

Response: 16

No response. 17

18 19

6.5 Acknowledging that an Entity’s circumstances have been reviewed to confirm 20 appropriate functional registration in the BC MRS Program at the time of 21 registration, and changes in an Entity’s circumstances require an application for 22 deregistration, followed by the Administrator’s review and ultimately Commission 23 Order for deregistration if the Commission determines deregistration to be 24 appropriate, why and how would it be unreasonable to follow the same process 25 when the changes in an Entity’s circumstances arise from a new BES Definition? 26

27

Response: 28

No response. 29

30 31





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6.6 Why and how would it not be reasonable in support of reliability objectives to 1 minimize risk by requiring Entities that are already participating in the BC MRS 2 Program to remain in compliance until deregistration is ordered? 3

4

Response: 5

No response. 6

7 8

6.7 Would it not be prudent for an Entity to obtain a deregistration Order from the 9 Commission in order to avoid potential for later dispute, should the Commission 10 not agree with the Entity’s determination that deregistration was appropriate? 11

12

Response: 13

No response. 14

15 16

7.0 Reference: Proposed BC Exception Process for the BC Rules of Procedure 17

Exhibit C19-2, CPC p. 4 Sec. C #12 18

CPC states “[a]pplicants will also require access to information about the bulk-power 19 transmission system and how their facilities affect that system for the application process 20 to be effective. BC Hydro or FortisBC will have much of the necessary information in 21 most cases. Applicants will need the assistance of these system operators to gather the 22 information and test results to support an application. The Commission needs to 23 develop rules on how applicants may access this information.” 24

7.1 What rules would CPC suggest for applicants to have “access to information 25 about the bulk-power transmission system and how their facilities affect that 26 system”? 27

28

Response: 29

No response. 30





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1 2

7.2 What information would BC Hydro, FortisBC and any other entities have in this 3 regard? 4

5

Response: 6

No response. 7

8 9

7.3 What assistance do entities expect to require from BC Hydro and FortisBC “to 10 gather the information and test results to support an application”? 11

12

Response: 13

No response. 14

15 16

8.0 Reference: Definitions 17

Exhibit C17-3, BC Hydro p. 3 Sec. 1 (b) i) 18

BC Hydro states it “…assumes that the new definitions included in Part B, section 2.0 of 19 Exhibit A-7 will only be applicable to the BC Exception Process in BC, rather than the 20 entire BC MRS Program. If this assumption is incorrect, BC Hydro recommends that 21 those definitions listed in Part B, section 2.0 only apply to the BC Exception Process.” 22

8.1 Would BC Hydro please explain its concern and why the definitions listed in Part 23 B, section 2.0 of Exhibit A-7 should not apply beyond the BC Exception Process? 24

25

Response: 26

No response. 27

28 29





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9.0 Reference: Definitions 1

Exhibit C18-3, FortisBC, p. 2 #8 2

FortisBC states “[i]n SD-1, there are multiple uses of the term ’Entity’ yet the term is not 3 defined. FortisBC requires further clarification or definition of this term.” 4

9.1 Would FortisBC please explain to what extent it would be beneficial to replace 5 the term “Entity” as used generically in the Straw Dog drafts with the defined 6 terms “Responsible Entity” or “Applicable Entity” as the context may suggest? 7

8

Response: 9

For consistency, FortisBC believes that, wherever possible, a specific term should be used to 10 avoid confusion, e.g. Applicable Entity, Responsible Entity, Registered Entity, Load-Serving 11 Entity, Purchase-Selling Entity. 12

Unless otherwise specified, the reference to “entity” throughout SD-1 should not be capitalized 13 as it is a generic term. 14

Regional Entity (RE) is not a function in British Columbia and therefore should be removed from 15 the “Applicant” definition of SD-1. 16

The Rules of Procedure for Reliability Standards in British Columbia (BC ROP) have definitions 17 for Applicable Entity and Responsible Entity. 18

19 20

9.2 Would FortisBC please identify potential harm if the generic term “Entity” is 21 used? 22

23

Response: 24

The reference to “entity” should not be capitalized if used as a generic term. Clarity and 25 consistency with terminology reduces the potential for confusion or misinterpretation. Please 26 also refer to FortisBC’s response to BCUC SD-1 IR 9.1. 27

28 29





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10.0 Reference: Basis for an Exception 1

Exhibit C14-3, AMPC p. 3 2

AMPC suggests to “[e]stablish a BC Exception Process. AMPC supports the basis for 3 Exceptions contained in Section 3.1. The Commission should maintain significant 4 procedural flexibility regarding filing requirements and procedures, at least during the 5 initial years of the Exception process.” 6

10.1 Would AMPC please clarify what AMPC means by significant procedural 7 flexibility? 8

9

Response: 10

No response. 11

12 13

10.2 For example, is AMPC suggesting that every exclusion application be processed 14 regardless of supporting evidence? 15

16

Response: 17

No response. 18

19 20


Exhibit C17-3, BC Hydro p. 4 b) ii) 22

Exhibit C19-2, CPC p. 3, Sec. C #10 23

Exhibit C19-2, CPC p. 2 Sec. A 3 (a) 24

BC Hydro states “Subject to BC Hydro’s comments in section 2(b)(v) below, BC Hydro 25 recommends that the technical criteria that will dictate what will be necessary for the 26 Reliable Operation of the interconnected bulk-power transmission system be clarified. 27 Further, BC Hydro recommends that the TAC be instructed to develop any additional 28 BC-specific criteria necessary to assist reviewers of the Exception Requests in 29 determining factors necessary to the Reliable Operation of the interconnected bulk-30 power system in BC.” 31





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CPC states “[t]he existing definition of ’reliable operation’ lacks sufficient detail to be 1 workable in practice. To assist those who must work within the MRS Program, the 2 Commission should provide additional guidance, to the extent it can, on the criteria it will 3 use to determine whether elements or aspects of the entity’s operations are necessary 4 for the reliable operation of the bulk-power transmission system.” 5

CPC states “...the Exception Process proposed in Straw-dog #1 should be streamlined 6 and reasonable in terms of time, process and cost. The Commission should provide 7 more detailed criteria for exclusion exceptions and identify any additional decision-8 making criteria that it may use.” 9

11.1 Assuming criteria will be developed by the TAC and recommended to the 10 Commission on an on-going basis, are there specific criteria that might be 11 suggested at this time? 12

13

Response: 14

No response. 15

16 17

11.2 To what extent are the technical criteria not set out in the various Reliability 18 Standards? Please describe. 19

20

Response: 21

No response. 22

23 24

11.3 In considering “Reliable Operation of the interconnected bulk-power transmission 25 system,” what would be helpful beyond recommendations from the Administrator 26 and any TAC technical criteria that may be developed and recommended to the 27 Commission? 28

29

Response: 30

No response. 31





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1 2

11.4 Given that Reliable Operation is considered in the context of the “interconnected 3 bulk-power transmission system,” what distinction does BC Hydro make between 4 BC-specific technical criteria and regional criteria? 5

6

Response: 7

No response. 8

9 10


Exhibit C17-3, BC Hydro p. 4 b) ii) 12

BC Hydro states “[i]t is BC Hydro’s view that the use of the term necessary is too 13 subjective and may lead to the reviewers of the Exception Requests arguing over 14 whether something is or is not necessary to the Reliable Operation of the interconnected 15 bulk-power transmission system. Subject to BC Hydro’s comments in section 2(b)(v) 16 below, BC Hydro recommends that the technical criteria that will dictate what will be 17 necessary for the Reliable Operation of the interconnected bulk-power transmission 18 system be clarified. Further, BC Hydro recommends that the TAC be instructed to 19 develop any additional BC-specific criteria necessary to assist reviewers of the 20 Exception Requests in determining factors necessary to the Reliable Operation of the 21 interconnected bulk-power system in BC.” 22

12.1 How would Interveners suggest that the term “necessary” be defined? 23

24

Response: 25

FortisBC would consider “necessary” to mean “essential” or “required”. 26

27 28

12.2 Can BC Hydro provide any information as to the use of the word “necessary” in 29 the NERC Exception process that may be helpful? 30





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1

Response: 2

No response. 3

4 5


Exhibit C18-3, FortisBC p. 2 #9 7

Exhibit C17-3, BC Hydro p. 1 (first bullet) 8

Exhibit C17-3, BC Hydro p. 5 b) iii) 9

FortisBC states it “requires further clarification on the purpose of the Partial Exclusion 10 Exception process before providing comment.” 11

BC Hydro recommends “[e]limination of the Partial Exception Request from the 12 proposed BC Exception Process.” 13

“Based on BC Hydro’s reading of the Partial Exclusion Exception, it appears that the 14 exclusion will be related to an Entity seeking relief from a specific Reliability Standard 15 versus an exclusion from the BES itself. 16

BC Hydro is of the view that the Exclusion and Inclusion Exceptions provide sufficient 17 opportunity for parties to seek relief from being captured under the BC MRS Program 18 and that once it has been determined that an Element is either included or excluded 19 from the BES definition, that Entity should be required to comply with all applicable BC 20 MRS standards. Further, there have been no specific examples given that provide any 21 rationale for the need for a Partial Exclusion Exception. The Partial Exclusion Exception 22 introduces the concept of an a-la-carte approach to compliance with reliability standards 23 in B.C. and BC Hydro does not believe that is consistent with ensuring the reliable 24 operation of the BES. Therefore, BC Hydro recommends that the concept of a Partial 25 Exception Request be removed from the proposed BC Exception Process.” 26

13.1 What potential value, if any, do Entities see in including a Partial Exclusion 27 Exception process in addition to the Exclusion Exception process? 28

29

Response: 30

FortisBC is continuing to consider the potential value and implications of a Partial Exclusion 31 Exception. 32





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13.2 What is the downside, if any, of introducing a Partial Exclusion Exception in BC 1 that is not contemplated in the NERC exception process? 2

3

Response: 4

FortisBC is continuing to consider the potential value and implications of a Partial Exclusion 5 Exception. 6 7

8

13.3 To what extent would a Partial Exception Request process be appropriate if an 9 entity could demonstrate to the Commission’s satisfaction that specific aspects of 10 the Entity’s operation needn’t be considered, in general or for specific standards 11 or functions, for Reliable Operation of the BES? Please describe any issues or 12 conflicts that may arise with MRS from this practice. 13

14

Response: 15

FortisBC is continuing to consider the potential value and implications of a Partial Exclusion 16 Exception. 17

18 19

14.0 Reference: Form, Content and Submission of an Exception Request 20

Exhibit C17-3, BC Hydro p. 6 b) iv) 21

“It appears that the bulk of the information provided in an Entity’s Exception Request 22 that will provide the BCUC, the Administrator, TAC or BC Hydro, in its capacity as the 23 BA, with the most constructive and useful information on which to make an assessment 24 as to whether or not an Element should or should not be excluded, will be contained in 25 section III of the Applicant’s Exception Request. 26

‘Section III of an Exception Request shall contain detailed information to support the 27 Exception Request [to be specified on an Exception Request Form when the BC 28 Exception Process details are settled].’ 29

In order to obtain this information, the process outlined in section 4.4 requires BC Hydro, 30 in its capacity as the BA, to submit a specific request for access to this section III 31 Information to the BCUC. BC Hydro expects that in order to adequately review and 32 comment on an Applicant’s Exception Request, in almost all cases it will submit a 33





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request to the BCUC for access to the information contained in section III. It therefore 1 strikes BC Hydro as an unnecessary procedural step to require it to submit a request to 2 the BCUC for access to the information contained in section III of the Applicant’s 3 Exception Request. For this reason, BC Hydro recommends that this information ought 4 to be provided to it in the first instance.” 5

14.1 What objections might other entities have? 6

7

Response: 8

FortisBC has no objection subject to all parties maintaining confidentiality as required. 9

10 11

14.2 How might those objections, if any, be addressed? 12

13

Response: 14

Please refer to FortisBC’s response to BCUC SD-1 IR 14.1. 15

16 17

14.3 Would time period concerns be resolved by a requirement for the information to 18 be provided to BC Hydro at the same time as it is provided to the Commission? 19

20

Response: 21

No response. 22

23 24

14.4 What volume of exception requests might be anticipated during an initial 25 transition period of 24-months, and thereafter? 26

27

Response: 28

FortisBC is unable to estimate of the volume of exception requests that might occur. 29





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1 2

14.5 What timelines might be considered reasonable for processing exception 3 requests, during the initial transition period, and thereafter? 4

5

Response: 6

FortisBC does not have sufficient information at this time to provide a timeline estimate. 7

8 9

15.0 Reference: Review and Consideration of Exception Requests 10



CPC states: “The Commission should also consider concessions for administrative 13 penalties while exception request applications are being considered, even if the 14 applications are ultimately rejected or only a partial exclusion is granted.” 15

CPC also states: “Compliance with the MRS Program is a costly and time-consuming 16 exercise. The failure to comply with reliability standards exposes parties to significant 17 administrative penalties. Parties that are initially captured by the BES definition despite 18 having elements not necessary for the reliable operation of the interconnected bulk-19 power system should not carry the onerous burden of complying with mandatory 20 reliability standards while their exclusion exception applications are being considered. 21 Some administrative accommodation should be permitted while the exception process is 22 pursued in good faith.” 23

15.1 What would be the basis for not considering penalties where exception requests 24 are rejected? 25

26

Response: 27

No response. 28

29 30





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15.2 Would concessions for administrative penalties while applications are being 1 considered provide an incentive for entities to submit unfounded or poorly 2 founded exception request applications? 3

4

Response: 5

No response. 6

7 8

15.3 How would entities suggest the Commission handle unsubstantiated requests 9 that may appear to be designed to stall or game the process? 10

11

Response: 12

FortisBC has no reason to expect that entities will file requests for such reasons. 13

14 15

16.0 Reference: Review and Consideration of Exception Requests 16

Exhibit C17-3, BC Hydro, p. 7 b) v) 17

BC Hydro states “[w]hile BC Hydro is supportive of the TAC, it has significant concerns 18 that the TAC appears to have the primary responsibility of making recommendations to 19 the BCUC with respect to BES Exceptions. BC Hydro is of the view that the primary 20 responsibility of making recommendations to the BCUC with respect to BES Exceptions 21 should be that of the Administrator (i.e., WECC), as is the practice in the US, because 22 WECC is in the best position to utilize criteria which is consistent across the relevant 23 regions and can use existing tools to make any recommendations. In this regard, BC 24 Hydro recommends that the TAC should be limited to reviewing Exception Requests 25 based on BC-specific technical criteria and for BC-specific impacts only.” 26

16.1 Is BC Hydro suggesting that BC-specific technical criteria and BC-specific 27 impacts may be viewed in isolation outside the context of integrated BES 28 operations? Please explain. 29

30

Response: 31

No response. 32





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1 2

16.2 What would BC Hydro suggest for the Commission to consider in the event of 3 significant differences between recommendations from the TAC and WECC? 4

5

Response: 6

No response. 7





Page 1

1.0 Reference: Find, Fix, Track Option (FFT) for Possible Violations 1

Exhibit C18-3, FortisBC p. 2, # 12 2

FortisBC states “FortisBC is in general agreement with a Find, Fix, Track (‘FFT’) process 3 described in Straw Dog #2 (‘SD-2’); however, the FFT process suggested requires 4 further clarification and consideration before FortisBC can fully endorse the process as 5 suggested. For instance, there is reference to the FFT Screen being conducted by the 6 Administrator using the NERC FFT process as well as using NERC FFT thresholds. 7 However, those NERC FFT thresholds are not identified.” 8

1.1 Reference is made to the criteria contained in the definition of the BC FFT 9 process (“remediated Possible Violations that appear to pose minimal risk to the 10 bulk power system”) and the factors contained in the definition of the FFT 11 Screen. Commission staff suggests replacing “threshold” with “criteria” may be 12 appropriate. What further comments would FortisBC have? 13

14

Response: 15

FortisBC agrees with replacing the reference to “threshold” with the “criteria” and is supportive 16 of the FFT process. 17

18 19

2.0 Reference: FFT Option for Possible Violations 20

Exhibit C17-3, BC Hydro p. 10, a) i) 21

BC Hydro states “BC Hydro understands this provision to mean that within 30 days after 22 the Administrator notifies the Entity that the situation will be addressed under the FFT 23 process, the Entity must provide a formal Mitigation Plan to the Administrator and 24 following that, a statement to the Administrator certifying that remediation is complete. 25 This suggests that the entire process, from notification to completion of remediation, is 26 30 days and that only issues that can be resolved within this timeframe will be eligible for 27 consideration under the BC FFT Process. BC Hydro is concerned that while this may be 28 an appropriate time frame for certain issues, many issues could require a longer time 29 frame within which to properly address and complete remediation. As such, BC Hydro 30 recommends that once the Possible Violation is identified and the FFT process 31 accepted, appropriate timelines for submitting a formal Mitigation Plan is 30 days, and 32 certification that the remediation has been completed would be aligned with the 33 Mitigation Plan Completion Date. In circumstances where a certification that remediation 34





Page 2

has been completed is submitted within 30 days, the requirement to file a Formal 1 Mitigation Plan should be waived.” 2

2.1 Considering that the “BC FFT Process” definition and the seventh numbered 3 factor in the definition of “FFT Screen” would provide for FFT to be available only 4 for matters that have already been remediated and not ongoing at the time of the 5 FFT Screen, how would a longer time period for remediation be consistent with 6 this criteria? 7

8

Response: 9

No response. 10

11 12

2.2 As entities are encouraged to file self reports and promptly mitigate all Possible 13 Violations, regardless of whether they may be processed as FFT or NOAVs, 14 would it be helpful to supplement the reference to “Mitigation Plan” in Sec. 5.0 of 15 the FFT section, to clarify that the Mitigation Plan in this context should outline 16 and confirm the steps that were taken in remediating the matter? 17

18

Response: 19

No response. 20

21 22


Exhibit C17-3, BC Hydro p. 10, a) ii) 24

BC Hydro states “BC Hydro is also concerned that the timing contemplated in Part A, 25 section 8.0 could result in significant back-fines being imposed on an Entity if it is 26 determined that a Possible Violation that is receiving FFT treatment or has been 27 considered resolved is not mitigated as certified. If such a determination is made, the 28 Entity may no longer be eligible for FFT treatment and may be instead processed as an 29 Alleged Violation.” 30

3.1 Would BC Hydro please clarify what the basis would be for enabling an Entity to 31 benefit from continued FFT treatment in a situation where it has certified that 32





Page 3

mitigation has been completed but the certification (and the accompanying 1 affidavit) is later found to be invalid? 2

3

Response: 4

No response. 5

6 7


Exhibit C17-3, BC Hydro p. 11, a) ii) 9

BC Hydro states “Section 8.0 suggests that the duration of the Alleged Violation will be 10 considered to begin with the original start date of the Possible Violation that previously 11 was considered to have been resolved as an FFT. BC Hydro is concerned that an Entity 12 could be subject to significant fines without any opportunity to remedy the deficiency. 13 BC Hydro recommends that the period for which penalties are assessed should not 14 begin until the Possible Violation becomes an Alleged Violation.” 15

4.1 How would BC Hydro justify an additional penalty-free period, given that 16 penalties may be based on the start of the violation, and prompt remediation of a 17 deficiency is encouraged in all cases? 18

19

Response: 20

No response. 21

22 23

5.0 Reference: BC Process for Assessing Severity and Risk for Violations 24

Exhibit C17-3, BC Hydro p. 11, b) ii) 25

BC Hydro states “BC Hydro notes that there appears to be some confusion in the 26 language used to describe the TAC’s role with respect to specific Confirmed Violations, 27 as described in Part B of Exhibit A-8. Based on BC Hydro’s understanding of TAC’s role 28 as currently drafted, it appears that the TAC would be limited to providing information 29 and recommendations to the BCUC that could be generally applicable for the B.C. 30 context, rather than in the more limited context of any particular Confirmed Violation. 31 However, it also suggests that the TAC will be in a position to review the specific facts of 32





Page 4

a Confirmed Violation case and provide input. BC Hydro is concerned that given the 1 make-up of the TAC, if the TAC was in a position to provide specific recommendations to 2 the BCUC with respect to Confirmed Violations and possible penalties, the process 3 would need to be very transparent and any information provided by the TAC to the 4 BCUC should necessarily also be provided to the impugned Entity to ensure procedural 5 fairness.” 6

5.1 Given Straw Dog #2 suggests “[t]he TAC would provide information and 7 recommendations to the Commission that could be generally applicable for the 8 BC context, rather than in the more limited context of any particular Confirmed 9 Violation,” and “[a]s the TAC’s information and recommendations will not be 10 related to particular Confirmed Violations, the Commission may publish all or 11 parts of the TAC’s input by posting on the Commission’s website,” what 12 additional language would alleviate confusion? 13

14

Response: 15

No response. 16

17 18

6.0 Reference: BC Process for Assessing Severity and Risk for Violations 19

Exhibit C17-3, BC Hydro p. 11, b) i) 20

BC Hydro states “BC Hydro recommends that for the initial adoption of the VRF and VSL 21 factors in BC, instead of the TAC assessing the VRF and VSL factors, BC Hydro include 22 the review of the VRF and VSL factors as part of its obligations in producing the annual 23 assessment reports. Under this process, the TAC would have the opportunity to review 24 and provide its comments on VRF/VSL factors, as do all Entities.” 25

6.1 Do other Registered Interveners agree with BC Hydro’s suggestion that BC 26 Hydro review the VRF and VSL factors in producing annual assessment reports 27 and that the TAC and other Entities would have opportunity to comment? 28

29

Response: 30

FortisBC supports an initial review of the factors by BC Hydro prior to involvement of the TAC. 31

32 33





Page 5

6.2 What would be considered in such a review? 1

2

Response: 3

No response. 4

5 6

6.3 Would BC Hydro evaluate the VRF/VSL on the basis of impact to the 7 interconnected Grid or simply to the impact on the BC Grid? 8

9

Response: 10

No response. 11

12 13

6.4 What supplementary value would this bring as an addition to TAC consideration 14 of BC-specific technical factors? 15

16

Response: 17

No response. 18

19 20

7.0 Reference: BC Penalties for Confirmed Violations 21

Exhibit C17-3, BC Hydro p. 12, b) iv) 22

Exhibit C18-3, FortisBC p. 2, #14 23

BC Hydro states “BC Hydro recommends revising the B.C.’s Rules of Procedure to 24 include a Notice of Penalty process.” 25

FortisBC states “Part C of SD-2 regarding “Penalty Process” needs further clarification 26 and consideration. For instance, there is no reference to a process if a Registered Entity 27 disagrees with a penalty. Additionally, item 4 in Part C of SD-2 requires clarification of 28 “others” from whom the Commission may request additional information. The document 29 should describe how the “others” fit in with or will participate in the Penalty Process as 30





Page 6

envisioned by the Commission. Further, the details of the submissions of advisors to the 1 BCUC or their Administrator should be made available under the same guidelines and 2 confidentiality applicable to the TAC.” 3

7.1 Considering Part 8.1 of the UCA, the Administrative Penalties Regulation and the 4 opportunity to provide information in the NOAV process, what further process 5 would BC Hydro and FortisBC consider essential and why? 6

7

Response: 8

The Penalty Process in Straw Dog #2 is a structured process involving two considerations of 9 severity level and risk factor classifications as well as complex and broad ranging issues relating 10 to impact level and non-compliance levels. The range of possible penalties, depending on the 11 result of this broad range of considerations, is $2,000 to $1,000,000. In these circumstances, 12 where the Commission finds pursuant to section 109.1 of the Utilities Commission Act, and 13 decides to impose a penalty, under section 109.2 of the Utilities Commission Act, fairness 14 requires that the Responsible Entity first be heard in regard to the administrative penalty to be 15 imposed by the Commission. An amendment to the BC Rules of Procedure would be the 16 appropriate way to provide for an amended penalty process. In this process, the Commission 17 would give the Responsible Entity an opportunity to be heard after disclosure by the 18 Commission of the VRF and VSL compliance provisions triggered by the subject alleged 19 contravention and disclosure by the Commission of what the Commission considers to be the 20 relevant impact and non-compliance levels. With that information disclosed to the Responsible 21 Entity, there will be a fair opportunity for the Responsible Entity to make submissions to the 22 Commission prior to the penalty being imposed. A right of appeal or a right of reconsideration 23 as currently provided in the UCA will not serve to provide a fair opportunity to be heard in regard 24 to penalties, in the first instance, prior to the Commission making any decision as to the penalty. 25

26 27

7.2 How are the general processes that already exist for disagreement with a 28 Commission Order insufficient for an Entity disagreeing with a Penalty ordered by 29 the Commission? 30

31

Response: 32

Please refer to FortisBC’s response to BCUC SD-2 IR 7.1. 33

34 35





Page 7

7.3 On what basis would FortisBC be suggesting any limitation on any others from 1 whom the Commission may request additional information? 2

3

Response: 4

FortisBC is not suggesting limitations on the Commission’s ability to request additional 5 information; however, fairness in the Penalty Process is a serious and important matter for a 6 Responsible Entity. FortisBC’s concern in regard to the Commission receiving additional 7 information from “others” was raised due to uncertainty as to the source of information as well 8 as the qualifications of “others”. The issue of confidentiality and disclosure of information should 9 not be provided to third parties without a fair opportunity for the Responsible Entity to respond. 10

11 12

7.4 To what extent might it be reasonable for the Commission to not pursue 13 administrative penalties for possible contraventions relating to periods before an 14 entity registered under the BC MRS Program? 15

16

Response: 17

No response. 18

19 20

7.5 If the Commission did not seek to impose administrative penalties for 21 contraventions relating to periods before an entity was registered, except in 22 particularly egregious situations such as those where actual disruption to the 23 BES was experienced or narrowly avoided, would it be clear to entities that they 24 were nevertheless subject to the MRS requirements for periods prior to 25 registration? 26

27

Response: 28

Where the UCA and the Mandatory Reliability Standards Regulation impose MRS requirements 29 and prescribed entities are obliged to comply with the MRS reliability standards, it is clear to 30 entities that they are subject to those requirements. Compliance with MRS is not dependent 31 upon registration. 32





Page 8

1 2

7.6 If a penalty were to be considered for not registering under the BC MRS Program 3 as and when required by the BC Rules of Procedure and Registration Manual, 4 what factors might be relevant for assessing penalty amount? 5

6

Response: 7

The factors relevant for assessing a penalty amount for not registering under the MRS program 8 as required by the BC Rules of Procedure and Registration Manual should be the same as for 9 any other penalty, except the Commission should consider the circumstances surrounding the 10 failure to register. The circumstances of that failure to register may be mitigating factors in 11 assessing the penalty amount. 12

13 14

8.0 Reference: BC Penalties for Confirmed Violations 15

Exhibit C18-3, FortisBC p. 2 #13 16

FortisBC states “SD-2 should provide further clarification on confidentiality and 17 publication issues where the security of the Bulk Electric System could be impacted by 18 the distribution of information. Where this security may be impacted there should be 19 posting or distribution of information only to parties as necessary.” 20

8.1 What details would be proposed for confidentiality and publication processes and 21 related system security? 22

23

Response: 24

Where there is a risk of harm to the security of the BES by the distribution or publication of 25 information received by the Commission from the TAC, the mandate of TAC should provide for 26 a right for TAC to provide input to the Commission on a confidential basis akin to the 27 Commission’s Practice Directive on Confidential Filing, which should include a requirement for 28 the TAC to consider designations of confidential information by an entity and provide TAC’s 29 information and recommendations to the Commission. The TAC would advise the Commission 30 as to whether information provided poses a risk of harm to the security of the BES. 31

For example, as confirmed by the Commission in its letter dated December 12, 2012, orders 32 issued by the British Columbia Utilities Commission related to CIP standards are treated as 33





Page 9

confidential, since information related to a Registered Entity's non-compliance with ClP 1 standards could potentially be used to compromise or disrupt the BES. 2





Page 1

1.0 Reference: TAC Mission and Purpose 1

Exhibit C19-2, CPC p. 6 #22 2

CPC suggests that the Commission should: 3

“(b) develop rules on how BC Hydro and FortisBC will: 4

(i) share information about their bulk transmission systems; 5

(ii) assess the interaction of interconnected facilities; 6

(iii) test the contribution of interconnected facilities for the purpose of 7

Exclusion or Inclusion; and 8

(iv) assess the causes and consequences of non-compliance or failure. 9

(c) develop rules on how the TAC members will declare their interests and avoid 10 conflicts of interests in matters being considered; and 11

(d) develop rules on how costs for TAC operations will be paid or allocated. Not all 12 participants will be able to pass cost to ratepayers.” 13

1.1 With respect to rules on assessing and testing aspects of operations, does 14 Columbia Power believe that present procedures and standards of WECC and 15 NERC with respect to interconnected facilities are insufficient for this purpose? 16

17

Response: 18

No response. 19

20 21

1.2 If so, please suggest what added procedures should be considered? 22

23

Response: 24

No response. 25

26 27





Page 2

1.3 With respect to rules on declaration and conflict of interest, what details would be 1 suggested? 2

3

Response: 4

No response. 5

6 7

1.4 With respect to rules on allocation of costs for TAC operations, what details 8 would be suggested? 9

10

Response: 11

No response. 12

13 14

2.0 Reference: TAC Members 15

Exhibit C4-2, Teck p. 2 Sec. 3(3) 16

Teck states “[a]s permanent members, BC Hydro and FortisBC should be limited to only 17 one member each.” 18

2.1 What is the basis for TECK’s suggestion that BCH and FBC be limited to only 19 one member each? 20

21

Response: 22

No response. 23

24 25





Page 3


Exhibit C4-2, Teck p. 2 Sec. 3(4) 2

Exhibit C14-3, AMPC p. 7 Sec. 4 3

Exhibit C15-2, Clean Energy BC p. 1 4

Exhibit C19-3, CPC p. 6 #22(a) 5

Teck states “[n]on-utility generation, transmission and load entities should also be 6 appointed to TAC positions by the BCUC.” 7

AMPC states “that the proposed TAC is fundamentally flawed in that there is no 8 mandatory provision for non-utility representatives from load or generation users of the 9 electrical system. Non-utility representation on the TAC under Straw Dog 3 would 10 depend totally on the good-will and judgement of utility representatives. This is a major 11 oversight that must be corrected.” 12

Clean Energy BC states “[i]n addition to the BC Hydro and FortisBC representatives on 13 TAC, there should always be at least one representative from each industry that is 14 affected by the Mandatory Reliability Standards Program (’MRS’) e.g. an industrial users 15 representative and a renewable electricity sector representative. As well, perhaps a 16 representative from WECC. Instead of at least one-half of TAC members being 17 employees of entities that are subject to the MRS in B.C., the figure should be two 18 thirds.” 19

CPC suggests “mandatory inclusion of representative energy generator and consumer 20 groups who are subject to the MRS Program.” 21

3.1 Given that the mission and purpose of the TAC would be to provide technical 22 information and recommendations to the Commission on specific technical 23 matters only, as directed by the Commission, that the TAC would perform no 24 governance, policy or lobby group functions, and that members of the TAC would 25 be selected for technical expertise and not be appointed to “represent” any 26 organization or group of organizations, what unique technical expertise would 27 non-utility generation, transmission and load entity members provide for the 28 TAC? 29

30

Response: 31

No response. 32





Page 4

1 2


Exhibit C18-3, FortisBC, p. 3 #19 4

FortisBC states “[i]n regard to the qualifications for TAC membership, FortisBC believes 5 that the interpretation of the word ’expert’ could prove problematic and suggests instead 6 that members of the TAC should simply be ’technically qualified’. There is no one 7 individual who will be ’expert’ in all aspects of the electrical system.” 8

4.1 Noting that the Straw-Dog provision would be for BC Hydro and FortisBC to each 9 appoint “a technically expert employee to serve as initial members” and to be 10 “required to develop appropriate criteria for the technical expertise, knowledge 11 and experience that TAC members must have, and provide these criteria to the 12 Commission for approval,” what technical qualifications would be suggested for 13 the initial BC Hydro and FortisBC TAC members? 14

15

Response: 16

FortisBC considers that the word ‘expert’ may imply that the individual is an expert in all fields of 17 the system and standards. FortisBC’s suggestion is simply for the purpose of recognizing that 18 no one individual exists who is able to cover all aspects; hence, ‘technically qualified’ may be a 19 more appropriate term. The initial members are expected to be individuals skilled in power 20 systems engineering and/or operations and to have a reasonable knowledge of the 21 interconnected BC electrical system. 22

23 24

5.0 Reference: TAC Rights and Obligations of Members 25

Exhibit C17-3, BC Hydro p. 14 Sec. 3 iii) 26

Exhibit C19-2, CPC p.2 Sec. 3(c) 27

BC Hydro states “[t]his implies that all TAC members will conduct their TAC activities in 28 an impartial and non-partisan manner, despite being representatives of their respective 29 organizations. Considering all TAC members (and their respective organizations) will be 30 volunteering significant time and resources to membership and participation in the TAC, 31 it seems unrealistic to require impartiality in the conduct of their TAC duties and 32





Page 5

decision-making. For this reason, BC Hydro recommends that there be an explicit 1 acknowledgment that each individual TAC member is acting as a representative of their 2 respective organization and will be considering TAC issues with their organization’s 3 interests in mind.” 4

CPC states “[t]he TAC requires a broader membership than BC Hydro and FortisBC, 5 each of whom have a vested interest in the outcome of many MRS decisions.” 6

5.1 Given that the mission and purpose of the TAC would be to provide technical 7 information and recommendations to the Commission on specific technical 8 matters only, as directed by the Commission, that the TAC would perform no 9 governance, policy or lobby group functions, and that members of the TAC would 10 be selected for technical expertise and not be appointed to “represent” any 11 organization or group of organizations. 12

13

Response: 14

No response required. 15

16 17

5.2 Why could TAC members not participate in an impartial and non-partisan manner 18 on such a technical committee? 19

20

Response: 21

No response. 22

23 24

5.3 What major conflicts of interest or vested interests would be anticipated? 25

26

Response: 27

No response. 28

29 30




Responses to British Columbia Hydro and Power Authority (BC Hydro) Information Request (IR) No. 1

Page 1

1.0 Reference: Exhibit C18 3 at page 2, Comments on Commission Straw Dog #1, 1 paragraph 9 2

“It is FortisBC’s understanding that the exception process, other than the proposed 3 Partial Exclusion Exception Process, is similar to the process used in the United States.” 4

1.1 Is FortisBC aware of any other jurisdiction that has a “Partial Exclusion 5 Exception”? 6

7

Response: 8

FortisBC is not aware of any other jurisdiction that has a “Partial Exclusion Exception”. At this 9 time the proposed Partial Exclusion Exception process would be unique to British Columbia. 10

11

12

2.0 Reference: Exhibit C18 3 at page 2, Comments on Commission Straw Dog #1, 13 paragraph 11 14

“FortisBC recognizes and agrees with comments during the workshop that MRS is 15 evolving. To that end, FortisBC recommends a review of procedures, processes, and 16 function of the TAC in approximately 3 years to assess whether any beneficial 17 adjustments should be considered.” 18

2.1 Please describe what the “review of procedures, processes, and function of the 19 TAC” would look like. 20

21

Response: 22

As the TAC has not yet been established, it is difficult to determine the review process. 23 However, the intent would be to have a mechanism in place to review the value of the TAC, 24 once criteria has been established and once all, or most, of the exception requests are 25 processed. Additionally, the review may need to be done on an as-needed basis rather than 26 over a set number of years to ensure that the purpose of the TAC is still valid to the scope, 27 scale and terms of reference that was originally perceived. 28

29




Responses to British Columbia Hydro and Power Authority (BC Hydro) Information Request (IR) No. 1

Page 2

2.2 Who would be involved in the review? 1

2

Response: 3

FortisBC anticipates that the review would be conducted by the TAC with participation by BCUC 4 Staff, and the results and recommendations would be provided to the Commission. 5




Responses to Association of Major Power Customers of BC (AMPC) Information Request (IR) No. 1

Page 1

1.0 Reference: Exhibit C18‐3, Comments on Straw Dog #1, page 2 1

“In FortisBC’s opinion, the terms “Bulk Power System” (“BPS”) and “Bulk Electric 2 System” should not be used interchangeably. Mandatory Reliability Standards are 3 intended to be applicable to the Bulk Electric System but not necessarily applicable to 4 the Bulk Power System because the BPS reaches farther than those facilities included in 5 the BES. NERC issued a memorandum on April 10, 2012 explaining the difference 6 between the BPS and the BES. As the standards making body does differentiate 7 between these two terms, there may be issues in terminology moving forward within BC 8 if no such distinction is made.” 9

1.1 Please provide the April 10 memo. 10

11

Response: 12

The requested memo is attached as AMPC Appendix 1.1.and available at 13 http://www.nerc.com/files/Final_BES_vs%20_BPS_Memo_20120410.pdf. 14

http://www.nerc.com/files/Final_BES_vs%20_BPS_Memo_20120410.pdf

AMPC Appendix 1.1 APRIL 10, 2012 NERC MEMORANDUM

Page | 1

MEMORANDUM

TO: NERC Standards Committee

FROM: NERC Legal and Standards Departments

DATE: April 10, 2012

SUBJECT: Use of “Bulk Power System” versus “Bulk Electric System” in Reliability

Standards

The purpose of this memo is to explain the difference between the use of “Bulk Electric System”

(“BES”) and “bulk power system” (“BPS”) in NERC Reliability Standards.

Statutory Authority of BPS versus BES

The term “Bulk Power System” comes from the Energy Policy Act of 2005 (the “Energy Policy

Act”) and is set forth in Section 215 of the Federal Power Act.1 It states:

(1) The term “bulk-power system” means—

(A) facilities and control systems necessary for operating an interconnected

electric energy transmission network (or any portion thereof); and

(B) electric energy from generation facilities needed to maintain transmission

system reliability.

The term does not include facilities used in the local distribution of electric

energy.

The Commission has addressed the BPS versus BES issue in several different orders. The

Commission has made clear that BPS defines the extent of its jurisdiction, and that definition has

not been delegated to the ERO. However, the Energy Policy Act extends NERC and FERC’s

authority over the BPS, which, as confirmed by the Commission, reaches farther than those

facilities that are included in the BES. The BES identifies who must comply with Reliability

Standards and is developed through the Standards Development Process.

Paragraph 76 of Order No. 6932 states:

. . . [S]ection 215 of the FPA broadly defines the Bulk-Power System as “facilities

and control systems necessary for operating an interconnected electric energy

transmission network (or any portion thereof) [and] electric energy from

1 16 U.S.C. § 824o (2011).

2 Mandatory Reliability Standards for the Bulk-Power System, Order No. 693, FERC Stats. & Regs. ¶

31,242 (2007), order on reh’g Order No. 693-A, 120 FERC ¶ 61,053 (2007)(“Order No. 693”) at PP 76.

Page | 2

generating facilities needed to maintain transmission system reliability.

Therefore, the Commission confirms its statements in the NOPR that the Bulk-

Power System reaches farther than those facilities that are included in NERC’s

definition of the bulk electric system.

Footnote 50 of Order No. 6933 states:

For these same reasons, the Commission rejects the position of those commenters

that suggest the statutory definition of Bulk-Power System is more limited than

the NERC definition of bulk electric system.

Additionally, the Commission-approved Statement of Compliance Registry Criteria provides:

Entities that use, own or operate Elements of the Bulk Electric System as

established by NERC’s approved definition of Bulk Electric System below are (i)

owners, operators, and users of the Bulk Power System and (ii) candidates for

Registration.

On November 18, 2010, FERC issued Order No. 743 (amended by Order No. 743-A)4 and

directed NERC to revise the definition of BES so that the definition encompasses all Elements

and Facilities necessary for the reliable operation and planning of the interconnected bulk power

system. Footnote 60 in the BES Final Rule, Order No. 743 provides:

While the Commission seeks to ensure that the definition of “bulk electric

system” includes all facilities 100 kV or above that are necessary for reliable

operation, our action here is not intended to determine the extent of the facilities

included in the Bulk-Power System. As stated in Order No. 693-A, the

Commission believes that the Bulk-Power System reaches farther than those

facilities that are included in NERC’s definition of the bulk electric system, but

we have not definitively defined the extent of the facilities covered by the Bulk-

Power System, and we are not doing so here (emphasis added).

The Commission also declined to define BPS in Order No. 743-A.

In addition, NERC was directed in Order No. 743 and 743-A to develop a process for identifying

any Elements or Facilities that should be excluded from the BES. On January 25, 2012, NERC

filed petitions requesting approval of a revised definition of BES, an exemption process that

includes criteria for exempting facilities that are not necessary for operating the interconnected

transmission grid, and an exception process included in the NERC Rules of Procedure for

3 Order No. 693 at fn. 50.

4 Revision to Electric Reliability Organization Definition of Bulk Electric System, 133 FERC ¶

61,150 (2011) (“Order No. 743”), at PP 29-33; Order on Rehearing, 134 FERC ¶ 61,210 (2011)

(“Order No. 743-A”).

Page | 3

requesting and receiving exceptions from the NERC definition of Bulk Electric System. Those

petitions are currently pending approval at FERC.

NERC Rules of Procedure and Glossary of Terms Definitions

The NERC Rules of Procedure and the NERC Glossary of Terms Used in NERC Reliability

Standards define the BES as:

“Bulk Electric System” means, as defined by the Regional Entity, the electrical

generation resources, transmission lines, interconnections with neighboring

systems, and associated equipment, generally operated at voltages of 100 kV or

higher. Radial transmission facilities serving only load with one transmission

source are generally not included in this definition.5

The NERC Rules of Procedure define the BPS as:

“Bulk Power System” means, depending on the context: (i) Facilities and control

systems necessary for operating an interconnected electric energy supply and

transmission network (or any portion thereof), and electric energy from

generating facilities needed to maintain transmission system reliability. The term

does not include facilities used in the local distribution of electric energy.

When Should BPS and/or BES Be Used?

Both “BES” and “BPS” are acceptable to use in light of NERC’s scope of authority in the

Energy Policy Act. “BPS” is the term to use when generally speaking about the interconnected

network or power grid. “BES” is a FERC-approved term in the NERC Glossary of Terms Used

in NERC Reliability Standards. In Order No. 693, FERC found that “BES” was acceptable and

should be used in the context of the applicability of Reliability Standards or NERC’s monitoring

and enforcement of compliance with the Reliability Standards. BES is the portion of the bulk

power system to which the standards apply and should be used when that specific meaning is

intended.

Accordingly, the NERC Reliability Standards generally apply to the BES. However, NERC’s

authority extends beyond the BES to the BPS. Stated differently, the BES is a subset of the BPS.

Therefore, while the NERC Reliability Standards generally apply to the BES, the Energy Policy

Act grants authority to NERC over the BPS. Therefore, standards should be written to apply to

the BES (or portions of the BES) but may also include other elements necessary for the reliable

operation of the bulk power system.

5 Note that this definition will change upon FERC’s approval of NERC’s revised definition of the BES filed with

FERC on January 25, 2012 in response to Order No. 743 and 743-A.

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