July / Aug. / Sept. 2009 - Nebraska Public Power District

Q: Which entity does
NPPD report to?
A: The Federal Energy
Regulatory Commission, or
FERC, has ultimate responsibility
over the reliability arm of the
electric industry. Under FERC,
is the North American Electric
Reliability Corporation. NERC
works with eight regional entities
to improve the reliability of the
bulk power system. NPPD is
a NERC‑registered entity and
currently reports to the Midwest
Reliability Organization, one
of the eight NERC‑based
organizations. However, since we
are now members of SPP, we have
submitted a request to transfer to
the SPP regional reliability entity.
This request is presently under
review.
Q: How does the
compliance program
work?
A: FERC has encouraged
NERC‑registered entities (such
as NPPD) to develop rigorous
written compliance programs,
to foster a culture of compliance
with active involvement of
senior management and their
governing bodies. In addition
to the traditional transmission
planning, system operations and
power plant operations functions
that the NERC standards have
traditionally focused on, NERC
has also turned its attention to
cyber security, an area that is
demanding tremendous effort
on the part of registered entities.
FERC states that an effective
compliance program is a factor
in mitigating any fines for noncompliance.
Compliance audits by
NERC include an assessment of
the registered entity’s reliability
ENERGY INSIGHT • JULY / AUGUST / SEPTEMBER 2009 13
standards compliance program.
NPPD is scheduled for its next
audit in September 2010.
Q: Why is compliance so
important?
A: Previously, there were 10
general policies that NPPD
needed to adhere to when
addressing compliance issues.
Today, that compliance structure
has expanded to include more
than 125 standards and more
than 1,500 total requirements
under each of the standards.
For example, one standard on
cyber security might have 10
requirements. If NPPD meets 9
of the 10 requirements, we can
still be held accountable for not
meeting the tenth requirement,
meaning we would be in
violation of this standard. Lack of
compliance on any one standard
can be very expensive—in
some cases up to $1 million per
violation. Of course, compliance
is also important to ensure the
safety and reliability of the
electric grid.
Q: What do you expect
from NPPD employees
and customers?
A: Because of the significant
growth in the number of
compliance standards and the
additional monitoring by NERC
on the enforcement of each,
NPPD needs all of its employees
and customers to understand that
enforcement of our program will
require much more support than
we needed in the past. Gone are
the days when a utility could
simply show it was compliant
by reporting limited operational
information and producing some
records of maintenance activities.
We need to expand our team and
work together if we expect to
remain compliant in the future.
This is no small undertaking. It
will take the efforts of many of us
to retain our great track record.
To help address this objective, we
established a new organizational
structure to achieve compliance
with all applicable standards.
Part of this change includes
expanding the role of the Board’s
Audit committee to focus on
compliance performance, creating
an executive level compliance
steering committee, and naming
Pat Pope, VP and Chief Operating
Officer as NPPD’s Chief Electric
Reliability Compliance Officer.
We have also increased the
responsibilities within my area
by authorizing two new positions
with responsibilities of monitoring
compliance issues on a full‑time
basis. Despite these changes,
we still need the assistance of
others. It is critical all employees
understand the importance of
supporting a standard, if asked.
In some cases, we may need
to make future investments to
maintain compliance. Violations
are expensive therefore anyone
who notices a potential violation
should report it so it can be
addressed accordingly. It will
take some time to accomplish
everything we have included
in our Compliance Program;
however, Pat and I are counting
on everyone to do their utmost
to assist in any way possible to
ensure NPPD remains NERC
compliant. NPPD’s compliance
program plan and related
information will soon be available
on the Energy Zone.