On March 7, 2014, the Federal Energy Regulatory Commission ("FERC") directed the North American Electric Reliability Corporation ("NERC") to develop reliability standards requiring owners and operators of the Bulk-Power System  to address risks due to physical security threats and vulnerabilities in order to enhance the resilience of the transmission grid.
Physical attacks to the Bulk-Power System can adversely impact the reliable operation of the Bulk-Power System, resulting in instability, uncontrolled separation, or cascading failures. However, the current reliability standards do not specifically require entities to take steps to reasonably protect against physical security attacks.
FERC exercises regulatory oversight of the Bulk-Power System pursuant to authority established in the Energy Policy Act of 2005. As part of that oversight role, FERC may direct the Electric Reliability Organization ("ERO") to develop and implement procedures and/or reliability standards to secure the Bulk-Power System against outside attack.
In order to provide for reliable operations of the Bulk-Power System, FERC recently directed NERC, the FERC-certified ERO, to submit for approval one or more reliability standards that will require owners and operators of the Bulk-Power System to take steps or demonstrate that they have taken steps to address physical security risks and vulnerabilities related to the operation of the Bulk-Power System.
The proposed reliability standards would require owners and operators of the Bulk-Power System to take at least three steps to protect physical security.
- First, owners and operators would be required to perform a risk assessment of their system to identify facilities that, if rendered inoperable or damaged, could have a critical impact on the operation of the interconnection through instability, uncontrolled separation, or cascading failures of the Bulk-Power System ("critical facilities").
- Second, owners and operators of critical facilities would be required to evaluate potential threats and vulnerabilities to those facilities.
- Finally, owners and operators would have to develop and implement a security plan to address potential threats and vulnerabilities.
It is FERC's position that the proposed reliability standards, if implemented, will enhance FERC's ability to assure the public that critical facilities are reasonably protected against physical attacks. NERC has 90 days from March 7, 2014, to submit the proposed standards. FERC's Order Directing Filing of Standards is available at www.ferc.gov/CalendarFiles/20140307185442-RD14-6-000.pdf.