System Reliability: Complying with NERC Reporting Standards

Manitoba Hydro has been working since 2003 to comply with North American Electric Reliability Corporation reporting standards for power system reliability. Lessons learned from this work are valuable for all utilities and companies for which such compliance is mandatory.

By H. John Clouston

Since 2003, Canadian provincial utility Manitoba Hydro has worked to comply with standards developed by the North American Electric Reliability Corporation (NERC). These standards are intended to ensure the reliability of the bulk power system in North America. NERC is a self-regulatory organization, subject to oversight by the Federal Energy Regulatory Commission (FERC) in the U.S. and governmental authorities in Canada.

About Manitoba Hydro

Manitoba Hydro is a vertically integrated Canadian utility owned by the Manitoba Provincial Government and is the fourth largest electrical utility in Canada. Manitoba Hydro has a total generating capacity of 5,465 MW, consisting of 14 hydroelectric generating stations with a total capacity of 5,003 MW and two thermal stations with a total capacity of 462 MW. In addition, the utility owns several small diesel generators that serve isolated communities.

Manitoba Hydro has more than 6,200 employees who serve more than 532,000 electrical customers and more than 264,000 natural gas customers. Gross revenue for the utility in fiscal year 2009-2010 was C$2.05 billion (US$2.07 billion), which includes export sales of 9,940 gigawatt-hours of power valued at C$427 million (US$432 million) to customers in Canada and the U.S. Of these export sales, 79 percent were to customers in the U.S., and 21 percent were to neighboring provincial utilities in Canada.

Why does Manitoba Hydro comply with NERC standards?

In 2003, a blackout occurred on the East Coast of the U.S. The U.S. – Canada Power System Outage Task Force, set up for this purpose, conducted an investigation. The task force issued its report in 2004. The first recommendation was to “make reliability standards mandatory and enforceable, with penalties for noncompliance.” The underlying intent of this recommendation is that enforceable standards will contribute to improving the reliability of the North American bulk power system. With the adoption of the U.S. Energy Policy Act in 2005, FERC was granted significant new responsibilities, which included overseeing the reliability of the nation’s electricity transmission grid. FERC certified NERC as the electric reliability organization for the entire U.S. Figure 1 shows the NERC regions in the U.S. and Canada.

As of June 18, 2007, NERC reliability standards became enforceable throughout the U.S. and Canada. Manitoba Hydro interconnects to the U.S. with two transmission lines — a 230- kilovolt (kV) line into North Dakota and a 500-kV line into the Minneapolis area.

A finding of noncompliance with NERC standards could result in the following consequences:

  • Penalties up to $1 million per day per violation;
  • Increased regulatory scrutiny by the Manitoba Public Utilities Board;
  • Public disclosure of noncompliance, which may negatively affect the corporation’s reputation and standing in the industry;
  • Immediate remedial action directives imposed by NERC on the corporation; and
  • Negative effect on the utility’s export capability.

Steering the utility’s compliance work


To mitigate the risks of noncompliance with reliability standards, Manitoba Hydro has established a Reliability Compliance Department within the Transmission Business unit. The goal of this department is to manage the corporate NERC Reliability Compliance Program. The role of staff in this section is to promote a culture of compliance within the corporation, act as the primary contact with external entities, manage the flow of information, and provide high-level support for corporate compliance-related activities.

The utility has adopted a decentralized approach to assigning responsibility for each standard that delegates responsibility for compliance to subject matter experts who can assess current practices against the requirements of the standards and take actions to ensure compliance. These subject matter experts, who are generally department managers, have been designated as either standard owners or stakeholders, depending on their level of involvement relative to the specific requirements of the standards. The program has created a set of clearly-defined roles and responsibilities for standard owners and stakeholders.

Manitoba Hydro personnel perform generator testing at the 1,220-MW Kettle hydroelectric project
Manitoba Hydro personnel perform generator testing at the 1,220-MW Kettle hydroelectric project as part of the utility’s work to comply with North American Electric Reliability Corporation (NERC) reliability standards.

Reliability Compliance Steering Committee members monitor and review the program status on an ongoing basis and collectively provide guidance as required. Members of the steering committee are responsible for ensuring that NERC requirements are being adequately addressed and that all elements of the program remain on track. In the author’s case, these responsibilities are carried out by performing the following functions:

  • Plan for and ensure that adequate resources are available to perform work required to meet NERC standards in a timely manner. For generator testing, this has involved setting up and staffing a small section comprised of two generator controls engineers and the associated budget for the function, as well as providing management and administrative support;
  • Approving the hiring of an experienced consultant to provide technical assistance with generator NERC testing;
  • Providing guidance or direction when necessary to staff assigned to the generator testing program;
  • Communicating requirements of the program and schedule to key stakeholders, such as the senior vice president of power supply, and staff groups within the two generation divisions;
  • Reporting progress related to the generator testing program to the power supply management team and other members of the Reliability Compliance Steering Committee;
  • Supporting the involvement of specialized technical staff in NERC standards drafting committees; and
  • Monitoring and reviewing progress of the work involved.

Collecting data


For each requirement of each standard, Manitoba Hydro must collect documentation to support compliance. This has been a difficult undertaking. Not only did this require the utility to develop a central data repository, it also required determining means of assigning requirements to specific individuals, means for each assigned person to report compliance status, and means to store compliance information.

Specific test data also is stored to support many of the standards. For example, Manitoba Hydro carries out real and reactive power capability testing to verify the capacity of its units. These test results are reviewed and entered into standard forms to meet regulator reporting requirements.

Manitoba Hydro designed a custom application to provide operating performance data for reporting to the Canadian Electricity Association. This application now is being modified to provide data for NERC Generating Availability Data System (GADS) reporting. GADS is a series of databases NERC uses to collect, record, and retrieve operating information needed to improve the performance of electric generating equipment. Manitoba Hydro began reporting GADS data in December 2009.

Adding staff for NERC compliance

Finding the staff necessary to perform the work involved in NERC compliance has been challenging. Initially, Manitoba Hydro redirected the efforts of a few staff members by temporarily deferring their core duties. However, it became apparent that it would be impossible to sustain the program and manage the risks of mandatory compliance without assigning dedicated staff to this task.

To address cyber security standard requirements, a corporate NERC Cyber Security Project team was established in 2006. The initial team of three people grew in size up to eight people in 2009. The staff and responsibilities associated with this group have since been dispersed into appropriate line departments.

Five positions also were added in the generation divisions within the power supply business unit, two associated with physical security upgrades, two with generator testing, and one with cyber security. No additional people have been added in the utility’s generating plants, and none are anticipated to be required at this point. Normally, existing plant technicians and operating staff assist the testing specialists with the testing.

Funding NERC compliance work

Costs involved in complying with NERC standards are due to staff increases and improvements required within the generating facilities. In the generation area, operating cost increases are estimated to be approaching C$1 million (US$1.01 million) a year. In addition, significant capital costs, on the order of C$30 million (US$30.4 million), will be incurred over the next several years, primarily due to in-plant improvements required to meet physical and cyber security standards.

Lessons learned

Through many years of complying with NERC standards, Manitoba Hydro has learned several valuable lessons:

  • Business unit and divisional plans should include strategies to support NERC reliability compliance responsibilities. This helps to bring focus to the program at all levels by making it real and visible.
  • Take steps to ensure that owners are identified for each standard. This may seem to be a simple task, but identification of a clear owner for standards and the associated processes can be difficult. Also, it is important to ensure that each standard owner completes rigorous compliance and mitigation plans.
  • Assign the resources necessary, including qualified staff, to complete the program work, by providing either additional resources or clear guidance on what other work should be deferred, cancelled, or scaled back to allow the NERC-related work to be completed.
  • Obtain expert assistance to come up to speed faster. Manitoba Hydro has utilized consultants to assist with generator testing, cyber security, and auditing of its compliance program.

What the future holds


Manitoba Hydro will continue to integrate the extra workload created by meeting NERC standards into various departments within the organization and will adjust staffing levels as needed.

NERC standards continue to evolve, requiring work to keep up, plus time to comment on and implement revised standards. Manitoba Hydro believes it is important to continue to actively participate in various NERC committees in order to stay current and participate in the process.

The utility is working to ensure that all NERC-related work is incorporated in an auditable and repeatable fashion into its work management and outage scheduling process. This ensures the work is part of Manitoba Hydro’s system and not dependent on individuals for continuation.

Ongoing effort is needed to effectively communicate requirements of the program to management and staff in the generating stations. Compliance training modules and work orders have been developed to provide required training in areas such as operator responsibilities, NERC cyber security, and overall NERC compliance.

Some of Manitoba Hydro’s data capture and reporting systems need updating; most were built before mandatory standards were implemented. For example, work began in late 2010 to replace the utility’s computerized maintenance management system, which is becoming obsolete.

In conclusion, maintaining compliance with NERC standards has proven to be a significant undertaking that has required continuous effort and diligence by specialized staff members within Manitoba Hydro. I expect the workload will continue to grow as standards evolve, but the initial staffing adjustments and understanding of requirements of the standards have been made.

John Clouston is division manager, Generation South, with Manitoba Hydro. Clouston is responsible for the operation and maintenance of the utility’s southern generating stations. He is a member of Manitoba Hydro’s Reliability Compliance Steering Committee, which is charged with guiding the utility’s compliance with North American Electric Reliability Corporation (NERC) standards.

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