FERC Directs NERC to Adopt Modified Definition of Bulk Electric System

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On November 18, 2010, the Federal Energy Regulatory Commission (FERC) directed the North American Electric Reliability Corporation (NERC) to modify its definition of “Bulk Electric System,” the term used by NERC to identify the electric transmission, generation and related facilities subject to the requirements of NERC’s mandatory and enforceable Reliability Standards. FERC’s action in Order No. 743 is intended to ensure that all facilities necessary for the reliable operation of the interconnected electric transmission network are captured by a uniform definition and that exemptions are granted only through a FERCapproved process. Because NERC has one year to develop and file the modified definition or a proposed alternative – as well as a process allowing regulated entities to seek exemption from the new definition – and because several important issues remain unresolved, the full impact of FERC’s decision is unclear at this time.

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