Slide 1 

Item No. A Item No. A-3 

July 15, 2010

Smart Grid Standards Adoption: Smart Grid Standards Adoption:

Staff Update and Staff Update and 

Recommendations Recommendations

Mr. Chairman, Commissioners, good morning. Today we are pleased to update 

the Commission on smart grid developments and present staff 

recommendations for the process to adopt smart grid interoperability 

standards. 

Since the Commission’s issuance of the July 2009 Smart Grid Policy Statement, 

staff has attended many of the National Institute of Standards and Technology 

(NIST) conferences and worked closely with NIST to gain a better understanding 

of NIST’s roles and responsibilities in developing standards, and has met with 

industry to communicate Commission priorities and emphasize the importance 

of industry participation in the standards development process. Based on 

these interactions, staff has developed several recommendations for the way in 

which the Commission can discharge its responsibilities pursuant to Energy 

Independence and Security Act Section 1305(d) to adopt smart grid 

interoperability standards. Our recommendations are based on the best 

information to date. As the standards development process continues to 

evolve, staff may recommend to the Commission additional or revised 

processes. 

In today’s presentation, we give a brief review of the requirements of the EISA, 

the Commission’s Policy Statement, and NIST activities as relevant to the staff 

recommendations for the process by which the Commission should adopt smart 

grid interoperability standards. We then turn to staff’s recommendations. 
Slide 2 

EISA Section 1305 EISA Section 1305

 FERC’s role, section 1305(d) s role, section 1305(d)

• “At any time after the Institute At any time after the Institute’s work has led s work has led 

to sufficient consensus in the Commission to sufficient consensus in the Commission’s 

judgment, the Commission shall institute a judgment, the Commission shall institute a 

rulemaking proceeding to adopt such standards rulemaking proceeding to adopt such standards 

and protocols as may be necessary to insure and protocols as may be necessary to insure 

smart-grid functionality and interoperability in grid functionality and interoperability in 

interstate transmission of electric power, and interstate transmission of electric power, and 

regional and wholesal regional and wholesale electricity markets. e electricity markets.”

Section 1305 of EISA defines the roles of both FERC and NIST as they relate to 

the development and adoption of smart grid standards. Subsection 1305(d) 

defines the Commission’s role. This subsection reads as follows: 

“At any time after the Institute’s work has led to sufficient consensus in the 

Commission’s judgment, the Commission shall institute a rulemaking 

proceeding to adopt such standards and protocols as may be necessary to 

insure smart-grid functionality and interoperability in interstate transmission of 

electric power, and regional and wholesale electricity markets.” 
Slide 3 

The Smart Grid Policy The Smart Grid Policy 

Statement Statement

 Priority areas

• Cross cutting issues cutting issues  System security (cyber and physical security) and physical security) 

standards development and harmonization

 More effective communication and coordination More effective communication and coordination 

across inter-system interfaces system interfaces

• Key smart grid functionalities Key smart grid functionalities

 Wide-area situational awareness, demand area situational awareness, demand 

response, energy storage, and plug-in electric in electric 

vehicles

On July 16, 2009, the Commission issued a Smart Grid Policy Statement that, 

among other things, identified cross-cutting issues and key grid functionalities 

that deserve high priority in the development of smart grid standards. The two 

cross-cutting issues are system security and inter-system communication. The 

four key grid functionalities are: wide-area situational awareness, demand 

response, electric storage and electric vehicles. NIST and the smart grid 

community have accepted the Commission’s prioritization and augmented it 

with two additional priority areas: advanced metering and distribution system 

automation. 
Slide 4 

NIST Work Since the NIST Work Since the 

Policy Statement Policy Statement

 Issuance of Framework and Issuance of Framework and 

Roadmap for Smart Grid Roadmap for Smart Grid 

Interoperability Standards, Release Interoperability Standards, Release 

1.0

 Creation of Smart Grid Creation of Smart Grid 

Interoperability Panel Interoperability Panel

Following a year of outreach and opportunities for public comment, NIST issued 

in January 2010 a Framework and Roadmap for Smart Grid Interoperability 

Standards, Release 1.0 (Framework). The Framework identified 75 

interoperability standards that are applicable, or are likely applicable, to the 

ongoing development of smart grid technologies and applications. The 

Framework also identified priority action plans for addressing gaps in smart grid 

standards needed to fulfill the priorities established by NIST and the 

Commission. 

As NIST moves forward to address these gaps and the development of other 

smart grid standards, it will rely on the Smart Grid Interoperability Panel 

(SGIP), a public-private partnership representing a broad range of stakeholders, 

many of whom have not previously been involved in the electric industry. 

Importantly, and consistent with the Commission’s Policy Statement that 

cyber-security issues be a priority, a Cyber Security Working Group (CSWG) was 

established within the SGIP. That group will review mature, applicable 

standards identified in the NIST Framework to determine the level of cyber 

security present and whether each identified standard meets appropriate 

security requirements. 
Slide 5 

Staff Recommendations Staff Recommendations 

for Processing Standards for Processing Standards

 Notification via letter to the Notification via letter to the 

Commission by NIST

 NIST posts standar NIST posts standards as ready for ds as ready for 

consideration

 Commission initiates rulemaking Commission initiates rulemaking 

process

Based on recent discussions with NIST staff, we expect that the first group of 

standards may be available for consideration by the Commission by late 

summer. This group may include emerging technology standards that impact 

both transmission and distribution level facilities. 

When NIST considers a group of standards ready for consideration by the 

Commission, those standards will be posted on the NIST smart grid website and 

NIST will inform the Commission by letter of the posting. 

Staff recommends that the Commission at that time initiate a rulemaking 

proceeding, as directed in EISA, to consider the standards identified by NIST as 

ready for consideration. Because the first group of standards is not likely to 

address all key priorities identified by NIST and the Commission, Staff 

anticipates continuing development of new standards and modification to 

existing standards to address these priorities, with additional notifications from 

NIST on a regular basis. As such, staff recommends that the Commission 

periodically initiate rulemaking proceedings in response to postings of new 

smart grid interoperability standards by NIST. 

As part of such a rulemaking proceeding, staff recommends that the 

Commission propose to adopt all standards identified by NIST as ready for the 

Commission’s consideration. Staff also recommends that the Commission seek 

public comment on issues related to those standards, including whether each 

standard satisfies EISA subsection 1305(d). 
Slide 6 

Staff Recommendations Staff Recommendations 

on Criteria for Standards on Criteria for Standards

 Determinations to Determinations to be addressed in a be addressed in a 

rulemaking for each standard rulemaking for each standard

• Whether sufficient consensus has been Whether sufficient consensus has been 

reached; reached;

• Whether the standard is Whether the standard is necessary for smart necessary for smart 

grid functionality and interoperability in grid functionality and interoperability in 

interstate transmission of electric power and interstate transmission of electric power and 

regional and wholesale el regional and wholesale electricity markets; and ectricity markets; and

• Whether there are known cyber security issues Whether there are known cyber security issues 

with the standard. with the standard. 

With regard to the evaluation of standards in a rulemaking proceeding, staff 

has identified three areas of consideration for each standard consistent with 

subsection 1305(d) of EISA. These are: demonstration of sufficient consensus; 

demonstration that the standard is necessary for smart grid functionality and 

interoperability in interstate transmission of electric power and regional and 

wholesale electricity markets; and a showing of no known cyber security risk. 
Slide 7 

Sufficient Consensus Sufficient Consensus

 In general, requirements of the NTTAA In general, requirements of the NTTAA 

should be met should be met

• Consideration of standards from voluntary, Consideration of standards from voluntary, 

private consensus standards bodies private consensus standards bodies

• Openness, balance of inte Openness, balance of interest, due process, an rest, due process, an 

appeals process, and a consensus process appeals process, and a consensus process

• ANSI accreditation may establish NTTAA ANSI accreditation may establish NTTAA 

compliance compliance

The first criterion, sufficient consensus, is a threshold criterion; EISA instructs 

the Commission to use its judgment to determine if sufficient consensus has 

been reached as a result of NIST’s process. 

Staff recommends that the Commission generally rely on the National 

Technology Transfer and Advancement Act (NTTAA) as guidance in determining 

sufficient consensus, along with comments received in the rulemaking 

proceeding. The NTTAA is the principal Federal law regarding the use of 

standards by the Federal government. 

The implementing regulations for the NTTAA state that voluntary consensus 

bodies are defined by the attributes of openness, balance of interest, due 

process, an appeals process, and a consensus process. In many cases, 

standards development processes accredited by the American National 

Standards Institute (ANSI) may establish compliance with the NTTAA. 
Slide 8 

Functionality and Functionality and 

Interoperability for Interoperability for 

Transmission & Markets Transmission & Markets

 For functionality and interoperability, For functionality and interoperability, 

rely on: rely on:

• Abstracts provided by NIST to aid in regulatory Abstracts provided by NIST to aid in regulatory 

review of each standard review of each standard posted for consideration posted for consideration

• Previously published documents Previously published documents

 For smart grid operations in For smart grid operations in 

“interstate transmission...and regional and regional 

and wholesale markets, and wholesale markets,” consider consider 

public comments

With regard to whether a standard is necessary for smart grid functionality and 

interoperability, staff recommends that the Commission generally rely on 

reports and other documents prepared by NIST for this demonstration. NIST 

has stated that it intends to coordinate the development of additional 

technical information on individual standards and specifications to support 

their evaluation and potential use for regulatory purposes; this technical 

information will be available on NIST’s public website. Staff has worked 

closely with NIST staff to ensure that this supplementary information provides 

information necessary for the Commission’s rulemaking process. Documents 

provided by the SGIP may provide additional information regarding these issues 

for consideration in future Commission rulemaking proceedings. 

As mentioned earlier, staff recommends that the Commission propose to adopt 

all standards identified by NIST as ready for consideration. Staff also 

recommends that the Commission seek comments in the proposed rule on 

whether each standard is necessary for the operation of the smart grid in 

“interstate transmission of electric power, and regional and wholesale 

electricity markets” and consider these comments as a basis for the final 

determination on this matter. 
Slide 9 

Cyber Security Review

 Rely primarily on the work of the primarily on the work of the 

Cyber Security Working Group

• Forthcoming CSWG Interagency Report Forthcoming CSWG Interagency Report 

on smart grid cyber security will include on smart grid cyber security will include 

guidelines guidelines

 The Commission can also use The Commission can also use 

staff’s own assessment s own assessment

The Commission also noted in the Policy Statement that “[b]ecause 

cybersecurity becomes a concern whenever one system communicates with 

another, it is important to focus from the outset on cybersecurity as an 

essential feature of the design of interoperability standards.” [P 40]. NIST 

responded to this inherent relationship of interoperability and cyber security by 

establishing the CSWG. 

The CSWG is composed of security professionals and representatives from 

federal and state agencies, private security firms, and the information 

technology, communications and power industries. It has been working for a 

year on developing cyber security requirements and guidelines for the smart 

grid. It is scheduled to issue a final report by the end of July on the cyber 

security needs for the smart grid. The CSWG will analyze individual standards 

using the report’s cyber security requirements. This analysis will become part 

of the technical information that will be posted on NIST’s public website. 

Staff recommends that the Commission look to the work of the CSWG, as well 

as rulemaking comments, to inform its consideration of cyber security 

measures. The Commission may also choose to conduct a staff cyber security 

analysis. In addition, NERC will continue to play an important role with respect 

to cyber security measures and concepts. 
Slide 10 

Item No. A Item No. A-3 

July 15, 2010

Smart Grid Standards Adoption: Smart Grid Standards Adoption:

Staff Update and Staff Update and 

Recommendations Recommendations

As the smart grid standards development process continues to evolve, we will 

keep the Commission apprised, including whether there is the need for 

additional or revised processes from what we recommend today. This 

concludes our presentation; we are happy to answer any questions.