Federal Energy Regulatory Commission Order No. 693

Federal Energy Regulatory Commission Order No. 693
Name	Federal Energy Regulatory Commission Order No. 693
Issued	April 2007
Issuer	Federal Energy Regulatory Commission
Subject	Electric Reliability Standards adoption and guidance
Related	North American Electric Reliability Corporation, Energy Policy Act of 2005

Federal Energy Regulatory Commission Order No. 693 Order No. 693 is a 2007 rulemaking and final order issued by the Federal Energy Regulatory Commission that approved a comprehensive set of mandatory North American Electric Reliability Corporation reliability standards pursuant to the Energy Policy Act of 2005 and the Federal Power Act. The order addressed technical, enforcement, and compliance aspects of initially approved NERC standards, established filing and implementation schedules, and responded to stakeholder comments from utilities, regional entities, and public advocates including American Public Power Association and North American Energy Standards Board. It served as a foundational regulatory action shaping subsequent reliability enforcement and legal disputes involving entities such as PJM Interconnection, California Independent System Operator, and Independent System Operator New England.

Background and Context

The order followed statutory authority conferred by the Energy Policy Act of 2005 amending the Federal Power Act to permit the Federal Energy Regulatory Commission to approve and enforce mandatory reliability standards developed by an organization certified as the Electric Reliability Organization, later designated as the North American Electric Reliability Corporation. The action responded to industry events and regulatory trends influenced by incidents like the Northeast blackout of 2003 and policy efforts involving the Department of Energy and congressional committees including the Senate Committee on Energy and Natural Resources and the House Committee on Energy and Commerce. Stakeholder engagement included transmission owners such as American Electric Power, generation companies like Exelon, and regional reliability councils such as the Midcontinent Independent System Operator.

Major Provisions and Compliance Requirements

Order No. 693 approved the initial set of NERC reliability standards, directing mandatory compliance for users, owners, and operators of the bulk-power system including balancing authorities, transmission operators, and generator operators across entities like Bonneville Power Administration and Tennessee Valley Authority. The order addressed enforcement policies derived from the Federal Power Act and harmonized requirements with regional entities including the Western Electricity Coordinating Council and Electric Reliability Council of Texas. It allocated responsibilities among compliance entities, set mitigation and penalty frameworks, and integrated reporting mechanisms akin to frameworks used by entities such as North American Electric Reliability Corporation and National Association of Regulatory Utility Commissioners stakeholders.

Technical Standards: NERC Reliability Standards Adoption

The technical content of the order encompassed approval or remand of dozens of NERC Reliability Standards covering areas such as transmission planning, protection systems, communications, and cybersecurity, affecting standards comparable in scope to practices at Entergy Corporation and Duke Energy. Order No. 693 analyzed standards addressing voltage and frequency control, generation interconnection, and protection coordination with sensitivity to existing regional standards used by ISO New England and California ISO. It emphasized technical justification, measurable requirements, and applicability to entities under NERC registration, referencing reliability methodologies practiced by organizations like National Grid (UK) only for comparative purposes in reliability treatment.

Implementation, Compliance Filings, and Deadlines

FERC set phased implementation schedules and directed compliance filings from entities such as PJM Interconnection, Midcontinent ISO, and investor-owned utilities including Consolidated Edison and Southern Company. The order required submission of compliance programs, violation mitigation plans, and periodic audit results, aligning timelines with NERC registrations and Regional Entity enforcement cycles including those of the SERC Reliability Corporation and ReliabilityFirst Corporation. It established deadlines for filing corrective actions and allowed requests for extensions while delineating enforcement discretion informed by prior enforcement practices at entities like FERC staff precedent and industry compliance guidance.

Legal Challenges and Judicial Review

Order No. 693 precipitated litigation and challenges addressing jurisdiction, standard specificity, and procedural matters before the United States Court of Appeals for the District of Columbia Circuit and other federal venues. Parties including utilities, trade associations such as the Electric Power Supply Association, and states represented by public utility commissions tested aspects of FERC authority under the Federal Power Act and the delegation to NERC. Judicial review considered precedents involving statutory interpretation similar to cases that reached the Supreme Court of the United States on administrative authority and regulatory delegation, and influenced subsequent enforcement and rulemaking, including later orders and remands.

Impact on Bulk Power System Reliability and Industry Practices

Order No. 693 materially shifted industry compliance culture, prompting utilities such as FirstEnergy and Xcel Energy and regional operators including New York Independent System Operator to strengthen compliance programs, invest in protections, and incorporate systematic outage reporting. The order catalyzed investment in monitoring, protection, and cybersecurity practices paralleling initiatives by Department of Homeland Security and standards bodies like the Institute of Electrical and Electronics Engineers. Its legacy influenced subsequent reliability rules, enforcement actions, and collaborative programs among stakeholders including NERC, regional entities, investor-owned utilities, municipal systems like Los Angeles Department of Water and Power, and cooperative utilities represented by the National Rural Electric Cooperative Association.

Category:Federal Energy Regulatory Commission orders