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Cost Effective Analysis Process (CEAP) to Enhance Standards Development

Muddassir Katchi December 19, 2013 Comments Off

Compliance with industry standards, especially reliability standards that affect a whole nation’s supply of power, doesn’t come cheap. Responding to issues raised by stakeholders and regulators in the U.S. and in Canada, the North American Electric Reliability Corporation (NERC) has developed the Cost Effective Analysis Process (CEAP) to address NERC compliance costs, as well as the efficiency and reliability impact of NERC’s reliability standards draft. NERC explained that the CEAP is a tool to estimate the costs of implementing a reliability standard (should the draft be approved and implemented). The power-reliability watchdog also noted that the CEAP improves the NERC standard development process.

The CEAP, together with an implementation white paper, has been approved by the NERC Standards Committee. The white paper, significantly, authorizes existing standard development to serve as pilots for the CEAP.

The CEAP traces its roots to the Northeast Power Coordinating Council region, where it was originally implemented as a tool to evaluate drafts of regional standards. Since it proved to be a successful evaluation tool, the process was recommended to the Standards Committee for adoption continent-wide.

The CEAP involves two phases –

  • Cost Impact Analysis Phase
  • Cost Effective Analysis Phase

The Cost Impact Analysis Phase happens early in the standards development process, at the so-called Standard Authorization Request (SAR) stage.  This phase allows the developers to identify the projected implementation costs of a draft standard before it is actually developed. Typically, information on implementation costs is gathered during the initial SAR comment period and then disseminated to the NERC Standards Committee (SC), the Standard Drafting Teams (SDT), and the NERC website.

The second phase, the Cost Effective Analysis Phase, is conducted after the draft standard has been developed by the SDT sometime in the latter half of the standards development process. This phase again involves collecting data on implementations costs from the industry and gives stakeholders the opportunity to put forward alternatives to achieve more efficiently the reliability objectives of the draft standard.

After concluding the second phase, the information is collated and shared with the SDT as the “CEAP Final Report,” during which time the industry gets to go through it and make its say via successive ballots. The report consolidates all the data collected in a form that makes it possible for the industry to make an informed choice during the balloting (the report is posted during the time the standard is balloted).

According to NERC, when the published report is finally published it will carry neither Critical Energy Infrastructure Information (CEII) nor market-sensitive data, but will contain the industry-supplied representative costs.

NERC pointed out that all that all new NERC standards will undergo both phases of the CEAP, but revised, expedited standards will only need to go through the second phase (the Cost Effective Analysis).  Extant standards that are being revised are considered to have undergone adequate reliability vetting and, therefore, will no longer need to go through the Cost Impact Analysis Phase.

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