Aiming to satisfy a FERC directive following the publication of the ERO’s five-year performance assessment, NERC has filed with the commission a set of new and existing metrics meant to “track the progress of the ERO in continuing to be an effective and efficient organization in furtherance of its regulatory responsibilities” (RR24-4). 

FERC approved NERC’s performance assessment in December 2024. (See FERC Approves NERC Assessment, Seeks Comment on IBR Standards.) The assessment covered NERC and the regional entities’ activities from 2019 to 2023 and argued that the organizations met the commission’s requirements to be recertified as the ERO. 

In a supplemental filing to the assessment, NERC said its plans for ongoing improvement include establishing “metrics around noncompliance processing … to ensure regional entities are realizing efficiency gains offered by a more streamlined minimal risk [compliance exception] process.”  

To help this process along, FERC directed NERC to submit a compliance filing within 180 days outlining metrics to track progress in the reliability standards development program, along with implementation and oversight of the compliance monitoring and enforcement program (CMEP). The commission specified that NERC’s metrics should track three areas: 

• • implementation and consistence of risk-based compliance monitoring practices; 
  • timeliness of violation processing; and 
  • reduction in subsequent serious risk violations stemming from similar issues as prior noncompliance. 

Four Categories of Metrics

• NERC’s June 16 filing contained 11 metrics in four categories: reliability risk assessment, standards process, compliance monitoring and enforcement. The ERO said the metrics provide “a systematic approach to determining the efficacy of certain ERO programs from one performance assessment period to the next, with the next performance assessment to be filed with FERC in 2029.” 

The reliability risk assessment category contains only one metric, which tracks the time needed for NERC to address a risk identified in one of its publications, such as the Long-Term Reliability Assessment or the State of Reliability report. The time between risk identification and action is divided into three time frames: expedited action, completed within six months; efficient action, done between six and 12 months; and delayed action, taking longer than 12 months.  

Two metrics are included in the standards process category. The first tracks the percentage of ballots that achieve approval (measured as at least a two-thirds segment-weighted majority in favor) in NERC’s balloting process, along with how many ballots were needed for each standard to reach approval. Tracking these measures will help NERC “consider how quickly consensus was achieved, reflecting the success rate of the standards development process.” 

The second standards process metric records the percentage of affirmative votes for a standard gained in successive ballots. NERC said that in the 2029 performance assessment, it will look at factors that may have influenced stakeholders to change their votes. 

Tracking CMEP Success

In the next categories — compliance monitoring and enforcement — NERC said it recognized “the need for data-driven metrics to evaluate success as one of the core tenets of a risk-based CMEP.” These categories comprised the bulk of the metrics in the filing, with four each. 

The first measures the completion of risk-based tools, such as inherent risk assessments, prior to compliance monitoring engagements. These tools are used to assess a registered entity’s risk profile to identify appropriate compliance monitoring activities. NERC said the tracking will help the ERO “to understand whether any updated risks are considered in compliance monitoring activities.” 

Under the second metric, NERC will record how many newly registered entities have completed their inherent risk assessments and oversight planning, and how quickly they did so. NERC said these activities are necessary to understand any reliability risks faced by new entities; when combined with the previous metric, NERC will be able to determine whether new entities’ risk is incorporated into yearly compliance monitoring activities. 

The next metric “assesses the frequency in which the reliability standards requirements identified in the CMEP implementation plan are in the scope of CMEP engagements, such as audits and spot checks,” NERC said. Collecting these data will help NERC see which standards, and which requirements, are most often involved in each year’s compliance monitoring engagements. 

For the final compliance monitoring metric, NERC proposed to track whether REs performing engagements review an entity’s internal controls in addition to standards compliance. This will help the ERO evaluate the risk an entity poses and how it may perform in the future and is “essential to the successful implementation of risk-based CM.” 

Metrics in the first enforcement category are mainly concerned with the timeliness of the ERO’s enforcement processes. NERC observed that although the ERO has successfully disposed of more than 99.7% of minimal risk compliance exceptions (CEs) — which are used to address standards violations posing a minimal risk to grid reliability — submitted to FERC during the performance assessment period, the average processing time for these infractions was more than 16 months, which NERC said was disproportionate to the risk involved.  

The first of the metrics aimed at giving the ERO insight into disposal times compares the number of violations submitted to the number processed each year. This will help NERC determine whether the open inventory of instances of noncompliance is increasing or decreasing. 

NERC noted that the ERO “focused on reducing the volume of its oldest open inventory” in 2024 and made significant progress in doing so, processing more than 43% of its pre-2024 inventory by the end of the year. This resulted in the inclusion of another metric, which tracks the reduction of open inventory by reporting year. 

The last timeliness metric will track the number of CEs processed within 180 days of submission. This information “will not only help to determine the effectiveness of existing reliability standards, but may also support evaluation of whether a reliability standard should be modified or enhanced,” NERC said. 

NERC’s final enforcement metric would track processing of infringements posing serious risks with aggravating compliance history. This involves prior noncompliance of the same standard and requirement with serious enough underlying conduct that the RE aggravated the disposition method or monetary penalty. NERC said it will also track serious risk noncompliance caused by failed mitigation of prior violations.