The above
title is my homage to the great catcher Yogi Berra, who is known for his short quotations
that don’t literally make sense but usually express a more profound meaning –
such as “The future ain’t what it used to be.” In the same spirit, I realize
the title doesn’t make sense; I can assure you that April 1 won’t be postponed!
But will the CIP v5 compliance date, currently set for April 1, be postponed?
I’ve just
heard that NERC is being lobbied by some organizations to move the v5
compliance date back to July 1. The ostensive reason for doing this is that it
would avoid a funny three-month period during which the 17 CIP v5 requirements
with the “Identify, Assess and Correct” language would be in force, even though
that language will go away once v6 comes into effect. This is due to the fact
that the seven CIP v6 standards won’t come into effect until July 1, rather
than April 1 as originally planned.
Of course,
the reason v6 implementation is delayed is because FERC didn’t approve CIP v6
in December; but that may have been inevitable. After FERC issued their NOPR
last July, which said they intended to approve v6 but asked for comment on other
questions, I wrote a post
pointing out that they hadn’t left themselves much time to make a decision on
these other questions, since the v6 compliance date would automatically move
back if they didn’t approve those standards at the end of 2015 (comments were
due in late September and were clearly going to be voluminous. Late December
was really the earliest that FERC could have issued their Order, and even that
would have been lightning-fast in FERC terms. It turns out they approved
v6 on January 21).
I further
speculated in the post that this might have been FERC’s intention – that is, to
delay the v6 implementation schedule. You may ask why FERC would want to do
that. I also speculated that they, like a lot of others, may have been
concerned that the April 1 date for v5 implementation was too ambitious, due to
the huge uncertainty over the meaning of some of the most important
requirements and concepts in v5. Since just delaying the “Identify, Assess and
Correct” language wouldn’t have made any difference for anybody’s actions
(because no region or entity I know of believed that would be enforced anyway,
even if v6 had never come into effect), FERC’s real intention may have been to
get v5 moved back as well as v6.[i] And now
it seems this may happen.
Of course,
I’ve said for a while (most recently in this
post) that I believe the effective
enforcement date for CIP v5 will not be April 1. I speculated that it will be
about one year from that date (i.e. around April, 2017) before auditors feel
confident enough in their understanding of CIP v5 that they’ll be comfortable
issuing PVs for anything other than egregious non-compliance.
So if the
official date for v5 is pushed back to July 1, this means the awkward one-year
interregnum will be reduced to nine months. Ideally, it would be reduced even
further (I’d like to see it reduced to zero, meaning the v5/v6 compliance date
would be officially pushed back a whole year to April 1, 2017), but three
months is certainly substantial. The big effect of this is that NERC entities
that aren’t close to being fully compliant on April 1 will have another three
months to get their house in order before they have to start self-reporting
violations. Since I believe there are a lot of entities that fall into this
classification, pushing the date back will constitute an act of mercy by NERC.
How can NERC
push the v5 date back? I suppose they can go the “full Monty” route, where they
petition FERC to do this. But I would think there could simply be a general
announcement by NERC and/or the regions saying that, due to the v6 enforcement delay,
it really makes sense to delay v5 enforcement for three months as well.
Of course,
we all know the real reason the date should be pushed back is that very little
guidance has been made available on the many interpretation issues of CIP v5.[ii] But I’m
fine if NERC wants to point to FERC’s delay as the reason this needs to be
done. Any port in a storm is a good one.
The views and opinions expressed here are my own and don’t
necessarily represent the views or opinions of Deloitte Advisory.
[i]
In the post, I was thinking FERC might delay approving v6 for more than a
quarter, which would have led to an enforcement date of October 1 or even
later. But even a three-month delay will be significant.
[ii]
In my opinion, there was no way NERC could have provided real guidance, absent
rewriting certain key parts of the v5 standards; it’s unfortunate they had to
go down so many blind alleys until they came to that realization (although I
admit that for a while I allowed myself to become hopeful they could pull this off).
Of course, they are now ordering some rewriting
to be done, but I’m almost certain the rewriting won’t be thorough enough to
make CIP v5/6/7 fully enforceable, in the sense that a fine issued by FERC
would be upheld if challenged in court – more on this topic soon. Even though the
rewritten standards (which will be CIP v7) will be helpful, I believe it will
be at least three to four years before they will be in force. I had hoped
that FERC would order NERC to rewrite CIP-002 as part of their Order approving
v5 (which was issued November 22, 2013). Had they done that, we would be at
least two years closer to having a more usable set of CIP standards.
Hope your right. 3 months sure would lower a lot of blood pressure readings in the industry.
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