We have a responsibility to our customers to keep their lights on 24/7. The growing reality of cyber and physical threats to our industry’s infrastructure is raising concerns with regulators and customers alike. As a result, the Federal Energy Regulatory Commission (FERC) is driving the North American Electric Reliability Corporation (NERC) to develop unparalleled regulations for our industry. These regulations protect the grid and keep it safe, reliable and secure. Our challenge is that the regulations are constantly evolving and new rules are being developed. NERC’s Critical Infrastructure Protection (CIP) Standards reflect the increased focus on protecting the grid from cyber threats.
Today, there are nearly 900 continually evolving requirements in effect within the NERC Standards. We must meet each of these requirements to remain in full compliance and avoid harsh financial penalties. To manage the risk of non-compliance, we are increasing the number and sophistication of proactive controls as one of several methods we are developing to track, manage and prioritize the ever-growing list of NERC obligations. Due to the increased number and complexity of the NERC Standards, along with our significant geographic footprint, we are continually in the process of completing or preparing for compliance audits. We must maintain a constant state of audit readiness across AEP. One of the ways we prepare is to maintain a strong focus on outreach efforts to internal and external stakeholders. Focusing on these cross-functional relationships allows for a comprehensive evaluation and understanding of requirements to the NERC Standards across the AEP enterprise.
Our NERC compliance governance structure was developed specifically to respond to the current compliance environment and provides the direction, agility and organizational support needed to implement an industry-leading NERC compliance program. This governance structure, in addition to collaboration with regulators and industry leaders, has resulted in the implementation of a strategic plan for achieving operational excellence in NERC compliance. In addition, our strong safety culture provides a solid foundation for ensuring that compliance is one of the essential elements of the program’s strategic plan. Every employee at AEP has a role in delivering reliable, safe, secure electricity to all of our customers, and compliance plays a critical role in achieving this goal.
Our establishment of the NERC Compliance Strategy and an updated Governance structure helped lay the foundation for a successful CIP audit with ReliabilityFirst (RF) and Midwest Reliability Organization (MRO). In our first ever virtual audit, the regulators provided positive feedback on several aspects of AEP’s program, including a statement that our Control Framework is “an excellent overall program for identifying and documenting internal controls.”