July 1, 2001
L.A. Loves a Loophole
There's no getting around it...
Two months ago in this space, I interviewed a power marketer and an independent power producer who sit on the operating and engineering committees of the North American Electric Reliability Council. What did they think of NERC, a group formed to prevent large-scale power outages and made up largely of volunteers from investor-owned electric utilities? Were they treated fairly? Did they have a chance to influence policy?
In general, my two "outsiders" felt satisfied with their status on the committees, though some skepticism emerged about NERC's internal decision-making process. Why, for instance, should NERC propose policy at the national level but send the ideas out to the regional councils for approval? How can marketers or IPPs hope to participate fully in NERC activities, given their skeleton staffs? (See, "Reliability, Whose Job Now?,"Jan. 15, 1997, p. 4.)
Now, however, I'm wondering whether I captured the wholesale picture. I'm starting to have doubts, after talking with a few people who have attended recent industry meetings where NERC officials have appeared to talk about their new strategic initiatives.
Some folks think that NERC wants too much reliability.
"Roving the Continent"
Much has happened since January, when NERC's Board of Trustees voted to accept the report known as Future Course of NERC, and thereby require mandatory compliance with its reliability standards.
In NERC's own words, it has been "roving the continent" (em meeting with groups and organizations to explain the steps it is taking to ensure reliability in a "changing world." But from what I hear, NERC's "roving" has set a few folks on edge.
In January, NERC President Michehl R. Gent and Director of Operations Donald M. Benjamin traveled down to Washington, D.C., to the U.S. Department of Energy, to present a summary of NERC's strategic initiatives at the kickoff meeting of the DOE's Task Force on Electric-System Reliability, chaired by former congressman Phil Sharp. Also at the meeting, DOE Deputy Secretary Charles Curtis has asked the task force to consider whether NERC and federal authorities were giving adequate attention to reliability issues.
Then, in late January, NERC's Transmission Reservation and Scheduling Task Force sponsored a workshop in Phoenix along with the Electric Power Research Institute to present details on a plan for scheduling and "tagging." NERC is proposing that all market participants should use a standard template to submit energy transaction information to control areas, effectively "tagging" the transactions to track where the power comes from and where it goes.
The roadshow continued in February, in Washington, D.C., where NERC's Vice President David R. Nevius appeared at the winter meetings of the National Association of Regulatory Utility Commissioners. Nevius discussed NERCs initiative to develop a "regulatory backstop" to ensure compliance with realiability standards by all market participants. He saw possible merit in developing "MOUs" (memoranda of understanding) with the DOE, the Federal Energy Regulatory Commission, and Canada's National Energy Board, to clarify their respective roles. "[we] will need to follow closely any legislation ... to make sure it does not undermine efforts to develop an effective industry compact."
Nevertheless, some believe that NERC's reliability