[BETA] Fortnightly

Can NERC Juggle All Three En Route to Open Access?

At the year's start, the North American Electric Reliability Council decided to leave its "peer pressure" policy behind and require mandatory compliance with its reliability standards. As NERC grapples with its new policy, Public Utilities Fortnightly asked eight industry representatives how they might ensure reliability in a restructured electric industry.

It had taken time for NERC to arrive at this point, but itÆs official: Mandatory sanctions and business incentives will soon be used to enforce compliance. Furthermore, all market participants will have to comply with reliability protocols. NERC has called on regulators to hit those who donÆt comply with financial penalties. It also wants to schedule and ôtagö power transactions.

For the rest of this year, "The Future Role of NERC Task Force II," a broad group of industry reps, will ponder how to carry out these policy positions on the way to the changing competitive market.

As an early step, the task force was expected to propose to the NERC board on May 5 a process for developing and approving new NERC standardsùa piecemeal process that heretofore has involved the separate regional councils, such as the WSCC. The task force had also agreed to suggest that the board should focus its effort on assuring voting rights and representation on the board and its committees. NERC would add two seats to the board and customer-sector committees. Under the same resolution, NERC would work to get a more balanced market representation. Regional councils, as well, would become more balanced.

The task force has yet to review several key topics, including dispute resolution policy and developing enforcement measures and options to ensure compliance.

Most forum participants appear entrenched in the debate. Former Congressman Phil Sharp chairs a Department of Energy task force on electric system reliability. A report is due this fall. Erle Nye, CEO of Texas Utilities Co., holds three reliability seats: vice chair of NERC, DOE task force member and participant in an Edison Electric Institute steering committee examining transmission system standards.

Every other forum participantùfrom power marketer to FERC chair--is equally well-versed in reliability issues.

We posed these questions:

Sanctions First? As the competitive market evolves, power marketers appear increasingly upset with NERC over reliability rules. NERC, meanwhile, says regardless of the electric restructuring that takes place, it will

continue to define compliance with planning/operating policies to ensure a continuous and adequate power supply and that transmission systems are operated within security limits. How can NERC enforce its policy of mandatory compliance? Should it deny access to the transmission system? What form of sanctions, then, should it use to carry out the policy?

Backseat Driver? Some say competition might force reliability, and therefore, NERC, to take a back seat so that new institutions can take NERCÆs place. Do you agree or disagree, and why?

Who Moves the Juice? What is the reliability of the power delivery systemùnot the generation plantsùand who will maintain that reliability in the future?

ISOs vs. NERC. Should a "reliability czar" be appointed over NERC? What if