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Electric Industry Issues Forum: Reliability, Transmission and COmpetition

Fortnightly Magazine - June 1 1997

ISOs become widespread? Who would settle ISO-NERC disputes? (NERC has suggested that it may become a sort of ôumbrellaö organization over ISOs.) Further, who will decide when to build new transmission? NERC or the ISO?

Tagging Electrons. What do you think of NERC's proposal to "tag" electricity so that systems operators can follow transactions and see which ones they can interrupt? Is there too much room for market power abuse here?

Finish this sentence: The most key issue in reliability is ...

Response from: Marc W. Chupka is acting assistant secretary for policy and international affairs at the DOE. He directed the research and writing of a key reliability report to President Clinton, The Electric Power Outages in the Western United States, July 2-3, 1996.

Sanctions First?

"These are pretty intriguing questions ... there is a fundamental question embedded in this first question of the limits of enforcing mandatory compliance in the context of, 'What is a voluntary association?' That issue is one that the task force is examining. And itÆs one that we have been thinking very hard on as we draft our restructuring bill, [deciding] whether or not NERC will be able to enforce mandatory compliance and whether or not there needs to be some buttressing of these voluntary compliance arrangements with some additional federal authority. Could they or should they deny access?

"Certainly they could deny access but there's a fundamental question of whether or not they have the authority to deny access to what is an open access system under FERC regulation. The down side, if they attempt to deny access, is potential litigation and/or people leaving NERC.

"With the proliferation of new actors in this market, it's not clear if the traditional sanctions will work, and again ... there's certainly a question of whether the denial of access is within NERCÆs capacity to enforce. I wouldn't want to speculate on other forms of sanctions. I think the fundamental sanction of basically being able to hook up is the primary one and one which may need some authority either at FERC or DOE.ö

Backseat Driver?

"I think that is a risk under competition--a risk that reliability will take a back seat. We donÆt view any inherent conflict between competition and reliability, but we believe some tension may emerge that needs to be countered.

"NERC is obviously in the midst of, in some sense, trying to redefine itself, given the new competitive realities in the marketplace. The new institutions may emerge to take on some reliability

functions, such as regional transmission groups and independent system operators and that sort of thing, but I donÆt view NERC's role as necessarily receding."

Who Moves the Juice?

"Despite the events of last summer, I think most people agree that, up until now, reliability of the bulk transmission system has been very high.

"I think [maintaining reliability in the future] will be a matter of the incentives in the market. Obviously, we view with some alarm the incentives to cut back on investments in transmission

reliability that may accompany the expansion of competition.