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Electric Industry Issues Forum: Reliability, Transmission and COmpetition

Fortnightly Magazine - June 1 1997

not yet figured out how to accomplish mandatory compliance. Everybody understands that.

"Ultimately, it is conceivable that [enforcement] may need to be part of some major congressional electric restructuring legislation, but they have not yet determined the penalty or compliance kinds of things.

"To the extent that it would involve transmission tariff kinds of penalties, FERC may be able to play a role.

"To the extent they want to extract penalties for noncompliance for certain kinds of things, that is well established at this juncture in the gas industry ... the electric industry is just beginning to work on such things.

Backseat Driver?

"I think that NERC will have to evolve to meet the challenges of a competitive industry. I do believe that it is absolutely essential that there be mandatory--and much better defined than they are today--standards. And that those providing transmission, for example, or those using ancillary services, will have to meet those standards. And I think it is essential that all of the players in the industry play by the same rules. IÆm certainly mindful of the fact that the industry is as strong as itÆs weakest link ... we saw it last summer. It is vitally important that people measure up to 'quantifiable' standards and that someone be able to enforce it."

Who Moves the Juice?

"Those who provide transmission will still be providing public service kinds of obligations and depending on wholesale or retail and what the particular circumstance we're talking about is, they will still have public service obligations. ...

"Now the generating capacity may be being sold at deregulated commodity prices but the services still have to be there.

"Historically [the reliability] has been excellent, and I see no reason that should change in a competitive industry."

ISOs vs. NERC.

"I don't have views on a reliability czar. I think that it's going to take a lot of people working together to make this work. And some entity will clearly need penalty authority.

"As to ISOs, I would expect eventually to have ISOs obligated to meet NERC reliability standards and I would also expect with all ISOs that there will be increasing emphasis on and interest in dispute resolution kinds of things. We've certainly seen that in the RTGs [regional transmission groups] and to the extent that we have any ISO plans that are bubbling along, they typically have ADR kinds of things go into them and I think thatÆs a very positive thing.

"Ultimately, ISOs will be providing transmission in interstate commerce subject to FERC-approved tariffs ... we will play a role as far as whether people are meeting their open access and tariff requirements and I would expect an ISO will develop and the individual members will be obligated to meet NERC standards.

"As to who will build, that will vary according to state law in each of the individual states, as it does today. Whether a given state or a utility will have a residual obligation to build, for example, or whether they will allow nonutility participants to build transmission, there are