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Special Report

Fortnightly Magazine - December 1998

a task force set up by the Secretary of Energy Advisory Board has been meeting regularly to develop policy on reliability to aid the DOE in presenting legislative ideas to Congress. In fact, on Sept. 29, the DOE Task Force issues its final report, Maintaining Reliability in a Competitive U.S. Electricity Industry. That report sets out 28 specific policy recommendations, most of which involve broader and more active supervision by the FERC. (See

Structure: National or Regional?

Last winter's Blue Ribbon report envisioned a "top-down" national structure for NAERO but left open the exact role of any regional reliability organizations, sparking controversy.

Commenting on NAERO's draft legislation, the Mid-Continent Area Power Pool (MAPP (em one of NERC's regional reliability councils) insists that the role of the regional council should be preserved: "First, all regions are not alike." MAPP stresses that "a wealth of expertise resides at the regions in the staff and committee membership." It adds: "The legislation should not permit the electric reliability organization to delegate its authority. It should require it to do so."

Another regional council, the Southwest Power Pool offers that "NERC should maintain strong, positive working relations and shared responsibilities with regional organizations." The SPP, along with other regional councils, maintains that regional organizations "coordinate a more competitive electricity market, while equitably protecting reliability of service."

On the other side, some tout the notion that independent system operators might take over the role of regional governance. As Carroll Scheer, operations vice president for American Municipal Power of Ohio suggests, "Rather than have regional paper organizations, have regional ISOs that are a part of NAERO and serve as the regional organization. These ISOs would not only control the transmission system, but also would be the control area for generation supply." Scheer's comments go on to state that "funding could be built into the transmission charges under the control of the ISO."

The Electric Consumers Resource Council, which represents 37 members using an estimated 5 percent of all electricity consumed in the United States, is concerned about the regulatory oversight of RROs. Representing ELCON, attorney Sarah D. Schotland questions NAERO's plan for regional implementation of reliability rules:

"This provision," notes Schotland, "subjects NAERO to regulatory oversight but does not subject RROs to equivalent oversight.

"The legislation," adds Schotland, "is ambiguous about two key features of the RROs: [Whether] the RRO Board will meet criteria for independence, not just fairness ¼ and second, [whether] any standard or variance adopted by the RRO will be subject to the same degree of regulatory oversight as that adopted by the national body."

At NERC's September Board of Trustees meeting, the status of various efforts to develop model agreements between NAERO and RROs were reviewed. The board discussed two types of agreements: one for RROs that are separate interconnections and one for RROs that are part of larger interconnections. Model agreements would be reviewed in January 1999 with final approval slated for May 1999.

Further down the line from the RROs, the state commissions, observing the possibility of a national governance, fear