There’s been a lot of talk in the industry about new super powers for market enforcement, conferred by Congress on FERC in last year’s energy legislation. But this hasn’t been the case entirely....
Building a Strong ERO
The North American Electric Reliability Council should be promptly certified as America’s electric reliability organization.
review these standards, will depend in part on commission rulings on ERO standards and ERO standard-setting processes.
These are just a few examples of sequencing issues. There are many more. The transition period to new reliability standards and institutions to enforce them obviously will take time. Caution must, however, be exercised to ensure that reliability mechanisms are in place continuously during the transition.
When NERC files its proposed ERO reliability standards with the commission, FERC should approve as many of these reliability standards as possible. This will avoid the potential for discrepancies, or gaps, in reliability standards—both with respect to ERO standards and to regional entity standards filed with the ERO. We are encouraged by the statements to date of FERC Chairman Joseph T. Kelliher, who has said that, in the event a particular standard requires improvement, FERC will consider granting conditional approval so that the standard can be enforced during the period the commission or the ERO is considering revisions to strengthen it.
The conditional approval approach being considered for ERO standards may have to be used to address regional issues as well. The commission may need to grant conditional approvals of certain regional standards or regional compliance enforcement programs to get a mandatory reliability regime in place as soon as possible.
As the ERO transition process moves forward, the commission also should support the formation of an industry forum within the ERO to focus on best practices and lessons learned. The Institute of Nuclear Power Operations (INPO) has established a solid track record of promoting nuclear safety, reliability, and operational excellence, based on the critical feature of conducting candid peer-to-peer discussions of lessons learned on a confidential basis. Adopting the INPO model within the ERO will help transmission owners and operators to evolve from focusing only on bottom-line compliance with mandatory standards to the mode of continuous performance improvement.
We strongly supported passage of the ERO provisions of EPACT, and we strongly support the prompt certification of NERC as the ERO. We have and will continue to encourage NERC to seek industry consensus on all-important issues prior to filing its ERO application and proposed standards. NERC also should address in its transition plan how it will proceed.
It is imperative that the transition to the ERO be completed by Jan. 1, 2007, so that we have in place the mandatory compliance enforcement system set forth in EPACT. EEI and its members will continue to offer input and assistance to NERC as it works to implement the ERO provisions within this time frame. We also will continue to support the efforts of the regional reliability councils to fulfill their roles as regional entities under the statute.
As FERC, NERC, the industry, and other stakeholders work toward completing this transition, the end result should be what Congress intended: a self-regulating ERO with active governmental oversight. The success of self-regulating organizations is based on adherence to the idea that regulation is most effective when it is carried out as closely as possible to the regulated activity. Thus, the expertise, experience, and “front line”