(November 2008)Economic uncertainties are raising doubts over utility returns. Will regulators feel the need to consider broader economic effects when engaging in ratemaking? While...
How Needed Is NERC?
Critics say its new budget and business plan could simply duplicate the work of RTOs.
their own regional budgets, neither the Florida Reliability Coordinating Council, nor the Northeast Power Coordinating Council (two likely REs) had considered that readiness improvement could qualify as statutory reliability functions, as NERC itself has acknowledged. Alcoa adds that education and training should not qualify either, since the ERO “could place its stamp of approval on college education classes or industry classes that meet the criteria for accepted training, rather than increase staffing.” (See, Comments of Alcoa, FERC Docket No. RR06-3, filed Sept. 13, 2006.)
For its part, NERC protests Alcoa’s insinuation of a conflict of interest, insisting that it would not be tempted to compromise its primary enforcement function, since “NERC does not and will not receive consulting fees from owners, operators, or users of the bulk- power system.”
NERC offers no rebuttal in its answer filed at FERC to Alcoa’s charge that readiness audits are merely duplicative of actual enforcement audits. However, it suggests that “proactive” steps, such as training, instruction, and guidance, should rank alongside actual enforcement:
“To suggest otherwise,” writes NERC in its answer filed Sept. 26, “would be nonsensical—like suggesting that the police department should not give tips on safe driving to motorists because those tips might result in motorists driving in a manner that reduces the number of tickets the police force issues.”
A more serious concern, perhaps, is that NERC’s business plan budgets funds for something called “situation awareness.” The plan states that NERC will “maintain real-time situation awareness of conditions on the bulk-power system.” This item has drawn protests from the ISO/RTO council, the association for the regional grid operators, which raised this same objection in ERO certification proceeding—that such endeavors will interfere with grid operations.
NERC answers that it has “no intention of inserting itself” into such matters, nor “to duplicate or infringe on existing arrangements,” but that it will simply “maintain,” “notify,” “enable,” and “facilitate,” by providing leadership, coordination, and expertise:
“The fact that NERC has allocated only 4.5 full-time equivalent staff members to the situation awareness and infrastructure security program ought to be conclusive proof [of] no intention of crossing the line into the operations arena.” (ISOs and RTOs typically employ staffs of 50 or more grid system operators.)
In NERC’s defense, the largest budget item for the situation awareness program will go toward contracts and consultants. That will help fund such items as NERCnet (a tool for real- time data exchanges among reliability coordinators), contracts for ICCP (Inter-Control-Center Communications Protocol), and tools for frequency monitoring and power-flow modeling and control, such as IDC (Interexchange Distribution Calculator) and NAPP (North American Phasor Project).
Moreover, such projects may well prove worthy, as the nation’s policymakers have assigned to NERC the task of investigating and reporting on the feasibility, cost, and likely timeline for building a transmission monitoring system. The TMS would yield real-time information on the functional status of all transmission lines within an entire grid interconnection—for both the Eastern and Western Interconnections. Congress first had asked FERC and the Department of Energy for an initial scoping report (see EPACT, sec.