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....
Miles to Go
Progress has been made, but much work remains along the path to ERO completion.
the approach suggested by NERC. Penalties, however, should not be imposed for violations of these conditionally approved standards until the necessary changes, such as supplying missing compliance elements, have been made. As soon as possible, though, the interim standards must be amended to comply with commission expectations.
FERC will not be developing or revising standards—the industry must do this. It is up to all of us, through the ERO, to clarify and improve standards as necessary, and to develop new standards. All standards, whether revised or new, must in turn be submitted to FERC for approval. With approximately half the 102 standards needing work, and with NERC simultaneously developing new standards, the industry has a big task in front of it.
Maintaining a reliable electricity system in the new ERO structure will require that the ERO delegate most compliance enforcement activities to the eight regional entities around the country. The ERO will harness regional expertise and resources through delegation agreements—the contracts through which the ERO will assign compliance enforcement duties to the regional entities, and ensure that those responsibilities are clearly delineated.
These delegation agreements also will determine the essential elements of the relationship between the ERO and the regional entities. And they will be the mechanism for achieving consistency both among the regional compliance programs and in the regional implementation of these programs.
To this end, we have strongly supported and facilitated the development of a pro forma regional delegation agreement. We are pleased that it has been conditionally approved by the commission and will soon be finalized. Now we must turn our attention to several key programs that will become part of the delegation agreement—the most important of which is the regional compliance and enforcement program.
Regional Compliance And Enforcement
FERC has required that when the regions carry out compliance and enforcement programs, and as the ERO oversees these programs, there must be a high degree of uniformity. NERC and the regions must provide the commission with adequate justification for any different regional approaches.
Two areas regarding the compliance and enforcement programs are particularly important. The first is that the ERO must ensure that compliance with standards is measured and determined with consistency across the regions. The second area concerns the investigatory and due process procedures followed by the regions. In addition to ensuring that all parties are treated fairly and even-handedly with respect to the conduct of investigations, confidentiality, and other matters surrounding enforcement, the ERO must make certain that its compliance enforcement process is consistently applied across the regions.
Any enforcement penalties must be uniformly applied as well—sanctions must consistently fit the severity of the violation, regardless of the region where it occurred. In short, all owners, users and operators similarly situated must be treated the same regardless of the region in which they operate.
Accomplishing these goals will be a formidable challenge, but it is crucial that the commission and the ERO demand consistency and accountability from the regions—both in how they investigate problems and in how they apply any penalties. The regions will be