Two months ago in this space, I interviewed a power marketer and an independent power producer who sit on the operating and engineering committees of the North American Electric Reliability Council. What did they think of NERC, a group formed to prevent large-scale power outages and made up largely of volunteers from investor-owned electric utilities? Were they treated fairly? Did they have a chance to influence policy?
In general, my two "outsiders" felt satisfied with their status on the committees, though some skepticism emerged about NERC's internal decision-making process. Why, for instance, should NERC propose policy at the national level but send the ideas out to the regional councils for approval? How can marketers or IPPs hope to participate fully in NERC activities, given their skeleton staffs? (See, "Reliability, Whose Job Now?,"Jan. 15, 1997, p. 4.)
Now, however, I'm wondering whether I captured the wholesale picture. I'm starting to have doubts, after talking with a few people who have attended recent industry meetings where NERC officials have appeared to talk about their new strategic initiatives.
Some folks think that NERC wants too much reliability.
"Roving the Continent"
Much has happened since January, when NERC's Board of Trustees voted to accept the report known as Future Course of NERC, and thereby require mandatory compliance with its reliability standards.
In NERC's own words, it has been "roving the continent" (em meeting with groups and organizations to explain the steps it is taking to ensure reliability in a "changing world." But from what I hear, NERC's "roving" has set a few folks on edge.
In January, NERC President Michehl R. Gent and Director of Operations Donald M. Benjamin traveled down to Washington, D.C., to the U.S. Department of Energy, to present a summary of NERC's strategic initiatives at the kickoff meeting of the DOE's Task Force on Electric-System Reliability, chaired by former congressman Phil Sharp. Also at the meeting, DOE Deputy Secretary Charles Curtis has asked the task force to consider whether NERC and federal authorities were giving adequate attention to reliability issues.
Then, in late January, NERC's Transmission Reservation and Scheduling Task Force sponsored a workshop in Phoenix along with the Electric Power Research Institute to present details on a plan for scheduling and "tagging." NERC is proposing that all market participants should use a standard template to submit energy transaction information to control areas, effectively "tagging" the transactions to track where the power comes from and where it goes.
The roadshow continued in February, in Washington, D.C., where NERC's Vice President David R. Nevius appeared at the winter meetings of the National Association of Regulatory Utility Commissioners. Nevius discussed NERCs initiative to develop a "regulatory backstop" to ensure compliance with realiability standards by all market participants. He saw possible merit in developing "MOUs" (memoranda of understanding) with the DOE, the Federal Energy Regulatory Commission, and Canada's National Energy Board, to clarify their respective roles. "[we] will need to follow closely any legislation ... to make sure it does not undermine efforts to develop an effective industry compact."
Nevertheless, some believe that NERC's reliability initiatives could slow down the restructuring process.
"Tightening the Shoestrings"
You may ask, "How can someone take a stand against electric reliability?" Well, here's what I heard over the phone the other day from one of those new, untraditional industry players, who requested anonymity:
"The industry forefathers are really tightening up the shoestrings on how business is being done. But they're lost focus on the overall picture, which is to reduce the cost of electricity.
"The meetings are open, but there are so many meetings and working groups and acronyms that only a multi-billion dollar company can afford the time to attend and participate in all these meetings. Who's going to pay for all of this?
"The costs should be going down, but instead they're going up.
"NERC has been involved in reliability for a long time. Now NERC wants to put tags on energy transactions to know where the power is going. Now they're saying that you have to tell them who you're going to buy energy from and where are you going to deliver it. And it you send the power to another marketer, then NERC wants to know what they are going to do with it.
"If the FERC sits by and lets all this go through, then it's ludicrous. We're cementing market power.
"NERC is using marketer participation in these committees to be able to say that participation is open, but it's just a ploy. They use your name, but it's just a figurehead. You can given suggestions, and they take your suggestions. But then they 'back-room' it and then say that there is a consensus.
"They take advantage of the IPP's and the marketers. They are using political techniques that the folks in Washington, D.C., have used for decades.
"And who's suffering? Is the cost of electricity dropping? Heck no.
"Maybe we need the politicians to get in here and deal with the politicians. Maybe we need Congress to get into this. We have a system now where the foxes are in charge. And the FERC has found an easy way out (em they're letting NERC and EPRI run things.
"So NERC and EPRI are going forward, leading the charge, putting the industry in knots. From my perspective we're just firming up market power here.
"IPP's and marketers don't have the resources to attend all these working groups and meetings. But NERC has utilities with groups of employees attending meeting all week. IPPs and marketers can't go to all these meetings. We've got a job to do. We've got to get back to the office and trade some electricity."
When I called Eugene Gorzelnik, NERC's communications director, to ask him about the NERC's proposals for scheduling and tagging, he assured me that Nevius was not announcing new policy when he appeared at NARUC's winter meetings.
"What Dave Nevius said was no different than what NERC [decided] at the Trustees' meeting in January," Gorzelnik explained.
"System operators must be able to follow the transactions that are going on so that [they] know what transactions they can interrupt. For the system operators to do their jobs, they've got to have information on power transactions(emwhere do they fall in priority order(emso if something needs to be curtailed, they can determine what action will pose the least problems for everybody."
Gorzelnik told me that NERC would continue to develop policy at the joint engineering and operating committee meeting scheduled for March 10-14, and at its board of trustees meeting coming up in May. To further explain the tagging procedure, NERC's system operator subcommittee planned a series of five workshops(emin Atlanta, Houston, Minneapolis, San Diego and Philadelphia(embeginning in late April and concluding in early June.
So what did Gorzelnik think? Was NERC moving too fast or too slow?
"Hey. We get as many arrows from the front as we're getting from the back."
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