FERC races to impose NERC’s new rules, raising howls of protest in the process.
Bruce W. Radford is editor-in-chief of Public Utilities Fortnightly.
After pleading with Congress for so many years, and then at last winning the requisite legislative authority to impose mandatory and enforceable standards for electric reliability, to replace its legacy system of voluntary compliance, the North American Electric Reliability Council (NERC) finds itself at a curious juncture.
It wants to slow the transition.
Of course, NERC still urges federal regulators to stay on track as expected to approve a new set of electric reliability standards by June 1—in time to go live for this year’s summer peaking season. However, when it comes to assessing fines and penalties on those violating the new rules, NERC wants to put on the brakes. It wants the Federal Energy Regulatory Commission (FERC) to agree to a grace period of at least six months without general enforcement of monetary penalties—what some have called a “shakedown cruise.” That would allow the industry to gain familiarity with the thousand and more requirements contained in the 100-plus standards that NERC proposed last April. During the transition, extending to Jan. 1, 2008, NERC would evaluate reliability performance and calculate any penalties otherwise owed, which could run to a million dollars a day, per violation. But NERC would not collect any fines, except for violations seen as especially egregious.