NERC, Not FERC, Best To Establish, Enforce Electric Reliability Rules: EEI

Platts T&D - 01/22/2004

Saying the Federal Energy Regulatory Commission lacks both the experience and authority to establish and enforce electric reliability rules, the Edison Electric Institute Friday approved a resolution calling for the North American Electric Reliability Council to continue in that role.

The resolution, approved at an EEI board meeting in Scottsdale, Ariz., supports prompt action by NERC to enhance its review of industry's compliance with reliability standards, perform audits of grid control areas and operators, and keep track of tree trimming near power lines. It also calls on NERC to implement a functional model that breaks down reliability requirements for different sectors of the industry and takes into account regional differences.

FERC Chairman Pat Wood in recent weeks has said the commission would set an aggressive agenda to tackle reliability issues, including adding staff and auditing reports filed with NERC and FERC, while Congress considers an energy bill that would establish mandatory reliability rules.

In a recent speech, Wood said he was "frustrated" to find that many of the events that led to the August 14 blackout were the same things that caused similar outages in the past and that a key aspect of new reliability rules will be a stronger auditing system that would hold control areas accountable for reliability problems.

Electric utility lobbyists last week said Woods' comments increased concern over how the grid would be managed. FERC auditing companies for noncompliance with reliability standards "may push Congress to do something" such as pass the comprehensive energy bill because "congressmen don't want Pat Wood to" be in charge of reliability rules, one lobbyist said.

The EEI resolution said that FERC "is considering whether it can and should assume the primary role to establish and enforce reliability standards, even though it lacks adequate authority." FERC's role should be one of "supporting and providing oversight to the NERC initiatives," EEI said.

The utility trade group urged Congress to pass an energy bill that assures that enhanced reliability rules apply to all market participants. While the group is pleased FERC wants to take an active role in enhancing reliability, "our CEOs believe strongly that the expertise to make this happen resides within NERC and the industry, with FERC in an important oversight role," EEI President Tom Kuhn said in a statement.

The ideal approach would be for Congress to pass the energy bill, but "in the meantime, our board clearly wants NERC to be in the driver's seat on implementation" of enhanced reliability rules, Kuhn said