NERC projects reliability through 2009

Kathleen Davis, Associate Editor

Members of the North American Reliability Council (NERC) are experts in the interconnected grid that spiders over Canada, America and parts of Mexico, but, as of late, they’ve been learning more and more about gridlock of the legislative variety.

NERC’s main focus is to ensure reliability. Unfortunately, it’s difficult to ensure reliability without having the power to sanction those who stray. Hence, NERC has been lobbying to become the North American Electric Reliability Organization (NAERO), a self-regulating entity equipped with the teeth to enforce reliability standards.

NERC moved toward becoming NAERO as the Senate passed S. 2071-more commonly known as the Electric Reliability 2000 Act-last June, but the progress was stalled when the House adjourned without passing similar legislation. It’s a situation they’ve been faced with before. The previous congressional session included variations on the same basic premise with S. 2098, S. 1047, H.R. 1828, H.R. 2944 and H.R. 4941.

And while NERC has high hopes that the 107th Congress will succeed where the 106th failed, they are currently facing a Department of Energy (DOE) considering a beeline straight for the Federal Energy Regulatory Commission (FERC) to impose mandatory electric reliability standards.

“We believe enactment of reliability legislation is the more effective approach to protecting the reliability of the North American bulk electric systems,” stated Gene Gorzelnik, Director of Communications for NERC.

“The difficulty with rulemaking [as the DOE has suggested doing in conjunction with FERC] is that it does not effectively deal with gaps in uncertainty in existing authority the legislation is designed to address,” he added.

NERC, in fact, submitted recommendations along these lines to the DOE this winter when the federal agency came knocking with a notice of inquiry about reliability issues.

In that response, NERC recommended “that the Department [DOE] focus its attention on securing passage of legislation that would establish a mandatory and enforceable reliability rules, rather than pursuing a rulemaking under the authority of section 403 [of the DOE Organization Act].”

Among the tersely-worded points of the same report, NERC claims that the grid “is now being used in ways for which it was not designed,” that the number and complexity of hourly transactions has made a “quantum leap,” and that “transmission providers and other industry participants that formerly cooperated willingly are now competitors.”

In fact, the report also states “NERC is seeing increasing violations of the rules under which the grid has been operated reliably for more than 30 years.” However, in its year-end annual assessment, NERC reported that the violations for 2000 were a “marked” improvement over 1999. (They weighed in with 681 violations for the year.)

And NERC seems to see improvements on the horizon for the long haul. In their near term assessment (for 2000-2004), they deemed generation satisfactory. Citing the growth of merchant generation projects in response to market signals, NERC projects new additions ranging form approximately 109,000 MW to 193,000 MW-a more than adequate number to offset the estimated 60,000 MW of demand growth.

Even the long term forecast (for 2005-2009) seems fairly sunny: Extrapolating on current trends, NERC sees the same level of satisfaction that the near term assessment revealed. However, they do contend that this rosy future depends upon merchant plant developers continuing a trend of cashing in on market signals.

And while a future with deregulation may not appear so bad, according to the NERC projection, positive trends do not negate a need for the organization’s transformation to NAERO. According to Ellen Vancko, Director of Media Relations and Government Affairs, competition on the horizon remains a solid reason to push NERC into high gear-to move forward with its plans to evolve.

“The impetus of competition is what makes electric reliability legislation more critical,” she stated in an interview with EL&P. “As we go from a regulated market where everybody cooperated to market where everybody is competing, it makes it more tempting to evade reliability rules if there are not consequences.”

“That is the whole reason we need legislation for mandatory enforcement by NERC,” she added.

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