Kathleen Davis, associate editor
In March, I spoke with four of NERC’s executives: Michehl Gent, president and CEO; David Cook, vice president and general counsel; David Hilt, vice president of compliance; and David Nevius, senior vice president. In the first part of this profile, Gent and Cook talked about reliability (see April 2004 EL&P).
In this second installment, David Hilt and David Nevius discuss some of NERC’s more unique aspects.
David Hilt, vice president of compliance
KD: How was the experience of NERC’s blackout investigation?
DH: We worked very, very closely to provide the U.S.-Canada task force the technical details that were required. There’s still quite a bit of modeling activity, and that’s likely to take several months yet to complete. Plus, we’re just now getting engaged in the restoration process. We want to see if there are any additional lessons or any new issues that we need to bring forth. And, as we’re talking about the blackout investigation, I’d like to thank the hundreds of volunteers that I had. I was heading up the investigation, and we had a lot of help from the industry and some very good technical experts.
KD: What recommendations does NERC have to prevent future blackouts?
DH: There are four strategic initiatives. The first strengthens the compliance program and the reporting that goes with that—to make compliance violations more visible. The second initiative, which is very aggressive, is to go out and audit all of the control areas and reliability coordinators in North America on a three-year cycle.
KD: Do you have the manpower for that?
DH: We are adding the manpower; right now, I’m working with contract manpower in addition to NERC staff, and the audits are already under way. We picked the largest 20 control areas to do by June 30.
The third initiative has to do with tracking the implementation of the recommendations that result from this blackout investigation. The fourth one is to develop a vegetation management reporting system. Obviously, vegetation was a problem in this blackout, as it has been in many others. So, we want to track and make public the performance of outages that affect major facilities to ensure that people are paying attention to vegetation management.
KD: The specific initiatives on auditing and tracking recommendations, are those laying the groundwork for NERC enforcement policies down the road?
DH: Certainly we’re taking steps, and what we’re doing, we believe, will ultimately fit well with legislative authority. We are moving in that direction.
KD: Of all the recommendations, which are the most important, in your opinion?
DH: The audits. We call them readiness audits because we’re not trying to be incredibly punitive with them. We’re trying to help this industry to move itself back towards a state of excellence.
The second most important recommendation is the program to track these recommendations to make sure that everyone follows through on them. A number of lessons should have been learned from the outages in ’96 in the West. When we looked at all these previous outages, and the findings that resulted from them, it was the same old line, “Those that fail to learn from history are doomed to repeat it.”
KD: Of the technical recommendations, do you think NERC will get a lot of flak about how expensive they might be?
DH: Well, certainly people will be concerned about the costs of some of the recommendations, but our hope is that people are focused on reliability. However, there was also a very large cost associated with the unreliable situation that we had last year.
KD: Will enforcement become part of your compliance program if reliability legislation is passed?
DH: Yes, it will, and certainly we’ve anticipated that for a number of years—hoping every year to have legislation.
What we need now is the teeth to make it enforceable so that we can identify the noncompliant entities and take action to make sure those violations are corrected.
KD: You’ve run simulations on what to charge for a particular violation?
DH: Yes, we’ve simulated penalties. We currently issue a letter that states, “You’ve been found noncompliant in this area, and, if the program had penalties, this is what your sanction could have been.”
KD: And, in the future, it will say “This is what your penalty is.”
DH: Assuming the action has financial penalties associated with it. Some levels of noncompliance may garner a simple notification. Obviously, as the violation becomes more significant in terms of reliability or repetition, then the sanctions and penalties will come into play.
KD: If you do start collecting fines and penalties, will that money go back into NERC’s budget or elsewhere?
DH: That has yet to be determined, and it’s somewhat related to the overall NERC funding issue and how that is resolved. In the areas where the regions do collect penalties and sanctions, at the moment it does go back into funding that organization.
Dave Nevius, senior vice president
KD: Now is there any myth about NERC floating around the industry that you would like to dispel?
DN: Recently, there has been a lot of talk about what NERC’s standards are and what they are not. Some have referred to them as “squishy,” least-common-denominator standards. When people refer to them as least-common-denominator standards, they are complaining because the standards apply universally throughout all of North America. By nature, there are some local conditions that need to be addressed differently in different parts of North America, and the standards that exist at the regional council level—our 10-member regional councils each have their own set of standards—they get into more detail.
I look at both NERC and regional standards as an integrated set of reliability standards. Under the legislation, regional standards and variances will become a formal part of the standards that are developed by NERC and approved by FERC.
KD: Certainly, legislation that would give you enforcement authority would allow you to be less “squishy.”
DN: Absolutely. The standards would be much more specific, much more measurable. They’ll address things at a North American level all the way down to individual, regional and local levels. And, they’ll all be part of this integrated set of enforceable reliability standards. Right now, while it’s an integrated set of standards, they are voluntary and not enforceable.
KD: Are there unknown areas of NERC that deserve more attention than they currently get?
DN: Well, there are a couple of areas that come to mind. One is in the critical infrastructure protection area. Since 9/11, we have re-doubled our efforts in this area.
The other area that is not very well known is our very detailed database activities related to the performance of electric generating equipment. We started this quite some time ago, back in the late 1970s. Very few people—besides those who use it— know about it. But, it’s an important element in the whole scheme of bulk electric system reliability.
KD: That’s a lot of data to work with.
DN: It’s tremendous. We’ve modernized the databases and analytical tools to the point where people can actually get a copy of the database and work with it firsthand. For example, if I have certain type of super-critical fossil unit, I can look at the performance of similar units of that class to see if I’m doing better or worse than others, and in what specific areas I could achieve the most improvement.
KD: Is it broken down by equipment per plant; is it also broken down by manufacturer?
DN: The data is broken down every which way. There are some limitations on who can see what parts of the data, but, other than that, we can look at groups of units of a similar size, a similar type and then be able to judge whether the unit that I’m operating is up to industry standards or falling below those standards.
KD: Do you have a database for the T&D side?
DN: No. It’s interesting you ask. Recently, there has been some renewed interest in doing that, but it would be just a lot of miles to cover and a lot of nuts and bolts, and the designs are so different from area to area. It would take probably years to get a similar system up and running for T&D equipment as exists as in the generation area.
KD: I appreciate NERC being willing to all get on the phone and talk to me for almost two hours now.
DN: Well, this is what we do: Keep the industry and the public informed. Some of us have been here a long time. I am here on a two-year loan assignment that began in 1977. It’s been a little more than two years. There have been a couple of blackouts since then, and I’ve seen NERC evolve from a small organization with a few staff people and a couple of committees to a very, very robust and active organization that is now in the limelight.
With the enactment of reliability legislation, I think we can take that next big step. It’s an exciting one; it’s also frustrating waiting for Congress to act.
We’re still hopeful that something will be passed this year. In the meantime, we’re looking for ways to encourage and to enforce compliance. One step at a time.