Michael T. Burr
“We may not be able much longer to keep the interstate electric grids operating reliably” without mandatory reliability rules, said David R. Nevius, a vice president with the North American Electric Reliability Council (NERC).
Nevius was among the numerous representatives of advocacy groups and companies that testified before the Energy & Power Subcommittee of the U.S. House of Representatives` Commerce Committee. The testimony was offered in response to H.R. 2944, “Electricity Competition and Reliability Act” introduced on Sept. 24 by Rep. Joe Barton (R-Texas), the subcommittee chairman.
The bill proposes comprehensive electricity restructuring, including repeal of the Public Utility Holding Company Act (PUHCA) and the Public Utility Regulatory Policies Act (PURPA). It would require all transmission utilities to join an independent, regional transmission organization (RTO), and would give the Federal Energy Regulatory Commission (FERC) significant authority to order retail wheeling.
All of these aspects of the bill elicited controversy. One section, however, seemed to go almost unnoticed, despite its significant ramifications for the utility industry. Title II, “Electric Reliability,” would establish an electric reliability organization (ERO), under the oversight of FERC, which would develop and enforce mandatory reliability rules.
Probably the reason the section escaped controversy was that it was taken almost verbatim from consensus language developed by a NERC-led coalition of industry groups.
“Virtually all industry participants believe strongly that new, enforceable, reliability standards need to be adopted to help ensure that our transmission system continues to operate safely and reliably,” said William Helton, chairman & CEO of New Century Energies.
NERC, however, pressed the issue at the committee hearings, urging prompt treatment of the legislation. “The longer it takes to establish this new system, the greater becomes the risk and magnitude of grid failures,” Nevius said.
Transmission system users and operators, he explained, cooperated voluntarily under the old, regulated system. Now, however, they are competitors and don`t have the same incentives to cooperate. The result is an increasingly shaky interstate transmission system. “NERC is seeing a marked increase in the number and seriousness of violations of its reliability rules, yet there is no recourse under the current voluntary model to correct this behavior.”
FERC Chairman James J. Hoecker added that the industry has begun seeking FERC`s involvement in reliability issues. “While the Commission has authority to address discrimination in jurisdictional transmission services, it has no explicit statutory role in setting or reviewing particular reliability standards or in ensuring the security of the electrical system or the adequacy of supply. Congress should make compliance with appropriate reliability standards mandatory,” Hoecker said.
For more information about H.R. 2944, see the House Commerce Committee website (www.house.gov/commerce/).