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Consumer Input, Mandatory Reliability Rules Seen as Keys to Bolstering Grid

Consumer input in decision making, mandatory power reliability standards, coordinated regional planning and clearly established jurisdictional bright lines between federal and state regulators are crucial elements in ensuring that the nation's future electricity needs are met, a new report issued by a diverse group of power sector stakeholders brought together by the Consumer Energy Council of America (CECA) concludes.

The sweeping report, which was completed by the CECA Transmission Infrastructure Forum, details how federal and state utility regulators, the Department of Energy (DOE), the U.S. Congress and various parts of the country are all positioned to play key roles in improving the nation's electricity transmission system, a subject that continues to receive attention in the wake of August 2003's historic blackout that left millions of customers without power in the U.S. and Canada.

What's striking about the membership of the CECA Transmission Infrastructure Forum is that it pulls together various members of the power sector that don't always see eye-to-eye on certain issues. "It is truly uncommon -- especially in this city and in an issue that is so controversial as transmission and electricity -- to have such a diverse group of industries all come together with a common set of recommendations," said Jimmy Glotfelty, a member of the transmission forum who formerly served as director of the DOE's Office of Electric Transmission and Distribution.

Along with Glotfelty, members of the forum in attendance at a Tuesday press briefing in Washington, DC, related to the report included: Charles Acquard, executive director of the National Association of State Utility Consumer Advocates; John Anderson, executive director of the Electricity Consumers Resource Council; Connie Hughes, a commissioner for the New Jersey Board of Public Utilities; Alan Richardson, CEO of the American Public Power Association; Glenn English, CEO of the National Rural Electric Cooperative Association; David Owens, executive vice president at the Edison Electric Institute; and National Grid USA's Mike Calviou.

The report, Keeping the Power Flowing: Ensuring A Strong Transmission System to Support Consumer Needs for Cost-Effectiveness, Security and Reliability, lays out a number of specific recommendations for policymakers to pursue going forward.

Among the key recommendations are the following:

"Our overarching objective here was to really get into this from a consumer's perspective and see what kind of sense we could make of it," noted John Derrick, who serves as chair of the CECA Transmission Infrastructure Forum and is the retired chairman of the board for PEPCO Holdings.

At the press conference, he said that the recommendations included in the report "have a broad call for action" aimed at the U.S. Congress, FERC, the White House, the states and the power industry "seeking to hopefully act in a coordinated way to assure that continued demand on the transmission system can be met."

Among the things that Congress can do is to mandate power reliability standards, Derrick noted. Such a measure is included in comprehensive energy legislation pending on Capitol Hill and there have also been stand-alone bills calling for making currently voluntary electric reliability standards mandatory.

But if and when federal lawmakers pass mandatory power reliability rules, that's not the end game, noted Glotfelty. "I think it needs to be clear that having mandatory reliability rules is not the end, it's the beginning," Glotfelty said. "It is the most critical first step in ensuring that the system is more reliable. What flows from that may be more policy recommendations. It may be increasing fines. It may be revoking certificates. It may be other accountability measures that evolve as we find some things are not as adequate as we thought. But it has to be the first step, not the last."

The report states that until federal legislation is enacted to provide an independent electric reliability organization with the authority to set mandatory reliability standards, FERC and state utility regulators should work with the North American Electric Reliability Council (NERC) and the regional reliability councils, and their counterparts in Canada and Mexico, to ensure compliance with NERC and regional reliability standards, using their existing regulatory authorities.

"In particular, FERC and NERC should continue their efforts to make reliability standards more specific and enforceable. State utility regulators should continue to monitor and enforce local transmission and distribution reliability requirements. FERC, NERC and state utility regulators should make sure that non-compliance violations are made public, so that consumers can be aware of such violations."

Also, in order to ensure independence and effectiveness, NERC, or another equivalent independent electric reliability organization, "should be funded by all users of the bulk power system on a fair and equitable basis. The reasonableness of such costs should be reviewed by FERC through a public process."

With respect to consumer input, the forum said that FERC, the DOE, state utility regulators and policymakers, regional transmission planning entities and the electric utility industry should undertake efforts to educate the public "about the critical role that the transmission system plays in ensuring that consumers are supplied with reliable power under a variety of scenarios at the lowest possible cost to meet their the electricity service needs."

As for next steps, CECA Vice-President Peggy Welsh told NGI that the group plans on holding congressional briefings related to the report and has already contacted certain Capitol Hill offices to this end. The group plans to meet with key Congressional leaders and will be contacting the offices of Sen. Pete Domenici (R-NM), chairman of the Senate Energy and Natural Resources Committee, and Sen. Jeff Bingaman (D-NM), the ranking Democrat on that committee.

Indeed, during his prepared remarks, Glotfelty underscored the importance of not allowing the report to sit on a shelf somewhere collecting dust. "Congress, FERC, DOE and the industry must take action," he said. "You can go back years -- perhaps decades, or a decade -- and find some of these recommendations and the call to action is now."

The former DOE official said that "the most important thing is not the development of this report and the recommendations, it's the follow up." The report "shouldn't just be more words on a page. These are real issues, real answers, real benefits to consumers and it's something that we should take very, very seriously."

Participants in the CECA transmission infrastructure forum included: federal policymakers, members of state public utility commissions and leaders from investor-owned utilities, rural electric cooperatives, municipally-owned utilities, independent transmission companies, independent power producers, state consumer advocates, state energy officials, state legislators, engineering firms, industrial consumers, national laboratories and academia.

The report can be downloaded from CECA's website at: www.cecarf.org.

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