FERC Chairman Pat Wood last Wednesday said that the board of trustees of the North American Electric Reliability Council (NERC) “stepped up to the mat” last week when it voted to approve a set of reliability-related recommendations crafted in the wake of the devastating Aug. 14, 2003 blackout that cut across large swaths of the United States and Canada.

NERC’s board “took a pretty firm and aggressive stance toward remedying a lot of the problems we heard about at our Dec. 1 conference, with regard to reporting, with regard to updating and crispening up the standards by the end of March, with regard to the audits, of which we’re a participant already with our staff, and with regard to some vegetation management issues,” said Wood. He attended the NERC board meeting in Phoenix on behalf of the Federal Energy Regulatory Commission (FERC).

At FERC’s Dec. 1 conference, Wood said that if Congress doesn’t mandate electric reliability standards the Commission may have to step forward with some standards of its own by this summer.

“I can’t tell you how gratifying it was to be out there and see the people from all parts of the industry speak very frankly and clearly to the board, that they want to see the board provide some leadership and similarly wanted to see very close relationships between them and the regulators in both countries,” Wood noted at the start of FERC’s regular agenda meeting. “I will just say that my initial impression was extremely positive.”

Wood said that FERC and its staff will continue to “cooperate and work with the members of the industry in anticipation of getting some legislation that will firm up all of the kind of outstanding details.” Wood said he has “resolved to get as much done under the current regime and I think there was a clear acknowledgment that there is room to get progress done in anticipation of the bill passing.”

Going forward, two Commission experts will accompany every NERC reliability readiness audit, 20 of which are scheduled to be performed across the country by June 30. In the interim, the Commission said that it will continue to explore its existing authority to oversee power grid reliability, while evaluating NERC’s stepped-up reliability efforts. FERC also is awaiting the final report of the joint U.S.-Canadian task force on the August 14 blackout, which is expected to be issued next month.

FERC is establishing a new 30-person reliability division within the Office of Markets Tariffs and Rates, which will be staffed with grid reliability engineering experts, to provide support to NERC’s efforts and assure sound integration of reliability and market considerations in Commission decisionmaking. Congress earmarked a $5 million in FERC’s current budget cycle for grid reliability oversight, and the President’s recent budget request to Congress seeks a similar funding level for fiscal year 2005.

FERC is urging Congress to pass legislation to give FERC statutory authority to oversee enforcement of a mandatory system of grid reliability standards, Wood said.

“Clearly, the existing voluntary reliability regime wasn’t up to the task of preventing last summer’s blackout,” Wood said. “We may not be able to move to fully mandatory electric system reliability until Congress acts, but there’s a lot we collectively can and will do to better ensure reliable power supplies for customers.” Energy legislation pending on Capitol Hill would, among other things, clarify FERC’s role in the area of electric reliability.

As FERC continues to grapple with its role in ensuring power grid reliability, the Electric Power Supply Association (EPSA) recently urged the agency to formally request that NERC provide periodic reports to the Commission — starting on May 1, 2004 — detailing the status of NERC’s reliability compliance program.

NERC CEO Michael Gent last month expressed concern about the possibility that FERC may face legal challenges if NERC files its reliability standards at the federal regulatory agency. “I think that there are plenty of entities around the country that would…take the chance to test whether FERC has this statutory authority or not,” he said.

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