The announcement last Tuesday by the North American Electric Reliability Council (NERC) that it is aiming to become the standards-setter for the wholesale power industry puts it on a collision course with the Gas Industry Standards Board (GISB), which already has announced it is expanding into setting standards for power industry business practices (see NGI, Sept. 24).

Both organizations have announced name changes — GISB to EISB or Energy Industry Standards Board and NERC to NAERO or North American Electric Reliability Organization — and expanded goals. NAERO would add the development of business practice standards to its current reliability standards, while EISB would function for the electric power operations as it does for natural gas.

NERC didn’t mince words, announcing its board voted at a “watershed meeting….to take all necessary steps to become the single organization in North America to develop both reliability standards and wholesale electric business practice standards.” The group said its work on setting standards for the OASIS electronic interface system for the power industry leads it naturally into the development of business practice standards.

In September, GISB’s board voted to change its name and its legal structure to “develop, maintain and publish voluntary standards and model business practices ‘designed to promote more competitive, efficient and reliable energy service.'” The group has been working for over a year on the move into power standards, posting several “strawmen” for comment on its website to develop the formative structure and language.

GISB, which was organized seven years ago to develop standards for the competitive wholesale natural gas market, expects to have its restructuring completed by the end of this year and be “working on wholesale electric standards development as early as next year,” said William Boswell, the organization’s chairman. GISB will be able to use the processes and template that it developed in setting the natural gas standards, he added. He noted that the membership of NERC, which is a staff-driven council of 10 regional transmission organizations, is not as representative and has fewer people participating in its activities than GISB does.

Rae McQuade, GISB executive director, who along with Boswell fought through the early highly contentious battles over the natural gas standards, testified as to the broad representation and “open, inclusive and balanced” process that created the gas standards. The standards represent “the work of a lot of people, participants who have to deal with the market on a daily basis.” McQuade pointed out that GISB now has been accredited by the American National Standards Institute (ANSI), and “as long as we follow the same practices, the ANSI accreditation follows us. No other organization in the industry has that accreditation.”

“If you don’t set up the process so people trust the manner in which you produce the standards, those standards won’t gain acceptance. People won’t follow them,” Boswell said. GISB’s role in developing wholesale power standards has already been endorsed by the PJM Interconnection ISO.

As part of its change in direction, NERC earlier this year turned over governance to a new, 10-member independent board of trustees (IBT), which directs all NERC activities. The IBT replaces a 47-member board, which comprised both stakeholders and independent members.

Spokesperson Ellen Vancko pointed to NERC’s historic role in developing reliability standards for the electric industry. She said the standards-making process draws on stakeholders from all parts of the industry. It was those stakeholders who convinced the NERC board to add business practice standards. “We’ve had a lot of pressure from all market participants to get into this,” Vancko said. She claimed GISB “does not have a total universe of electric interests supporting their process.”

McQuade disputed the claim, saying GISB has support from a broad range of power companies, including several that are on its board, and from trade associations and government agencies. She said GISB has approached NERC on several occasions to coordinate development of reliability and business standards, but there has been no response. McQuade also pointed out that the “ultimate determiner is going to be FERC,” and GISB has been working with FERC and the Department of Energy to develop its standards-making process.

In the past, NERC has had some run-ins with FERC, most notably when the Commission staff accused it of failing to provide requested operating information for the Commission’s market monitoring efforts even though staff pledged the information would remain confidential (see NGI, June 26, 2000).

For more information on each organization, go to www.nerc.com and www.gisb.org.

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