Mandatory electric reliability standards and transmission expansion
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Mandatory Electric Reliability Standards and Transmission Expansion. Suedeen G. Kelly Commissioner Federal Energy Regulatory Commission The Canadian Institute Energy Group Transmission Planning & Reliability Toronto, Canada January 26, 2005. Standards and expansion go hand in hand.

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Mandatory Electric Reliability Standards and Transmission Expansion

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Mandatory Electric Reliability Standards and Transmission Expansion

Suedeen G. Kelly


Federal Energy Regulatory Commission

The Canadian Institute Energy Group

Transmission Planning & Reliability

Toronto, Canada

January 26, 2005

Standards and expansion go hand in hand

  • Canada and the U.S. should continue and expand our cooperative efforts on improving grid reliability.

  • We need both mandatory reliability standards and – at least in the U.S. - cost-effective transmission expansion

  • One without the other is simply second best

FERC has added Reliability to the Infrastructure portion of its Strategic Plan

  • Allow prompt recovery of prudent expenses to safeguard reliability, security and safety

  • Oversee the development and enforcement of grid-reliability standards

  • Work with other agencies, especially the states, to improve infrastructure security

  • Work with the states to support robust programs for customer demand-side participation

Transmission infrastructure investment problems

  • Not just one problem

    • Siting

    • Uncertainty about

      • Restructuring

      • Who builds?

      • Who pays?

      • Lack of regional overview of needs

  • We have many roads, few regional highways.

  • What can the FERC and others do?

Lagging ElectricTransmission Investment

Half as much annual investment in 2000 as in 1975

Annual growth rates in Gen, Trans, Load


  • Generator interconnection policies

  • Clarify transmission rights & pricing

  • Provide incentives where effective

  • Support others’ efforts:

    • FERC’s Infrastructure Conferences

    • Improve RTO transmission planning

    • States (NGA, MSEs, RSCs) & merchants

    • DOE: critical infrastructure bottlenecks

    • Legislation

  • Take a regional focus

  • FERC’s new Reliability Division

    FERC reliability efforts in 2004

    • Completion of the Blackout Report

    • Participation in the Readiness Audits with NERC

    • Policy Statement – Bulk Power System Reliability (107 FERC ¶ 61,052)

    • Encouraging the revision of NERC standards to be specific and enforceable (Version 0)

    More 2004 reliability efforts

    • Specific investigations & studies -- e.g., Vegetation Management (107 FERC ¶ 61,053)

    • Operator training study

    • Coordination with the NRC for grid reliability and nuclear plant safety issues

    • Participation in a natural gas pipeline disruption impact analysis

    • Study and identification of best tools and practices for IT functions

    Possible future FERC initiatives

    • Cyber security evaluations of SCADA systems and IT platforms

    • Reactive power oversight, including planning, operations, and compensation

    • Transmission planning oversight including adequacy and extreme contingency plans

    • Work that will be required by any reliability legislation – various rulemakings

    Reliability legislation needed

    • FERC would certify an Electric Reliability Organization – ERO – for the United States.

    • The ERO would develop reliability standards applicable in the U.S., subject to FERC approval or remand.

    • The ERO would enforce standards and impose penalties.

      Note: the ERO could not require transmission expansion – separate expansion policies needed as discussed earlier.

    After legislation passes

    • FERC issues a proposed rule implementing the legislation

    • Rulemaking process must follow the Administrative Procedures Act: notice & comment; decisions based on the record

    • Ex parte does not apply; no prejudgment

    • Issue final rule within 180 days – a tight deadline

    After the final rule issues

    • One (or more – unlikely) parties may apply to FERC to be the ERO in the U.S.

    • FERC selects and certifies one ERO for the U.S.

    • The ERO then pursues recognition in Canada and Mexico, according to the law.

    • Canada and Mexico may choose to have a similar or different process.

    An International ERO

    • The proposed law urges the President to negotiate international ERO agreements with Canada and Mexico.

    • FERC, DOE and Canada have been consulting frequently for several years about working together on implementing the new law.

    • U.S. is committed to a cooperative effort.

    Binational ERO Oversight Group

    • Formed in the early Spring 2004 by the Canadian Federal-Provincial-Territorial task force, DOE, and FERC.

    • Government staff from NRCan, Provincial Regulators, DOE, FERC.

    • Identifying issues and possible solutions

    • Have not yet involved principals

    • Mexico to be included later

    A Cooperative Effort

    • Common Goal of Enhancing Reliability

    • FERC is working in partnership with

      • Canadian government officials

      • U.S. Federal and State Agencies (DOE, NRC, DHS)

      • NERC, regional reliability councils and industry stakeholder groups

      • Non-jurisdictional entities

    • Overlapping Roles and Responsibilities

    Examples of Issues

    • ERO as an International Organization

    • Standards Development Process

    • Regulatory Review/Approval of Standards

    • Enforcement of Standards

    • Intergovernmental Cooperation

    • Other Issues: roles of regions & members

    Two Governments—One Goal

    • Reliability standards should be more than the “least common denominator” of the current practices of today’s grid operators.

    • The ERO must be an advocate for excellence in North American reliability.

    • Blackouts like in 2003 should be, if not a thing of the past, as rare as humanly possible.

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