Mandatory Electric Reliability Standards and Transmission Expansion

1
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

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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

3
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

4
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?

5
Lagging ElectricTransmission Investment
Half as much annual investment in 2000 as in 1975
Annual growth rates in Gen, Trans, Load
6
Solutions

• Generator interconnection policies
• Clarify transmission rights pricing
• Provide incentives where effective
• Support others efforts
• FERCs Infrastructure Conferences
• Improve RTO transmission planning
• States (NGA, MSEs, RSCs) merchants
• DOE critical infrastructure bottlenecks
• Legislation
• Take a regional focus

7
FERCs new Reliability Division
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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)

9
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

10
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

11
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.

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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

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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.

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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.

15
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

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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

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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

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Two Governments One Goal

• Reliability standards should be more than the
  least common denominator of the current
  practices of todays 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.