NERC

1
NERC
2
System Planning

• Then
• Integrated
• Transmission to get local generation to local
  loads
• Generation to meet fixed reliability targets
• Long pay backs
• Expenditure smoothing
• Generation expansion process slow

• Now
• Fractured
• Transmission to connect new generators
• Generation planned to maximize profits
• Short paybacks
• Loss of fuel diversity
• Lots of generators being built quickly

3
New Gas-Fired Capacity Added During 1998 to 2007
as a Percent of 1998 Total Capacity
4
System Operations

• Then
• Bundled
• High degree of coordination
• Few wholesale transactions
• Limited entities

• Now
• Illegal to discuss transmission with generators
  (unless in public forum)
• Many, many transactions
• Numerous entities

5
How is Electricity Traded?

• Then
• Economy sales used split savings
• Emergency transactions were generally capped at a
  fixed rate
• Number of and distance of transactions generally
  small
• Typically two parties

• Now
• Charge what the market is willing to pay
• Lots and lots of transactions
• Distance not an issue (contractually)
• As many as 17 parties

6
Electricity Transactions

• Must define and register all entities and their
  roles
• All transactions must be electronically tagged
• Reliability Coordinators formed to oversee wide
  area transactions

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NERC

• Then
• Fixed number of entities
• Peer pressure, voluntary compliance to rules
• Reliability chosen over commerce

• Now
• More players almost daily
• Need for mandatory compliance legislation
  pending
• Reliability important to all (but big sure is
  tempting to some.)

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Reliability Implications of the New World

• Mixed results
• Breakdowns in California, Pacific Northwest,
  Desert Southwest
• Smooth transition in PJM and Texas
• Lots of generators being built

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Maintaining System Reliability

• Peer pressure no longer sufficient
• Reliability rules must be mandatory
• But must not limit market response
• NERC continually assesses current and future
  system reliability