January 2, 2004—The Federal Energy Regulatory Commission recently directed staff to develop an order that will require transmission system operators to report violations of the industrys power- grid reliability standards. The pending order marks the first step in the Commissions exploration of its authority under existing law to assure power grid reliability in the aftermath of an August 14, 2003, blackout that affected millions in the U.S. and Canada.
The Commission unanimously accepted a staff recommendation to expedite an order proposing to require public filings at FERC of any violations of the industrys voluntary grid reliability standards, which are overseen by the North American Electric Reliability Council. Subject to a final order, the filings at FERC would be required contemporaneously with reports of violations to Princeton, N.J.-based NERC. The reports to NERC would then be public information kept on file at the Commission.
FERC Chairman Pat Wood, III, described the pending order as “a modest but appropriate step forward.” It comes after Chairman Wood said at a December 1, 2003, public meeting on electric system reliability that FERC would explore what options it has under existing law as long as reliability legislation remains pending before Congress.
In approving the staffs recommendation, the four sitting FERC members agreed that the Commission would continue to explore what additional measures it can take under its existing statutory authority. The Commissioners noted the ongoing effort to address reliability under existing law marks a change in long-standing FERC policy.
Commissioner Joseph Kelliher spoke for the Commission when he expressed disappointment that reliability legislation stalled earlier this year in Congress, and called it “appropriate” for FERC staff to “determine how far we can go” under existing statutory authority.
Commissioner Suedeen Kelly cited an industry consensus on the need to replace the industrys traditional voluntary approach to grid reliability with one that is mandatory. “We need to do more than just reporting,” Commissioner Kelly observed.
Chairman Wood noted that Congress gave FERC a $5 million spending increase for fiscal year 2004 with instructions that the additional funding support power grid reliability efforts. That additional funding could support audits of transmission system operators compliance with NERC reliability standards. “Now that we have the resources,” Chairman Wood said FERC should adopt a “trust but verify” approach to industry compliance with grid-reliability standards.
