Jan 3 2002 — US federal regulators have given electricity suppliers and consumers a Mar. 15 deadline to decide who will determine the rules for reliability and business practices.

With the North American Electric Reliability Council (NERC) and North American Energy Standards Board (NAESB), formerly the Gas Industry Standards Board (GISB), vying for the job, the Federal Energy Regulatory Commission said it is ready to designate an organization or “develop the standards ourselves.”

The threat may — or may not — have lent a sense of urgency to the task. Despite NERC’s plea to the industry to comment on its proposal by Jan. 8, so far just 10 organizations have complied.

John Anderson, executive director of the Electricity Consumers Resource Council, Wednesday said he was “very surprised” the NERC proposal has elicited so little reaction. He said many industry participants may not know FERC has set a deadline for the project.

NERC, a voluntary grid reliability organization, posted for public comment a proposed Wholesale Electric Standards Model (WESM), for developing, maintaining, and publishing standards to “promote reliable and efficient wholesale electricity markets throughout North America.”

NERC spokeswoman Ellen Vancko expected more comments by the end of the week. The organization asked the industry to focus on how NERC and the NAESB could collaborate in developing and overseeing a single, industry-based consensus process to develop standards that will assure the continued reliable operation of the integrated North American electric transmission grids. The proposed process would also develop business practice standards and communication protocols.

In comments, Florida regulators complained NERC’s proposal doesn’t recognize the “separate and proper oversight role of state regulators who cannot be relegated to mere ‘stakeholders.'” The Florida Public Service Commission said it wanted to participate, but added, “We would like to avoid the perception that we have either implicitly or explicitly accepted the results” of the standard setting.

Proposal objective ‘vague’
PJM Interconnection LLC, grid operator for the Mid-Atlantic, called the NERC proposal “vague” and said the debate should not become merely a “beauty contest” between EISB and NERC. PJM said it is unclear whether the proposed organization would be setting policy, implementing it, or both.

While the NERC proposal is “thorough and well thought out,” independent electricity generator Calpine Corp. said it preferred the NAESB proposal. “Key to our position is the opinion that commercial and reliability standards cannot be separated,” Calpine said. The San Jose, Calif., company said NAESB should develop the standards, while NERC continues to monitor the grid, ensuring compliance, and advising on the reliability implications of standards as they are developed.

Vancko said Calpine represents the “generator side of the business. Bottom line we have to maintain reliability. That is not being fully understood or addressed.”

FERC appeared to be leaning toward the NAESB, noting it has been “very pleased” with the consensus standard setting process by GISB in the past. For the commission to have similar confidence in the process used to set standards for the wholesale electricity industry, FERC said it expected the organization and the process to be open to the entire industry. The commission also called for due process, plus an appeals process and for the standards to be developed through consensus.

Anderson said ELCON, which represents large industrial electricity users, wants a “strong top down” organization that sets standards that are then implemented by regional transmission organizations. “We don’t feel you can separate reliability and business standards,” he said, “or have different organizations setting standards for retail and wholesale transactions.”

ELCON members are subject to retail rules, he noted, while much smaller cities come under wholesale rules. Anderson said the NAESB proposals apply to retail transactions, while NERC rules would apply to wholesale transactions and reliability issues.

“We would like an organization which does both retail and wholesale,” he said. “If they want our support, it has to be all encompassing.” The American Gas Association has scheduled conferences Jan. 17 and Jan. 29 to discuss the NAESB’s proposals with respect to retail gas and electric transactions.