The U.S. Federal Regulatory Energy Commission Names Electric Reliability Organization For The Nation

The U.S. Federal Regulatory Energy Commission has approved the North American Electric Reliability Council’s (NERC) application to become the Electric Reliability Organization (ERO) for the nation. As the ERO, NERC will have legal authority to enforce reliability standards on all owners, operators, and users of the bulk power system, rather than relying on voluntary compliance.

NERC is working to gain similar recognition by governmental authorities in Canada, including eight provinces and the National Energy Board, before the end of this year, and will seek recognition in Mexico once the necessary legislation is adopted there.

“We appreciate the faith and trust that the U.S. Congress, Federal Energy Regulatory Commission, and governmental authorities in Canada have in NERC,” said NERC chairman Richard Drouin. “Our mission–to improve the reliability and security of the bulk power system in the United States and Canada–will not change, but our ability to achieve that mission will increase greatly with the new authority to enforce compliance with industry reliability standards,” he said.

“Approving NERC as the electric reliability organization is the culmination of several years’ preparation, dedication, and cooperation among the participants in the bulk power industry, and the federal, state, and provincial governments. Now it’s up to all of us to make it work,” added Rick Sergel, NERC’s president and CEO.

The creation of an ERO is authorized under the U.S. Energy Policy Act of 2005, and was triggered in part by concerns generated by the August 2003 blackout that affected 40 million people in the midwestern and northeastern United States and 10 million people in eastern Canada.

NERC’s application explains how NERC meets all statutory and regulatory requirements set forth for the ERO in the Energy Policy Act, cites NERC’s qualifications to be a strong and effective ERO, and provides detailed plans for the ERO’s corporate structure, governance, bylaws, and procedures. It clearly defines the authorities and responsibilities of the ERO, the eight regional reliability councils, and the bulk power system owners, operators, and users that fall under the ERO’s jurisdiction.

The Commission’s approval included a number of conditions NERC will address in the next few months. “We have not had the opportunity to examine the details of the Commission’s order, but we have successfully dealt with every issue that has arisen so far. I am confident NERC will be able to address these remaining issues in a satisfactory manner,” said Sergel.

Established in 1968, NERC develops and enforces reliability standards; monitors the bulk power system; assesses future adequacy; audits owners, operators, and users for preparedness; and educates and trains industry personnel. NERC is a self-regulatory organization that relies on the diverse and collective expertise of industry participants. As the ERO, it will be subject to audit by the Federal Energy Regulatory Commission and governmental authorities in Canada.