States regulators promote cooperation in overseeing reliability

Washington (Platts)--28Sep2005

The interplay between state resource requirements and new federal
reliability rules will continue to evolve as details on an electricity
reliability organization are finalized over the coming months, state officials
said Wednesday.
     The ERO and what will be mandatory reliability rules to be overseen by
the US Federal Energy Regulatory Commission is the subject of a proposed
rulemaking at FERC, and speakers at an Infocast conference on reliability
highlighted the need for deference to regional entities. The nature of
reliability, with state regulators having authority over utilities and FERC
having authority over the transmission system, calls for a partnership rather
than a top-down command structure, said William Chamberlain, chief counsel
with the California Energy Commission.
     Plenty of states have requirements on resource adequacy or generating
reserve margins, while transmission planning and other grid operations are
under federal jurisdiction in accordance with the Energy Policy Act of 2005.
The ERO "needs to be sensitive to regional differences," and states are
pleased that the law allows that, Chamberlain said.
     The change--from regional councils within the North American Electric
Reliability Council with their own standards to a more centralized ERO with
its own rules approved by FERC, as is now the law--has been a topic of much
debate within NERC. The energy act says FERC shall authorize the ERO to enter
into agreements delegating authority to regional entities for the purpose of
proposing reliability standards to the ERO and enforcing standards if the
regional entity meets certain requirements, such as covering an entire
interconnection and being governed by an independent or balanced stakeholder
board.
     Section 215(j) of the law allows states to form regional advisory bodies
to address transmission needs, and there is interest within the Western
Interconnection to do that, said Chamberlain, who also is vice chairman of the
Western Electricity Coordinating Council.
     As comments on FERC's proposed rule are filed and details of the law are
examined "I see gray areas remaining" on what are wholesale market issues that
can affect state jurisdiction and what are clear state reliability rules, said
John Reese, senior policy advisor with the New York Public Service Commission.
Clearly defining who has what role in maintaining reliability "will be an
evolving process that will unfold over a multi-year period," Reese told the
conference. 
     "Reliability and energy market design must be addressed at a multi-state
level," said John Sillin, director of integrated resource planning with the
Maryland Public Service Commission. The PSC is working with others in the
recently formed Organization of PJM States to address regional market design
issues, including transmission constraints within PJM Interconnection, Sillin
said.
                                      ---Tom Tiernan, tom_tiernan@platts.com

For more information, take a trial to Platts Inside FERC at
http://insideFERC.platts.com.

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.