FERC, industry head for court clash on reliability

WASHINGTON, Jan 29 (Reuters)

Utilities will sue the Federal Energy Regulatory Commission if it tries to enact reliability rules to prevent a repeat of August's massive blackout, the head of an industry group said on Thursday.

The industry and FERC are at odds over who will lead the push to ensure that the U.S. power grid is more reliable.

Utility executives met this week with FERC Chairman Pat Wood and insisted the agency take a back seat to the North American Electric Reliability Council, an industry-funded group.

FERC is weighing its authority to conduct reliability audits of the U.S. grid. The agency is concerned that parts of the grid remain vulnerable to the lapses on Aug. 14 that left 50 million people without power in parts of the U.S. Northeast and Canada.

Michehl Gent, NERC's president and chief executive, told an industry conference his group has been doing reliability audits of utilities for years and "we don't need FERC's help."

"If certain things are done, you're going to see lawsuits," Gent added, because utilities will "almost certainly" challenge FERC's authority in court.

FERC could have "some sort of oversight role," he said. But the industry group wants to continue performing audits.

Gent said FERC should stay within the boundaries of an energy bill now stalled in the Senate, which has FERC taking an oversight role but lets NERC write reliability rules and perform audits.

The bill is the "consensus language of the whole industry," Gent said. "We just can't part from it."

Lawmakers and consumer groups have criticized NERC as a toothless watchdog because it lacks authority to levy fines against utilities that violate the voluntary rules.

Last year, a U.S.-Canadian task force found the Aug. 14 blackout began when overgrown trees shorted out three major transmission lines owned by Ohio-based FirstEnergy Corp. .

Investigators found several NERC rule violations by FirstEnergy and the Midwest grid operator, but the industry group cannot levy fines or penalties.

Gent said he believed "peer pressure" -- not fines -- can make utilities fix reliability problems.

Levying fines would "allow the offending party to buy his way through a violation," Gent said. "There's probably no amount of money we could charge to make them fix it."

News Provided By