Transcript Slide 1

Structuring and Implementing a
Truly International ERO
Kevin Kelly
Director, Policy Analysis and Rulemaking
Office of Markets, Tariffs and Rates
Federal Energy Regulatory Commission
Canadian Electricity Association Reliability Workshop
Washington, D.C.
October 20, 2004
The author’s views do not necessarily represent the views of
the Federal Energy Regulatory Commission.
International ERO
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Legislation directs the President to work
with Canada and Mexico
FERC and DOE have been consulting with
Canada frequently for years about working
together on implementing the new law.
This Spring: Binational ERO Working
Group began identifying ERO issues
U.S. is committed to a cooperative effort
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After legislation passes
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FERC issues a proposed rule implementing
the legislation
Rulemaking process must follow the
Administrative Procedures Act: notice &
comment; decisions based on the record
Ex parte does not apply; no prejudgment
Issue final rule within 180 days – a tight
deadline
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After the final rule issues
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One (or more – unlikely) parties may
apply to FERC to be the ERO in the U.S.
FERC selects and certifies one ERO for the
U.S.
The ERO then pursues recognition in
Canada and Mexico, according to the law.
Canada and Mexico may choose to have a
similar or different process.
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Our Governments’ Common
Goal
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The ERO must be an advocate for excellence in
North American reliability.
Reliability standards should be more than the
“least common denominator” of the current
practices of today’s grid operators.
Our September conference on what NERC
learned from its audits shows that some 2/3 of
grid operators have room for significant
improvement.
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Which policies to include in the
rulemaking?
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At minimum, the rule must establish
procedures for ERO application and
criteria for ERO certification.
Adding other issues has a pro and a con:
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Pro: simplifies ERO stakeholder negotiations
Con: extends a process with a tight deadline
Preferred: NERC stakeholders address
these issues in advance of legislation.
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Examples of other possible ERO
rulemaking issues
Should the rule provide the answers, should the
ERO develop answers as it develops its ERO
application, should the issues be addressed after
the ERO is certified, or should NERC address
issues in advance of legislation?
 Relation of the ERO to regional entities
 ERO funding
 Regional entity funding
 Standard-setting process – excellence
Note: NERC is addressing the first two issues.
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Insert RTO map here
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Canadian Input to the Process
There are at least two approaches to Canadian
government input to these ERO issues:
1. The international ERO uses an international
stakeholder process to develop answers to
propose to all the governments: U.S., Canada,
Mexico.
2. The governments consult to discuss issues and
preferred ERO policies.
Use the better approach for each issue: e.g.,
funding versus coordinating enforcement versus
coordinating multiple Canadian jurisdictions
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Binational ERO Working Group
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Formed in the early Spring 2004 by
Canadian Federal-Provincial task force,
DOE, and FERC.
Government staff from NRCan, Provincial
Regulators, DOE, FERC.
Identifying issues and possible solutions
Have not yet involved principals
Mexico to be included later
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Examples of Issues
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ERO Mandate
ERO Independence
ERO as an International Organization
Standards Development Process
Certification of ERO
Regulatory Review/Approval of Standards
Enforcement of Standards
Intergovernmental Cooperation
Other Issues: roles of regions & members
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