The Electric Reliability Organization: Getting from here to there'

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The Electric Reliability OrganizationGetting
from here to there.
Public Release

• Gerry Cauley
• Director, Standards
• ERO Project Manager

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Electric Reliability Organization
Canada Alberta, British Columbia, Manitoba,
Ontario, New Brunswick, Nova Scotia, Quebec, and
Saskatchewan
United States Federal Energy Regulatory Commission
Mexico Comision Reguladora de Energia
Reliability Standards
Compliance Enforcement
Electric Reliability Organization
Regional Entities
Bulk Electric System Owners, Operators,
Users
Other ERO Members
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Strengths of ERO Model

• Partnership between government and private sector
• Industry expertise, experience, technical
  competence
• Government oversight to assure fairness,
  openness, due process, accountability
• Recognizes international character of grid
• Interests from U.S., Canada, Mexico
• Develop single acceptable ERO solution

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U.S. Reliability Legislation

• One industry self-regulatory ERO
• FERC oversight
• Delegates authority to set and enforce mandatory
  standards to ERO
• ERO delegates authority to regional entities
• Standards apply to all owners, operators and
  users of bulk power system
• Independent governance
• FERC rule within 180 days (2/4/06)
• Additional details in FERC rule

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ERO Is International

• Bilateral Electric Reliability Oversight Group
  principles and terms of reference
• ERO oversight in each Canadian province
• Enforcement of mandatory standards
• Consistency of enforcement actions
• Proportionate funding in Canada
• Coordination of ERO certification and regulatory
  actions with U.S.
• Plan to work with Federal-Provincial Task Force
  and each province

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FERC NOPR Key Issues

• NOPR mostly stays close to legislation and
  provides good framework for ERO
• Areas of interest
• De-certification and civil penalties against ERO,
  regions and their directors
• Disclosure of alleged and about to occur
  violations
• Standardization of regional delegation agreements
  and rules of procedure
• Limitations on regional standards
• Chain of accountability FERC, ERO, regions
• FERC directives on standards
• Compliance personnel qualifications

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ERO Transition Project
FERC Rulemaking
ERO Certification
ERO Implementation
Final ERO Rule
Energy Policy Act 2005
Public Comment
ERO Application
ERO Rules of Procedure
NERC Preparations
Stakeholder Inputs
Delegation Agreements
Region Rules of Procedure
Region Preparations
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NERC Stakeholder Inputs

• Post Legislation Steering Committee
• Reports to Board of Trustees
• Consults stakeholders and members (regional
  reliability councils)
• Working groups
• Membership
• Funding
• Regional delegation
• Sanctions and penalties
• Standing committees
• Including SAC/CCC

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ERO Transition Timetable

• 8/31/05
• 9/1/05
• 9/30/05
• 10/7/05
• 11/30/05
• 12/05
• 1/06
• 2/06
• 4/06 8/06
• 10/06
• 12/31/06

• Project startup and organization
• NOPR issued
• Principles on key issues drafted
• NOPR response
• Rules of procedures drafted
• FERC rule issued
• FERC rehearing and final rule
• ERO and regional applications
• ERO certification
• ERO 2007 budget approved
• Transitional business cycle ends

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ERO Governance

• Retain existing NERC independent board
• Add second Canadian trustee to exceed 12.5 NEL
  threshold
• Retain NERC identity
• Form new corporation prior to certification and
  merge into new corporation upon certification

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ERO Membership (Team Assigned)

• Required members?
• Bulk electric system owners, operators and users?
• Voluntary members?
• Other stakeholders?
• Decision-making rights of members?
• Elect board, approve amendments to certificate
  and bylaws?
• Stakeholder representation and balance?

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ERO Funding (Team Assigned)

• Who pays?
• Bulk electric system owners, operators, users?
• Based on NEL (at balancing area or load-serving
  entity)?
• Other members pay?
• Who collects funds ERO? Regions?
• ERO must include plan in application
• Annual regulator approval of budget
• All entities subject to FERC jurisdiction must
  pay according to approved plan
• Transition funding through 2006 using existing
  budget process

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ERO Reliability Standards

• Subject to FERC approval
• FERC may direct and remand standard
• FERC defers to ERO on technical expertise, but
  not on effect on competition
• Rebuttable presumption for Interconnections
• Approach
• Maintain ANSI-accredited, open process
• File all approved standards with application
• Develop procedures for filing of standard,
  responding to remands, etc.
• Develop procedures for ERO approval of regional
  standards and differences

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ERO Compliance Enforcement

• Delegated to regional entity by agreement
• Framework for penalties and sanctions (Team
  Assigned)
• Need consistency of process and
  penalties/sanctions among regions
• Compliance actions subject to FERC review - FERC
  may enforce directly
• Procedures for handling of alleged compliance
  violations
• Preserve existing disclosure guidelines

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ERO Additional Functions

• Disturbance investigations
• Reliability coordinators
• Organization certification
• Personnel certification
• Readiness audits
• Critical infrastructure protection
• Training program accreditation
• Reliability support tools

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Regional Entities (Team Assigned)

• Pro forma delegation agreement
• Execute individual agreements
• Include regional entity applications with ERO
  application
• Executed agreement
• Documentation of minimum qualifications and
  requirements of region met