Power Regulation

Industry Has Concerns on NERC Audit

By Todd H. Cunningham | ECT Staff Writer Published: August 29th, 2012

Federal Energy Regulatory Commission approval of a far-reaching staff audit of its certified electric reliability organization could throw a cloud over future operations, NRECA and other energy groups asserted.

Electric power groups caution that a far-reaching FERC staff audit of its reliability watchdog could throw a cloud over future operations. (Photo By: no_limit_pictures)

Electric power groups caution that a far-reaching FERC staff audit of its reliability watchdog could throw a cloud over future operations. (Photo By: no_limit_pictures)

Approval would draw FERC into the North American Electric Reliability Corp.’s management decision-making, hampering flexibility, and restrict NERC’s activities in support of industry reliability, they warned.

In addition, the scope of the audit, which covered NERC’s budget and operations, exceeds the commission’s statutory authority under the Federal Power Act, the signatories said in their Aug. 20 filing (Docket FA11-21).

NRECA, the American Public Power Association, Edison Electric Institute, Electric Power Supply Association, Large Public Power Council and other groups told FERC that they have ample reason to be concerned.

Each of the trade associations noted that it has members subject to NERC’s reliability standards and compliance regime, and that it actively participates in the reliability watchdog’s administrative processes and standards development.

The trade groups emphasized that they support FERC’s oversight of NERC’s electric reliability activities. But the Federal Power Act places primary authority for oversight of NERC’s expenditures with its governing board, the comments said, and FERC should defer in this regard.

The trade groups also noted the audit’s criticism of NERC’s assumption that all its project costs are recoverable through the assessment on load-serving entities provided in Section 215 of the Federal Power Act.

“If the commission intends to send a different signal now, a staff-developed audit report covering past activities and expenditures is not the right place to do it,” they emphasized.

“FERC is more used to auditing jurisdictional utilities, so it is not surprising that this first-time audit of a non-utility electric reliability organization hit some rough spots,” commented Rich Meyer, NRECA senior regulatory counsel, following submittal of the comments.

“Informed by industry comment, FERC is more likely to get it right next time around,” Meyer added .

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