Rick

The following discussion is to bring you up to date on the latest NERC activities on reliability legislation that was a subject on the weekly ENRON-NERC team conference call.

John Shelk explained that NERC has significantly reduced the length of its proposed "Title on Reliability" so as to look more like the PJM approach.  Fundamentally, there are still major differences.  NERC continues to push for the embodiment of deference by FERC to the "SRO" in the legislation.  

Given the conference call last week with John Q Anderson, Dave Cook and Jeff Skilling, we were concerned how the upcoming meeting on Aug 9 by NERC stakeholders to "finalize" the NERC version would impact Jeff's request to speak with the Independent Board members before accepting any form of deference to NERC to become the SRO (or the term we prefer Standards Setting Organization - SSO).

The meeting on the 9th should not interfere with Jeff's ability to present issues to the Board.  We don't think Jeff needs to contact John Q Anderson or any NERC members about the Aug 9 meeting.  However, for the discussions with NERC, John Shelk plans to "stay the line" on the Enron position of keeping authority to defer to any SSO with FERC and to keep any language that defers to the SSO out of the legislation.  

Jeff should still be able to argue for key Board action items, and if Enron is appeased, deference to NERC could still be given - but not through legislation, rather through FERC "comfort" that the SSO is doing a good job.  By knowing that FERC can "pull the plug" on the SSO if it is not satisfied, this will provide the correct incentive for the SSO to ensure that no industry segment dominates the standards setting process.

I am completing a draft of issues that we want the Independents to resolve/address for Jeff Skilling to take to the Board.
Additionally, Andy Rodriquez and I will develop a summary of examples of why NERC, in its current form, is not able to develop consensus rules that all its members are willing to comply with.  These examples should be powerful arguments for John Shelk to leverage in arguments for FERC authority in the legislation.  

We also discussed the need to shop our reliability legislation principles with Pat Wood and perhaps DOE.

Charles Yeung
713-853-0348