Its my turn, sorry I havent jumped in til now, computer problems.

At a EPSA sponsored meeting on Aug 9, the GISB Chair and Rae McQuade sat down and we went through what it takes to get EISB rolling and how they would tackle the tough issues at NERC.

I beleive the EPSA folks in the room, Mirant, Dynegy, Ontario Power Gen, Enron, Exelon, Calpine  and ELCON all felt that there shouls be one organization setting standards because of the inherent risks of assuming reliability and commercial issues can be sleanly separated.  We came away from the meeting with a comfort level that the GISB process will provide the right mechanism to resolve this age old debate - I don't care what kind of standard you call it - if you write it - it must be put through the GISB/EISB wringer.  GISB recommended that perhaps what we know as NERC today could be given a segment in the energy quadrant.
 
Also to respond to Sarah's note about support for an SRO - no entity in the room supported that FERC give deference to ANY standards organization - not NERC, NAERO, GISB or RTOs.  So I think we need to hold tight to this issue and we will be able to rally support for it.

I will speak at the GISB conference next Wed, Aug 15 at DOE.  I am working with Mark Bennett and other EPSA folks on key principles of what EPSA wants from the EISB Strawman.

I have attached notes I put together that will evolve into the statements I will make on behalf of EPSA.

Please proviede me your thoughts.

Also - I agree with Dick, today, NERC is 12.5 million dollars annually, and mostly utility dollars.  If we are going to push for a EISB, we have to provide some carrot for these utilities to agree to let EISB do this.  NERC (and their supporters) will fall on their sword on funding and the reult will be we have 2 organizations setting standards if NERC cannot agree to become a part of the EISB process.  

And one more thing, I don't know how much commitment Jeff Skilling feels he has to the Independent Baord members, many of which he helped get seated.  But pushing for EISB and perhaps wrapping NERC into it as the reliability piece (GISB's suggestion) - may render the Independents obsolete.  I don't know if are wedded to them.

 





 -----Original Message-----
From: 	Ingersoll, Richard  
Sent:	Wednesday, August 08, 2001 8:47 PM
To:	Shapiro, Richard
Cc:	Rodriquez, Andy; Yeung, Charles; Nicolay, Christi L.; Perrino, Dave; Steffes, James D.; Shelk, John; Novosel, Sarah; Walton, Steve; Scott, Susan
Subject:	RE: FTC / NERC - Comment of the Staff of the Bureau of Economics and of Policy Planning of the Federal Trade Commission.


When all is said and done money rules and this means that the source of the funds to run the RTO's must come from an independent source if we are to have independent RTO's.  Perhaps directly from the rate payers or as a last resort federal funding.  If the feds fund they will rule the electric business like they do the schools and highways by using  threats to with hold dollars as a method of geting their proposals accepted.  Kind of dammed if we do and dammed if we don't.   If we don't sole the funding we will not resolve the other issues to our satisfaction.   




	Richard Shapiro/ENRON@enronXgate 08/07/2001 06:53 PM 	   To: Steve Walton/ENRON@enronXgate, Dave Perrino/ENRON@enronXgate, Charles Yeung/ENRON@enronXgate, James D Steffes/ENRON@enronXgate  cc: John Shelk/NA/Enron@Enron, Andy Rodriquez/ENRON@enronXgate, Richard Ingersoll/HOU/ECT@ECT, Sarah Novosel/Corp/Enron@ENRON, Christi L Nicolay/ENRON@enronXgate, Susan Scott/ENRON@enronXgate  Subject: RE: FTC / NERC - Comment of the Staff of the Bureau of Economics and of Policy Planning of the Federal Trade Commission.	


I agree with Steve although I've articulated a different point of view at times in the recent past. The CAISO experience is the most compelling argument of all. Let's make sure this is our position...but, if there are still dissenting points of view, we should hear them out....But,We do need to resolve this quickly. A final thought: this perspective puts us in between the NERC and PJM views..perhaps in an advantageous position to broker a legislative compromise.


-----Original Message-----
From:	Walton, Steve
Sent:	Tue 8/7/2001 7:40 PM
To:	Perrino, Dave; Yeung, Charles; Shapiro, Richard; Steffes, James D.
Cc:	Shelk, John; Rodriquez, Andy; Ingersoll, Richard; Novosel, Sarah; Nicolay, Christi L.; Scott, Susan
Subject:	RE: FTC / NERC - Comment of the Staff of the Bureau of Economics and of Policy Planning of the Federal Trade Commission.

After reading the FTC document, I am concerned that we are loosing sight of the fact that the RTO is first and foremost a provider of transmission service.  It will decide who uses the system, how it will be used, what schedules will be accepted, etc.  Do we really want it to set the standards by its performance is to be judged by others?  There are two tendencies to guard against.  (1)  Most of these organizations are going to be not-for-profit ISOs in form.  There may be a tendency to use very stringent rules to minimize outage risk and criticism of the RTO's management.  This could require the construction of facilities when they are not completly necessary.  (2) The opposite possiblity exists, namely, that they will adjust rules to cover their own mistakes.  I think the former problem is the most likely.  

If the RTOs take over the NERC role as suggested, then the reliability rules would have to become part of the FERC tariff.  In order to judge the validity of the "reliability provisions" of the tariffs the FERC will be required to develop expertise it does not have.  In practice NERC doesn't have the expertise either.  It really resides in the members of the committees and is thus derived from the industry.  By having a separate Standards Setting Organization, the rules can still be established using the expertise of the industry.  The SSO would propose rules which FERC would accept subject to complaint.  The SSO's governance has to be fair, but I am not personally concerned about it being indepenent as long as FERC has oversight. It is the service provider (the RTO) that needs to be independent.  The standards in most industries are set in this way.  The power of the state to enforce the rules come from commissions of various types.  For instance, the National Electric Code is developed by the industry, but its enforcement is accomplished by adopting it into building codes, state liscensing requirements, etc.  In the same way, the SSO can develop the reliability rules which are incorporated in FERC's requirement imposed on the RTO.  The RTO's tariff would incorporate them by reference.  If the RTOs performance violates the rules or if a generator doesn't hold up its requirements, then ADR/FERC action can be taken to enforce.

My reason for this long message is to draw attention to the fact that the major function of the RTO is provision of transmission service.  It should not see itself as a regulator.  The case of the CAISO is instructive, since they think they are above compliance with rules since the believe they are the guardians of the public interest.  When the service provider thinks it regulates to comes to believe it has a right to decide who "should" have transmission service rather than get on with providing it. 

Steve

	 -----Original Message-----
	From: 	Perrino, Dave  
	Sent:	Tuesday, August 07, 2001 6:16 PM
	To:	Yeung, Charles; Shapiro, Richard; Steffes, James D.
	Cc:	Shelk, John; Rodriquez, Andy; Ingersoll, Richard; Novosel, Sarah; Nicolay, Christi L.; Scott, Susan; Walton, Steve
	Subject:	FTC / NERC - Comment of the Staff of the Bureau of Economics and of Policy Planning of the Federal Trade Commission.

Charles,

	Attached to this message is the results of a study completed by the FTC at DOE's request relating to NERC and open access, dated Jan 4, 2001.  I believe this document is significant and should be considered in our ongoing quest for a truly independent "standards" organization.  I would point you to page 10, the last sentence which states, "To the extent that RTOs are implemented in all areas of the country and have large geographic scope (or that FERC causes RTOs to coordinate their policies and rates that affect reliability within each of the three transmission Interconnects), the need for a separate reliability organization with mandatory rules may be greatly  educed or eliminated.",  Interesting.....

	Kind Regards,

	Dave

	 << File: FTC document.pdf >> 

		 -----Original Message-----
		From: 	Yeung, Charles  
		Sent:	Tuesday, August 07, 2001 2:57 PM
		To:	Shapiro, Richard; Steffes, James D.
		Cc:	Shelk, John; Rodriquez, Andy; Ingersoll, Richard; Perrino, Dave; Novosel, Sarah; Nicolay, Christi L.; Scott, Susan; Walton, Steve
		Subject:	Update - NERC Version of Legislation

		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