I assume that we will discuss the entire process on the next NERC call?  

Jim

 -----Original Message-----
From: 	Yeung, Charles  
Sent:	Saturday, August 11, 2001 7:50 AM
To:	Shelk, John; Richard Shapiro/Enron@EnronXGate; Robertson, Linda; James D Steffes/Enron@EnronXGate; Novosel, Sarah; Dave Perrino/Enron@EnronXGate; Rodriquez, Andy; Richard Ingersoll/Enron@EnronXGate; Christi L Nicolay/Enron@EnronXGate; Susan Lindberg/ENRON@enronXgate; Walton, Steve
Subject:	RE: Summary of "Final Draft" of NERC "Electric Reliability Organization" Legislation

Bullet 4:
FERC cannot directly "amend" a proposed standard (I was told this is because the Canadians would object to FERC telling them what to do directly); however, FERC can remand a proposed standard to the ERO for a modification by a date certain.  The proposed standard is not implemented until the modification is made.  (In some cases, a proposed standard takes effect automatically if FERC fails to act on the proposed standard within a specified period of time.)

At the GISB - EPSA meeting last Thurs, the GISB people clearly stated that GISB has NO authority over its members, it is 100% voluntary.  All the muscle lies in FERC and any governmental agency that is willing to adopt the GISB standard.  Agencies in Mexico for example have adopted certain GISB standards.  In fact, ANSI acreditaion requires that the standards setting organization NOT to have authority.  So it makes sense for FERC to not amend a proposed standard since other agencies will have to be able to adopt it.(e.g.- Canada)  I don't see a problem with this - but this makes the consensus building process even more important since the final product must be amenable to any and all relevant governement authorities.  

This is a good reason why the legislation cannot give deference to the ERO, especially one which proposes to have compliance and enforcement authority as NERC's proposal.  If NERC is going to set standards AND have compliance authority over its members - then the ANSI acreditation they claim to be getting will not be the same as that of GISB.  ANSI does not allow this combination.  If the deference language is in the legislation - that means the GISB/EISB proposal is excluded from FERC's choice.  FERC needs to be aware of this.  So why does the voluntary GISB process with FERC oversight model work? 

It is the very nature of knowing FERC has final authority that makes the consensus building process work - not the threat of the ERO's compliance authority over its members as NERC approaches this.  In GISB, the  members know that if they do not produce a standard that all its members and FERC can live with - FERC will not adopt it, nor can FERC amend it - and since no enforcement mechanism will be behind the mis-guided standard (remember it is 100% voluntary), it becomes a worthless exercise.  This is a powerful incentive.   

On the other hand, NERC's approach of a standards organization with enforcement power sets the stage for power struggles between sectors and knocks down the consensus building attitude the GISB process encourages.   Compliance and penalites are not assigned or targeted to every member/sector.  Certain parties are impacted by certain standards - and in different ways. For example - a congestion management standard will affect a control area very differently than it would a power marketer.  The penalites may not apply at all to the marketers who want to protect themselves by making the congestion management penalites as harsh as possible and vice versa for the control areas.  If the ERO doles out compliance without FERC approval - then the standards will become a battleground over compliance and penalties. The point is the enforcement and penalty debate will drive sector arguments and will cloud the real task of developing an equitable congestion management standard.




 -----Original Message-----
From: 	Shelk, John  
Sent:	Friday, August 10, 2001 3:58 PM
To:	Shapiro, Richard; Robertson, Linda; Steffes, James D.; Novosel, Sarah; Yeung, Charles; Perrino, Dave; Rodriquez, Andy; Ingersoll, Richard; Nicolay, Christi L.; Lindberg, Susan; Walton, Steve
Subject:	Summary of "Final Draft" of NERC "Electric Reliability Organization" Legislation


Attached is a summary I did of the key points in the Final Draft of the NERC reliability legislation, as amended yesterday.  While it is now shorter than the old version, and some of the objectional features have been deleted or watered down, I assume we still do not support the final version.  We and others who attended these meetings have been asked to provide our comments and position by close of business on Thursday, August 16th.  I thought the summary would help highlight the major features so we can evaluate the final version in light of our concerns and interests in this subject.  Your comments are welcome.


 << File: SummaryNERCFinalDraft081001.doc >>