[Federal Register Volume 65, Number 224 (Monday, November 20, 2000)]
[Notices]
[Pages 69753-69754]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29600]


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DEPARTMENT OF ENERGY


Interstate Electric Transmission System; Electric Reliability 
Issues; Notice of Inquiry

AGENCY: Department of Energy.

SUMMARY: The Department of Energy (DOE) is seeking comments on whether 
to initiate, pursuant to section 403 of the DOE Organization Act (42 
U.S.C. 7173), a rulemaking for final action to the Federal Energy 
Regulatory Commission (FERC) to impose mandatory electric reliability 
standards. This is the initial step in a process in which DOE intends 
to examine electric reliability issues and proposals, and the extent of 
Federal authority under existing law, given the transition to 
restructured, more competitive electricity markets. Based on the 
results of that examination, DOE will consider the issuance of a 
proposed rulemaking. Any proposed rulemaking would seek to promote and 
ensure the long-term reliability of the interstate electric 
transmission system. DOE is seeking responses to particular questions 
posed below, and welcomes any other comments or proposals pertinent to 
an electric reliability rulemaking.

DATES: Written comments are to be filed at the address listed below no 
later than 4:30 p.m., eastern time January 4, 2001. DOE is requesting a 
signed original, a computer diskette (WordPerfect or Microsoft Word) 
and 3 copies of the written comments. Comments can also be filed 
electronically by e-mail to: [email protected], noting 
``Electric Reliability Comments'' in the subject line.

ADDRESSES: Written comments should be submitted to: Office of Policy, 
Office of Economic, Electricity and Natural Gas Analysis, PO-21, 
Attention: Electric Reliability Comments, U.S. Department of Energy, 
Forrestal Building, Room 7H-034, 1000 Independence Avenue, S.W., 
Washington, D.C. 20585.

FOR FURTHER INFORMATION CONTACT: Mr. John J. Conti, U.S. Department of 
Energy, Office of Policy, Office of Economic, Electricity and Natural 
Gas Analysis, Forrestal Building, PO-21, 1000 Independence Avenue, 
S.W., Washington, D.C. 20585, (202) 586-4767, e-mail: 
[email protected], or Lot Cooke, Esq., U.S. Department of Energy, 
Office of General Counsel, Forrestal Building, GC-76, 1000 Independence 
Ave., SW., Washington, D.C. 20585, (202) 586-0503, e-mail: 
[email protected].

SUPPLEMENTARY INFORMATION: The 1998 Final Report of the Secretary of 
Energy Advisory Board's Task Force on Electric System Reliability 
noted:

* * * the electricity industry is in a transition from a highly 
regulated industry dominated by monopoly utilities to an industry 
that will rely, in large part, upon competitive commercial markets 
at both the wholesale and retail levels. The industry is unbundling, 
and the old institutions for reliability are no longer sufficient. 
We are already in the middle of our journey toward a restructured 
electricity industry. However, the new policies and institutions 
needed to assure electric reliability are not yet in place. Until 
such policies and institutions are in place, substantial parts of 
North America will be exposed to unacceptable risks.

    The complete report is available at http://www.hr.doe.gov/seab.
    The events of the last two summers have borne out the Task Force's 
warnings. During the Summer of 1999 a number of regions of the country 
experienced blackouts and brownouts. Utilities located in other areas 
narrowly avoided major reliability-related problems. This past summer 
the California Independent System Operator declared a record number of 
``Stage 2'' electricity emergencies and was often on the brink of 
having to implement rolling blackouts. Some businesses were forced to 
temporarily shut down operations and millions of people were left to 
wonder whether the lights would be on when they returned home from work 
in the evening.
    The Report of the Secretary of Energy Advisory Board's Task Force, 
and a report prepared by the Department of Energy's Power Outage Study 
Team (available at http://www.policy.energy.gov/), offered 
recommendations on actions that could be taken to improve the 
reliability of the electric grid. Some of these recommendations focused 
on efforts to improve the adequacy of our electricity supply to ensure 
that it keeps pace with demand for power. Other recommendations 
attempted to address some potential problems associated with the 
security of the integrated bulk power grid. Both reports recommended 
that all users of the bulk power system be subject to mandatory 
reliability rules.
    The electric utility industry, through a tradition of voluntary 
self-regulation and cooperation, has historically performed admirably 
in maintaining reliability. That self-regulation was accomplished under 
the auspices of the North American Electric Reliability Council (NERC). 
NERC was established in 1968 as a voluntary membership organization. 
NERC develops standards, guidelines, and criteria for ensuring and 
evaluating the electricity system's security and adequacy. NERC 
operates through ten regional councils and has been largely successful 
in maintaining a high degree of transmission grid reliability. The 
reliability councils have functioned without formal enforcement powers, 
relying on voluntary compliance.
    However, in a highly competitive electricity market, voluntary 
self-regulation of reliability issues may not be sufficient. Utilities 
are under increasing pressures to cut costs and maximize the economic 
value of the electric transmission grid, to the possible detriment of 
electric reliability. In addition, in a competitive environment 
industry participants may use reliability concerns as a pretext for 
anti-competitive behavior.
    NERC and other interested parties have stated that the 
establishment and enforcement of mandatory reliability

[[Page 69754]]

standards will be necessary to protect the reliability of the bulk 
power system in a restructured electricity industry. The 
Administration's proposed comprehensive electricity restructuring 
legislation--the Comprehensive Electricity Competition Act (CECA) 
(H.R.1828 and S.1047 in the U.S. House of Representatives and the U.S. 
Senate respectively)--includes a provision that would amend the Federal 
Power Act (FPA) (16 U.S.C. 791a, et seq.) to require FERC to approve 
the formation of and oversee a self-regulating reliability organization 
that prescribes and enforces mandatory reliability standards. Several 
other bills introduced in the 106th Congress included similar 
proposals. Although the Senate approved S. 2071, which authorizes 
mandatory reliability standards, on June 30, 2000, the Committee on 
Commerce of the House of Representatives failed to act on this or any 
other electric reliability-related legislation.
    Because the 106th Congress is likely to adjourn without enacting 
legislation to improve the reliability of the electric grid, DOE is 
considering using its authority under section 403 of the DOE 
Organization Act to initiate an electric reliability rulemaking at 
FERC. To assist DOE in its consideration of this issue, we are 
requesting comments on the following questions:
    1. Is the existing arrangement of voluntary compliance with 
industry reliability rules sufficient to ensure reliability of the bulk 
power transmission system? If not, why not, and has reliability been 
jeopardized by violations of the existing bulk power reliability 
standards?
    2. What can FERC do under existing authorities to address 
reliability concerns?
    3. If FERC has the authority to establish and enforce reliability 
standards, may FERC delegate such authority to a self-regulating 
reliability organization? Should it do so?
    4. Are there elements in CECA, or other electric reliability 
legislative language, which can, with or without modification, be used 
in a rulemaking?
    5. What should the relationship be between Regional Transmission 
Organizations, as advanced in FERC Order No. 2000, 65 FR 809 (January 
6, 2000), FERC Stats. & Regs. para. 31, 089 (2000), and an Electric 
Reliability Organization as proposed in CECA?
    6. How should the responsibilities and roles of FERC and the States 
be addressed in a rulemaking?
    7. Recognizing the international nature of the interconnected 
transmission grid, how could implementation of mandatory reliability 
standards be coordinated with Canada and Mexico?
    In addition to the above, commenters are encouraged to discuss, 
comment on, and make suggestions on other electric reliability issues 
that may be relevant to DOE's consideration of a rulemaking. Comments 
submitted pursuant to the Notice of Inquiry will be deemed public and 
will not be treated as confidential.

    Issued in Washington, D.C. on November 15, 2000.
Bill Richardson,
Secretary of Energy.
[FR Doc. 00-29600 Filed 11-17-00; 8:45 am]
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