Public Power - October 2008 - (Page 42)

RELIABILITY Preparing for NERC Compliance Audits By William Atkinson With new mandatory reliability standards in place, North American Electric Reliability Corp. audits are becoming increasingly formal. “Reliability of the bulk power system in North America is becoming more and more important as new uses for electricity continue to multiply,” said Rick Sergel, president and CEO of NERC, at a June 3 media briefing. “Major service interruptions have much greater implications than just turning the lights off. They can cost our economy millions of dollars, and more importantly, put lives in danger. Even though issues like weather, simultaneous equipment failures, and human error are impossible to rule out entirely, we can ensure the right practices are in place so the likelihood and severity of disturbances are substantially reduced.” Compliance monitoring today consists of all of the regulator-approved standards in the United States, said David Hilt, NERC’s vice president and director of compliance. There are currently 86 NERC approved standards approved, 24 standards pending, and eight regional standards approved by NERC and the Federal Energy Regulatory Commission that are mandatory within the Western Interconnection (WECC). Each year, NERC identifies a subset of standards to monitor. “This means the entity must report compliance to that standard to NERC or its region, even if it is in full compliance,” Hilt said. As of April 29, 2008, there were 42 OCTOBER 2008 1,835 organizations registered with NERC and responsible for some part of the standards. NERC monitors compliance in seven ways: Self-reporting—when a utility discovers non-compliance and reports directly to NERC. Periodic reporting—this requires data submittals from companies for certain standards. Self-certification—where NERC requires a physical report, even if in full compliance. Exception reporting— where a system may be exceeding its limits for a period of time. Investigations—investigating various events and reports of non-compliance. Random spot checks and audits—designed to confirm that self-certification and self-reporting are accurate. Compliance audits—comprehensive audits, usually involving a site visit or at least a series of documents for review. In the instance of a violation, the regional reliability council that discovers the problem notifies NERC and possibly the violator within a couple of business days. NERC then notifies the appropriate government authority. All monitoring is confidential. The regions then continue to evaluate the situation to determine if there is an issue with the standard. Next, the region and NERC issue a notice of alleged violation, and a proposed penalty or sanction is sent to the entity. At any time during the process, NERC or the region can enter into a discussion to settle the matter with the registered entity. The entity can accept the violation and submit a mitigation plan or contest the violation. There is also an appeals process at NERC. Once completed, NERC receives a formal notice of confirmed violation of one of the standards. “Our board compliance committee then reviews those actions of the regions and either approves or remands those proposed penalties, sanctions, or other enforcement action,” said Hilt. There is a five-day waiting period as documents are prepared. “We then publicly post and file a notice of penalty or settlement with FERC,” he said. “In addition, we are very concerned about mitigation of the reliability standards and making sure that reliability is preserved,” said Hilt. Each mitigation plan is reviewed by NERC for approval, and they are filed non-publicly with FERC. “The good news is that the industry is really stepping up to the plate and self-reporting most of these,” said Hilt. Over half of the violations are selfreported. Many more are identified through the self-certification process. There are even a few from exception reporting and data submittal. Only just over a quarter are from NERC’s formal compliance audit process, he said. As of June 18, 2007, 55 percent of alleged violations were self-reported, according to the NERC Web site. (www.nerc.com) “The majority of the initial set of reported violations were documentation-related and did not include a financial penalty. All of the violations are already being addressed by the utilities, which are required to take immediate corrective action,” according to a NERC press release. PUBLIC POWER http://www.nerc.com

Table of Contents Feed for the Digital Edition of Public Power - October 2008

Public Power - October 2008 Contents Perspective 10 Questions The Future of Fuels in a Carbon-Constrained World An Energy Revolution Energy Policy in 2009 and Beyond A Green Reincarnation Beyond the Green Bandwagon Reliability Green Energy Community Broadband Customer Service Hometown Connections Human Resources Parting Shot

Public Power - October 2008

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