1. The Electric Reliability Organization: Getting from here to there.
Public Release
ERO
Slippery
Slope
NERC
Today
Uphill
Climb
Gerry Cauley
Director, Standards
ERO Project Manager

2. Electric Reliability Organization
Canada
Alberta, British Columbia, Manitoba, Ontario, New Brunswick, Nova Scotia, Quebec, and Saskatchewan
United States
Federal Energy Regulatory Commission
Mexico
Comision Reguladora
de Energia
Reliability
Standards
Compliance
Enforcement
Electric Reliability
Organization
Regional
Entities
Other ERO Members
Bulk Electric System Owners, Operators, Users

3. Strengths of ERO Model
Partnership between government and private sector
Industry expertise, experience, technical competence
Government oversight to assure fairness, openness, due process, accountability
Recognizes international character of grid
Interests from U.S., Canada, Mexico
Develop single acceptable ERO solution

4. U.S. Reliability Legislation
One industry self-regulatory ERO
FERC oversight
Delegates authority to set and enforce mandatory standards to ERO
ERO delegates authority to regional entities
Standards apply to all owners, operators and users of bulk power system
Independent governance
FERC rule within 180 days (2/4/06)
Additional details in FERC rule

5. ERO Is International
Bilateral Electric Reliability Oversight Group principles and terms of reference
ERO oversight in each Canadian province
Enforcement of mandatory standards
Consistency of enforcement actions
Proportionate funding in Canada
Coordination of ERO certification and regulatory actions with U.S.
Plan to work with Federal-Provincial Task Force and each province

6. FERC NOPR – Key Issues
NOPR mostly stays close to legislation and provides good framework for ERO
Areas of interest:
De-certification and civil penalties against ERO, regions and their directors
Disclosure of alleged and ‘about to occur’ violations
Standardization of regional delegation agreements and rules of procedure
Limitations on regional standards
Chain of accountability: FERC, ERO, regions
FERC directives on standards
Compliance personnel qualifications

7. ERO Transition Project
FERC Rulemaking
ERO
Certification
ERO
Implementation
Final
ERO Rule
Energy Policy Act 2005
Public Comment
ERO
Application
ERO Rules of
Procedure
NERC
Preparations
Stakeholder
Inputs
Delegation
Agreements
Region Rules of
Procedure
Region
Preparations

8. NERC Stakeholder Inputs
Post Legislation Steering Committee
Reports to Board of Trustees
Consults stakeholders and members (regional reliability councils)
Working groups
Membership
Funding
Regional delegation
Sanctions and penalties
Standing committees
Including SAC/CCC

9. ERO Transition Timetable
8/31/05
9/1/05
9/30/05
10/7/05
11/30/05
~12/05
~1/06
~2/06
~4/06 – 8/06
~10/06
12/31/06
Project startup and organization
NOPR issued
Principles on key issues drafted
NOPR response
Rules of procedures drafted
FERC rule issued
FERC rehearing and final rule
ERO and regional applications
ERO certification
ERO 2007 budget approved
Transitional business cycle ends

10. ERO Governance Retain existing NERC independent board
Add second Canadian trustee to exceed 12.5% NEL threshold
Retain NERC identity
Form new corporation prior to certification and merge into new corporation upon certification

11. ERO Membership (Team Assigned)
Required members?
Bulk electric system owners, operators and users?
Voluntary members?
Other stakeholders?
Decision-making rights of members?
Elect board, approve amendments to certificate and bylaws?
Stakeholder representation and balance?

12. ERO Funding (Team Assigned)
Who pays?
Bulk electric system owners, operators, users?
Based on NEL (at balancing area or load-serving entity)?
Other members pay?
Who collects funds – ERO? Regions?
ERO must include plan in application
Annual regulator approval of budget
All entities subject to FERC jurisdiction must pay according to approved plan
Transition funding through 2006 using existing budget process

13. ERO Reliability Standards
Subject to FERC approval
FERC may direct and remand standard
FERC defers to ERO on technical expertise, but not on effect on competition
Rebuttable presumption for Interconnections
Approach:
Maintain ANSI-accredited, open process
File all approved standards with application
Develop procedures for filing of standard, responding to remands, etc.
Develop procedures for ERO approval of regional standards and differences

14. ERO Compliance Enforcement
Delegated to regional entity by agreement
Framework for penalties and sanctions (Team Assigned)
Need consistency of process and penalties/sanctions among regions
Compliance actions subject to FERC review - FERC may enforce directly
Procedures for handling of alleged compliance violations
Preserve existing disclosure guidelines

15. ERO Additional Functions
Disturbance investigations
Reliability coordinators
Organization certification
Personnel certification
Readiness audits
Critical infrastructure protection
Training program accreditation
Reliability support tools

16. Regional Entities (Team Assigned)
Pro forma delegation agreement
Execute individual agreements
Include regional entity applications with ERO application
Executed agreement
Documentation of minimum qualifications and requirements of region met