On May 11, 2011 Commissioner Phillip Moeller of the Federal Energy Regulatory Commission (“FERC” or the “Commission”) and Gerry Cauley, President and CEO of the North American Electric Reliability Corporation (“NERC”), offered their thoughts on ensuring the reliability of the bulk power system in a keynote address at a conference presented by the Electric Utility Consultants, Inc. (“EUCI”) and hosted by Troutman Sanders LLP. 

Commissioner Moeller offered his thoughts on several trends in the power industry; both past trends and future developments.  First, Mr. Moeller suggested that over the past year the power industry, FERC, and NERC have begun to work together better than previously, and this is a trend he believes needs to continue to ensure reliability of the bulk power system.  Secondly, Commissioner Moeller stated that FERC and NERC need to find a way to deal with the thirty-two month backlog of violations that has piled up.  Next, he noted that state policies have created regional crises.  These crises could be mitigated if FERC had full backstop siting authority for electric transmission. 

Commissioner Moeller went on to briefly discuss an eighteen month Berkley Lab study that began in May 2009 on demand response that exposed how fragile the Eastern Interconnect is to real vulnerabilities.  The Commissioner also stated that cyber-security will need strong standards, and right now state renewable portfolio standards (“RPS”) are colliding with the public interest.  Specifically, Moeller mentioned the recently passed California RPS and how it will be implemented.  Finally, Commissioner Moeller spoke about the EPA’s eight rulemakings that will affect coal-burning power plants.  The major problem with the eight rules is that the quick timeline in which they are likely to be offered will create uncertainty in the industry.  Additionally, Mr. Moeller suggested that there need to be incentives in place in order to compensate older plants or reliability must-run plants in the face of compliance with EPA’s rules. 

Gerry Cauley discussed NERC’s focus on ensuring reliability as well as their commitment to holding entities accountable for ensuring the reliability of the bulk power system.  He believes that the industry, NERC, and FERC need to continue to share information and issues with each other as a community to ensure reliability.  Cauley also stated that currently the CEO risk priorities are: mix-operation of relay and control systems, human errors, incomplete voice communication and right of way maintenance and clearance.  He then stated that NERC needs to improve the process for passing better standards.  Finally, Cauley offered five critical success factors for NERC: (1) standards need to be approached from a risk management perspective, (2) compliance needs be prioritized and fully evaluated, (3) mitigation plans must be implemented and followed, (4) event analysis and investigation should be conducted, and (5) critical infrastructure in general needs to be improved with a focus on both resilience and protection.