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Electric Council Seeks Bid to Lead Reliability Standards for Nation’s Power Grid

FERC Solicits Comments on Proposed Standards

New York, May 16, 2006

The North American Electric Reliability Council (NERC) has petitioned the Federal Energy Regulatory Commission (FERC) for a bid to lead standardization efforts to improve the nation’s electricity capacity and reliability. A member and accredited standards developer of the American National Standards Institute (ANSI), NERC is working with industry stakeholders, FERC, and Canadian government authorities to earn certification as the official Electric Reliability Organization (ERO) for the United States and Canada.

Under the Energy Policy Act of 2005, all owners, operators, and end users of the nation’s electric power system are required to adhere to mandatory standards established and enforced by the ERO. Failure to comply with the standards could result in steep financial penalties of up to $1 million per day.

NERC has submitted a petition to FERC seeking approval of 102 proposed reliability standards addressing topics such as critical infrastructure protection, interconnection reliability, emergency preparedness, and telecommunications. All proposals for new standards and modifications to existing ones will be subject to FERC approval.

“Once approved, the standards will be legally binding and provide a basis for enforcement actions in the event of non-compliance,” said Rick Sergel, chief executive officer of NERC, at a Senate Energy and Natural Resources Committee hearing yesterday.

FERC issued a preliminary assessment of the proposed standards last week. According to FERC General Counsel John S. Moot, NERC’s standards program “represents a solid foundation on which to maintain and improve the reliability of the nation’s bulk-power system.” Nevertheless, the report highlighted areas needing further development, including measures of compliance, clarification of applicability, and standards addressing power outages. If the application for ERO is successful, NERC believes it will be able to achieve mandatory standards by next summer.

FERC is soliciting public comment on the commission’s preliminary assessment in order to determine whether the proposed standards meet the statutory criteria. Following the comment period, FERC will issue a rulemaking proposing to approve, reject, or conditionally accept the NERC standards. The comment period ends June 26, 2006.

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