ST. LOUIS — Below is a summary of operational issues and personnel changes discussed at meetings of the NERC Member Representatives Committee (MRC) and Board of Trustees on May 8 and 9.
NERC Five-Year Performance Assessment
The board approved the filing of NERC’s Five–Year Performance Assessment with FERC, NERC’s argument for why it and the regional entities should be recertified as the Electric Reliability Organization under the Energy Policy Act of 2005.
In renewing NERC as the ERO in November 2014, FERC ordered it to continue to improve consistency and developing performance and reliability metrics (RR14-5). It also directed NERC to compare actual project completion times with estimated times and begin analyzing repeat violations by registered entities.
After NERC files the assessment, FERC will open a docket to invite public comment on the ERO’s performance.
Among the accomplishments NERC cited during the 2014-2018 assessment period:
- The use of assessments and events analysis to identify, prioritize and mitigate risks to the bulk power system.
- The enactment of reliability standards on cybersecurity, physical security and planning risks.
- “Enhancements” to NERC’s Compliance Monitoring and Enforcement Program (CMEP) and its Electricity Information Sharing and Analysis Center (E-ISAC).
- Improved efficiency by increasing the “alignment” of NERC and its REs.
Potential Change to Committee Structure
NERC is considering a restructuring of its Operating, Planning and Critical Infrastructure Protection committees to address the increasing overlap in their activities, Mark Lauby, NERC senior vice president and chief reliability officer, told the MRC.
Lauby said the current committee structure, which has been in place for more than a decade, is “expensive and time-consuming for NERC members.”
The accelerating speed of change is causing a “blurring” of the committee silos and requires “cross-cutting [and] rethinking of many utility paradigms,” he said, noting that several REs have changed their committee models.
Because each of the three “technical” committees “identify and assess risk,” Lauby said, a “stakeholder engagement team” that includes Lauby, MRC Chair Greg Ford and Trustees Ken DeFontes and Fred Gorbet, has been working since January on potential changes. The team is considering two alternatives:
- Retaining the three committees while adding an Oversight Committee to coordinate their work; or
- Replacing the three committees with a new Reliability Council reporting to the board.
The team will refine its proposal through July 18, when it plans a webinar to outline its plan. It is scheduled to be presented to the MRC about Aug. 15 and the board Nov. 6, with implementation in January.
Lauby said NERC’s “advisory” committees (Compliance Certification, Standards and Personnel Certification Governance) have “distinct” missions and are not part of the review. Also exempt is the Reliability Issues Steering Committee, which Lauby said “has a unique charge and participation model.”
On Thursday, the trustees approved amendments to the Standards Committee Charter to streamline it, clarify responsibilities and eliminate content discussed in other NERC governing documents, including provisions regarding Canadian representation and field tests. The charter was last changed in 2015.
Changes to State of Reliability Report
John Moura, NERC director of reliability assessment, said the organization is changing the format of its annual State of Reliability Report, reducing its length from more than 200 pages to less than 50 and replacing some tables with infographics. The report is intended to identify system performance trends and reliability risks, and measure the health of the grid and the success of mitigation measures.
Moura said the change in format resulted from a decision to make the report more useful to regulators and industry leaders.
Before, “the audience was everybody: It was engineers, policymakers; it was anyone who wanted to know something about reliability. And if it’s for everybody, it’s for no one,” he said. “So, we were really focused on, who was our target audience? And then that really kind of set the stage for everything else. I asked the question[s]: ‘What does [PJM CEO] Andy Ott want to know about this? What does [FERC Chair] Neil Chatterjee want to know?’”
The draft was circulated to the Operating and Planning committees for comment last week.
The board will review and approve the release of the report in mid-June, with a target release date of June 19, before FERC’s June 27 reliability technical conference.
Members Cautioned on Public Statements
General Counsel Charlie Berardesco disclosed that NERC’s Feb. 22 revision to its Participant Conduct Policy resulted from a Wall Street Journal op-ed whose author cited his NERC affiliation.
Although Berardesco did not identify the author, it was an apparent reference to a Feb. 20 op-ed by Robert Blohm that said renewable energy can’t consistently balance power supply with demand. Blohm, a managing director at consultancy Keen Resources, was identified in the article as “an elected member of the Operating Committee and the Standards Committee” of NERC.
In a letter to the editor in response, Michael Goggin, vice president of consultant Grid Strategies, was likewise identified as “an elected member” of NERC’s Planning Committee.
NERC’s revised policy states: “Unless authorized by an appropriate NERC officer, individuals participating in NERC activities are not authorized to speak on behalf of NERC or to indicate their views represent the views of NERC, and should provide such a disclaimer if identifying themselves as a participant in a NERC activity to the press, at speaking engagements or through other public communications.”
“We understand that people want to be involved and work in the arena of advocacy,” Berardesco said. “But NERC has to have the ability to control the message on behalf of NERC.”
“If you are doing an op-ed … best not to reference NERC at all because it’s confusing,” Chairman Roy Thilly added.
Trustees’ Pay Unchanged
Trustee DeFontes told the board’s Corporate Governance and Human Resources Committee that NERC will not be changing the trustees’ salaries, which were last increased in August 2018. The board agreed then to increase the annual retainer by $15,000 to $127,500 in three $5,000 steps between 2019 and Jan. 1, 2021. The board chair’s retainer is being raised to $175,000 in three steps over the same time period. Committee chairs receive an additional $10,000 and vice chairs are paid $5,000 annually.
The ERO expects to end the current fiscal year about $3 million (1.5%) over budget, largely because of SERC Reliability’s expansion into Florida, NERC Controller Andy Sharp told the board’s Finance & Audit Committee on Wednesday.
SERC is projected to run $5.1 million over budget because of its absorption of the Florida Reliability Coordinating Council, which expects to run $1.6 million below budget, a net increase of $3.5 million.
NERC and the remaining REs are expected to be at or near budget for the year, Sharp said.
Through March 31, the “ERO Enterprise” was $2.9M (5.9%) under budget for expenses and capital spending.
Chief Financial and Administrative Officer Scott Jones gave the committee a preview of the proposed 2020 budget, which anticipates a 3.8% increase after a 9.5% increase in 2019.
The projected assessment for 2020 is $72 million (+4.5%) from 2019, which was itself up 9.5% from 2018.
Costs for the E-ISAC are growing 13.3% while the rest of NERC will be flat to lower, Jones said.
Jones said “inflationary pressures on pay,” especially for technical roles, have forced NERC to boost its annual salary increases to 3.5% from a historical 3%.
Jones said NERC has had to become “more flexible” on pay ranges because of the competition for talent. “We’ve had a history of being very rigid on the pay side. When we budget something … we sort of box ourselves in a little bit for that particular role,” he said. “When we find good people, especially on the ISAC side, we want to negotiate hard and fair, but we also want to make sure we get good people.”
First drafts of the budget are expected to be posted about May 17, with comments due June 28. The final draft will be posted July 15, with comments due July 31.
The meetings included several personnel matters:
- CEO Jim Robb announced the appointment by the board of new vice presidents Mechelle Thomas, chief compliance officer, and Howard Gugel, head of standards and engineering.
Nominating Committee Chair George Hawkins announced that the committee agreed to renominate Thilly and Trustee Suzanne Keenan to new terms and has hired executive search firm Leadership Lyceum to seek a new candidate to replace Janice Case, who will end her final term in February 2020. The trustees will review candidates at their next quarterly meeting in August. (The board increased to 12 members with the election in February of Colleen Sidford, representing Canada. It will drop back to 11 in February 2020 following the departure of Case and Frederick W. Gorbet.)
The trustees also approved the following committee appointments:
- Critical Infrastructure Protection Committee: John Greaves, Georgia Power, replaces Brian Harrell, formerly of Duke Energy as SERC’s representative. Doug Currie, Hydro One, replaces Francis Bradley of the Canadian Electricity Association as the CEA representative.
- Reliability Issues Steering Committee: Woody Rickerson, ERCOT, replaces Dave Osburn, Oklahoma Municipal Power Authority, for a term ending Jan. 31, 2020.
- Compliance and Certification Committee: Appointed Nicole Mosher, Nova Scotia Power, representing the Northeast Power Coordinating Council. Reappointed Gregory Campoli, NYISO, representing ISOs/RTOs; Ted Hobson, JEA, representing FRCC until its dissolution; Jim Stanton, SOS International, representing Small End-Use Electricity Generators.
- Planning Committee: Appointed Richard Kowalski, ISO-NE, as an ISO/RTO representative for the remainder of the 2018-2020 term. Kowalski will fill a vacancy resulting from the passing of Dana Walters of NYISO.
— Rich Heidorn Jr.