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Power & Pipes

FERC, CFTC, and State Energy Law Developments

During last week’s Open Meeting, the Federal Energy Regulatory Commission (FERC or Commission) firmly rebuffed challenges to its prior order directing the North American Electric Reliability Corporation (NERC) to revise its Rules of Procedure. The prior order was made to ensure that NERC responds to the Commission’s directives to make changes to Reliability Standards, as FERC holds that it is not sufficient for NERC to merely consider Commission-directed revisions in the Reliability Standards development process. While reiterating its order, however, the Commission softened its earlier language regarding NERC’s obligation to comply with FERC directives, explaining that NERC remains free to develop alternative approaches to address the issues underlying such directives. This order confirms that, while the Commission cannot “dictate the specific content” of a Reliability Standard, NERC is obligated to respond to such directives By developing appropriate changes.

The Commission has certified NERC as the Electric Reliability Organization (ERO) under Section 215 of the Federal Power Act. As the ERO, NERC is the sole entity that may draft Reliability Standards that are enforceable By the Commission, NERC, and the Regional Entities against all users, owners, and operators of the bulk-power system. However, this authority to draft Reliability Standards is subject to Commission oversight, and all Reliability Standards must be submitted to and approved By FERC before they can be enforced. As part of that oversight function, the Commission has the authority to direct the ERO to develop revisions to a Reliability Standard. Read more…