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The North American Electric Reliability Corporation (NERC) is a nonprofit corporation based in Atlanta, Georgia, and formed on March 28, 2006, as the successor to the National Electric Reliability Council (also known as NERC). The original NERC was formed on June 1, 1968, by the electric utility industry to promote the reliability and adequacy of bulk power transmission in the electric utility systems of North America. NERC's mission states that it is to "ensure the reliability of the North American bulk power system."
NERC's major responsibilities include working with all stakeholders to develop standards for power system operation, monitoring and enforcing compliance with those standards, assessing resource adequacy, and providing educational and training resources as part of an accreditation program to ensure power system operators remain qualified and proficient. NERC also investigates and analyzes the causes of significant power system disturbances in order to help prevent future events.
NERC also provides for critical infrastructure protection (NERC CIP).
Early electric power systems, such as those installed by George Westinghouse and Thomas Edison, prior to the start of the 20th century were isolated central stations which served small pockets of customers independently of each other. As some of these power systems grew to cover larger geographic areas, it became possible to connect previously isolated systems. This allowed neighboring systems to share generation and voltage stability resources, providing mutual benefit to each side. However, tying power systems together with these early interconnections also introduced the risk that a single significant disturbance could collapse all of the systems tied to the interconnection. Generally it was decided that the benefits outweighed the risks, and by 1915 interconnections began to flourish and grow in size. By the end of the 1960s there were virtually no isolated power systems remaining in the lower forty-eight states and southern Canada; practically all power companies were attached to large interconnections.
In 1962, when the Eastern Interconnection was established in its current form, The Interconnected Systems Group (composed of Southern and Midwestern utility companies), the PJM Interconnection, and the Canada-United States Eastern Interconnection (CANUSE) formed the Interconnection Coordination Committee to recommend an informal operations structure, which led to the formation of the North American Power Systems Interconnection Committee (NAPSIC). NAPSIC eventually grew to also include the Texas Interconnection and most of the companies in what is today the Western Electricity Coordinating Council (WECC), operating within the Western Interconnection.
On November 9, 1965, a relatively minor system disturbance triggered a power system protection component that was not properly configured. The interconnection was operating near peak capacity due to the extreme cold weather and high heating demand, and was therefore more vulnerable than usual. The small initial outage quickly cascaded into the Northeast Blackout of 1965. This disturbance revealed the extent that interconnections had evolved without adequate high-level planning and operating oversight to try to prevent such events, and that interconnected power systems frequently had varying operating standards and procedures developed somewhat independently by each member on the interconnection. Restoration efforts were also partially hampered due to the lack of common practices and coordination procedures. Furthermore, power system protection schemes were often designed with only a local power system's design in mind, meaning that they might misoperate in response to protection schemes activating in neighboring systems. This disturbance revealed the necessity to develop common operating and protection standards as well as plans to effectively coordinate power system restoration efforts.
The [Electric Reliability Act of 1967] proposed the creation of a council on power coordination. Although not enacted, the proposed legislation stimulated the development of an industry reliability council. The Federal Power Commission (predecessor of the Federal Energy Regulatory Commission) recommended the formation of a council on power coordination made up of representatives from each of the nation’s regional coordinating organizations, to exchange and disseminate information and to review, discuss and assist in resolving interregional coordination matters.
The National Electric Reliability Council (NERC) was established by the electric utility industry, in response to the 1965 blackout. Nine regional reliability organizations were formalized under NERC. Also formalized were regional planning coordination guides, which NERC maintained. NAPSIC operations criteria and guides continued to be maintained and practiced voluntarily.
Although significant disturbances continued to occasionally occur, such as the New York City blackout of 1977, NERC undoubtedly played a significant role in minimizing the impact and frequency of these events. It is difficult to quantify this success because it is impossible to know how many disturbances were prevented by the influence of NERC and the reliability councils.
Out of its long history, NERC developed a complex committee structure which brings together hundreds of industry expert volunteers in nearly 50 committees, sub-committees, task forces, and working groups considering issues from wind and renewable power integration to education to demand-side management and energy efficiency. NERC's role in raising awareness of reliability issues and creating the impetus to address them is intended to improve reliability every day.
With the passage of the Energy Policy Act of 2005, an Electric Reliability Organization (ERO) was created to develop and enforce compliance with mandatory reliability standards in the U.S. This non-governmental, "self-regulatory organization" was created in recognition of the interconnected and international nature of the bulk power grid. In 2006, NERC applied for and was granted this designation.
Today, NERC's standards are mandatory and enforceable throughout the United States and several provinces in Canada. Electric utilities and/or energy concerns in the States of Alaska, Hawaii, the Dominion of Puerto Rico, and the Territories of American Samoa, Guam, and the Virgin Islands are not under reliability oversight by NERC. Entities in the U.S. found to be in violation of a standard can be subject to fines of up to $1 million per day per violation.
As part of the fallout of the Northeast Blackout of 2003, the Energy Policy Act of 2005 authorized the Federal Energy Regulatory Commission (FERC) to designate a national Electric Reliability Organization (ERO). On July 20, 2006, FERC issued an order certifying NERC as the ERO for the United States. Prior to being the National ERO, NERC's guidelines for power system operation and accreditation were referred to as Policies, for which compliance was strongly encouraged yet ultimately voluntary. NERC has worked with all stakeholders over the past several years to revise its Policies into Standards, and now has authority to enforce those standards on power system entities operating in the United States, as well as several provinces in Canada, by way of significant financial penalties for noncompliance. Efforts between NERC and the Canadian and Mexican governments are underway to obtain comparable authority for NERC to enforce its standards on the NERC member systems residing outside of the United States.