Living in the new world of mandatory reliability standards.
Zhen Zhang is an environmental attorney and a global energy fellow at the Institute for Energy and Environment at Vermont Law School. Matthew Stern is pursuing a J.D. and a masters degree in environmental law and policy at Vermont Law School. The authors acknowledge the assistance of Institute for Energy and Environment staff, especially Professor Michael Dworkin and John A. Sautter.
Mandatory reliability standards put in place by NERC three years ago give reason for optimism concerning their success. But the organization struggles with standards development, compliance, enforcement and transparency.
The future challenges facing NERC are many and a review of current issues shows it is not yet time to conclusively assess the effectiveness of NERC or its mandatory reliability standards. NERC’s first Three-Year Electric Reliability Organization Performance Assessment Report (Three Year Report) since its appointment as the electric reliability organization (ERO) concludes optimistically that the regulatory process and the standards themselves have improved reliability.1 While one logically can conclude a mandatory system is more effective than a voluntary system, closer examination shows NERC struggles with standards development, compliance and enforcement, and transparency and uniformity of these processes. The good news is some solutions already have been identified in the Three Year Report and have been implemented. One truly can be optimistic about the future effectiveness of the mandatory reliability standards regulatory regime.