N ORTH A MERICAN ELECTRIC R ELIABILITY C OUNCIL

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1 N ORTH A MERICAN ELECTRIC R ELIABILITY C OUNCIL Princeton Forrestal Village, Village Boulevard, Princeton, New Jersey September 12, 2000 The Honorable J. Dennis Hastert Speaker United States House of Representatives H-232 Washington, DC Dear Mr. Speaker: RE: HIGH-VOLTAGE ELECTRIC SYSTEM RELIABILITY LEGISLATION The North American Electric Reliability Council (NERC) 1, on behalf of a broad-based list of electric industry and state organizations (Attachment A), is writing to urge your support for prompt House passage of federal legislation in this session of Congress to promote and ensure the continued reliability of high-voltage electric transmission systems in the United States and throughout North America. This international transmission grid the backbone of our electricity infrastructure is critical to public health, safety, welfare, and national security, while enabling robust competition in electricity markets. On June 30, the Senate passed S. 2071, the Gorton bill, which we understand is being held at the desk in the House. It is critically important for the House to act on this legislation as discussed below before adjourning in October. It will take many months after legislation is enacted for the Federal Energy Regulatory Commission (FERC) to adopt implementing rules and designate the new electric reliability organization that the legislation provides for. In the meantime, consumers are exposed to increased risk of failure of the transmission grid as more and more demands are placed upon it. For three decades, NERC and its member Regional Reliability Councils have worked cooperatively and voluntarily to set reliability standards for high voltage transmission systems so that customers could enjoy reliable electric service. As electricity markets become increasingly competitive, this voluntary arrangement will no longer suffice and needs to be transformed into a mandatory system to assure a continued reliable supply of electricity to America s homes and businesses. The essence of S is the creation of an independent, industry self-regulatory reliability organization to establish and enforce compliance with mandatory rules for the reliable operation of the 1 NERC is a not-for-profit industry group that works with all segments of the electric industry as well as customers to promote reliability of the electric grid system throughout North America. It is comprised of ten regional reliability councils that account for virtually all the electricity supplied in the United States, Canada, and a portion of Baja California Norte, Mexico. Phone v Fax v URL

2 high voltage electric transmission system. Such rules must be fairly developed and fairly applied to all operators and users, under the oversight within the United States of FERC. The proposal follows the model of securities industry self-regulatory organizations (the stock exchanges and NASD) and enjoys broad, bipartisan support. Since the Senate passed the Gorton bill, language has been developed to address concerns regarding the role of regional transmission organizations, as prescribed in FERC Order 2000, in maintaining reliability of transmission facilities subject to their control. Most of this language (Attachment B) has been incorporated in H.R The National Electric Reliability Act - introduced by Mr. Wynn and cosponsored by Mr. Bilbray, Ms. Eshoo, Mr. Pallone, and Mr. Shadegg. NERC and the other supporting organizations urge you to call up S. 2071, incorporate the RTO coordination amendments as shown on Attachment B to this letter, and approve S as amended. Having Congress enact this legislation now, with the RTO coordination amendments, is an important step to ensure the continued reliability of the nation s high-voltage electricity system, and one that should not wait. Please understand that these organizations would oppose the bill if any other provisions are added. Thank you for your support. Sincerely, Michehl R. Gent President North American Electric Reliability Council Cc Hon. Richard Gephardt Hon. Thomas J. Bliley, Jr. Hon. John D. Dingell Hon. Joe Barton Hon. Rick Boucher Phone v Fax v URL

3 Attachment A Organizations that join NERC in urging passage of S. 2071, The Electric Reliability 2000 Act, and associated RTO coordination amendments. American Public Power Association (APPA) California Independent System Operator (CAISO) Canadian Electricity Association (CEA) Edison Electric Institute (EEI) Large Public Power Council (LPPC) National Association of Regulatory Utility Commissioners (NARUC) National Association of State Utility Consumer Advocates (NASUCA) National Electrical Manufacturers Association (NEMA) National Rural Electric Cooperative Association (NRECA) PJM Interconnection LLC (PJM) Transmission Access Policy Study Group (TAPS) Western Interconnection Coordination Forum (WICF)

4 Attachment B RTO Coordination Amendments to S [These amendments make the changes in S needed incorporate certain RTO coordination amendments, and other technical corrections.] 1. Page 2, lines 19-20, change the commas to semicolons after the words transmission lines; substations; and control centers; and add the word and after control centers;.. 2. Page 6, insert after line 25 the following new section: (2) COMPLIANCE - Compliance with any entity rule, organization standard, or Commission order under this section shall not make an electric utility or other entity subject to the jurisdiction of the Commission for any purposes other than the purposes specified in this section. 3. Page 6, line 2, after includes insert, but is not limited to. 4. Page 6, immediately after line 6, insert: (v) a regional transmission organization; and renumber remaining subparagraph accordingly. 5. Page 7, immediately after line 4, insert the following: (3) Not later than 90 days after the date of enactment, the Commission shall issue a proposed rule for implementing the requirements of this section. The Commission shall provide notice and opportunity for comment on the proposed rule. The Commission shall issue a final rule under this subsection within 180 days after the date of enactment of this section. (4) Nothing in this section shall be construed as limiting or impairing any authority of the Commission under any other provision of this Act, including its exclusive authority to determine rates, terms, and conditions of transmission services subject to its jurisdiction. 6. Page 7, line 8, delete person and insert in lieu thereof entity. 7. Page 7, line 13, delete person and insert in lieu thereof entity. 8. Page 7, line 16, delete interested persons. 9. Page 8, beginning on line 20, delete (1) and all thereafter on that page and page 9, through and including line Page 9, line 12, delete paragraph (1) and insert in lieu thereof subsection (b)(3). 11. Page 14, line 5, delete persons and insert in lieu thereof entities. 1 Page and line number references are to S (Gorton, as engrossed), as it passed the Senate on June 30, 2000.

5 12. Page 34, line 10, delete of any person. 13. Page 40, immediately after line 6, insert the following: "(r) COORDINATION WITH REGIONAL TRANSMISSION ORGANIZATIONS. (1) Each regional transmission organization authorized by the Commission shall be responsible for maintaining the short-term reliability of the bulk-power system that it operates, consistent with organization standards. (2) Except as provided in paragraph (5), in connection with a proceeding under subsection (e) to consider a proposed organization standard, each regional transmission organization authorized by the Commission shall report to the Commission, and notify the electric reliability organization and any applicable affiliated regional reliability entity, regarding whether the proposed organization standard hinders or conflicts with that regional transmission organization s ability to fulfill the requirements of any Commission-accepted, approved, or ordered rule, regulation, order, tariff, rate schedule, or agreement. Where such hindrance or conflict is identified, the Commission shall address such hindrance or conflict, and the need for any changes to such Commission-accepted, approved, or ordered rule, order, tariff, rate schedule, or agreement in its order under subsection (e) regarding the proposed standard. Where such hindrance or conflict is identified between a proposed organization standard and a provision of any rule, order, tariff, rate schedule or agreement accepted, approved or ordered by the Commission applicable to a regional transmission organization, nothing in this section shall require a change in the regional transmission organization s obligation to comply with such provision unless the Commission orders such a change and the change becomes effective. If the Commission finds that the tariff, rate schedule, or agreement needs to be changed, the regional transmission organization must expeditiously make a Section 205 filing to reflect the change. If the Commission finds that the proposed organization standard needs to be changed, it shall remand the proposed organization standard to the electric reliability organization under subsection (e)(2)(e). (3) Except as provided in paragraph (5), to the extent hindrances or conflicts arise after approval of a reliability standard under subsection (c) or organization standard under subsection (e), each regional transmission organization authorized by the Commission shall report to the Commission, and notify the electric reliability organization and any applicable affiliated regional reliability entity, regarding any reliability standard approved under subsection (c) or organization standard that hinders or conflicts with that regional transmission organization s ability to fulfill the requirements of any Commission-accepted, approved, or ordered rule, regulation, order, tariff, rate schedule, or agreement. The Commission shall seek to assure that such hindrances or conflicts are resolved promptly. Where a hindrance or conflict is identified between a reliability standard or an organization standard and a provision of any rule, order, tariff, rate schedule or agreement accepted, approved or ordered by the Commission applicable to a regional transmission organization, nothing in this section shall require a change in the regional transmission organization s obligation to comply with such provision unless the Commission orders such a change and the change becomes effective. If the Commission finds that the tariff, rate schedule or agreement needs to be changed, the regional transmission organization must expeditiously make a Section 205 filing to reflect the change. If the Commission finds that an organization standard needs to be changed, it shall order the electric reliability organization to develop and submit a modified organization standard under subsection (e)(3).

6 (4) An affiliated regional reliability entity and a regional transmission organization operating in the same geographic area shall cooperate to avoid conflicts between implementation and enforcement of organization standards by the affiliated regional reliability entity and implementation and enforcement of Commission-accepted tariffs, rate schedules, and agreements by the regional transmission organization. In areas without an affiliated regional reliability entity, the electric reliability organization shall act as the affiliated regional reliability entity for purposes of this paragraph. (5) Until 6 months after approval of applicable subsection (h)(3)(a) procedures, any reliability standard, guidance, or practice contained in Commission-accepted tariffs, rate schedules, or agreements in effect of any Commission-authorized independent system operator or regional transmission organization shall continue to apply unless the Commission accepts an amendment thereto by the applicable operator or organization, or upon complaint finds them to be unjust, unreasonable, unduly discriminatory or preferential, or not in the public interest. At the conclusion of such transition period, any such reliability standard, guidance, practice, or amendment thereto that the Commission determines is inconsistent with organization standards shall no longer apply.

Rules of Procedure. Effective: May 4, 2016

Rules of Procedure. Effective: May 4, 2016 Rules of Procedure Effective: May 4, 2016 Rules of Procedure of the North American Electric Reliability Corporation TABLE OF CONTENTS SECTION 100 APPLICABILITY OF RULES OF PROCEDURE... 1 SECTION 200 DEFINITIONS