State/Provincial Agency Dues to NAESB

On May 16, 2002, FERC issued its “Order on a Standards Development Organization for the Wholesale Electric Industry.” FERC asked the industry to establish an organization to develop business standards and communication protocols for implementing Standard Market Design. Reliability issues are inextricably bound to such business practices so FERC envisions a coordinated effort between NERC and NAESB. NERC would develop core reliability policies for the principles, requirements and related quantitative measures necessary for the reliable operation and planning of the grid. NAESB would develop business practices to implement these policies, like electronic data interchange protocol.

The North American Energy Standards Board (NAESB) is a non-profit corporation whose purpose is to propose and adopt voluntary standards and model business practices to promote competitive and efficient natural gas and electric service. The organization is divided into four industry quadrants: gas wholesale, electric wholesale, gas retail, and electric retail. Each quadrant is composed of segments organized according to types of entities. Members can be voting or non-voting.

The Wholesale Electric Quadrant (WEQ) is composed of five segments: Transmission, Generation, Marketers/Brokers, Distribution/Load Serving Entities and End Users. Each segment has six seats to fill on NAESB’s Board of Directors and Executive Committee. State regulators are in the End Users segment and concerns have been raised over the state role in WEQ operations. They include:

• Membership Dues – NAESB has authorized promotional dues of $500 per year for 3 state regulatory agency staff memberships in WEQ’s End User segment. A typical membership costs $5,000.
• State Role – Only three WEQ voting memberships are available to state regulatory staff. In addition, WEQ’s End User segment allots only 1 of the Quadrant’s 30 total seats on the Board and Executive Committee to state regulators, thus limiting states’ roles in NAESB standard-making.
• Division of Responsibility – Reliability and commercial standards are closely related. Care must be taken to clearly define the duties and powers of NERC and NAESB to keep policy and technical issues separate.
• Regional Issues – Does a national organization with rigid standard-proposal and voting procedures have the flexibility to properly address regional issues?

These and other concerns deserve attention as NAESB positions itself to play a significant part in the transition to Standard Market Design. See the most recent FERC order on a standards development organization at: http://www.westgov.org/wieb/meetings/crepcfall2002/briefing materials/ferc_stdsdev.pdf. Visit WEQ’s site at: http://www.gisb.org/naesb.htm. View a draft letter of intent between NERC and NAESB at: http://www.gisb.org/pdf/bd062802w3.pdf.