June 18, 2001 The Honorable Spencer Abraham RE: HIGH-VOLTAGE ELECTRIC SYSTEM RELIABILITY LEGISLATION Dear Secretary Abraham: The North American Electric Reliability Council (NERC) and a broad-based list of electric industry and state organizations are writing to urge your support for prompt 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. In the Senate, legislative language to make the reliability rules mandatory and enforceable has been included as part of both S. 389 and S. 597. In the House the equivalent language has been introduced on a stand-alone basis (H.R. 312). The President's National Energy Policy has endorsed legislation providing for enforcement of reliability rules by a self-regulatory organization subject to oversight by the Federal Energy Regulatory Commission (FERC). It is critically important for Congress to act on reliability legislation as soon as possible. It will take many months after legislation is enacted for 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 the various pending bills 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 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. These various bills contain language to address the concerns raised during the past two years with regard to the appropriate role for state commissions and for regional transmission organizations. NERC and the other supporting organizations urge you to act on reliability legislation. Having Congress enact this legislation now is an important step to ensure the continued reliability of the nation's high-voltage electricity system, and one that should not wait. Thank you for your support. Sincerely, Organizations that join NERC in
urging prompt passage
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