• FERC Responds To Task Force Report Concerning 2003 Blackout
  • May 2, 2004
  • Law Firm: Orrick, Herrington & Sutcliffe LLP - San Francisco Office
  • On April 14, 2004, FERC issued an order in response to the report of the U.S.-Canada Power System Outage Task Force, which was established by the U.S. and Canadian governments to investigate the causes of the August 2003 electric power blackout that affected large portions of the Northeast and Midwest United States and parts of Canada, and recommend measures to reduce the possibility of future outages (See Regulatory Update September 2003). In addition to identifying certain root causes of the blackout, the Task Force report also found that several entities violated the North American Reliability Council's operating policies and planning standards, which ultimately contributed to the blackout. Despite these alleged violations, the Task Force noted that NERC's policies were unclear and ambiguous.

    Consequently, the Commission clarified its power grid reliability policies and objectives and emphasized the need to modify NERC reliability standards in order to make the policies more clear and enforceable. Specifically, the Commission stated that "Good Utility Practices" would require compliance with the modified standards and policies. Moreover, FERC indicated it had the authority, and would exercise it, to take action on a case-by-case basis to address significant reliability problems or the failure of a utility to comply with "Good Utility Practices."

    The Commission also took immediate steps in response to the Task Force report, including (i) suspending any new ISO or RTO from operating until its reliability capabilities are functioning; (ii) appointing a staff task force to report on potential funding mechanisms for NERC and the regional reliability councils to ensure their independence from the utilities they monitor; and (iii) ordering its staff to draft a memorandum of understanding defining NERC's working relationship with the Commission.