FAQ

General

• What is the “bulk power system” or “bulk electric system”?

• How does NERC define “reliability”?

• What is the ERO?

General

What is the “bulk power system” or “bulk electric system”?
There is no one definition, but NERC defines the bulk power system as the electric power generation facilities combined with the high-voltage transmission system, which together create and transport electricity around the continent.  Put another way, the bulk power system is the continent’s electricity system except for the local electricity facilities you see in your town or city.  NERC does not deliver power directly to homes and businesses.  That service usually is provided by a local utility of some kind.  Local delivery is under the jurisdiction of state, provincial or local utility regulatory agencies.

How does NERC define “reliability”?
NERC defines a reliable bulk power system as one that is able to meet the electricity needs of end-use customers even when unexpected equipment failures or other factors reduce the amount of available electricity.  NERC divides reliability into two categories: 

Adequacy:  Adequacy means having sufficient resources to provide customers with a continuous supply of electricity at the proper voltage and frequency, virtually all of the time. “Resources” refers to a combination of electricity generating and transmission facilities, which produce and deliver electricity; and “demand-response” programs, which reduce customer demand for electricity.  Maintaining adequacy requires system operators and planners to take into account scheduled and reasonably expected unscheduled outages of equipment, while maintaining a constant balance between supply and demand.  

Security:  For decades, NERC and the bulk power industry defined system “security” as the ability of the bulk power system to withstand sudden, unexpected disturbances such as short circuits, or unanticipated loss of system elements due to natural causes.  In today’s world, the security focus of NERC and the industry has expanded to include withstanding disturbances caused by man-made physical or cyber attacks.  The bulk power system must be planned, designed, built and operated in a manner that takes into account these modern threats, as well as more traditional risks to security. 

What is the ERO?
“Electricity reliability organization” refers to NERC’s role.  It is a generic name given by the U.S. Congress to the independent entity that would be given the authority to develop and enforce mandatory standards for the reliable operation and planning of the bulk power system throughout North America, as called for in the U.S. Energy Policy Act of 2005.  NERC was designated as this “electricity reliability organization” by FERC on July 20, 2006.

Role & Responsibilities 

What is NERC’s role in the industry?
NERC’s mission is to improve the reliability and security of the bulk power system in the United States, Canada and part of Mexico.  The organization aims to do that not only by enforcing compliance with mandatory Reliability Standards, but also by acting as a “force for good” -- a catalyst for positive change whose role includes shedding light on system weaknesses, helping industry participants operate and plan to the highest possible level, and communicating Examples of Excellence throughout the industry.

For more detail on NERC programs and services, please visit Company Overview.

What exactly does NERC do?
NERC develops and enforces Reliability Standards; monitors the bulk power system; assesses adequacy annually via a 10-year forecast and winter and summer forecasts; audits owners, operators, and users for preparedness; and educates and trains industry personnel. For more detail on NERC programs and services, please visit Company Overview. 

How has NERC’s role changed over the years?
Historically, NERC connected the various industry participants through a voluntary council.  That changed with the passage of the U.S. Energy Policy Act of 2005, which called for the creation of an international “electricity reliability organization”.  “EPAct” marked a fundamental shift in electricity regulation in the U.S.  NERC is itself now an industry participant with a much larger role in improving and maintaining reliability, including the ability to enforce compliance with mandatory Reliability Standards. 

What did NERC do to assume its new role?
Many aspects of NERC’s traditional operations provided a solid foundation upon which to build the new NERC.  These included its governance by an independent board of trustees, an open and balanced standards development process, an effective program of monitoring and enforcing compliance with standards, technical excellence, an established ability to oversee regional reliability programs, and a philosophy of including stakeholders in regular operations and decision-making.

NERC has worked very hard over the past few years to transform itself into the strong, independent organization authorized by the legislation.  At every step of the way, NERC consulted with industry stakeholders to ensure all views were considered fully, to achieve the greatest level of consensus possible, and to engender the trust and confidence of regulators, industry and the public.

In its application to FERC to be named the “electricity reliability organization”, NERC defined its proposed structure, governance and operational procedures.  NERC also defined the respective authorities and responsibilities of NERC, the regional entities and the bulk power system owners, operators and users within the jurisdiction of NERC for reliability purposes.  The application also included NERC’s bylaws, rules of procedure, regional delegation agreements, and a transition plan.

In 2005, NERC revised its entire set of reliability standards.  In early 2006, NERC made sweeping internal changes to enhance its organizational effectiveness and efficiency. 

When did NERC’s role change?
The transition from voluntary member organization into the independent authority charged with ensuring legal compliance with mandatory Reliability Standards is being phased in.  From its creation in 1968 until approximately July 2006, NERC operated as a voluntary industry organization.  In July 2006, FERC certified NERC as the “electric reliability organization” for the U.S., and preparations began in earnest for its new, expanded role.  On June 18, 2007, compliance with NERC Reliability Standards will become a legal requirement for bulk power system owners, operators and users.

Why did the name change form the North American Electric Reliability Council to the North American Electric Reliability Corporation?
A separate entity, the Corporation, was created for two reasons.  First, the members of the Council were the eight Regional Reliability Councils.  The members of the Corporation represent a much larger cross-section of the industry.  It was easier to start a new entity rather than adjust the Council’s membership structure.  Second, the Council needed to continue operating while the Corporation was created and approved.

What is FERC’s role?
FERC is a federal agency that regulates the interstate transmission of electricity (as well as natural gas and oil).  FERC oversees NERC in the U.S. (as do provincial governments in Canada).

Corporate Structure & Governance

What type of legal structure does NERC have?
NERC is a 501(c)(3) not-for-profit corporation.

What is meant by “self-regulatory”?
“Self-regulatory” refers to a non-governmental entity to which the government has delegated power.  In NERC’s case, FERC has delegated to NERC the authority to create and enforce compliance with Reliability Standards.  Although FERC and Canadian provincial governments retain the power of review and audit of NERC, NERC and the industry have the power to write rules and standards. This approach has the advantage of greater involvement by those entities directly involved in the operation of the bulk power system, who have detailed knowledge of the operational and technical needs of the industry.

Who runs NERC?
NERC is governed by a Board of Trustees comprised of 10 independent Trustees and the president of NERC.  Trustees have expertise in electric operations and reliability; legal, market, financial and regulatory matters; and familiarity with regional system operation issues; and they reflect geographic diversity.  Trustees are independent of the industry and must commit to serve the public interest and represent the reliability concerns of the entire North American electric system. Trustees are elected by the Member Representatives Committee and serve for a term of three years.

NERC is overseen by the U.S. Federal Energy Regulatory Commission (FERC) and governmental authorities in Canada.

Is NERC a government agency?
No, it is a not-for-profit corporation registered in New Jersey.

How is NERC funded?
Previously, the Regional Entities funded NERC operations.  Today, the U.S. government and Canadian provincial governments have directed NERC to allocate costs to those who benefit from a reliable bulk power system: the end users.  NERC allocates its operating costs and those of the Regional Entities to “load-serving entities” ­ those owners, operators and users of the bulk power system responsible for delivering electricity to retail customers -- based on how much net energy they need to meet their users’ energy requirements.  Funds are then collected from these load-serving entities.

Membership

Who can be a member of NERC?
Before, eight Regional Entities were the sole members and owners of NERC.  Today, membership is open to all entities with an interest in the reliability of the bulk power system.  Click here to view the Membership FAQ section.  Members fall into these sectors:

What role do members play?
NERC members contribute their expertise with bulk power system planning and operations in many ways, including participation in various NERC committees. (Non-members can also sit on NERC committees.)  Through the Member Representatives Committee (MRC), NERC members elect the NERC Board and can amend NERC bylaws.  The MRC also provides policy input to the Board. 

How many members does NERC have?
More than 500.

What is the difference between a NERC member and a NERC stakeholder?
NERC members are individuals and entities that chose to join NERC so they can participate in NERC planning and operations through committees, voting privileges and the Member Representatives Committee.  “Stakeholders” refers to any party that has a “stake” in what NERC does.  Stakeholders include members, governments, all bulk power system participants, employees, and end-use electricity customers. 

What is the membership fee?
Membership in NERC is free.

Regional Entities

What are the Regional Entities?
NERC works closely with eight regional reliability organizations, whose members come from all segments of the electric industry:  investor-owned utilities; federal power agencies; rural electric cooperatives; state, municipal and provincial utilities; independent power producers; power marketers; and end-use customers.  These entities account for virtually all the electricity supplied in the U.S., Canada and a portion of Baja California, Mexico.  Click here for more on the eight regional reliability organizations. 

What is the role of the Regional Entities?
First, the Regional Entities have delegated authorities and responsibilities, as approved by FERC, to enforce NERC and regional reliability standards, and perform other standards-related functions assigned by NERC.  NERC oversees the regions in this role to ensure consistency of delegated functions across North America, while allowing for an appropriate degree of flexibility to accommodate regional differences.

Second, the Regional Entities have non-statutory roles, which include working with their own members to forecast electricity demand, coordinate operations, share information, and plan for emergencies, in their respective regions of North America. 

Staff

How many staff does NERC have and what are their functions?
By involving bulk power industry experts in its operations and planning, NERC is able to operate with a streamlined staff of less than 100.  Staff members are responsible for the coordination and planning of all NERC functions, and for support functions including Legal, Human Resources, Communications and Administration.

NERC in Canada

What is NERC’s role in Canada?
NERC’s role in Canada as the U.S. are extemely similar. NERC Reliability Standards are already mandatory and enforceable in the provinces of Ontario and New Brunswick.  NERC is working to achieve the same result with the remaining provinces. 

When will NERC be named as the Electric Reliability Organization for Canada?
NERC is seeking recognition as the “electric reliability organization” for the Canadian provinces as it did in the United States.  NERC signed Memorandums of Understanding with Ontario, Quebec, Nova Scotia and the National Energy Board of Canada in 2006.  NERC is working with the remaining provinces to achieve the same result.

How is Canada interconnected to the U.S. grid?
Please refer to the Regions map.

NERC in Mexico

What is NERC’s role in Mexico?
NERC expects to seek recognition as the “electric reliability organization” for Mexico as the Mexican electric grid is strengthened and interconnected to a greater degree with the U.S. grid. Currently, Baja Mexico is connected to the Western Interconnection.  The Western Electricity Coordinating Council continues to be responsible for coordinating and promoting electric system reliability in both Canada and Mexico.  Other regions have interconnections to Canada.  Please see the Regions (link) page for more information on the NPCC, RFC, and MRO.

When will NERC be named as the reliability organization for Mexico?
The legislation is with the Mexican Congress, but due to various elections, it is on hold.

NERC in My Neighborhood

Does NERC’s work affect my local neighborhood and electricity supply?
NERC’s focus is the bulk power system, which includes power generation and the high-voltage transmission of electricity.  NERC is not directly involved in the local distribution or delivery of electricity to homes and businesses.  But, its work to maintain and improve the reliability of the bulk power system impacts the entire electricity industry, because the bulk system forms the backbone of the entire international network of power delivery lines and equipment.

I use electricity.  Does that make me a “user” of the bulk power system?  Do I have to register with NERC?
Although anyone can choose to join NERC as a member, for the most part individuals and businesses are not considered “users” unless they are able to exert a material impact on the reliability of the bulk power system.  For detailed information on the Compliance Registration process and who must register, please see the Statement of Compliance Registry Criteria.

What is NERC’s rule on tree-trimming in local neighborhoods?
NERC’s tree-trimming standard applies onlly to high-voltage transmission lines of 200 kV or higher, or transmission lines of lower voltages if the Regional Entity deems the line critical to bulk power system reliability.  If such a line runs through your neighborhood, then the owner of that line must keep the vegetation in that area trimmed to meet the NERC standard.

The NERC standard does not apply to lower-voltage lines such as those of the local distribution systems.  Most distribution or local power lines that run through neighborhoods and back yards likely fall under the purview of local utilities and state regulatory agencies. 

History

When was NERC created and why?
NERC was founded in 1968 by representatives of the electric utility industry, for the purpose of developing and promoting voluntary compliance with rules and protocols for the reliable operation of the bulk power electric transmission systems of North America.