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Home > Electronic Reading Room > Document Collections > Commission Documents > Commission Meetings, Slides, Transcripts, Meeting SRMs, and Full Written Explanation for Closed Meetings > 1997
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04/23/1997
1
UNITED STATES OF AMERICA
NUCLEAR REGULATORY COMMISSION
***
BRIEFING ON ELECTRIC GRID RELIABILITY
***
PUBLIC MEETING
***
Nuclear Regulatory Commission
One White Flint North
Rockville, Maryland
Wednesday, April 23, 1997
The Commission met in open session, pursuant to
notice, at 1:30 p.m., Shirley A. Jackson, Chairman,
presiding.
COMMISSIONERS PRESENT:
SHIRLEY A. JACKSON, Chairman of the Commission
KENNETH C. ROGERS, Commissioner
GRETA J. DICUS, Commissioner
NILS J. DIAZ, Commissioner
EDWARD McGAFFIGAN, JR., Commissioner
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STAFF AND PRESENTERS SEATED AT THE COMMISSION TABLE:
JOHN C. HOYLE, Secretary
KAREN CYR, General Counsel
DAVID MEYER, Electricity Team Leader, Office of
Policy & International Affairs, Department of
Energy
DENNIS EYRE, Executive Director, Western Systems
Coordinating Council
ERLE NYE, President and Chief Executive, Texas
Utilities Company
JOSEPH CALLAN, EDO
ASHOK THADANI, Associate Director for Inspection
and Technical Assessment, NRR
RONALDO JENKINS, Electrical Engineering Branch,
NRR
MARY WEGNER, Reactor Systems Engineer, AEOD
DENWOOD ROSS, Director, AEOD
ROBERT WOLFF, Chief Executive, New England Power
Pool
MICHEHL GENT, President, North American Electric
Reliability Council
JOSE DELGADO, Director of Electric System
Operations, Wisconsin Electric Company
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P R O C E E D I N G S
[1:30 p.m.]
CHAIRMAN JACKSON: Good afternoon, ladies and
gentlemen, this meeting is the first of two Commission
meetings dealing with electric utility deregulation and
related issues. This first meeting will focus on electric
grid reliability and how it may be impacted by electric
utility restructuring -- deregulation and restructuring.
The second meeting will address deregulation
issues in general with representatives from several federal
agencies involved.
The Commission will hear presentations today from
both the NRC staff and invited industry representatives,
along with a representative from the Department of Energy,
I'm told.
Specifically at this first meeting, the Office for
the Analysis and Evaluation of Operational Data, or AEOD,
will present information from its study of grid performance
factors. The study was initiated to collect operating
experience where grid disturbances had an impact on nuclear
power plants and other background information on grid
performance.
Last year, two electrical disturbances within a
five-week period on the western grid caused 190 plants to
trip off line, including several nuclear units.
. 4
These events occurred after AEOD had released its
draft report -- after it had released its draft report
concluding that the grids are basically stable.
A stable and reliable grid was an assumption in
the NRC's report on unresolved safety issue A-44, the
evaluation of station blackout accidents at nuclear power
plants dated June 1988.
The reliability of off-site power is important to
nuclear safety since accident sequences initiated by loss of
off-site power are important contributors to risk for many
nuclear plants.
The Office of Nuclear Reactor Regulation also will
address licensing requirements for electric power systems,
station blackout, and potential safety concerns with recent
grid events.
The Commission understands that grid reliability
is a voluntary function under the North American Electric
Reliability Council and the regional councils, and that
federal oversight is currently located at the Federal Energy
Regulatory Commission and at the Department of Energy.
DOE has created a working advisory committee on
the reliability of the U.S. electric system, which is
considering whether efforts to date to maintain reliability
are sufficient to provide assurance of reliability in the
future and whether there may be a need for increased federal
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authority over reliability in the future.
NRC, we understand, has been coordinating with DOE
and will continue to keep abreast of this effort. This is a
long introduction.
Following the NRC staff presentation, industry
representatives chosen to represent several different
geographical areas and grids will discuss the strengths and
vulnerabilities of their grids.
Additionally, a representative from the DOE will
describe the department's current activities regarding
electric grid reliability.
And so the Commission is interested in a number of
things and I'll tell you a few.
First, insight on what effects electric utility
deregulation will have on grid reliability as far as we
understand, a discussion of the independent system operator
concept, and an assessment of what governments or
operational specifications need to be built into the ISO
process to ensure a stable grid.
I personally have discussed the issue of electric
grid reliability with numerous utility executives over the
past year. It was not possible to invite to the panel today
all of the industry representatives who have been active on
this issue, so I apologize to you in advance. But if there
is, toward the end of the meeting time, I may invite other
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utility or state representatives to offer any additional
brief comments they would have to the Commission as
appropriate.
I understand that copies of the various -- the
presentation, at least the staff's, is available at the
entrance to the meeting, and so unless there are any further
comments, Mr. Callan, please proceed.
MR. CALLAN: Thank you, Chairman, and good
afternoon, commissioners. WITH me at the table are Dr.
Denwood Ross, the director of AEOD, and to his right, Mary
Wegner, who is a reactor systems specialist who works for
Dr. Ross in AEOD. To my left is Ashok Thadani, who is an
associate director in the Office of Nuclear Reactor
Regulation, and to his left is Ronaldo Jenkins, an
electrical engineer who works for Mr. Thadani.
Chairman, you've covered all the points I was
going to make in my preamble, so I will at this point turn
the discussion over to Dr. Ross who will begin the
presentation.
DR. ROSS: If we go to slide 2, the reliability of
the grid to which the nuclear plant is connected can affect
the safe operation of the plant. And because of several
events on grids around the country, AEOD performed a study
which is the basis for the first part of this Commission
briefing and Mary Wegner is the author of that study.
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The study identified several grid performance
factors, such as demand growth, capacity margin, and plant
age, which she will talk about. And on the basis of this
study, AEOD developed a recommendation that all licensees
should confirm and maintain their licensing basis with
respect to stability.
Mary will discuss her study in more detail, and
then following that, NRR will discuss the original licensing
basis concept and NRR's plans for addressing grid
reliability. Mr. Jenkins will provide the NRR comments,
along with Mr. Thadani.
Slide 3.
CHAIRMAN JACKSON: And before you go, in terms of
the recommendation from this study for licensees to confirm
and maintain their licensing basis, I think the memo you
sent also states that several licensees reviewed their grid
analyses. Was this voluntary on their part?
DR. ROSS: Yes. In fact, Mary will have the
specific discussion on that point. Sometimes it was in
response to an event, such as the Virgil summer event
prompted a Virgil summer reconsideration, but I think we'll
discuss that in more detail in the middle of her
presentation. But I'm not aware of any regulatory
requirement that dictated or required reexamination of it.
Now, it is true that this concept is embedded in
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their 5054 letters that went out last year with respect to
licensing basis in general, of which this is just a part.
CHAIRMAN JACKSON: Now, are you going to talk
about agency actions that are generic -- any generic agency
actions that came about as a result of the summer event you
mentioned at the summer plant?
DR. ROSS: I don't think we were.
MS. WEGNER: The only action I know of was the
issuance of an information notice and that led to another
utility doing --
DR. ROSS: But I don't believe there are a
specific licensing action if that's the question.
CHAIRMAN JACKSON: Okay. Even though at the time,
the FSAR stated for that plant that the grid should be able
to absorb the loss of a generating unit, but in that
particular case, it couldn't and 16 other units tripped off
line. You didn't feel that any --
DR. ROSS: Let me check.
MR. THADANI: I think my understanding also is
that, as you say, an information notice was issued as a
result. Any other actions we may have taken, I don't know
of, but we can check on that.
DR. ROSS: Slide 3. Certainly, reliable power is
needed for safety equipment, and we see this at several
places in the Commission's regulations.
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For example, GDC-17 has the notion or the idea
that an off-site electric power system shall be provided to
permit functioning of structure systems and components
important to safety.
It has a number of statements and provisions
relative to off-site power as well as on-site power.
Further, GDC-35 states that for ECCS, system
safety function must be accomplished using the off-site
electrical power system assuming the on-site power system is
not available, and conversely, and also, assuming a single
failure.
And other rules have links to off-site power. For
example, 10 CFR 50.63, loss of all AC, has requirements
linked to the expected frequency and loss of off-site power
and duration of the loss.
Risk assessments also considered a loss of off-
site power, and if in the modeling you also lose the on-
site power from the emergency diesels, you would be in a
condition referred to as station blackout, or SBO.
This event in many risk assessments is the
dominant contributor to core damage frequency.
At present, the contribution of grid reliability
to loss of station power is relatively small and it's more
likely the origin of loss of station power would be within
the station, sometimes called plant centered, such as a
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circuit breaker or transformer faults, or weather related,
such as winter ice storms, strong winds, possibly an
earthquake, and Hurricane Andrew is a good example of a
weather-related loss of station power.
And from this you can see that adequate safety is
based on a combination of both, on site and off-site power.
And while at present, grid reliability is not a dominant
contributor to the risk factor such as core damage
frequency, it seemed important to us to provide assurance
that this would continue to be the case in the future
consistent with the licensing basis.
What I want to do now is turn over a discussion of
the grid performance factor study to Mary Wegner.
CHAIRMAN JACKSON: Let me just ask you a couple
questions before you do.
Do we have confidence that the assumptions
supporting the station blackout rule remain valid in light
of some of the more recent data? And what would be the
significance if such events -- the loss of off-site power
were more frequent that what had been assumed at the time?
DR. ROSS: From what we've seen -- we don't have a
published study -- that the frequency, especially related to
grid stability and loss of station power, is less.
Now, I'd say the definitive study is in a NUREG-
1032 which is good up to 1985. It's a 20-year study from, I
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think, 1966 through '85, and it counts the number of events
and categorizes them into the three bins that I mentioned,
which is grid centered, plant centered, and weather, severe
weather.
We are in the process of updating that study, so
we will have a new Sub 1 or Rev 1 to 1032. Actually, it
will have a different number.
There was about, I think, 12 grid stability events
at the time of that study, but most of them were in the
Florida Peninsula area and it was a hardware alignment
situation which was corrected and there's been essentially
no subsequent grid centered -- or grid stability problems
because of the way they rearranged their interties.
So from what we can tell, the data would support a
lower frequency of occurrence.
Now, what we would have to do is put in the
duration, which is part of the blackout rule also.
The other half of your question would deal with
the reliability of on-site facilities. AEOD just finished a
publication on that study, almost all the diesels in all the
plants, and it showed in general that the reliability is
tracking about what it was assumed to be, and there is a
statistical spread. And I think we have made this available
to the Commission.
We don't have any information now that would put
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50.63 in a new and different light, but we are working on
it.
CHAIRMAN JACKSON: Do we require a certain
reliability of on-site power sources that is referenced to
assumptions about the grid?
MR. THADANI: In most cases, as a result of the
station blackout rule requirements, licensees came in and
make certain commitments about reliability of on-site AC
power source. In this case, it might be diesel generators.
So we do have licensee commitments on site, AC power source
reliability.
If I may just add to it --
CHAIRMAN JACKSON: I guess what I'm -- let me just
ask you this. Are they referenced to assumptions about the
duration --
MR. THADANI: Yes.
CHAIRMAN JACKSON: -- and the extent of the loss?
MR. THADANI: In fact, I was going to touch on
that. That's exactly the issue, is the station blackout
rule, the real controlling factors are not just the
frequencies themselves, loss of off-site power, but also
duration.
Duration is a very critical issue, and in many
cases, the resolution on a plant-specific basis was that
they could cope with station blackout for a certain time
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period. In most cases, it was on the order of four hours,
because the expectation was that off-site power could be
recovered during that time period.
And there are a number of -- as you noted in your
introduction, that this rule went into effect in 1988, and a
number of issues have developed in the intervening years.
Dr. Ross mentioned the IPEs are showing station
blackout to be still a dominant contributor, and in some
cases it's quite significant still.
And there have been some new issues that have
developed over the last eight or nine years, one of which
has to do with the behavior of reactor pump seals, and their
performance could be significantly degraded in the absence
of cooling to the pump seals.
What we're doing in the Office of Nuclear Reactor
Regulation is we are collecting and looking at all the new
information, grid reliability being one of the issues. We
are collecting all the information and we're planning to
reassess the whole issue of station blackout, integrating
all this new knowledge that we have now, and would expect to
complete that evaluation by the end of 1998.
That was going to be Mr. Ronaldo Jenkins' -- part
of his presentation, so excuse me for having -- I think it's
important to recognize that we're trying to integrate all
these issues and reevaluate station --
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CHAIRMAN JACKSON: So we'll wait.
DR. ROSS: I think many of the commitments are
found in the companion reg guide to the blackout rule, which
is -- Mary.
MS. WEGNER: Slide 4, please.
In 1989, an event occurred at the Virgil summer
nuclear plant that resulted in a major grid disturbance.
AEOD began an inquiry to identify other grid-related events
that impacted the operations of nuclear plants, naturally
the availability of off-site power.
It was necessary to learn about the grid in order
to evaluate the findings of the study and to communicate
them. My presentation is divided into three parts. First I
will address the organization of the North American Electric
Reliability Council and some important characteristics of
the grid.
Secondly, I will describe some events involving
grid perturbations or the potential for a grid instability.
Finally, I will close with the conclusions I have
drawn.
Slide 5, please. The North American Electric
Reliability Council was formed in 1968. Its mission is to
promote the reliability of the electricity supply for North
America. It is made up of ten regional councils and one
affiliate council. The local utility is connected to other
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utilities in its reliability council and to other
reliability councils which form the North American Electric
Reliability Council.
The entire Continental United States, most of
Canada, and part of Mexico are interconnected in order to
provide reliable electric power to consumers.
Membership in the regional councils is voluntary
and is open to all individual electric systems from all
ownership segments of the electricity supply industry.
This map shows the location of each reliability
council. The acronym and the names of the councils are
listed in the study.
In 1997, adherence to the North American Electric
Reliability Council standards was made mandatory. Each
reliability council has a set of operating criteria that
were based upon the North American Electric Reliability
Council criteria, but modified to allow for regional
differences.
The operation of each reliability council is not
uniform, that is, the Mid-Atlantic Area Council operates as
a single entity, while the Southeastern Reliability Council
is composed of four subregions which are virtually
autonomous.
Slide 6, please.
CHAIRMAN JACKSON: When you said that the
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adherence to the operational requirements was made
mandatory, made mandatory by whom?
MS. WEGNER: The board of trustees of the North
American Electric Reliability Council, and I believe the
members have completed their voting on the acceptance of it.
But Mr. Gent could answer more detailed questions on that
than I could.
CHAIRMAN JACKSON: Mr.?
MS. WEGNER: Gent of the North American Electric
Reliability Council.
COMMISSIONER ROGERS: Just before we go on, does
every electric generator or generator of electricity for
sale belong to an electric reliability council?
MS. WEGNER: I would say probably not since it's a
voluntary organization, but I would say most of them do, if
they wanted to be interconnected to other utilities to
provide their electricity to others and to receive aid from
them when they need more additional power. There's nothing
requiring them to be.
MR. JENKINS: Independent power producers would
not fall under this. This was mainly for utilities.
MS. WEGNER: Well, they can. It's voluntary.
CHAIRMAN JACKSON: So membership is voluntary?
MS. WEGNER: Yes.
CHAIRMAN JACKSON: But decisions are binding on
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the members, provided the members accept them?
MS. WEGNER: I presume. Mr. Gent can answer the
question more adequately, that there are business contracts
written up to enforce these decisions.
CHAIRMAN JACKSON: Okay.
MS. WEGNER: Peak demand and capacity margin
projections are important grid parameters. On this chart,
the peak demand projections for the Mid-Atlantic Area
Council, our council, are shown in the upper left-hand
graph. The lower left-hand graph shows the peak demand
projections for the New England Region of the Northeast
Power Coordinating Council.
All reliability councils project a yearly increase
in peak demand over the next ten years from about 1 percent
to about 2 percent per year.
Capacity margin is a planner's tool to deal with
unexpectedly high demand, demand forecast error, and so
forth. Capacity margin projections for the Mid-Atlantic
Area Council are shown in the upper right-hand graph.
Capacity margins for the New England Council -- the New
England region of the Northeast Power Coordinating Council
are shown in the lower right-hand graph.
System response to a developing situation is
affected in part by the availability of unloaded generation.
Unloaded generation is related to capacity margin. A
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continuing decrease in capacity margin will eventually
impact system response.
Slide 7, please. Power plants are aging. The
plants that are expected to produce the electricity needed
during the 1997-2005 period have already been built. The
chart shows the total numbers of plants started up and their
total capacity by decades. Both the number of plants coming
on line and their capacity declined sharply after the 1970s.
40 percent of the electricity is generated by
plants which may be 26 years old or older. According to the
East Central Area Reliability Coordination Agreement, ECAR,
the aging of generating capacity necessitates the increased
maintenance and lengthened outages.
The Virgil Summer 1989 events report named the age
of nearby plants as a contributing factor. Age has the
potential to become a factor in grid reliability.
Slide 8, please. I have talked about the
organization of the North American Electric Reliability
Council and some characteristics of the grid. Now I will
address some operational aspects of the grid as demonstrated
during events.
There are two kinds of grid emergencies. The
first is the outcome of excess demand. That is, demand
above expected peak demand that may exceed reserves. As
this kind of emergency develops, there is usually time for
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human intervention to mitigate the transient.
The second emergency type develops very rapidly as
a result of a fault. Automatic systems protection must cope
with the situation.
The third type of situation is a discovery of the
potential for grid instability due to an existing nuclear
plant condition.
Slide 9, please.
CHAIRMAN JACKSON: I'm looking at the fault issue
with the summer event, and particularly the western grid
disturbance of last year, and I recall that your draft
report at that time concluded reliability just weeks before
this western grid disturbance --
MS. WEGNER: Yes.
CHAIRMAN JACKSON: -- on August 10th.
Now, had that report specifically looked at the
potential of the kind of fault that caused those two events,
that caused the western grid disturbance?
MS. WEGNER: There were previous faults, the July
2nd one, the December 14th, 1994 in which a seemingly
innocuous situation occurred far across the country from the
nuclear plants and caused a disturbance, and I looked at it
to the point in which I determined to the best of my ability
what transpired during these events and wrote them up in
technical review reports, and they were summarized in the
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report.
That is, I believe, as far as I could say that we
have reviewed the events, but --
CHAIRMAN JACKSON: I guess I'm really more
interested not so much in ringing your bell relative to that
particular event, but more to understand is whether the way
we track the status of the grid was such or is now such that
we would be sensitive to the potential for the kind of event
that occurred last summer.
DR. ROSS: Other than expose what happened in the
reports, I'm not sure of any specific action --
CHAIRMAN JACKSON: I guess I'm saying, what do you
measure to make a conclusion that a grid is stable and
reliable? What do you measure? What do you look at? How
do you reach that conclusion?
DR. ROSS: Okay, I understand your question now.
The specific event, and I think Mary's going to get bottled
-- segmented the western area to a number of little ad hoc
islands, and within the islands, certain actions took place.
And if the plant -- some of them tripped, most of
them tripped, some did not -- it was such that you still
have reliable off-site power to the plant, even though the
plant may trip, then I think that's relevant.
CHAIRMAN JACKSON: I guess I'm wondering, are we
sensitive to whether there may be operational conditions
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that are occurring, or do we know enough even about the
maintenance of the grid to know whether the loading -- or
whatever factors, to know when a potentially problematic
situation is developing?
MS. WEGNER: That, I believe, would be DOE's
Office of Emergency Management's job.
CHAIRMAN JACKSON: Okay. And I guess this goes
back again to something we had talked about in an earlier
stage, and the issue becomes then the interface.
If DOE's Office of Emergency Management -- and
we're going to hear from them -- tracks certain things, what
communication is there then to us that we fold into in any
kind of a trending database that would trigger us to be more
sensitive or transmit information to the regions, to have
our folks be more sensitive to the potential for some --
MS. WEGNER: DOE has been sending me weekly
reports, which I've been transmitting to a number of people
in DOE and NRR, discussing a potential situation in a few
weeks in areas where there may be problems or where there
have been problems.
Don't know about any databases other than the
study --
CHAIRMAN JACKSON: But nothing that would allow
any response on a real-time basis or anything that
approaches that?
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MR. CALLAN: Chairman, I think in all candor, I'm
speaking as an ex-regional administrator, the insights the
region gets regarding grid reliability they get from
industry sources, typically through the resident inspectors
who are -- attend several operational meetings every day
that the licensee holds at site.
But we don't have a mechanism, a reliable
mechanism internally to disseminate that kind of
information.
DR. ROSS: And I think also to the point we talked
about, the sudden, rather than the slow drop in capacity.
There's some inner workings amongst the councils about how
to, given a trauma of some sort, to separate into islands,
and we don't review that. We don't have access or --
CHAIRMAN JACKSON: You have the issue of sudden
disturbances.
DR. ROSS: Yeah.
CHAIRMAN JACKSON: And then you have the issue of
degraded voltage, right?
DR. ROSS: Right.
CHAIRMAN JACKSON: And I noted that your report,
and I'm going to quote from it in discussing a particular
plant that had a degraded voltage event stated, that "the
degraded voltage analysis accepted by the NRC in 1979 was
not updated because no requirement for periodic update
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existed."
And so what's the status with respect to that? Do
licensees adequately monitor degraded voltage concerns, if
the licensee's data is updated with respect to that when
they perform their IPEs or their PRAs now?
And I guess my -- I'm told that degraded voltage
weaknesses were routinely identified when we did these
electrical system SSFIs some years ago. What staff actions
came out of those and do we have any current concerns?
DR. ROSS: Let me answer the first part and I'll
turn to Mr. Thadani for the second part. We don't know the
extent to which utilities have updated their stability,
hence our recommendation. We just don't know.
As far as what came out of the SSFIs, I'll ask Mr.
Thadani to answer, but I'll expect we're into the plant
centered rather than the grid centered area now.
MR. THADANI: Yes. By and large, the findings
were more on plant-centered issues and there were follow-on
activities as a result of that. But two parts. Let me go
back to this point to a question you raised.
IPEs are -- at least it's my view that they do not
look at degraded conditions. They look at failures, actual
experiential database, and that's how they come up with
frequencies of events.
In addition to that, Mr. Jenkins will be talking
. 24
about an effort that we're initiating at Oak Ridge National
Laboratory, and one element of that is going to be -- focus
attention on the issue you raised just now.
CHAIRMAN JACKSON: I keep coming to Mr. Jenkins.
DR. ROSS: He's the last speaker so we're all --
CHAIRMAN JACKSON: I will try to be good for the
next three minutes.
MS. WEGNER: Slide 9, please.
The first example is an event in which weather-
driven excess demand affected grid operations locally. The
event occurred on January 18th through 20th, 1994. Cold
weather affected most of the Midwest, south, northeast, and
Mid-Atlantic areas of the United States. The figure shows
the relationship of temperature at the Washington National
Airport to electricity demand for the region.
On the 18th in the Mid-Atlantic area, the
temperature began to drop from 35 degrees Fahrenheit at 5
a.m. to 8 degrees Fahrenheit at midnight. In the evening,
electricity demand increased inversely with the temperature
when it was expected to drop with the change in usage from
commercial to residential.
Weather conditions not only increased customer
load, but also disrupted fuel supplies. Generation was
increased to the maximum. Transmission lines were loaded to
their maximum.
. 25
Slide 10, please. Emergency measures for reducing
the load as shown on slide 10 were instituted. The Mid-
Atlantic Area Council and Virginia Power had to resort to
rotating blackouts to maintain the reliability of the grid.
Florida, New York and Canada provided power to the Mid-
Atlantic. Load reduction measures as shown in slide 10 were
instituted and utilities, government entities, the business
community, and the private sector all cooperated to reduce
load.
The system frequency never decreased to the point
where step 8, actuation of automatic underfrequency load
shedding relays occurred.
The second kind of emergency, a fault driven
transient, occurred in 1989 at the Virgil Summer Nuclear
Plant. At Virgil Summer, a loss of cooling signal was
generated, the turbine tripped, and the reactors scrammed.
Nearby plants attempted to make up the load but tripped
because their generator protection was set high because of
their age.
A cascading failure resulted during which 16 units
tripped off line and caused a severely depressed voltage
throughout South Carolina and the neighboring states.
Virgil Summer's 20 buses saw the degraded grid
condition and isolated from the grid. The emergency diesel
generators started and loaded the running buses. They ran
. 26
for one hour and 35 minutes. Subsequently, the licensee
determined that his grid analyses had to be periodically
updated.
Slide 11, please. Another important event was the
western grid disturbance of August 10, 1996. The weather in
Los Angeles was hot. Relatively inexpensive hydropower was
available from the northwest. Large amounts of power were
flowing southward when voltage problems in the northwest
became evident.
A line sagged into a tree at Oregon. Lines
tripped; generating plants tripped. The system separated
into four islands as shown on the slide outlined in heavy
black lines.
Frequency in the Northern California island
dropped. All five sets of load shedding relays actuated
causing about 50 percent of Northern California load to be
shed.
Many power plants tripped, including Diablo Canyon
units 1 and 2-- units 1 and 2. Southern California, Arizona
and New Mexico were part of the southern island. Frequency
dropped there also, triggering load shedding.
Palo Verde units 1 and 3 in the southern island
tripped. Neither nuclear site lost all off-site power as a
result of the event. A transient resulted in the loss of
over 30,000 megawatts of load, 25,000 megawatts of
. 27
generation, and the tripping of 190 generating units shown
in dots on the slide, which came from the western grid
disturbance report of WSCC.
Included in those dots are the Diablo Canyon units
in California and the Palo Verde units in Arizona. The
Western Systems Coordinating Council concluded that the
system operation was not in compliance with WSCC minimum
operating criteria prior to the beginning of the transient.
That criteria requires that the system be operated
so that cascading failures which can cause system collapse
do not occur. Cascading failures did occur. However, the
structure of the system and the responses of the operators
controlled the situation to prevent grid collapse and
equipment damage, allowing rapid recovery.
Besides events, several potential grid
instabilities based on licensees' analyses have been
reported. For example, the licensees for Point Beach units
1 and 2 in Kewaunee have identified scenarios involving
transmission line outages with the potential to cause loss
of all off-site power to Kewaunee.
Slide 12, please. My conclusions are these. On
the whole, the grid is stable and reliable, even in the face
of events as serious as the August 10 disturbance. However,
problems described in the study, including decreased
capacity margin, plant aging, reanalyses which have
. 28
identified problems, actual events, and uncertainties
introduced by restructuring of the electric industry,
indicate the need to monitor grid conditions on a regular
basis.
And that's the end of my presentation.
COMMISSIONER DIAZ: Are you sure on the Palo Verde
trip?
MS. WEGNER: I'm sorry, sir.
COMMISSIONER DIAZ: Are you sure that Palo Verde
tripped?
MS. WEGNER: Palo Verde units 1 and 3 tripped.
MR. CALLAN: Let me clarify that. There's a
distinction here that's important. Palo Verde can withstand
a loss of load without a reactor trip and, in fact, I was
regional administrator at the time. My recollection is that
the unit withstood the loss of load transient turbine trip
without a reactor trip.
MS. WEGNER: The reactors trip on a low TNBR.
COMMISSIONER DIAZ: But only one was actually --
information was only 2 and 3 you're talking about.
MS. WEGNER: Units 1 and 3 tripped from 100
percent power.
COMMISSIONER McGAFFIGAN: 2 didn't?
MS. WEGNER: 2 did not. It's because of -- I
presume, and it looks like it's because of the direction of
. 29
power flow out of the plant.
COMMISSIONER DIAZ: But unit 1 was not on line.
Unit 1 was --
MS. WEGNER: Unit 1 was in 100 percent power, and
unit 3. Unit 1, I believe, just came out of an outage.
COMMISSIONER DIAZ: Mr. Callan, would you like to
figure that out, please?
MR. CALLAN: I don't recall exactly the units that
were up or and down, Commissioner, but we'll get back to you
on that. I've forgotten.
CHAIRMAN JACKSON: There's an AEOD recommendation?
DR. ROSS: Let's go to slide 13. We had a single
recommendation from the study. NRR, which is our usual
receiving office -- well, sometimes it's NMSS, but we
requested -- NRR should request licensees to confirm that
they continue to meet their licensing bases with respect to
stability and reliability, and further, have a process for
ensuring they meet this licensing basis on stability for the
rest of their license.
CHAIRMAN JACKSON: That's a natural segue into
NRR's part of the presentation.
Mr. Callan.
DR. ROSS: Now I believe it's Mr. Jenkins.
COMMISSIONER DIAZ: I think I'm actually very
proud of it. I guess the SONGS unit, SONGS 2 and 3 did stay
. 30
on line.
MS. WEGNER: They did stay on line, yes.
CHAIRMAN JACKSON: We have Mr. Ray here.
MR. JENKINS: Good afternoon, I would like to
briefly discuss first the licensing basis for reliable power
to safety systems and components, and then those NRR actions
which we believe are appropriate in light of the ongoing
changes in the electric power industry.
Slide 14, please. General design criteria 17
details the electric power requirements for nuclear power
plants. The on-site and the off-site power supplies
together assure reliable power for safety-related functions.
Each power type, independent of each other, have
different characteristics. The on-site power source must
meet the scene-of-failure criteria. As a minimum, the off-
site power source consists of two independent circuits.
Each must be capable of safely shutting down the reactor.
In addition, GDC-17 also states that provisions
must be included to minimize the loss of off-site power.
As part of the staff's review of the licensee's
design, grid stability analysis which were performed by the
licensee must verify that the local grid remains stable in
the event that the nuclear unit generator is lost or the
largest other generating unit is lost, or the loss of the
most critical transmission line occurs.
. 31
With that short overview of the licensing
perspective from off-site power, the next slide describes
our ongoing or near-term actions.
CHAIRMAN JACKSON: Let me just ask you two
questions. The Virgil Summer event of 1989, tell me where
that stood with respect to any of these three factors.
MR. JENKINS: The Virgil Summer event reflected
the fact that they had not updated their grid analysis and
taken the appropriate action with respect to ensuring that
the loss of that particular unit would create a local grid
disturbance.
So technically they were not consistent with that,
but the problem is that that's not a hard requirement. At
the time plants are licensed, the staff looked at the grid
analysis and basically verified that, in fact, that had been
done.
But over the course of time, and this showed up in
the ANO event, or the licensee event, the disconnect between
the transmission departments and the nuclear generating
units sort of led to a disconnect between them. But the ANO
event which was led by the fact that they were going to have
an ESFI inspection forced them to look at their grid
analysis, and then of course they reported it.
CHAIRMAN JACKSON: So have all of our licensees
systematically verified?
. 32
MR. JENKINS: I could not state that. The -- at
one time, if it's stated in their SCR that they performed a
grid analysis, they did do that, but over time, conditions
change. There's no requirement at this point.
MR. THADANI: Let me comment. When we issue
information notices, we're not explicitly calling for
licensees to do specific analyses that they need to report
back to us, but there is an expectation that they need to go
back. Given the information in that notice, they need to
assess the information and its applicability to the
requirements that they need to meet.
So there is that expectation. When we find
information in one plant that could potentially be
applicable to other plants, we issue the information notice
that those plants will in fact look at the information
notice, make a conscious decision whether there is
information there that may be applicable to their plant and
their requirements that they need to go back and verify it.
DR. ROSS: Chairman Jackson, a typical FSAR
statement will be the stability of off-site power systems is
in compliance with the branch technical position. That's an
NRC branch, concerning stability, and that they have --
steady state and transient studies show that the loss of
both units, which happens to be south Texas, or the loss of
one unit with the other unit either on line or off line
. 33
would not impair the ability of the system to supply power
to the ESM electrical system.
Then it goes on and talks about stability. That's
a typical SFAR commitment.
CHAIRMAN JACKSON: So given that, there's no
specific requirement that if some event like this western
interconnect situation occurs, that they have to go back and
assess what's in their FSAR against what has occurred? Is
that what you're telling me?
MR. JENKINS: They would have to look as part of
-- being a member of the reliability council --
CHAIRMAN JACKSON: No. I'm talking about in terms
of us.
MR. JENKINS: From our perspective, there's no
requirement that they would have to do any grid analysis.
DR. ROSS: I do note that the --
CHAIRMAN JACKSON: What is -- go ahead.
DR. ROSS: The FSAR is written in the present
tense.
CHAIRMAN JACKSON: So you're saying that to say
what, Mr. Ross?
DR. ROSS: To me, that means whatever is true then
is true now. It didn't say at a certain point in time, I
could do this. It says it is.
MR. JENKINS: Certainly it would be actionable on
. 34
our part if we determined that there was deficiencies. They
would have to go and correct those deficiencies, either the
FSAR, or they would have to correct the plant in response to
the grid.
CHAIRMAN JACKSON: Commissioner Diaz.
COMMISSIONER DIAZ: I'm trying to understand the
role of the house power or the -- you know, our -- the
reactor and, you know, the power plant running.
If I remember correctly, when TMI happened, we
actually required that whole power plants will trip -- I
mean all the reactors will trip when the turbine trips,
that's correct, and then at the same time, those power
plants that had an integrated control system and had
actually bought a power run-back were authorized to
disconnect the power run-back.
And how many plants are affected like that? How
many plants actually had a power run-back option that would
allow them to trip and then restart and pick up 10 percent
of the load? Do we have an idea?
DR. ROSS: Let me comment a little bit on that
because at that time, the BMW plant had a -- well, of course
it still does -- had a pilot-operated relief valve, and on a
typical load separation where the primary pressure is going
up, the PORV would be electrically commanded to open first,
and then if the pressure kept on going higher, the reactor's
. 35
trip signal would be generated. This was built in so that
the ICS could run by power before they tripped on high
pressure.
One of the more immediate things that happened
after TMI was an emergency bulletin that reversed these set
points such that you got the trip first, and then the PRV
was challenged next.
That really more or less invalidated the run-back
feature of BMW.
COMMISSIONER DIAZ: It also affected the
Westinghouse plants that don't have the problem with the
power grid relief valve, will have an integrated control
system; is that correct?
DR. ROSS: I'm not sure about that, but the
feature did come into mind on one of the European plants
that had a precursor PRV stuck open years before, so I think
that was true, that the valve opened first and stuck open.
The whole idea of reversing it was to quit
challenging the PORV.
MR. THADANI: That was also the pressure trips at
a point were modified for reactor trip versus opening of the
PORV. That was all.
COMMISSIONER DIAZ: I was trying to determine
whether the power plant -- you know, the turbine trips,
there's an overload, the actual trips, and then we get into
. 36
a situation in an hour or two, you know, how we access the
capability of the nuclear power plants to come up and pick
up the house load itself and I've seen that missing from the
analysis.
MR. JENKINS: As I understand it, there's no
provision for picking up house loads once the plant trips.
CHAIRMAN JACKSON: I want to go back and try to
close the loop here between what your statement -- your
statement about FSARs being written in the present tense and
your statement that there's no specific requirement in the
-- if there is some major grid disturbance relative to
what's in the license -- related to the licensee, is to go
back and assess their grid stability analyses relative to
these factors that are laid out here.
And I don't understand. I mean, what are you
trying to tell us, they do or they don't -- that they are or
they are not required to update their analysis?
MR. JENKINS: I think we're saying the same thing,
which is that apparently a licensee has an FSAR and that
indicates that it includes not only a licensing basis but
the design basis, and if they find a condition which --
that's no longer true, then they're going to either have to
adjust one or the other, and --
CHAIRMAN JACKSON: Right. But I guess I'm trying
to get at this issue of, they find that something is no
. 37
longer true. The issue is, what triggers that judgment?
MR. JENKINS: Discovery either by the staff or the
licensee.
CHAIRMAN JACKSON: Okay. So then if something
happens like the WSCC events, okay, and/or the Virgil Summer
event of '89 and/or the ANO event, is that a discovery that
triggers a need for reanalysis?
MR. JENKINS: The western grid disturbance, given
its regional nature, will not necessarily force licensees to
look at their particular control area and say that we need
to reanalyze.
In other words, the central problem, as Mary
discussed with the western grid disturbance, was the fact
that some parties were not meeting their minimum operability
reliability criteria which was established by the council,
and the corrective actions would have to work through that
voluntary organization.
If the WSCC found that there was a problem with
that -- with a particular control area and it centered on
that plant, then that would be something that the licensee
or the utility would have to address.
But none of the conclusions I saw were that
specific.
DR. ROSS: Chairman Jackson, what I meant by the
present tense is that when NRR proceeds, like they said, on
. 38
their third bullet to implement this recommendation, they
certainly, when they communicate, this say this is not a new
requirement; remember, your plant was licensed that way.
So it's not like we're reinventing something. It
just we're saying, are you still doing what you said you
would do 15 or 20 years ago?
COMMISSIONER ROGERS: Well, I'm troubled by the
whole way this thing is being discussed because it seems to
me that our responsibilities and our licensees'
responsibilities are between the two of us, and now we're
talking about a grid that's out there, and it seems to me
that what we have a responsibility for is to see that the
licensee can function safely in the event that something
happens on the grid but we can't control that grid.
And so we're talking about -- you know, we keep
talking about grid stability considerations as if we can
control the grid through some licensing action of our own,
and to me that -- you know, that's never-never land. We
don't do that.
And so there's an analysis that says -- I mean the
statement here, the analysis must verify that the grid
remains stable in the event of these sorts of things, that's
a presumption that the licensee makes in developing their
coping requirements, I'll call them, and how they handle
those sorts of things.
. 39
But that's not a requirement on the grid because
the grid's out there and it's whatever it is. And so, you
know, I think that the issue which we've been ducking here,
I think, is that things are changing or could change out in
that grid that are different from the way the historical
record will show. That's what we're concerned about.
And what are the implications of that with respect
to our requirements on our licensees?
CHAIRMAN JACKSON: Exactly. That's all I'm trying
to get you to say. Thank you. Thank you.
COMMISSIONER ROGERS: We can talk until the cows
come home about what the reliability councils have to do.
We don't control the reliability councils.
MR. JENKINS: If we can go to slide 15, please.
Okay, and slide 15, this is a part of the ongoing actions,
future actions that we plan to take in light of these
changes in the industry.
First, we plan to monitor industry developments.
We met with utilities, Commonwealth Edison, government
authorities, such as FERC and DOE, and also with the North
American Electric Reliability Council. I would say that
this particular matter is a new area for the staff to enter
into before we consider the grid reliable.
We still consider the grid reliable and stable
based on the evidence that we have, however, we are trying
. 40
to look ahead and identify if there are any problems
approaching on the horizon.
The next bullet, we're proceeding in securing a
contractor to assess the risk significance due to potential
grid instability as a result of deregulation, and this will
address some of the points that you are mentioning.
We can't control the -- what's happening in Iowa
as how it affects a plant at Palo Verde, but we can assess
whether or not changes in the industry require us to take
additional actions to compensate for any grid instability.
As recommended by the AEOD report, we plan to
issue a generic communication to licensees to reemphasize to
them the need to maintain their design basis with respect to
off-site power requirements.
There is no change here. The equipment has to
have adequate voltage and frequency in order to operate, and
the preferred source is the off-site power system.
Lastly, as part of the PRA implementation plan, we
plan to reassess the risk from the SBO perspective.
Overall, we are taking a look at this brand-new world as it
develops, and I think in the past, the line for us was the
capacity to switch. Some of the grid stability
considerations on the previous slide dealt with when a plant
was initially licensed and we were concerned with the local
grid operation. But that was all assuming that the grid was
. 41
reliable and stable.
COMMISSIONER ROGERS: It's out there. Whatever it
was was not going to change.
MR. JENKINS: Right.
COMMISSIONER ROGERS: And that in the event of any
of these three things on -- these challenges on slide 14,
that the plant could handle that.
MR. JENKINS: Right.
COMMISSIONER ROGERS: See, we're using the term
stability and reliability. We're coupling the two together,
and I wonder whether there's a distinction between them or
if there is no distinction between them, then we ought to
use one term, not two. But I suggest that there might be a
distinction between them in that it seems to me that when
we're talking about stability, we really are talking about
certain deterministic considerations, and when we're talking
about reliability, we may be talking about more
probabilistic considerations out in the grid someplace,
whereas the stability analyses tend to be related to very
specific types of events which could then be handled through
a deterministic fix of some sort.
So I don't know what your thinking on this is, but
I would suggest that in the interest of clarity, either we
use one term, reliability, and not two, unless we really do
want to draw a distinction between stability and reliability
. 42
and how they affect licensees and how we think about the
grid, in which case we have to be, I think, clearer than we
are right now.
CHAIRMAN JACKSON: Dr. Thadani, you want to
comment?
MR. THADANI: I just want to say, I completely
agree with your comments and we do want to draw a
distinction and just as you described it. So we'll make a
point of making --
CHAIRMAN JACKSON: So there are two terms.
MR. THADANI: Two issues, yes, and we'll make sure
that we characterize them properly.
COMMISSIONER DIAZ: I just wanted to make sure
that when Mr. Jenkins was talking about the brand-new world,
are you talking about daylight time or nighttime?
MR. JENKINS: We have to find out exactly which it
will turn out to be.
COMMISSIONER ROGERS: Which time zone?
CHAIRMAN JACKSON: Well, I guess my only question
has to do with the following: why is it going to take until
the end of 1998 to do these things? And if we're going to
utilize contractor expertise, have we placed a contract?
MR. JENKINS: We're in the process of placing a
contract.
MR. THADANI: Mr. Jenkins, he was down at Oak
. 43
Ridge about two weeks ago.
MR. JENKINS: We wanted to assess the capabilities
of the contractor, and that was part of the delay in order
to have a good fit between our -- what we're interested in
what they can provide.
CHAIRMAN JACKSON: Well --
MR. THADANI: If I may.
CHAIRMAN JACKSON: Please.
MR. THADANI: There are a number of issues that
we're trying to make sure we take into consideration. I
mentioned reactor coolant pump seal issue. Some of the
inspections have identified concerns about the so-called
alternate AC power source at some plants, Millstone in
particular, there were the problems there; questions about
availability of the alternate AC source if there is delayed
loss of on-site power.
That is, if you don't have simultaneous loss of
off-site and on-site AC power, it could be, the way the
station blackout rule is written, it could be that an hour
later, and that's what happened at Millstone, an hour later,
because the battery charger has gone from the alternate AC
power source, but that alternate AC power source may not be
available.
There are a number of issues. We're trying to
make sure. The whole idea of trying to go to Oak Ridge and
. 44
trying to get additional information on this issue, the
potential impacts in terms of grid reliability, it would be
very difficult for us to move an issue at a time,
particularly if we're in the realm of backfits. We need to
be able to integrate, understand what the risk significance
is, and be able to support whatever actions we want to take.
CHAIRMAN JACKSON: Of course we have to support
whatever actions we want to take. Of course we have to
worry about backfit. Of course we have to do the cost-
benefit analysis. Nonetheless, the train is leaving the
station.
And the issue, to me, they're twofold, there are
two pieces. One has to do with, as Commissioner Rogers
says, all we can control is what we can control.
Nonetheless, we're a public health and safety agency. If we
know that there's a larger issue out there, even if it's in
the realm that we don't control, but the industry is
organizing itself, and it's not that they're not thinking
about it themselves, relative to certain kinds of
requirements, whether some agency needs to have some ability
to enforce certain things, et cetera, we might be asked to
speak to it.
We need to be in a position to speak to it in a
time frame that is timely relative to what's going on. And
that's why I'm asking the question about why is it taking us
. 45
two years to get to this when there could be legislation or
there could be actions that go on this year that relate to
these kinds of things. So that's number one.
And number two, again, we're here, you know, going
around the barn more generally on issues having to do with
licensees maintaining their current licensing bases, and we
have things in the FSAR that relate to assumptions or
analyses about, you know, grid stability and, you know, in
terms of coping capabilities in plants, and the Commission
is being asked and in the process of making decisions, you
know, with respect to that, and the issue again of being
able to inform that process in a way that makes sense.
And so again, we can't just kind of lull along
because we say, well, you know, that's DOE's Office of
Emergency Management, we've got to get this contracting,
we're going to take two years to do our thing, when the
train's leaving the station.
And that's all I'm really trying to say. We don't
do what we don't have the regulatory authority to do. And
we don't want to overstep the bounds, but at the same time,
if there's an issue, we need to clearly identify it,
identify it in a timely way, and even if it's not in our
regulatory purview, if there's a public health and safety
issue, we have to be prepared to speak to it.
And that's what -- I mean, I think you have to
. 46
develop a little bit more of a sense of urgency with respect
to this.
Is that the end of your presentation?
MR. THADANI: Yes.
CHAIRMAN JACKSON: All right, we'll hear from the
next panel. Thank you.
Well, gentlemen, I want to thank you for coming
and I think -- I'm assuming that -- who's the lead of the
discussion here? The gentleman from DOE, Mr. Meyer.
Okay, so why don't you give us the organization of
your discussion.
MR. MEYER: Good afternoon, and thank you for the
opportunity to present the Department of Energy's views on
matters related to the reliability of the Nation's fault
electric system.
I am David H. Meyer, electricity team leader in
the Office of Policy and International Affairs at the
department.
The department strongly supports the restructuring
that is now occurring in the electric industry because we
believe that it can lead to reduced electric costs and
enable consumers to choose among a wider range of energy
products and services.
However, the transition to competition will
require changes in the institutional infrastructure that has
. 47
been developed over the past several decades for maintaining
grid reliability.
We believe that competition and reliability can be
compatible, but we also believe that that result will not be
achieved automatically.
Ensuring continued reliability must be set as a
design requirement and taken into account as a critically
important policy objective by the legislators, regulators,
industry executives, and others who are presently concerned
with the overall architecture of the new electric industry.
I'm pleased to say that in my personal opinion,
this concern has been generally accepted as a critical
design requirement and that in one fashion or another,
strong mechanisms for preserving reliability will be built
into the new industry.
That, however, I have to add immediately that
there may be some bumps in the road before we get the design
set exactly right.
Let me turn to the department's current activities
related to reliability, and there are several activities
that come under this heading.
The first, and perhaps the most important to you
in today's context, is reliability as it relates to the
proposed federal legislation, that is, not DOE's own ideas
or views on the legislation, but more generally by others.
. 48
The department believes that the existing legal framework
for the industry is out of date and needs to be modified to
be relevant to a competitive industry.
Legislation is needed that will resolve
jurisdictional ambiguities, eliminate obstacles in federal
law to competition, and provide policy guidance and
direction on a wide range of issues raised by the prospect
of competition.
We have developed some concepts and draft
materials for such legislation as a basis for interagency
discussions, and we hope that these discussions will lead in
due course to a legislative proposal that the President will
recommend to the Congress.
CHAIRMAN JACKSON: Now, do you have this working
on a particular track where you developed a specific
interagency process and have it tracked to a recommendation
or set of recommendations to the President by a proposed
date?
MR. MEYER: Our proposal is in a -- has gone into
an interagency review process. That's not a process that we
can control, so we are not able to give you any particular
date.
CHAIRMAN JACKSON: And the NRC is part of that?
MR. MEYER: I am not sure who is and who is not in
on that process.
. 49
CHAIRMAN JACKSON: Is the NRC part of that? Can
anybody speak to that?
MS. CYR: People on my staff have been meeting
with a group of people at least from DOE on issues on
restructuring legislation. I don't know if it's a different
set than this, but --
CHAIRMAN JACKSON: You do suggest that there's an
actual document that's undergoing interagency review?
MR. MEYER: The interagency review process was put
on hold pending Secretary Pena's confirmation.
Now, Betsy Moler has been nominated as deputy and
my personal expectation is that she will want to take a very
active role in that process, so it may be that that process
will be delayed yet further to allow her to be in place and
then take an active role.
CHAIRMAN JACKSON: So let me make sure I
understand. There is or is not a draft document that's
undergoing interagency review?
MR. MEYER: There's a draft document that awaits
an active interagency process.
Reliability is one area that we think needs to be
addressed in this legislative debate. The existing
infrastructure for maintaining reliability has been
developed on an as-needed basis by the industry and has
little or no explicit basis in federal law.
. 50
Legislation may be needed to express an explicit
federal interest in reliability and provide support to the
industry concerning the setting of reliability standards,
operation of the bulk electric systems, monitoring of
compliance with the standards, and enforcement of the
standards when necessary.
I will return to this subject in more detail in
another section below.
Let me speak very briefly to the task force on
electric system reliability that the Secretary of Energy,
Hazel O'Leary established last year.
This is a subcommittee of the Secretary of
Energy's Advisory Board and the task force is chartered to
address technical, institutional, and policy issues
pertaining to reliability. It is chaired by former
Congressman Phillip Sharp, now of Harvard.
We were pleased that a member of the Commission's
staff attended the task force's March meeting, and I suggest
that the Commission consider writing to Mr. Sharp to express
its principal concerns in the reliability area so that he
and the other members of the task force can take your views
into account as they do their work.
CHAIRMAN JACKSON: Now, we may indeed do that, but
I also would ask that you make -- take the NRC's concern on
this issue to the task force.
. 51
MR. MEYER: Yes, yes. We would welcome more
frequent dialogue with you and others as appropriate here to
-- so that we have a very clear appreciation for your
concerns.
We have federal reporting requirements for major
system incidents. That is, that the department, in order to
meet its national security requirements and responsibilities
contained in the federal response plan, has established
mandatory reporting requirements for electric power system
incidents or possible incidents.
These incidents are to be reported to the
department through its Emergency Operations Center and the
type of incidents to be reported on include load shedding
actions or loss of firm loads, system voltage reductions,
public appeals for short-term reductions in electricity
usage, acts of actual or suspected physical sabotage or
terrorism, add fuel supply emergencies.
CHAIRMAN JACKSON: Have you been actually trending
this data? How recently has this reporting started?
MR. MEYER: That reporting requirement has been in
place for quite some time. We are in the process of
preparing a new summary which we will distribute to all
transmission owning and operating entities.
The plan is that that would be distributed under a
cover letter signed by the Secretary and we wish to -- the
. 52
thought is that this would demonstrate the Secretary's keen
interest in reliability issues.
Once an incident is reported to the department,
the department then alerts other agencies as appropriate and
works with them to develop a coordinated response to the
problem, if a response is needed.
Let me speak briefly about our participation in
disturbance reviews. That is, when significant outages or
other disturbances occur, the industry examines the data
pertaining to the disturbance in minute detail in order to
learn as much as possible from the incident about its causes
and how similar incidents might be prevented.
Last summer, as one of the 24 recommendations in
our report to the President on the western outage of July
2nd and 3rd, the department determined that henceforth, it
would participate in the reviews of all major system
disturbances, and our reasons for participating in these
reviews are to demonstrate our continuing commitment to
maintaining reliability and to learn, along with the
industry, all that we can about the causes and
preventability of such incidents.
Finally, let me speak briefly about our activities
related to systems under -- or regions under stress.
From time to time it becomes apparent that the
bulk electric system in one or another region is under
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stress, even if no actual disturbance or incident has
occurred, due to severe weather, outage of one of major
generation or transmission facilities, or some combination
of such factors.
In these cases, an electricity staff group at the
department monitors the state of affairs in the region
closely and provides at least weekly status reports to the
secretary and other senior department officials.
In some cases, we have been able to send technical
staff to the affected region before incidents occur. These
people have worked with their counterparts from industry and
State and local governments to identify and execute
preventive -- or preventive or mitigating actions.
Let me turn to involvement of industry, State, and
federal regulatory agencies in these activities.
We endeavor to maintain an active dialogue, as
appropriate, with other parties, and we would be pleased to
work more closely with the Commission on matters of common
interest.
One of your questions in the letter of invitation
concerned activity on our part with respect to nuclear
safety issues in the context of reliability, and so far as I
am aware, the department has not as yet found occasion to
give explicit attention to nuclear safety issues in relation
to its reliability activities, but we would be happy to work
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with you to find a way to focus those.
CHAIRMAN JACKSON: Well, a beginning would be if
we are clearly in the interagency process.
MR. MEYER: I appreciate that. If you want to
play a role, I cannot believe that there wouldn't be an
opportunity to do that.
Let me turn to our interest in the independent
system operator concept.
The department has a keen interest in the ISO
concept in general, although we do not wish to be understood
as endorsing any particular one of the many ISO designs and
proposals now in circulation.
The ISO concept became popular as it became
apparent that in the competitive wholesale market, it will
be necessary to ensure that regional transmission networks
are run without discrimination against any participants in
the market's commercial transactions, and that utilities
that own both generation and transmission could avoid
conflict of interest problems by acceding the operation, if
not the ownership of their transmission facilities to an
independent party.
But secondly, it also has become apparent that
there is a need to ensure that the regional transmission
networks would be run without stressing them beyond their
physical limitations, but also without allowing those
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limitations to be used as a pretext for discrimination to
the advantage of some market participants and the
disadvantage of others.
Both of these concerns imply that there will be a
strong and enduring need for independent regional scale
transmission entities. As federal legislation to update the
legal framework for the industry takes shape over the coming
months, consideration should be given to provisions
pertaining to ISOs.
Like reliability itself, ISOs appear to be too
important, too critical to the successful function of the
new industry not to warrant explicit coverage in the new
legal framework.
Let me conclude then by going back to the subject
of reliability provisions in proposed federal legislation.
The department has not yet offered its proposal, but -- and
so here I can only mention ways that reliability might be
addressed in federal legislation.
One approach would be to authorize a federal
agency, such as the FERC, to approve reliability standards
developed by affected parties through a membership-based
organization.
The agency that is -- possibly the FERC could also
be empowered to approve procedures proposed by a reliability
organization for the organization's own activities,
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including monitoring and enforcement of the standards.
Finally, the legislation can provide the agency
with the authority to enforce the standards itself if
necessary, although the initial responsibility for
enforcement might reside with an industry organization.
That concludes my statement and I would be happy
to answer questions at your convenience.
CHAIRMAN JACKSON: Okay, I think we'll go through
-- I think what we'll do is start with you, Mr. Gent. Is
that the correct pronunciation of your name?
MR. GENT: Yes, it is.
CHAIRMAN JACKSON: And then we'll go through the
different regional, and we'll let you Mr. Nye, last but
certainly not least, tell us the real deal from the
industry.
MR. GENT: Thank you, Madam Chairman. Good
afternoon, commissioners. I'd like to thank the Commission
for extending this opportunity to the North American
Electric Reliability Council for us to talk about what we're
doing in the way of reliability and how deregulation might
affect reliability.
I'd like to start by saying something that's not
in my prepared remarks. I've noticed while sitting in the
audience that you have this desire to participate in this
process and I'd like to offer that invitation for the NRC to
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participate in any, all, some, or none of our processes at
any time you would like immediately without going through
NERC processes, peer review.
We would welcome your attention. Your staff has
visited our offices and I'd like to invite them back because
I think a lot has happened since they were there when they
were preparing this report that served as a basis for this
discussion.
As you know, NERC's responsibility is the high-
voltage grid that interconnects generators and load centers.
We have three major grids in the United States and Canada.
Some say four. It depends on how you count Quebec. That
would be the fourth.
We call them in our terminology interconnections
and I understand what Commissioner Rogers is saying about
the terminology. We have some very strict terminology that
probably conflicts with your very strict terminology in many
cases.
So as we have defined reliability, we break it
into two parts. We talk about adequacy and we talk about
security, and I've learned that security means something to
everybody a little bit differently than it means to us.
In this case, it means that we must be able to
withstand a large contingency outage. Your staff has listed
a number of examples in their report, transmission lines,
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corridors, generating plants and the like.
Our initiatives dealing with security and
standards relate directly to your interests in grid
reliability. We require that there has to be enough
spinning reserve to be able to withstand those
contingencies. We need to ensure that these units that have
the spinning reserve are strategically located and we have
to ensure things like transmission lines have enough room
left to withstand these losses.
The public in general doesn't understand why we
can't load transmission lines right up to the maximum
thermal rating, and I think after listening to this, I'm
sure you understand that there is a stability issue. There
is also a contingency issue.
To help us reliably handle the increasing number
of transactions, NERC is establishing a network of 22
security coordinators graphically and electricity
distributed across North American. And many of the other
speakers that follow me will be addressing those security
coordinators.
This is the real key to instantly providing a
reliable network. These coordinators are going to have
their own dedicated communications network, we call it
interregional security network, or ISN and it will begin
operation as soon as June of this year with some limited
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functionality.
Today, our security coordinators are implementing
several interim procedures and processes so that the more
sophisticated tools that they'll need to make definitive
judgments, and, yes, even run stability studies, are fully
developed. The ISN is going to ramp up to full
functionality later in 1997 and we hope will be totally on
line in the early part of 1998.
These 22 security centers will be responsible for
conducting security analysis of the grid with on-line data,
and will have the authority to take the actions necessary to
prevent or relieve overloads or prevent potential risk to
the grid.
This very elaborate system should allow many
multiples of additional transactions to take place in this
new deregulated open access world that we are surely facing.
You've asked in the notes that I received earlier
about how the governance that would involve an independent
system operator concept --
CHAIRMAN JACKSON: Before you go on, let me just
ask you this question. Do nuclear plants receive any
special recognition in protecting their off-site power,
their access to off-site power?
MR. GENT: Yes, they surely do.
CHAIRMAN JACKSON: Could you tell us how that
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works?
MR. GENT: Yes. In an operational sense, if you
look at what I have attached to my material, you'll see that
I have excerpted what's called a NERC operating manual.
This is just a cover sheet.
If you look a little bit deeper at the table of
contents, you'll see something I've highlighted in yellow.
It's called operating policies. And then I've gone a little
bit deeper. Policy number 5 on the next page, for instance,
refers to emergency operations, and then the number E item
there is called system restoration.
I realize this is a lot of detail, but if you will
shift with me now to a page that's numbered at the bottom
P5-7, there will be a reference to system restoration.
There's something called requirements. This is something
that's required. These are must-do things.
In this case, when you're restoring the system
from some system collapse or an outage such as we had in the
Western Systems Coordinating Council on August 10th, under
the requirements, you see steps one through five. The fifth
step in this process is off-site supply for nuclear plants.
This is the first thing that happens after the
system is brought back together, resynchronized and judged
to be functioning. This is before we bring back any other
loads or generating plants. The first thing we do is try to
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bring back the nuclear plants.
CHAIRMAN JACKSON: Well, as part of that, do you
have specific information as to the coping capabilities of
the nuclear units in a particular region to -- relative to
how long the unit or units can go without off-site power,
the provision of off-site power?
MR. GENT: I don't have information of how long
they could go without off-site power.
CHAIRMAN JACKSON: So that's not readily available
to those who would be in the position of working to restore
the provision of off-site power?
MR. GENT: I don't know that that's the case.
MR. DELGADO: That information is available in the
EMS screen. We have figures built into the energy
management system that address the needs of our plants.
There are written and screen procedures similar to this.
And of course we also monitor the plant, for example, the
alarm, so that the operator -- even when the plant is out,
the operator can do something about voltage levels that is
required to meet the requirements of the power plant.
CHAIRMAN JACKSON: I'm asking a slightly different
question. That is, let's assume there's been, you know,
some loss of the grid, and now you're working to restore the
power. I guess what I'm trying to understand, you know that
there the different stations have different coping
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capabilities depending upon their own on-site power sources
and design of the plant. And the question is, is there --
as part of this grid management and restoration you say
should be given high priority, but that has to be informed
by what the actual status is of the given plant.
MR. GENT: We have actual real-time communication
with the plants, and if they were to have specific problems,
my operators and the plant operators would be in
coordination. We generally know of their requirements and
they know of the status of the grid in preparation for these
events, and in real time, we can tune the situation by
direct telephone communication with ring-down circuits.
CHAIRMAN JACKSON: Do you have a worked-out
protocol relative to the nuclear plant?
MR. WOLFF: I'm struggling with the word protocol
but we have a worked out, ongoing daily relationship of
talking with the plants, and if you will accept that as a
protocol, yes, we have a protocol. It may not be written in
a document somewhere. It is a general agreement to operate
and communicate.
MR. DELGADO: Maybe I can address it. From our
perspective, we do have the procedures which have been
written in conjunction with the power plant, so our plant
staff has -- in preparation for this meeting, I checked and
the last one I saw was revised in April of this year, so I'm
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satisfied that we're keeping up with it.
Whether or not -- and I cannot answer your
question, whether or not the operator knows how long the
power plant can be black. By giving it top priority, I can
assure you that it's getting it as soon as the operator can,
in other words, getting first priority.
So -- and besides that, the communication is
pretty solid from the perspective of dealing directly with
the power plant by hands off operating and communication is
not required. Line communication can be done hands off.
So by having a top priority issue, it assures us
-- it assumes the system is energized with the black start
plants. The nuclear power plant will be given the first
priority in getting access to it.
Besides, since they are connected to a backbone
345, which is the highest voltage we have, in any
restoration of the system, you begin with the black plant
and you go right to the backbone. So those plants naturally
will receive priority because you right away want to get to
the backbone.
CHAIRMAN JACKSON: You don't have any 765 kV?
MR. DELGADO: Sometimes I wish we did, but right
now we don't, no, and I don't expect we will in the near
future, but 345 is quite ample for us.
COMMISSIONER ROGERS: Would that be true in all
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the regional coordinating councils?
MR. DELGADO: I have a map here of Maine and I can
assure you if you look at it, the thick lines join all
nuclear power plants.
COMMISSIONER ROGERS: No. I'm talking about the
whole country now. I'm not talking about a regional. I'm
talking about now every regional, whether that's the case.
MR. GENT: I'm not sure this will answer your
question, but virtually every plant has a procedure and
protocol for being restored to the network and there is an
order in which they're called in to do that depending on the
situation, but everyone has a plan that includes that.
COMMISSIONER ROGERS: See, the question that I
haven't heard a direct answer to is whether there is
something different about how a power pool treats nuclear
plants from how the regional coordinating council treats
nuclear power plants.
Because you may have a -- you know, a larger
problem than just one that is in a particular power pool
grid that extends well beyond that, and then the question is
whether the coordinating council has a particular way of
dealing with nuclear power plants in the broader region.
That's the question I think that we haven't had an answer
to.
MR. WOLFF: I brought with me two paragraphs that
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indicate that we do have a formal procedure for ensuring
that nuclear plants receive the highest priority. That is
in conjunction with NERC requirements and I can assure you
that the New England Power Pool and New York Power Pool and
PJM do it that way. We're known as the three tight pools.
I have no reason to believe it's not done that way in other
areas. I'm sure it is, but I know for a fact it is done in
the whole northeast region.
COMMISSIONER ROGERS: Yeah. Well, it's a question
-- it's a national based question rather than a regional
based.
COMMISSIONER DIAZ: Is the NRC notified when
something like this happens and you're actually trying to
restore the load? Is our incident response seen on the
network?
CHAIRMAN JACKSON: I think our information comes
through our licensees. Okay.
MR. GENT: I mentioned the NERC operating manual.
There are a number of other issues in there that you may be
interested in and I'd be happy to provide your staff with a
copy or as many copies as you'd like and answer as many as
questions as you might have.
Regarding the governance issue, whether governance
of ISOs is going to affect reliability, we think that that
is not going to be the case and I'd like to explain why.
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Our initiatives are based on separating transmission
operations and reliability from a marketing function. We're
trying to do that right now.
If an ISO is a means to achieve this separation of
market and operating function, then certainly it will be
successful in creating the separation and independence and
they will enhance reliability.
What we're doing now with our security
coordinators is getting out in front of this. We think that
eventually they'll probably evolve into ISOs if that truly
is going to be what the industry will be shaped like.
Today, however, we need to move on, and so to make
sure that our security coordinators, these 22 locations
around the United States and Canada, are truly acting
independently, we've asked them all to sign data
confidentiality agreements.
This is necessary because some of the data they
need for reliability purposes and analysis can be used to
somebody else's commercial advantage, and I think you can
understand how they're fairly skittish at doing that.
So we think that the best way to handle this,
without it taking an awfully long time, is to have them sign
data confidentiality agreements. That's in the process
right now.
Our security coordinators will then be independent
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of the marketing function and will not be affected by any
decision made by the governance of an ISO.
I've mentioned our operating standards. I need to
talk about our planning standards, which you may have some
interest in as well. These are not nearly as well-defined
as our operating standards. We're now approaching the issue
of elaborate planning standards. It's under way and I would
invite the Commission to participate.
I'm personally going to take the issues I've heard
here today back to the groups working with this and see that
there is a consideration of the stability issue, viewing
with me your licensees to see that that's an updated process
and done fairly often.
I think that as soon as we get into this, we'll
see that it is a process that's now considered. I just
can't testify to it.
I hope from the comments that you'll hear from
those that follow me and from me, we believe that NERC's
interest here is really in seeing that the grids are not
only reliable today, but they remain reliable through the
coming years during the restructuring and after.
We agree in large measure with the conclusions of
the report that was presented to you earlier, and then I
said earlier, I think we need to revisit not only the report
but have the staff revisit with NERC staff to learn what
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changes have been made since they visited this.
I thank you again for this opportunity and I'm
sure that there will be other questions. I'll try to answer
them along with the others on the panel.
CHAIRMAN JACKSON: Well, I'd like to ask you a
question couples relative to the submission that you've
made. You were talking about your processes for developing
operating and planning standards have been accelerated and
are being changed to include more opportunity for input by
all affected parties.
And you talked about ways of enforcing standards,
and you said regarding that enforcement, one possibility is
that we will end up with what are generically called a
reliability -- calling a reliability compact, which will
probably consist of a series of contracts that specifically
obligate the policies to abide by the NERC standards.
Does this need some kind of a federal backing or
legislative undergirding? And when the industry
representatives speak, I'm going to ask them to address that
issue separately. But I want to hear from you.
MR. GENT: You'll probably get four or five
different answers. This is currently the issue under debate
now. We know what the rules are, we know what they should
be. How do you enforce them when somebody says I'm just not
going to do it?
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We currently have a process that has worked, but
we're anticipating that as competition gets heavier and
heavier, we're going to have some people that refuse to obey
by the rules.
The best way we have right now is with contracts,
and to the extent the contract law works, this will work.
But we are debating whether we do need some federal
backstop. We're a little bit timid in asking for it because
we often get more than we ask for. And I think that was
evident from a previous presentation.
CHAIRMAN JACKSON: Also, I note that you claim
that with respect to the last issue we had asked you to
discuss in terms of factors and considerations used in
establishing reliability governed structures vis-a-vis loss
of off-site power events for nuclear power plants, that you
say that language is being included in some ISO agreements
that requires ISOs to operate the grid in accordance with
special operating criteria established by NRC operating
licenses.
Do you think that's a good idea in general?
MR. GENT: I think we absolutely must visit that
issue to make sure that it has been considered. I'm certain
it has. I just can't testify to that. But I will be able
to soon.
CHAIRMAN JACKSON: And you also were talking about
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that NERC is the home of the generating availability
database, and you say you're primarily interested in, these
days, in the types of data that would allow us to model a
nuclear unit during a transient or slightly slower dynamic
disturbance event.
That kind of modeling doesn't go on today? I'm
going to ask the --
MR. GENT: Yes, it does.
CHAIRMAN JACKSON: -- industry people to speak to
this too. So if it does, what's the issue?
MR. GENT: The issue is one of size. Before, most
of this type of modeling has been done by your licensees,
and we've learned very recently that these outages spread
over entire regions, like the entire western United States,
and we need to extend our modeling to include more than just
your licensee's area, and having the rest of the world as an
equivalent, we need to get into huge modeling, and that's an
issue with planning people in NERC.
CHAIRMAN JACKSON: Do you have the resources and
capability to do that?
MR. GENT: We're not sure that we have the
resources and capability to do that. We need to find out.
It's never been done before.
CHAIRMAN JACKSON: Is this a path you're
definitely planning to go down?
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MR. GENT: Yes, it is.
CHAIRMAN JACKSON: All right. Any questions?
COMMISSIONER DIAZ: I have just a piggyback on the
Chairman's question on that next to last paragraph where it
says, "language being included in some ISO agreements." Is
there any reason why some is selected or are we going to try
to -- everyone is using it?
MR. GENT: There's only one ISO agreement now in
force and that's in Texas. What's being proposed in
California will also honor the agreements of the licensees
in that ISO agreement. So that was the reason for the
reference to some.
But I think that you can expect, especially after
this process today, I think you can expect they will all be
aware that there needs to be a consideration in the
agreement.
CHAIRMAN JACKSON: Let me hear from Mr. Wolff.
MR. WOLFF: Thank you, Chairman Jackson. I'm
pleased to be here to give you some feeling for what it's
like to be an ISO.
First, by way of background, I've been in the
industry for about 39 years in charge of distribution, in
charge of station plant design for Indian Point 1 and 2 when
I was at Con Edison, in charge of the control room at Con
Edison, which is an 8,000 megawatt control area, so I know
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what it's like to operate a control area as an individual
company.
I have had grid planning and construction
experience and now four years as the CEO of the New England
Power Pool so I know what it's like to operate a grid from a
power pool standpoint.
We are effectively an ISO and have been for some
25 years. The term has come to mean new things now, but we
have been an ISO for those people that supply the electric
industry during that 25 years. That group of people has
expanded and the term ISO now means you're dealing with not
only utilities, but marketers and the rest.
But we will do very little different in the
management of the New England Power Pool from what we have
done, and I'd like to give you a feeling for that.
We were formed as a result of the 1965 blackout in
order to ensure reliability in that area. What will change
as we become an official ISO? Our governance will change.
We like to think that we are very fortunate. We
are, at least at present, the only ISO in the nation that
will have an independent board of directors. They have been
selected and are about ready to be put into place. It is
not a sector board of various interests. It is a single
monolithic board dedicated to reliability, dedicated to the
ISO, and dedicated to supplying nuclear plants and ensuring
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that the facilities are built into the system to make it
happen. They have no other vested interest than our
interest of reliability. So we're quite fortunate.
As a matter of fact, this meeting is my last
official duty before going into retirement. This whole
thing is getting ready to move and so I do cherish the
opportunity to talk to you just before retirement.
But I can say that I am quite pleased with the
excellent board members we have, names you might be familiar
with is Charles Stalen and other people with fairly
reputable reputations. I think that they will back the
interests --
CHAIRMAN JACKSON: Is this the Stalen who was at
FERC?
MR. WOLFF: Yes, it is. And we have people in the
regulatory markets and in the marketplaces in reliability
and in the industry. So we are positioned to move forward.
What else is going to change? Our method of
dispatch will change. We have for 25 years been dispatching
the system every five seconds on the basis of least cost.
That has been very effective. We have huge computers that
capture the data, make the dispatch, and monitor the entire
system to make sure economy is in place.
What else is going to change? I project that we
will have additional power now that we have a board. The
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regulators in New England, an organization known as NEPURG,
the New England Public Utility Regulatory Group, are very
much behind the process. They were involved in the
selection of the board.
They have, as Mike said, actually given me a
little more power than I feel comfortable with at times. I
think a limited amount of power is good. I think too much
could be dangerous, but barring that possible problem
sometime in the future, we have been reasonably well
empowered to enforce the reliability rules.
Now, how do we address reliability? I'm very
interested in the questions you asked about reliability and
stability and that sort of thing.
They do mean different things and they're more or
less in the eye of the beholder, but reliability means how
much of the time are the lights going to be on? Now, they
can go off for different reasons. They can go off because
we have a slowly growing load and we've had to go to load
shedding in order to balance load and generation when we run
out of generation.
First we ask for voluntary appeals, and then we
get the involuntary appeals if things get bad enough. We
have not had to do that in New England. The last incident
that I'm particularly familiar with when it was consciously
done was in this area in January 19th, I believe, and it was
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conscious rolling blackouts.
CHAIRMAN JACKSON: Is it well -- within a given
power pool, is it well understand how low the voltage and/or
frequency margins can show before you have a potential for
some instability?
MR. WOLFF: Yes, it's extremely well-known and we
do the studies, we model the system, and we actually
practice voltage reductions during the spring time of each
year in order to see that they work and give us what we want
and they're not excessive, so the answer to your question is
quite clearly, it is known.
CHAIRMAN JACKSON: And that is automatically
coordinated with the actual plants or the utilities that
operate the plants?
MR. WOLFF: Yes, it is. We coordinate directly
with Millstone and have a voltage schedule based on
Millstone's needs and they determine those needs and we
follow that schedule and drive the base points at the
substations around Millstone to make sure they do not go
below those voltage requirements.
So we, in fact, do meet your requirements very
specifically in coordination with the utilities, and we have
some voltage schedules throughout New England to make sure
we don't have a voltage collapse.
Now, getting back to the area of stability, once
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we have ensured the reliability by balancing load and
generation, using both sources, load and/or generation, we
have to worry about the stability issue, which is the issue
that is taken care of by what we call security constrained
dispatch.
In other words, we will not dispatch the system to
a load level or to a transmission line loading level which
will result in a problem for the loss of any generator or
any major system.
So we are already looking in advance. The
computers are constantly monitoring, what happens if this
generator goes out, what happens if I lose a Canadian power
source, what happens here? They will make that study, check
the stability, determine if we can survive that event, and
if we can't survive that event, we will dispatch additional
generation, change the dispatch, go off economics, make a
contract with New York to import additional power. There
are many, many ways to solve the problem. This is a cat
that can be skinned in many different ways, and it is the
job of the operator to determine which way is the most
reliable, which is the quickest way, and which will achieve
the desired result.
So when we do a security constrained dispatch, we
take care of the stability issue. That's how we do that,
because stability is something you have to prepare for
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before it happens.
The same as voltage collapse, is something you
have to prepare for before it happens, possibly even the day
before. If you're not ready for a voltage collapse, it's
too late to do anything about it. Once it starts to sag,
you're in a worse position than before it sagged.
So that all will remain exactly the same in the
New England Power Pool. We're quite fortunate. For the
last 25 years, the New England power utilities have allowed
us to operate that grid as if we owned it, and they have
charged us with operating it as if we own it in order that
they could gain the relief necessary for knowing somebody is
looking at the farm and making sure everything is done
properly.
We look at the whole system in a coordinated way.
We coordinate with the New York Power Pool, we coordinate
with Quebec, we coordinate with PJM. We even are limited by
certain flows across the central portion of Pennsylvania
that limit our Canadian imports, so there is the ability and
it is done every day in practice to coordinate across
regions, and it is done by the operators in real time and is
in no way in conflict with what Mr. Gent is suggesting, a
broader and greater scope of this coordination, and I
wholeheartedly support that additional scope as part of an
answer to one of your questions.
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I mentioned the security constrained dispatch. We
continue to support all of the NERC criteria. We as
operators find it very consoling to have that criteria in a
time of competition. There's no question that the members,
the players in the market, have fiduciary responsibilities
to their stockholders and they will have to make tough
decisions, but I am sure they won't directly conflict with
reliability, but having a set of standardized rules and ISOs
who are empowered to take care of the reliability aspect is
very consoling.
If you stop to think of it, there are only three
people that are interested in reliability: The customer
most assuredly is, the regulatory bodies, and the ISOs. I
don't believe it is proper to charge the individual players
totally with reliability because they have a direct
conflict.
We are prepared to set the system up and make sure
that the incentives are there for all the players to bring
to the table the assets that we need, transmission,
generation, and the like.
In the past, we have monitored reliability by
looking at reserve levels and doing a statistical analysis,
Monte Carlo type outage analysis on generators, lines and
the like.
In the future, since we don't have direct control
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of that, we in New England have decided to go toward other
incentives, such as operable capacity.
If you remember when Pilgrim was out for several
years a couple years back, that plant received capacity
credit and was in the planning criteria even though it had
been out for two years. The owning utility got capacity
credit because statistically it works. There were other
plants that were in.
In the world of the future, we will not be able to
give capacity credit for two years for a plant that is not
operating. So we have changed our criteria. We are
insisting that all the players go to operable capacity to
take care of reliability.
What I'm saying to summarize is, we can take care
of reliability several different ways, and in this new
marketplace, we will have to find those new ways to take
care of reliability. There are ways. If we do it right,
there's no reason for reliability to suffer and there's no
reason for anybody to have interests that conflict with DOE,
your Commission, or anybody else.
CHAIRMAN JACKSON: Do we need any kind of federal
legislative backing?
MR. WOLFF: Well, I think NERC is in a position to
require these things. I think the good faith and support of
the Federal Government is always good. A limited
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involvement. I'm one of those people who believes that
limited involvement is probably good. Complete ignoring the
situation certainly is not good.
Too much involvement, my personal opinion, is not
necessarily good either. That's just my personal philosophy
on things.
CHAIRMAN JACKSON: But a system where some agency,
whether it's FERC or whatever, might lay out some baseline
criteria but that the NERC has the primary responsibility
but the ability to enforce it based in some statute is not a
problem?
MR. WOLFF: No, that's not a problem.
CHAIRMAN JACKSON: Okay, let me hear from Mr. Eyre
from Western Systems.
MR. EYRE: Chairman Jackson, I'm sure you're aware
the WSCC is the largest and most diverse of the ten regional
reliability councils of America. WSCC has 99 members
ranging from 71 traditional utilities to 10 independent
power producers and 18 marketers. So we have all segments
of the industry involved in the council's activities.
It also includes three regulatory representatives
that serve on WSCC's Board of Trustees. Let me take a
moment just to review with you who is responsible for
reliability today and where it should be in the future.
As the industry restructuring occurs and we
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implement competition, it is imperative on all of us to make
sure that we maintain a reliable electric system.
For over 30 years, NERC and the regional
reliability councils have been the caretakers of reliability
through the cooperative development of NERC and regional
council policies, procedures, and criteria.
There is no reason to doubt the ability, the
appropriateness and the resolve of NERC and the regional
reliability councils to continue to serve as self-regulating
organizations.
CHAIRMAN JACKSON: Now, you're telling me this in
spite of the two events that happened in the summer of 1966
-- I mean 1996?
MR. EYRE: Absolutely.
CHAIRMAN JACKSON: And why should I have that
comfort?
MR. EYRE: Why should you have that comfort? I
think what you see happening as of the disturbances that
happened last summer is a resolve that the councils are
doing right now, to make sure that everything is in place,
everything will be administered, and as I go on through my
presentation, you'll see, at least in the west, we're moving
rapidly to implement a reliability compact that calls for
mandatory compliance with sanctions, incentives, financial
penalties as may be appropriate.
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CHAIRMAN JACKSON: And that did not occur before?
That did not exist before?
MR. EYRE: We did not have the sanctions and
penalties provisions available to us prior to those
disturbances.
CHAIRMAN JACKSON: So you're saying that you've
gotten religion now and that's the reason --
MR. EYRE: That's a good way to put it. It was a
wake-up call to the whole industry to see what can occur if
in fact we do not have the mechanisms in place to make sure
we have compliance with the rules of the road.
CHAIRMAN JACKSON: Okay, go on.
MR. EYRE: WSCC and NERC are committed to
enhancing accountability for reliability and improving
compliance with reliability standards. WSCC strongly favors
an industry self-regulating organization approach with a
federal and/or state regulatory backstop as may be
appropriate.
Let me take a few minutes just to outline to you
some of the activities that are being taken in the west to
ensure reliability.
CHAIRMAN JACKSON: Let me back you up. Elaborate
on that sentence a little bit.
MR. EYRE: As far as the backstop is concerned?
CHAIRMAN JACKSON: Correct.
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MR. EYRE: I think I would support the earlier
comments, that I think a limited involvement would be
appropriate. I think it is also necessary. There is one
thing that the industry cannot do by itself. It can design
programs for mandatory compliance. It can design a program
for sanctions, incentives, and penalties, but it has no way
of assuring that it can get everybody at the table and
that's where we need support from the regulatory community,
to make sure that everyone is at the table helping design
those mandatory criteria and making them accountable and
also subject to the penalties or incentives that we feel is
appropriate.
CHAIRMAN JACKSON: So would this kind of backstop
be some kind of federal action, say, mandating NERC
membership?
MR. EYRE: There are several ways that that could
be done. That is one way it could be done. It could be
done through licenses by the Public Utility Commissions of
the various states. It could be done with -- through FERC
mandating to the jurisdictional utilities who they do
business with those types of things. Those are just various
options.
WSCC is continuously and expeditiously
implementing new protocols and mechanisms to ensure
reliability is not sacrificed as we restructure the
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industry.
In 1996, the WSCC Board of Trustees unanimously
endorsed a reliability compact that reaffirms the council's
mandatory compliance requirements and which will result in
the enforcement of established reliability protocols in the
west.
The compact recognizes that to ensure continued
reliability, all market participants must adhere to the
established reliability protocols.
A policy level group has been formed to develop
incentives and sanctions for implementing the reliability
compact. These recommendations will be submitted to the
WSCC membership by the end of 1997.
The WSCC agreement states that all control areas,
which includes the ISOs, must be members of WSCC. And as
such, they must comply with all WSCC and NERC protocols and
sanctions.
Also, and of importance to you as we've already
discussed, the most recent filing of the California ISO
filing includes a transmission control agreement which
requires the ISO to meet the WSCC and NERC protocols and the
provisions of NRC plant licenses.
In addition, system operators are required to give
a high priority to nuclear plant restoration, as already
mentioned in the NERC policy 5. I believe, however, that we
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must make a careful review of this policy to make sure that
this issue is properly addressed, and therefore, I will be
recommending that NERC and WSCC criteria and procedures be
reviewed and revised as necessary to meet the nuclear plant
requirements.
Second, mandatory compliance does not stop with
WSCC. As you've heard, NERC also made compliance with its
protocols mandatory. By establishing a system of mandatory
compliance, all market participants will be accountable for
adhering to established protocols and result in a level
playing field.
Within WSCC, we have another reliability program
which has been established and is called our compliance
monitoring program, which reviews members' compliance with
WSCC minimum operating reliability criteria, WSCC operating
policies, procedures, and guidelines, and NERC operating
policies.
In addition, WSCC and NERC are in the process of
enhancing their operating protocols to make them more
specific and measurable as possible. They will have to be
measurable and specific to be enforceable under a mandatory
compliance program which requires the application of
sanctions and penalties.
WSCC and other regional councils are implementing
additional security measures. These measures will enhance
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interconnected system reliability through the exchange of
information required to assess system security and
reliability, including on-line power flow and security
analysis and increased system monitoring.
These measures will enhance the operator's ability
to identify potential reliability problems and promptly take
proactive corrective actions to ensure system reliability.
The council has approved a regional security plan
that is intended to convey both the responsibility for
overall system reliability and the authority needed to carry
out the responsibility successfully.
This plan was developed and is currently being
implemented in response to one of the four strategic
initiatives for reliability established recently by NERC.
The regional security plan empowers the security
coordinators to take the actions necessary to preserve
reliability. The California ISO will be one of the security
coordinating centers, and it is envisioned that as the other
ISOs are formed in the west, they will also become the
security coordinating centers for their section of the
interconnected system.
WSCC has also established a successful training
program that has been carefully structured to provide system
dispatchers and other operating personnel with the necessary
skills to deal with the ever increasing complexity of
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interconnected system operation.
In addition, a schedulers/contract writers
training program was implemented in 1996. This training
program familiarizes schedulers, contract writers and energy
accountants with system operations and increases their
understanding of how their actions impact interconnected
system operation and system reliability.
Although WSCC currently has an operation training
program, we are currently working with NERC to implement a
certification program.
Moving on, you have often heard the question or
maybe asked the question yourself: is the transmission
system being used differently than originally designed and
will it impact reliability? The answer to the first part of
the question, is it being used differently than originally
intended? And the answer in most cases is yes.
Will it impact reliability? As long as
established operating protocols and those implemented by the
industry are followed, transmission reliability should be
preserved. Industry and regional reliability councils
recognize the changing competitive nature of the industry
and the impact this may have on system operations.
As such, and as we speak, new protocols are being
developed to address changes occurring and being forecast
for electric system operation in the future.
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As we restructure --
CHAIRMAN JACKSON: Let me ask you a question.
These new protocols that are being developed as we speak,
how are they going to be verified to be adequate?
MR. EYRE: Well, number one, in our compliance
program, they will be part of our protocols criteria that
must be followed. As part of our compliance program, we
will be monitoring those to be sure they're complied with,
number one, and through that compliance process and review
process, we will identify the needed changes that will be
needed.
As we restructure the industry, there are a few
implementation issues to consider. We must make certain
that interconnected system reliability is preserved. As
time frames are established for restructuring the industry,
we must all bear in mind that these time frames must be
realistic and prudent, and that they may have to be revised
to maintain reliability.
The regulatory community, especially the Federal
Energy Regulatory Commission and the state regulatory
agencies will need to serve in a backstop role, providing
NERC and the reliability councils with the required tools to
maintain and ensure reliability. The regulatory community
should then hold NERC and the reliability councils
accountable for ensuring reliability.
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We must ensure that all entities that own, operate
or use the interconnected transmission system are complying
with the established criteria, guidelines, and policies. To
ensure compliance, NERC and the reliability councils must be
able to monitor those involved and correct those in non-
compliance.
Where financial or business incentives cannot be
developed to ensure compliance and accountability, the
regional reliability councils and NERC, working with the
ISOs and others, must have the ability to impose sanctions
or fines on non-complying members, so that one participant's
non-compliance does not degrade reliability or increase
costs for other market participants.
Federal or state action mandating membership in
reliability councils and NERC or some other federal or state
mechanism will almost certainly be needed to equitably
administer the costs of maintaining reliability and ensure
compliance with the rules of the road.
In conclusion, restructuring will impact the
electric industry. That impact can be positive if all of us
involved in the restructuring process do it right the first
time.
Commercial pressures may stress the reliability of
the electric system. Consequently, we will need to ensure
that balance between competition and reliability is
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maintained.
We need to move through restructuring in a prudent
and timely manner. However, we must manage this transition
with a critical eye if we are to be sure that there are no
complications that develop which will not impact our
objective of preserving reliability.
The ISOs being formed in the west will have a
responsibility to maintain system reliability, and as
members of WSCC, will play an important and essential role
in administering interconnected system reliability.
NERC and the regional reliability councils, as
self-regulating organizations, having the support of the
regulatory community must have the appropriate tools and
therefore ability to continue to effectively manage electric
system reliability.
No matter how dramatically the industry changes
and evolves, the public will expect and demand reliable
service. Mandatory compliance, reliability monitoring,
enforcement capability and accountability will be essential
for ensuring the public's desired level of reliability.
Thank you.
COMMISSIONER ROGERS: Yes, I was particularly
interested in your note that you're working to implement a
certification program. I wonder what your thoughts are
there with respect to what the significance of that
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certification program might be.
It sounds to me like a very good idea and one that
might help to really ensure some uniformity in handling very
complex situations as they might develop any place in the
country.
Is this a program that you would think would be
applicable to all of the coordinating councils or just your
own?
MR. EYRE: No. In fact, my comment was that we
are working with NERC, with Mr. Gent's organization, to put
in place both a program which would accredit training
programs and certify system operators throughout the
country.
COMMISSIONER ROGERS: It sounds like a very good
idea. This is something -- the type of thing which we've
been very concerned about with respect to nuclear power
plant operators' training, and there are some good models, I
think, within the nuclear industry that -- NPO for instance,
Mr. Nye is very familiar with, that might be helpful to you
there in carrying that out.
CHAIRMAN JACKSON: Commissioner Dicus?
Commissioner Diaz?
Commissioner McGaffigan?
Mr. Delgado.
MR. DELGADO: Thank you very much, Dr. Jackson,
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Commissioners. I am director of electric system operations
for Wisconsin Electric and I would like to tell you what
that means. I'm responsible for every aspect of
transmission service, the control center, construction,
planning, protection. My background is power plant
operations, all fossil though.
I would like to begin with a rather
uncontroversial statement. I would say that deregulation
will not impair transmission security. In my brief comments
here, I hope to be able to --
CHAIRMAN JACKSON: You say that was a
controversial statement?
MR. DELGADO: No. I said uncontroversial but I
suspect that you might not totally agree. I hope to be able
to back up the statements to give you a sense that this is
not genetic optimism, but in fact there are very valid
reasons to believe so.
First, let's begin with two provisions. The first
one is that the consequences of unreliable electric supply
-- incidentally, I appreciate Commissioner Rogers' comments
regarding the terminology, and I did select the terminology
very carefully here because I think it will add clarity to
the subject and I think it will help the Commission identify
its objective.
As I was saying, the consequences of unreliable
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electrical supply which are -- you can conceive are frequent
burnouts and rotating blackouts, are not acceptable to the
North American customers. This is, to us, assurance that
there will be a continuous motivation and incentive and
that, in fact, will be powerful.
Second, the physical reality of an interconnected
electric network will not be changed by either deregulation
of the industry or by the growth of competition. The power
plants will move, and frankly, from the perspective of
physics, it will look very much the same.
I will add to it that from every aspect, I would
predict that transmission service will continue to be a
regulated monopoly. I do not think that anybody can
conceive of building a parallel competitive system, and to
me, that's the definition of a natural monopoly.
Besides, there is, I would say, a very solid
consensus in the industry about the necessity to maintain
reliability. To a greater or lesser degree, all portions of
the transmission network support each other.
At a transmission level, all users using an
interconnected network share the same reliability. No
individual transmission owner can choose to build, maintain
or operate its system to a lesser reliability level without
affecting other entities within the interconnection.
There is no alternative to keeping a high degree
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of transmission network reliability. Practically speaking,
the reliability of the network is the highest reliability
available to any single user. Obviously at a distribution
level, other things can be done.
Security and adequacy are two aspects of
reliability which will help to explain the issue here. The
NERC definitions are at the end of the document but I would
like to rephrase them.
A transmission network is secure if it operates
within adequate voltage and frequency margins and survives
contingencies without cascading failures. It is adequate,
however, if it in fact is able to meet the needs of the
customer with the level of assurance the customer thinks
they need.
The electric system operation is the epitome of
real time. Either generation matches the electrical demand
or the demand must be reduced to match the generation by
taking delivery. Any major mismatch of generation and load
will result in localized equipment overloads and low voltage
operation that could lead to equipment damage and cascading
system failures. This is like a primer in transmission
operations. If I drag you through it, I'm sorry.
If the whole interconnection, and you realize we
have three interconnections in North America, is overloaded,
system frequency would decay and that would lead even to
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more sudden and wider disruptions of network operations
unless it is arrested, and of course we have the mechanics
to do so.
When a transmission system cannot deliver
sufficient generating capacity to meet the load demand,
system security will be maintained by disconnecting load as
necessary to balance the remaining demand with the
generating capacity so the transmission system can deliver
reliably at any particular moment.
Load reduction is achieved through the exercise of
curtailable contracts with customers, and I would say also
with appeals to the customers incidentally, which in fact it
can become very, very effective, and by rotating blackouts
after the demand side programs and appeals have been
exhausted.
From this perspective, rotating blackouts are
controlled actions of the operator in order to match load to
generation when generation is not enough to meet the load.
These are not failures of the transmission system. Such
actions are directed at the prevention of equipment damage
and black plant shutdowns which have a high potential of
costing our plant equipment damage, and of course that means
that we would have then long-term problems.
Unfortunately, the distinction would seem
irrelevant to the end user, but it's extremely significant
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for the maintenance of long-term adequacy. It is also at
the heart of this Commission's concern with electric
reliability's impact on the safety of nuclear power plants.
So electric system operators have the means to
assure security even when the system is not adequate. These
means include computer-based controls and communication
systems which all control areas have. These are the energy
management systems, or EMS, whose procedures, the training
and the necessary authority to take appropriate actions, and
I would like to just on the side say that once a year, the
chief operating officer of each company in Wisconsin sends a
letter to the operators reminding them that they have all
the authority required to keep the system secure, including
dropping firm load. They do not have to request permission
to do so. And it is renewed. We try to renew it once a
year, make sure everybody knows about it.
All of the more persuasive scenarios being
proposed for deregulation of the industry recognize the
imperative necessity of retaining the system operator's
focus on electrical security. An adequate system, on the
other hand, must secure by necessity, because there's no
adequacy if the system cannot stay on.
Long-term system reliability, both adequacy and
security, are the result of appropriate transmission and
generation planning. Generation planning is directed at
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meeting the projected demand growth in the most economic
fashion.
Transmission planning, in turn, is traditionally
intended to connect generation to load and it has been said
already here several times. It also is intended to increase
reliability at the least cost by promoting the sharing of
generation resource margins across the interconnection.
In a competitive electricity market, the entities
with contractual or regulatory obligation to serve end load,
and I'm not specifying what that might be because there is
no need to specify it -- there are many possible outcomes --
they will provide the necessary generation, and I say
transmission resources through firm contracts. In other
words, they will assure that there is sufficient firm
services in order to meet the obligations of the load that
-- meet the load that they're obliged to serve.
If those resources are not sufficient to meet the
demand obligation, system operators will be able, as they
are today, to maintain the system energy balance with the
traditional means already noted using curtailable contracts
and ultimately implementation of rotating blackout.
As I repeat, rotating blackout is in fact the
ultimate goal. I do not want to give you the impression
that we look forward to using it.
I say that regional transmission planning will
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improve long-run adequacy and security by removing
constraints. Two of the most widely expected developments
for the near future of the electric industry are original
transmission planning and the establishing of grid wide
tariffs that eliminate the stacking or pancaking of
transmission costs for generation located for most of the
load. I would say of course that we also expect regional
operations is very much in the near future.
Regional planning will facilitate the elimination
of transmission congestion, even though the most economic
solutions often span jurisdictional and property lines, and
I can assure you that the transmission limitations affecting
the state in which I live, Wisconsin, are not in Wisconsin.
I had to explain that to the governor last Monday because he
wanted to do something in a hurry, and I'm sorry. Actually,
they're outside of Wisconsin, so we had to work through the
region in order to remove them.
Grid-wide tariffs, in turn, should promote the
shifts and deciding of new generation locations that expand
rather than constrain transmission facilities. This would
improve the effectiveness of the existing transmission
system.
And of course proper location of transmission can
expand transmission capability -- I mean, proper location of
generation can expand transmission capability, and of course
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the fact that the cost is in different locations for
transmission service will improve the -- will motivate the
proper location of generation.
In varying degrees, all regional councils have
achieved some coordination of the operation and planning of
transmission systems. Obviously if the council involves a
pool, there is more coordination.
The main area, of course, is not a pooled area.
However, there is coordination.
The push for greater integration of regional
operations is urged by the rapidly increasing number of
entities transacting the transmission network.
Let would say that before the EPACT of 1992, we
probably transacted with six entities, which we were
directly connected to. Right now the list is probably
upwards of 50 or 60 of them.
Many of us are convinced that regardless of the
process of deregulation, there's already a need for
independent regional system operators with real time
information and authority over large areas of the
transmission network. And I could illustrate that if you
had any questions about it.
Wisconsin Electric, me personally, is
participating with other Wisconsin and Minnesota utilities
in information of what we call the upper Midwest ISO. This
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was an ISO filed with the FERC last October by the Primergy
applicants, but it was put together with the assistance of a
variety of Wisconsin and Minnesota companies.
We also are participating with 25 other
transmission owners in forming the Midwest ISO which should
be filed with FERC this year. The structures of the ISOs
are compatible. The Midwest ISO goes from West Virginia
through Ohio, Pennsylvania, all of Indiana, Illinois,
Missouri, Wisconsin, Michigan. I don't want to forget
anybody.
The efforts should result in one very large entity
responsible for transmission operation and planning over a
vast portion of the Midwest.
Some of the key features included both in the
upper Midwest and the Midwest ISO proposals, and just to
refer to some of the comments I already made here, it will
have real time information over the broad area of the
network. The whole area will have information on it.
It will have authority over all transmission
operations including the dispatch of generation to assure
network security, would produce a regional transmission
plan, will operate within rules set by reliability councils
and regulatory entities.
So the ISO will not set its own rules. It will
operate within the rules that are given to it by the
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councils and by the regulators.
Transmission owners will maintain responsibility
over local system conditions, over hands-on maintenance and
operation of their equipment under the authority of the ISO,
and I would say these last two features, the fact that the
rules given to it, and they do not -- and the ISO will not
develop its own rules, and the fact that the transmission
owners under the ISO will still remain in control of the
hands-on operation should give some comfort to this
Commission.
The ISO will uphold all special reliability
requirements and priorities of generating plants and large
load centers, and there are a variety of them and I would
assure you that the text we are working on in the Midwest
ISO does say that and in fact it will refer specifically to
nuclear power plants.
This would include the technical specs of the
nuclear power plants. These requirements will be identified
with plant owners and/or operators and it will become a part
of the ISO procedures.
I would like to address just briefly the training
-- the basis of system operations just to illustrate a
little bit of what goes on in system operations.
Electric system operations for Wisconsin is
typical of transmission groups throughout the Midwest.
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There are 13 systems supervisors. These are fairly well
paid, highly trained individuals.
These employees perform the transmission
operations and generation dispatch functions around the
clock seven days a week from the system control center that
we have west of Milwaukee. There is an on-line backup
center in Appleton, so all the computer software, all the
communication is doubled up so in case there's a failure,
the backup can in fact take over operations.
The energy management system monitors special
reliability requirements. Nuclear plant requirements are
built into the EMS display. There is voltage monitoring and
there's voltage alarms that allow the operator to know, and
those are set to the limits within which the power plant has
to be. Likewise, there are operating procedures which are
built into the computer displays so that the operators in
fact bill them out for consultation as necessary. There are
also paper procedures that back that up.
The system supervisor is selected from a variety
of work backgrounds that include plant operations, both
fossil and nuclear. We have them from the military, but
also from the nuclear power plant, electrical design
employees, protection, planning, and startup.
This variety is put to use in the development and
revision of operating procedures and in the process of
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cross-training the group, which is an ongoing effort.
On the job training, with the use of procedures
under the supervision of an experienced employee -- and this
is the way we bring the new employee -- forms the core of
the training program.
However, the Wisconsin companies perform joint
training of system operators through the WUMS, what's called
WUMS, Wisconsin, Upper Michigan System, system operator
training, and the purpose of this is that it in fact allows
that all the operators in fact work together even though
they're in different companies to learn the same basis and
it's a lot of practical information they learn together.
We are in the process of revising that and we
should have that coming up this year and be able to restart
that whole effort.
And I would say that future NERC operator
certification would provide greater nationwide uniformity to
train system operators, and we look forward to it. In
addition, NERC and Maine, though NERC has requested it, has
completed the certification of control rooms to make sure
the control rooms in each control area have the adequate
elements to be able to do the job.
You asked, if you want to, for a legal background.
Would you like me to comment on it?
CHAIRMAN JACKSON: Sure.
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MR. DELGADO: We think there is a need for some
legal backdrop or some legal action. For one thing, we
think it's very important to finally clarify among the
agencies of the government who has the authority over
reliability, and as we stated earlier, that is somewhat
vague.
We think it is important to make very clear that
all entities using the network must follow the same rules,
and that means jurisdictional as well as non-jurisdictional,
and that is not clear to date, even though I will have to
add that non-jurisdictional entities by and large do belong
to the NERC regional councils.
We also have to keep in mind that we're talking
about the North American grid. Canada and Mexico are an
integral part of it, and it is important that whatever rules
we agree to, and of course they participate in NERC, that
they do too, and so the sense of obligation and
participation is something that may require government to
government dealing. It has to be clarified.
And then ultimately, we are of the opinion that
regional operations in fact is a necessity and ultimately,
even though it should not be specified as how to do it, it
should be a very strong indication, either through law or
regulation, that all entities must participate in regional
operations, and that of course is controversial, I have no
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doubt.
CHAIRMAN JACKSON: Thank you. I think I'm going
to go on to Mr. Nye and then we'll take any commissioner
questions.
MR. NYE: Thank you, Chairman Jackson. I would
say in view of the lateness of the hour and our physical
physique is maybe affecting our mental acuity, I will seek
to try to summarize as best I can and not try to repeat what
has been said here today.
I am president and CEO of Texas Utilities Company,
a large integrated utility in Texas. That is the
owner/operator of a large nuclear power plant, and I am also
currently vice chairman of NERC and a member of the DOE
Reliability Study which has been referenced previously.
If I could simply ask you to refer to the remarks
that I've provided you previously, and I'll seek to try to
sort of summarize from some notes I've made as I sat here.
I think it's clear that restructuring, and in some
degree deregulation, can impact reliability of the grid
negatively. Restructuring will likely change the
traditional way the grid is used. That is, more users, more
heavily loaded circuits and the like. If we are to maintain
traditional reliability of the grid, it will require some
vigilance, various steps and some precautions.
Markets offer many benefits, but markets also may
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operate in dynamic stress with reliability. Grids are not
perfect and we should keep that in mind. They have not been
perfect in the past, nor will they be perfect in the future,
but the record today, particularly over the last 30 years,
is pretty exceptional.
My view is that the current reliability of grid is
good, and I will say that recognizing that as we leave this
meeting, there may be an incident, and so notwithstanding
the fact that there will be from time to time operating
circumstances that are and will be of concern.
The question really is the question that the
Chairman asked at the very outset, and that is, will the
reliability of the grids be maintained as the industry
changes?
In that connection, I think it is helpful, at
least I found it helpful, to divide this issue into two
halves, the one-half being the supply and what we've tended
to think of as an infinite supply of electricity always
available to everybody who wishes it on short notice.
I think as to the supply, we've got to depend on
the market. I think markets do provide adequate responses
to consumer needs, but when I studied economics 101, there
was a proviso there. It said, markets respond to consumer
demands over time. And so that at any one time, the supply
may or may not be adequate under a market condition, and I
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think some customers will choose to buy under less than
optimal conditions, some customers will choose to secure
supplies that are very reliable, very dependable, and in
connection with their particular need.
So if we can set the supply on one side and the
grid on the other side. The grid is reliable. The grid can
be maintained, very reliable in the future, providing that
we ensure certain provisions.
As a part of that reliability, I think it is clear
that security coordinators, and they are variously referred
to as ISOs and RTGs and councils and what have you, but
there is a function that must be performed someplace that
sets the security of the grid above all other considerations
that does not deal with the market considerations and that
does not deal with the equity of someone's economic
position, and that is the essence of what I think -- when I
talk about an ISO or security coordinator, that I'm looking
for and I am seeing.
My view is that NERC, reconstituted and renewed,
provides the best vehicle for securing the reliability of
the system. I do believe that NERC and NERC standards can
be developed by full participation by all players in the
industry, all the new players, as well as the traditional
players, and that those protocols, reliability standards and
so forth will require either governmental or regulatory --
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legislative or regulatory backup.
I think there's precedent for that sort of thing
in the way we operate the securities markets in this
country. The government has seen fit to allow the market to
work to its fullest extent and to allow self-help agencies
to conduct very serious and critically important activities,
commercial activities, and yet the government always
provides some backup and some assurance that the sanctions
and the incentives that are provided by the commercial
market do have a backup in the event that there is a failure
in that regard.
I am anxious to make the point that the work that
NERC is doing is more in the nature of renovation. It is
not in the nature of basic construction, and you asked
earlier, Chairman Jackson, what confidence do we have that
these new standards will be all right. I think we've got 25
or 30 years of experience under generally those kinds of
standards, those kinds of protocols, those kinds of
expectations, and the changes that are being made are
changes that are being made to accommodate more players
under a more rigorous circumstance.
In that connection, I do think that the ISOs are
developing along the right lines in this country, that is,
the security coordination function, and I do think we need
to be careful about the definition when we talk about what
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an ISO is.
I'm pleased to report that ERCOT has a broad
governance-based ISO, and in connection with all of the
ERCOT standards, I'm very pleased to tell you that as has
been traditionally the case in all the regions with which
I'm familiar, the nuclear power plant needs and criticality
is treated as the first and foremost consideration.
I think as we develop improved ISOs or improved
security coordination agreements, that nuclear power plant
needs will be recognized as a high priority.
I think there are six key elements for
transmission grid reliability and I'll speak to them very
quickly. Mandatory reliability protocols applicable to all
market participants with sanctions for non-compliance.
Security coordinator oversight for the big picture
on the regional or broader basis.
Monitoring of operations in real time to ensure
compliance.
Authority of an ISO or a security coordinator to
be responsible for security to implement corrective measures
as needed to ensure reliability.
Complete sharing of reliability analysis and data
around the market, and competent system operators, and
that's been referred to previously.
I think that everyone must recognize the
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potentially serious consequences of core damage due to loss
of off-site power. I do believe that the NERC reliability
criteria focuses on keeping the grid reliable, operating
above security and contingency limits and always leaving
margins available to assure grid reliability.
Nuclear power plant reliance on secure
transmission grids is recognized by owner/operators and it's
important that everyone involved with the industry
restructuring be extraordinarily sensitive to this
requirement.
I do believe that regulatory and legislative
bodies must give priority attention to the reliability needs
of nuclear power plants, to the many reliability-dependent
customers, and to the importance of a highly reliable
electric supply system to the Nation's economy.
I think I would conclude simply by saying that I
think we can manage this well. I think we can accommodate
the new market players, and I think we can accommodate a
major paradigm change in the traditions of the industry, but
I don't think it will happen unless we are vigilant about
it, unless we take the precautions that are appropriate.
CHAIRMAN JACKSON: Thank you. What I'd like to do
is I have a couple of questions and you can tell me in
answering them if in a certain sense they have been
addressed already.
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I'd note that you were saying the best prospect
for assuring reliability is the enhancement of the NERC
organization. Do you mean along the lines that have been
already discussed or are there some other specific?
MR. NYE: There are probably shades of gray
between the speakers I heard today as to what they would
expect with concern to NERC. I think there is perhaps on
the part of DOE, and I won't speak for David, but I think
there is perhaps a concern and I think probably so, that
there not be a continuation of some narrow focused group of
players that determine standards, and I think NERC is in the
process of delivering a governance which will assure that
all the players have full participation in not only the
enhancement of the existing standards, but the confirmation
that those standards are appropriate, and I do believe they
are appropriate and I do believe they will stand the test of
time.
But with that one qualification, and understanding
that it is natural, given that the players who have run the
reliability system, the grid system in this country for so
long have come principally from the traditional electric
utilities, the investor owned, the federal agencies, the co-
ops, the munis, but not the IPPs and not the marketers, and
those folks have to have an equal participation.
Given that in the governance, I think the
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reliability standards that come out of NERC give us the best
shot. We've been at that for 30 years. It doesn't stand to
reason that we would start over trying to establish a whole
new set of standards and practices, but rather to fix the
ones we've got to ensure that everyone is treated fairly and
that the market is not encumbered by the absolute necessity
to maintain the reliability of the grid.
CHAIRMAN JACKSON: You think by having this
restructuring and empowerment of NERC, that would also
address the question about movements of power between grids?
Because there is an issue, you can take care of your own
regional network, but you could have internetwork movement
of power wheeling.
MR. NYE: Yes, Dr. Jackson. I do believe that the
only hope for interregional conduct is through some national
organization, some national standards, such as NERC, and
certainly we have all the experience with NERC and I can't
imagine that we would seek as a nation, through changing the
public policy, the way we run our utilities to start over
with a system that essentially is prepared to handle that
problem.
CHAIRMAN JACKSON: And do you think that NERC's
reliability criteria should have a direct linkage to NRC
criteria or not?
MR. NYE: I think that the NRC has to be satisfied
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that whatever system is put in place that the public policy,
the Congress, and the state legislators will evoke, that
they have to be satisfied that it works.
Whether or not the NRC needs to be an active
player in each of those activities, I would rather doubt.
I'm a little bit back to what Dr. Rogers said, which is, we
have to, at the NRC, take for granted what is out there.
Now, certainly we ought to -- we. You all ought
to be a party to the public policy debate and it seems to me
that holding up reliability as a critically important
element in nuclear safety is likewise parallel to the equal
concern that many high, high reliability customers that
require critical reliability or are depending on -- I'm not
saying this very well, but the concern you have about
nuclear power plants having adequate off-site power is
shared by a number of electronics and computer and other
manufacturers that must have a high degree of reliability
all the time.
And it is also necessary for the economy of the
nation. I don't think we're about to jettison the feeling
that we need to have the most reliable electric power system
in the country, and I'm sure DOE doesn't intend that, nor
does FERC. We're all working towards accommodating a new
market consideration consistent with the traditional
reliability that we have come to enjoy.
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CHAIRMAN JACKSON: Thank you.
Commissioner Rogers.
COMMISSIONER ROGERS: Well, just I listened very
carefully to your remarks and read them. I wasn't sure
though whether you felt that some kind of federal
legislation was desirable here or not.
MR. NYE: Well, it's probably against my interest
to say so. But I do believe in due course some sort of
federal legislation as it relates to regulatory sanctions
may be necessary.
I do believe that states and local governments
should act first, and generally I'm inclined to think that
government closest to the people is best, but this is a
national issue. It involves a national market, perhaps an
international market, and therefore I think some sort of
minimal enforcement standards that does not intrude upon the
market or does not try to conduct a command and control type
philosophy will be necessary.
I don't think that's imminent. I think that can
happen in three or four years, once this plays out and we
really understand what sort of a market we have and what
sort of a problem we have.
I do believe that it's better to have a self-help
industry group composed of all the players bring forward
standards that do the least damage to the market, that
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inhibit the market the least amount, and yet absolutely
ensure for all the players, not only the NRC but others,
that this will deliver a highly reliable grid system upon
which we can rely.
COMMISSIONER ROGERS: Thank you.
CHAIRMAN JACKSON: Commissioner Dicus.
COMMISSIONER DICUS: One quick question, please.
And this is a question that Mr. Wolff responded to from the
Chairman. It had to do with whether we know with some
reasonable certainty what the floor is with regard to grid
voltage and frequency or any combination of the two below
which we shouldn't go because we know at that point that we
would have some grid instability situations, and you said
yes, and for your council, you knew what the number was and
you were prepared to deal with it.
So my question is probably to you. Is this the
case across all the councils across the entire systems? Do
we know what that is and are we prepared to deal with it?
MR. WOLFF: It's generally coordinated in the
three interconnections. It's different in each one. I
think you can see the reason why, Texas being smaller than
the east.
CHAIRMAN JACKSON: But Texas is its own country.
MR. NYE: Great nation, Texas.
MR. GENT: There are uniform requirements in the
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various interconnections for different levels of frequency,
unit response. This goes right down to the basic individual
generating unit, how it responds to the load, where load is
shed under frequency, how low the different voltage steps
should be, how it's tested. This is all very uniform.
MR. NYE: If I could offer an alert, an alarm or a
concern as a long-disqualified engineer, there's one thing
to say we know what the standards are and what the limits
are and what the conditions are that we need to seek.
It's quite different to imply by that that we
understand all we need to understand about the concepts of
voltage collapse which have developed in some of these
dynamic situations. It's quite a different matter to talk
about a steady state condition for which we can plan and
which we seek to control and it's quite another to try to
anticipate the myriads of millions of different operating
conditions that may fall upon Bob or anyone else at any one
time and tell you or assure to you that voltage collapse is
not a problem, because it is sort of the current concern in
the industry, I think. And the more we load the lines and
the more we expose the system to unanticipated flows, the
more likelihood it is that we're going to have some
conditions that we did not anticipate.
So we need to be able to control even under the
circumstances of unanticipated demands, and I think that's
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perhaps the backup we need to all assure ourselves of.
CHAIRMAN JACKSON: Commissioner Diaz.
COMMISSIONER DIAZ: No questions.
CHAIRMAN JACKSON: Commissioner McGaffigan.
COMMISSIONER McGAFFIGAN: No questions, but it
looks like Mr. Wolff wants to get in the last word.
MR. WOLFF: I was just going to make one comment,
that I can understand the concern of the Commission about
how seriously we take the nuclear plants and their supply,
but when you stop to think of it, all the operators out
there have wives and children in the area and all the
operators -- speaking from an area that is relatively short
of nuclear power right now, I can tell you that we've missed
nuclear power and we would do nothing to jeopardize it in
the long run.
The other thing I thought I might leave you with
is the cost of an ISO, our ISO costs the ratepayer in New
England on average 16 cents a month. So it's too cheap to
meter to use in the whole place.
CHAIRMAN JACKSON: No. I thank you, I thank all
of you. I appreciate that your wives and children live in
the area. So do we all, as do our nuclear operators. We
regulate them any way.
But I would like to thank the NRC staff, the DOE
representative, the coordinating council, reliability
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council representatives, and the industry representatives
for a very informative briefing to the Commission on this
subject of electric grid reliability and security and its
potential impacts coming out of electric utility
deregulation but potentially -- particularly with respect to
the security and safety of the nuclear plants.
As I stated in a speech to the National
Association of Regulatory Commissioners in January, from the
NRC perspective, we've said that deregulation has to proceed
with a sensitivity to and an understanding of the
vulnerability of nuclear plants to loss of off-site power,
and that grid reliability governance structures and
operating criteria must reflect this, and it's an important
issue to be considered in the formation of independent
system operators.
And that this implies again that the standards of
performance, operational criteria, and the training of
personnel, which we've all spoken to today, are critical
oversight issues that have to be factored in and properly
addressed as deregulation goes forward.
I hope that in bringing you gentlemen here, that
we have sensitized you to the NRC's issues and concerns, and
those of you who are our direct licensees understand that
and are as sensitive to it as we are to start with.
But I'd like to make a couple of comments relative
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to each presentation that we've heard today.
With respect to the staff presentation, I think
it's very important that we understand how the issue is to
be addressed within our current regulatory context,
understanding where we are and what we control versus what
we do not, but how it is to be addressed in these issues of
licensing basis, et cetera, and I've already spoken to the
issue of the timeliness and the expeditiousness of your
reviews, and I'm also going to be asking the AEO to arrange
for each region to have someone come -- go to a power pool
and a reliability council for that region to get themselves
more informed than I think our staff currently is today.
On the federal level more broadly, it strikes me
that there are parallel paths for the NRC and the
interagency process doesn't always work as well as it
should, and typically, when one agency goes to see another
-- and we do the same thing -- we would say, well, of
course, you know, if you want to be in, you're welcome to be
in, but the way to really be in is to make the interagency
process work and to have all the players, just as we've
spoken about it in the broader context, at the table as the
discussions go on.
And I'm going to be meeting with the Secretary at
any rate and I'm sure we'll talk about this point.
I think that we will be prepared and I will be
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prepared to speak to any legislation as appropriate within
the context of our concerns that reinforce the ability to
ensure that the issues are appropriately dealt with,
including testifying if it comes to that.
And with respect to NERC and the other regional
councils, I think the issue of -- the path that you're
proceeding down seem oriented, but it all has to address
these issues, but it really does have to be pulled together,
and that your operating protocols and the training of people
are, to us, very serious issues, and the compatibility of
what you lay out in terms of operational criteria to nuclear
power plant requirements and having some enforceability of
that, I think, is a very important issue to us.
And then with respect to the industry, I think
it's important that we have a clear understanding with
respect to the extent to which you feel the various
operating protocols that are being developed in fact are
compatible with the requirements on the nuclear plants, as
well as getting input from you on how you think the issues
can be addressed within the licensing basis or FSAR space
since that is something that the Commission has under
consideration at any rate as we go along.
And so unless there are further comments or
questions from fellow commissioners, adjourned.
[Whereupon, at 4;25 p.m., the briefing was
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adjourned.]
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