Who Are the Major Players in Electric Grid Reliability?

In the summer of 2003, a culmination of seemingly small failures by the power grid, its monitoring software, and human operators quickly cascaded into the largest blackout to ever occur in North America. Power outages spread throughout the Northeast and Midwest United States, as well as into Ontario, Canada, with an estimated 50 million people losing power. Homes were left in the dark anywhere from a few hours up to a few days and the economic cost of the outage was estimated to be between $4 billion and $10 billion.

In response to this disastrous event, a federal law passed two years later calling for an entity to develop and enforce reliability standards for the power grid. The North American Electric Reliability Corporation (NERC), which previously existed under a slightly different name and role, was given authority as this reliability entity.

Having mandatory requirements has certainly helped with reliability. But the effects of climate change now are straining the grid with heatwaves and cold spells pushing it to its limits, and sometimes beyond. Gas-burning power plants that have traditionally been thought of as stalwarts of grid reliability are coming under scrutiny as they fail in these moments of critical need. The interdependence between the gas and electric system means that grid reliability efforts are undermined by a lack of oversight in the gas system.

These vulnerabilities to the grid have played out with dire consequences and it’s clear there needs to be more accountability. That starts with understanding who the major players are in electric grid reliability.

Let’s start with the North American Electric Reliability Corporation

When power grid folks think of reliability, NERC is the most important player and a good place to start the discussion. Succinctly put, NERC develops and enforces reliability standards.

There are currently 93 NERC standards directing the grid at the operational level (how to keep the grid operating on a real-time basis) and the planning level (how to make sure the grid is prepared for the future). The first misstep in the 2003 blackout was an overloaded, sagging electrical line that touched a tree limb and short-circuited. Tree trimming is now included in a standard. Some other examples include maintaining a set frequency on the grid, cybersecurity, resource adequacy, infrastructure maintenance, and communication protocols.

NERC additionally conducts reliability and risk assessments for the winter, summer, and long-term, as well as special assessments when the need arises. In the most recent summer assessment, NERC highlighted that two-thirds of the US would have reliability challenges if there were periods of extreme demand caused by heatwaves. And indeed, Danger Season returned this year with unrelenting heat that severely strained the grid in Texas and other parts of the South and Midwest.

Working with NERC are six affiliated regional entities that have very similar authority to NERC but for a smaller region. NERC and these regional entities collectively create the ERO Enterprise.

These regional entities also develop and enforce region-specific reliability standards when needed. For example, in the four regions of the Eastern Interconnection (the power grid covering the eastern United States) there is a standard to coordinate how to relieve transmission when the system is at risk of overloading from high electricity demand.

Who must comply with NERC’s standards?

Falling under NERC’s jurisdiction are the “users, owners, and operators” of the bulk-power system. (The bulk-power system includes the electricity generation and transmission network, but not the distribution network). These players include grid operators, transmission owners and operators, and generation owners and operators, among others.

The grid system has become more complicated with new market entrants, ownership structures, and regional bodies. As I walk you through how compliance works, note that an entity may function in multiple roles. For example, a utility may be the owner of the transmission and generation in its service area, but cede balancing authority and transmission operations to a regional transmission organization (RTO). Vice versa, a single NERC reliability standard will often have many entities that must adhere and coordinate to the standard.

Balancing Authorities

Balancing authorities have one of the most foundational roles in maintaining grid reliability—making sure the supply of electricity to the grid is equal to the demand. This is a real-time process to maintain a set frequency that keeps the grid running.

These balancing authorities include RTOs, independent system operators (ISOs), and utilities in regions not under an RTO or ISO (primarily the West and the Southeast). NERC’s reliability standards are the north star for the technical operations of this electricity supply and demand balancing act. But given the critical role of balancing authorities to the grid, NERC also enforces standards that go beyond these technical operations and into issues such as communication protocols, security (both cyber and physical), and data reporting for future planning.

Transmission

Many groups are involved to make sure the transmission network is properly maintained and that there are sufficient lines to bring electricity to customers now and in the future. Prior to deregulation in the 1990s, utilities largely owned and operated transmission for their service area. While transmission lines are still owned by these utilities, operations are often ceded to RTOs to ensure that power is being delivered efficiently across the territory. Many of the facility design and maintenance requirements, such as tree trimming near transmission lines, still fall on the transmission owner.

While NERC sets the standards for transmission reliability, states and RTOs play a major role in compliance. This is because the actual development of transmission, including permitting, planning, and cost allocation, are under state and RTO authority.

Generation

Similar to transmission, making sure there’s enough electricity generated for grid reliability falls on multiple entities. At a very simplified level, NERC sets performance metrics that monitor the amount of generating capacity the grid needs to meet demand. But this is actually incredibly complicated considering the different characteristics of each resource, forecasting electricity demand, and variation in how regional electricity markets are set up.

While NERC sets performance requirements and thus indirectly affects which generating plants get built, the planning and development of facilities must receive state approval. Keeping the grid reliable not only relies on NERC to set proper standards, but also for many other entities to coordinate the development of this infrastructure.

The above entities should give you a good sense of how the bulk power system works together, but there are other players that contribute to grid reliability under NERC’s jurisdiction. Notably, there are groups that coordinate between these different pieces and plan regional longer-term needs for reliability.

The Federal Energy Regulatory Commission plays a big role

A final entity that plays an important role in maintaining grid reliability is the Federal Energy Regulatory Commission (FERC). FERC acts in an oversight role and must approve all standards that are developed by NERC. FERC’s authority extends to directing NERC to develop or modify standards to address specific reliability issues.

Additionally, FERC has reliability oversight over all the utilities and RTOs (except in Hawaii and Alaska). This is particularly important for reliability considering that RTOs and utilities are deeply involved with the development and planning of transmission and generation. While grid planning by RTOs and utilities ultimately must adhere to NERC’s reliability standards, there is a range in how an RTO or utility can reach these requirements. Thus, FERC can shape how the power industry thinks of planning and implementing a reliable grid.

Who’s missing?

With so many entities working to make sure the grid is reliable, why are we still seeing catastrophic failures of the grid during extreme weather events?

One of the major vulnerabilities to electric grid reliability is the gas system.

There is no NERC-equivalent for the gas system, and this lack of oversight has created serious problems for the grid, especially in extreme weather conditions. Gas plants generated 40% of electricity in the US in 2022, and when these power plants don’t perform due to plant malfunctions or fuel supply problems (issues that could be addressed with stronger oversight), these affect the power grid. During Winter Storm Uri in 2021, gas plant failures, many of which were caused by a failure of the gas system to deliver sufficient fuel, were a major contributor to the collapse of Texas’ grid that led to a devastating 246 deaths.

In the other direction, electricity is also needed for gas production and delivery. This means failures by gas plants that impact the grid can fuel a vicious cycle of grid unreliability as power outages trip more gas plant problems.

Unfortunately, efforts to address electric grid reliability will continue to be incomplete if the issues of gas reliability are not addressed. A fast transition to a cleaner grid can help lessen the overreliance on gas in times of extreme weather. But the gas industry needs to be held accountable now for its role in helping maintain a reliable grid.

The inadequacies of the gas system prevent efforts for stronger grid reliability and past grid failures reveal the deadly consequences of this vulnerability.

We need to update grid reliability to meet today’s needs

The clean energy transition is underway and it’s important for grid operators to update how they think about grid reliability. As extreme weather events cut off fossil fuels, narratives that fossil fuels are a guaranteed resource for grid reliability are proving outdated and harmful.

During Winter Storm Elliott, there were widespread failures by gas plants to show up for the grid due to equipment and fuel issues from the cold. In the recent Texas summer heatwave, it was renewables and storage that kept the grid humming as demand for electricity reached record highs and fossil fuel plants fell offline. Fossil fuel interests continue to sideline efforts to quickly integrate clean energy resources into the grid that would improve grid reliability and help address climate change.

If we are going to depend on NERC and other grid-related organizations to provide a reliable grid, they must adapt to the changing climate and market landscape that increasingly shows the importance that renewables and other clean energy solutions can provide to the grid.

Originally published in Union of Concerned Scientists.