The North American Electric Reliability Corporation ( NERC ) is a nonprofit corporation based in Atlanta, Georgia , and formed on March 28, 2006, as the successor to the North American Electric Reliability Council (also known as NERC). The original NERC was formed on June 1, 1968, by the electric utility industry to promote the reliability and adequacy of bulk power transmission in the electric utility systems of North America . NERC's mission states that it is to "ensure the reliability of the North American bulk power system." 
NERC's major responsibilities include working with all stakeholders to develop standards for power system operation, monitoring and enforcing compliance with those standards, assessing resource adequacy, and providing educational and training resources as part of an accreditation program to ensure power system operators remain qualified and proficient. NERC also investigates and analyzes the causes of significant power system disturbances in order to help prevent future events.
Originally formed as a voluntary organization in 1968 by the electricity industry and called the National Electric Reliability Council, the name was changed to include "North American" in place of "National" in 1981 in recognition of Canada's participation and the broader scope of NERC’s footprint. The name was changed from "Council" to "Corporation" in 2007.
In 2000, NERC established the Electricity Sector Information Sharing and Analysis Center, which provides industry with timely responses and alerts on cyber and physical security threats that have the potential to impact the bulk power system. The ES-ISAC, which changed its name in 2015 to Electricity Information Sharing and Analysis Center, shares timely information with industry through its secure web portal.
In August, 2003, North America experienced its worst blackout to date, as 50 million people lost power in the Northeastern and Midwestern United States and Ontario, Canada. A United States–Canada Power System Outage Task Force was formed to investigate the causes of the blackout and to make recommendations to prevent future blackouts.
The Energy Policy Act of 2005 called for the creation of an Electric Reliability Organization (ERO) to develop and enforce compliance with mandatory reliability standards in the United States. This non-governmental, "self-regulatory organization" was created in recognition of the interconnected and international nature of the bulk power grid.
In April 2006, NERC applied for and was granted the designation of the ERO by FERC in July 2006. NERC also filed the first set of mandatory Reliability Standards with FERC, as well as filing the same information with the Canadian provincial authorities in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Quebec, Saskatchewan, and with the National Energy Board of Canada.
FERC approved 83 NERC Reliability Standards in March 2007, making them the first set of legally enforceable standards for the U.S. bulk power system effective on June 2007. Although significant disturbances continued to occasionally occur, the formation of an ERO undoubtedly played a significant role in minimizing the impact and frequency of these events.
Understanding the Grid
Early electricity systems, such as those installed by George Westinghouse and Thomas Edison , prior to the start of the 20th Century were isolated central stations that served small pockets of customers independently of each other. As these systems grew to cover larger geographic areas, it became possible to connect previously isolated systems, allowing neighboring systems to share generation and voltage stability resources. However, tying power systems together with these early interconnections also introduced the risk that a single significant disturbance could collapse all of the systems tied to the interconnection. Generally, it was decided that the benefits outweighed the risks, and by 1915 interconnections began to flourish and grow in size. By the end of the 1960s, there were virtually no isolated power systems remaining in the lower 48 states and southern Canada; practically all power companies were attached to large interconnections.
Unlike water or gas, electricity cannot be stored in large quantities. It must be generated at the instant it is used, which requires supply be kept in constant balance with demand. Furthermore, electricity flows simultaneously over all transmission lines in the interconnected grid system in inverse proportion to their electrical resistance, so it generally cannot be routed over specific lines. This means generation and transmission operations in North America must be monitored and controlled in real time, 24-hours-a-day, to ensure a reliable and continuous supply of electricity to homes and businesses. This requires the cooperation and coordination of hundreds of electricity industry participants.
NERC defines the reliability of the interconnected bulk power system in terms of two basic and functional aspects:
- Adequacy. The ability of the electricity system to supply the aggregate electrical demand and energy requirements of the end-use customers at all times, taking into account scheduled and reasonably expected unscheduled outages of system elements.
- Operating Reliability. The ability of the bulk power system to withstand sudden disturbances, such as electricity short circuits or unanticipated loss of system elements from credible contingencies, while avoiding uncontrolled cascading blackouts or damage to equipment.
Regarding adequacy, system operators can and should take “controlled” actions or procedures to maintain a continual balance between supply and demand within a Balancing Area.
All other system disturbances that result in the unplanned and/or uncontrolled interruption of customer demand, regardless of cause, fall under the heading of operating reliability. When these interruptions are contained within a localized area, they are considered unplanned interruptions or disturbances. When they spread over a wide area of the grid, they are referred to as cascading outages — the uncontrolled successive loss of system elements triggered by an incident at any location. Cascading results in widespread service interruption.
What occurred in the Northeast in 2003 and in the Southwest in 2011 were uncontrolled, cascading outages. In the Summer of 2000, California experienced rotating outages when supply was insufficient to meet all the demand. This is the controlled interruption of customer demand in order to maintain a balance with available supplies, while maintaining the overall operating reliability of the interconnected system.
The ERO’s key programs, which impact more than 1,600 bulk power system owners and operators, are based on four pillars of continued success:
- Reliability – to address events and identifiable risks, thereby improving the reliability of the bulk power system.
- Assurance – to provide assurance to the public, industry, and government for the reliable performance of the bulk power system.
- Learning – to promote learning and continuous improvement of operations and adapt to lessons learned for improved bulk power system reliability.
- Risk-based Approach – to focus attention, resources, and actions on issues most important to bulk power system reliability.
NERC Reliability Standards
NERC Reliability Standards are developed using an industry-driven, American National Standards Institute-accredited process that ensures the process is open to all persons who are directly and materially affected by the reliability of the North American bulk power system; transparent to the public; demonstrates the consensus for each standard; fairly balances the interests of all stakeholders; provides for reasonable notice and opportunity for comment; and enables the development of standards in a timely manner. NERC’s ANSI-accredited standards development process is defined in the Standard Processes Manual and guided by
NERC Reliability Standards define the reliability requirements for planning and operating the North American bulk power system and are developed using a that focuses on performance, risk management, and entity capabilities. The Reliability Functional Model defines the functions that need to be performed to ensure the bulk power system operates reliably and is the foundation upon which the mandatory Reliability Standards are based.
The Standards Committee oversees and prioritizes NERC’s standards development activities. The Standards Committee also coordinates NERC’s development of Reliability Standards with the North American Energy Standards Board’s (NAESB) wholesale electric business practices. Standards drafting teams, which are made up of industry volunteers and supported by NERC staff, work collaboratively to develop requirements using results-based principles that focus on three areas: measurable performance, risk mitigation strategies and entity capabilities. NERC’s standards are mandatory and enforceable throughout the United States and several provinces in Canada . Entities in the United States found to be in violation of a standard can be subject to fines of up to $1 million per day per violation.
Electricity Information Sharing and Analysis Center
NERC also operates the . The E-ISAC offers security services to bulk power system owners and operators across North America. E-ISAC member services includes specific cyber and physical security threat intelligence, tailored cyber security knowledge and physical security collaboration. The E-ISAC, which NERC established at the request of the U.S. Department of Energy, works closely with NERC’s Bulk Power System Awareness team in Atlanta to monitor real-time cyber and physical security threats to the grid.
The E-ISAC, through capabilities including its Cybersecurity Risk Information Sharing Program (CRISP), works with critical asset owners and operators to analyze real-time cyber and physical security data for patterns of incidents with the potential to impact the bulk power system. NERC has a “firewall” separating the E-ISAC and NERC’s compliance and enforcement activities. The separation extends to a physical separation of the E-ISAC from the rest of NERC.
Interconnections and Regional Entities
- The Eastern Interconnection covers most of eastern North America, extending from the foot of the Rocky Mountains to the Atlantic seaboard, excluding most of Texas. The Eastern Interconnection is tied to the Western Interconnection via high voltage DC transmission facilities and also has ties to non-NERC systems in northern Canada.
- The Western Interconnection covers most of western North America, from the Rocky Mountains to the Pacific coast. It is tied to the Eastern Interconnection at six points, and also has ties to non-NERC systems in northern Canada and Northwestern Mexico.
- The Texas Interconnection covers most of the state of Texas . It is tied to the Eastern Interconnection at two points, and also has ties to non-NERC systems in Mexico.
- The Quebec Interconnection covers the province of Quebec and is tied to the Eastern Interconnection at two points. About one third of Canada's installed power (42 GW out of 130) and about one third of Canada's production (184 TWh out of 567) are in this interconnection. Despite being a functionally separate interconnection, the Quebec Interconnection is often considered to be part of the Eastern Interconnection.
- Florida Reliability Coordinating Council (FRCC)
- Midwest Reliability Organization(MRO)
- Northeast Power Coordinating Council (NPCC)
- ReliabilityFirst (RF)
- SERC Reliability Corporation (SERC)
- Southwest Power Pool, Inc. (SPP RE)
- Western Electricity Coordinating Council (WECC)
As part of the fallout of the Northeast Blackout of 2003 , the Energy Policy Act of 2005 authorized the Federal Energy Regulatory Commission (FERC) to designate a national Electric Reliability Organization (ERO). On July 20, 2006, FERC issued an order certifying NERC as the ERO for the United States. Prior to being the National ERO, NERC's guidelines for power system operation and accreditation were referred to as Policies , for which compliance was strongly encouraged yet ultimately voluntary.
NERC has worked with all stakeholders over the past several years to revise its Policies into Standards , and now has authority to enforce those standards on power system entities operating in the United States , as well as several provinces in Canada, by way of significant financial penalties for noncompliance.
Efforts between NERC and the Canadian and Mexican governments are underway to obtain comparable authority for NERC to enforce its standards on the NERC member systems residing outside of the United States.