Vol. 27, No.40 Week of October 02, 2022
Providing coverage of Alaska and northern Canada's oil and gas industry

Railbelt ERO approved

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The RCA grants certificate to the RRC to oversee the regionís electrical system

Alan Bailey

for Petroleum News

In a major milestone for the electricity system across the Alaska Railbelt, on Sept. 23 the Regulatory Commission of Alaska granted a certificate to the Railbelt Reliability Council to operate as the electric reliability organization for the Railbelt system. The system extends from the southern Kenai Peninsula, through Southcentral Alaska, and north to Fairbanks. The RRC will maintain and mandate reliability standards for the Railbeltís high voltage electrical system; administer rules for open access to the transmission grid; and conduct Railbelt-wide system planning.

The system is owned and operated by five independent utilities and the state of Alaska. The concept behind the implementation of an ERO is the achievement of more unified management of the system, thus minimizing electricity costs while also maintaining an acceptable level of supply reliability. The RRC, as part of its planning function, will also presumably be able to develop a regional strategy for the appropriate use of renewable energy sources.

Senate Bill 123

In 2020 the state Legislature passed Senate Bill 123, giving the RCA regulatory authority over EROs in Alaska and requiring the formation of an ERO for the Railbelt. Under the resulting statute, if an organization had not been certified as a Railbelt ERO by Sept. 23 of this year, the RCA would itself would have had to form an ERO. The RRC was the only entity that applied for certification.

The RRC made its formal certificate application to the RCA in March and the commission subsequently opened a docket for the application and held a hearing into the matter. On Aug. 16 the commission issued a preliminary decision, requiring some changes to the RRCís governing documents before certification could be granted. On Sept. 14 the RRC filed amended documentation. The RCAís Sept. 23 order accepted the amendments.

A need for balance

One of the most difficult issues in managing an ERO revolves around ensuring an appropriate balance between the various stakeholders in the electrical system when making decisions over how the system should be developed and operated. For example, while individual utilities have their own power generation facilities, independent power producers may seek access for supplying power to the system. And the electricity consumers that the electricity system serves obviously have a keen interest in both the cost of the power that they use and the supply reliability.

Consequently the RCA regulations include specific rules for what the agency will approve as an acceptable ERO board structure.

The RRC board structure has 13 voting directors, plus two non-voting directors. There are eight distinct stakeholder classes, including the electric utility cooperatives, independent power producers and three categories of electricity consumer. Of the voting directors, one is independent of any stakeholders while the remainder represent various stakeholder classes. In its Sept. 23 order approving the RRC certification the RCA said that the RRC board does comply with the regulations, given that the board can be characterized as a combination independent and balanced board.

Several committees will provide support to the board.

The RRC structure

The RRC plans involve the employment of a chief executive officer, who will report to the board and supervise a Technical Advisory Council. Reporting to the CEO will be four senior engineers: a senior standards engineer, a senior studies engineer, a senior compliance engineer and a senior planning engineer. The senior engineers will participate in the Technical Advisory Council. And the organization also requires the usual business functions such as human resources, finance, regulatory affairs and public affairs.

The senior planning engineer would be responsible for the development of an integrated resource plan, or IRP, for the future evolution of the Railbelt electrical system - the Technical Advisory Council would be involved in plan development, together with opportunities for public participation and comment. The RRC anticipates board approval of an initial IRP by June 30, 2026, with RCA approval of the plan anticipated by September of that year. The expected cost of developing the plan is $12.7 million. Apparently a need to first adopt some planning reliability standards will delay the start of work on the plan itself, a factor that impacts the estimated completion date of the plan.

Concerns about costs

Most of the questions raised during the hearing related to concerns about the anticipated costs of operating the RRC - the RRCís operating costs will be recovered from the electricity rates in the region via RRC surcharges to the utilities. However, the expectation is that over time these costs will be more than offset by cost savings from improved system efficiency.

Some utilities questioned the number of staff engineers or subject matter experts that the RRC might retain and thus incur significant costs. The stateís Office of the Attorney General Regulatory Affairs and Public Advocacy Section said that 55% of the RRCís proposed budget related to the hiring of staff engineers and SMEs. The RRCís original documentation included, for example, the possibility of individual directors on the RRC board independently engaging SMEs.

Consequently, in its August preliminary decision the RCA required the RRC board to approve rules that would limit the number of SMEís that the RRC can use. The RCA also required the RRC board to pass resolutions prohibiting any changes to bylaws designed to comply with state statutes until the first ERO certificate renewal in six years time. The board also had to pass a resolution ratifying all statements made on behalf of the RRC in the RRC certification docket. The commission now says that the RRCís Sept. 14 filing fully complies with the requirements of the preliminary decision.

Separate tariff filing

In conjunction with its ERO certificate application, the RRC filed an initial tariff, describing its operations, services, budget and initial surcharges to the Railbelt utilities. However, the commission has not approved this tariff as part of the certification docket and requires the RRC to separately file its initial budget and tariff for approval.

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