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Alaska utilities publish MOU for Railbelt Reliability Council
Alan Bailey for Petroleumnews
As previously reported in Petroleum News, the six Alaska Railbelt electric utilities have signed a memorandum of understanding for the formation of a Railbelt Reliability Council to oversee the operation of the Railbelt electrical system. The utilities have now published the MOU, thus making public the organization’s anticipated roles and responsibilities, its governance structure, and the way in which it will be formed.
The concept is that better coordination across the grid system will lead to improved efficiency and the rigorous implementation of appropriate reliability standards.
The MOU says that the RRC will be a not-for-profit organization, funded by all electricity load-serving entities in the Railbelt and regulated by the Regulatory Commission of Alaska. The organization will not own or operated any of the Railbelt transmission and generation assets, nor will the RRC itself provide any electrical services.
Reliability standards A primary purpose of the new organization will be to adopt and administer reliability standards for the Railbelt electricity system, under an RCA-approved compliance monitoring and enforcement program. Security standards will include standards for physical and cyber security.
The RRC will also develop, adopt and administer rules and protocols for open and non-discriminatory interconnection with the electrical grid for any entities wishing to use the grid, including utilities and independent power producers. An appropriate mechanism for cost recovery from grid users will require RCA approval.
The RRC will be responsible for developing, adopting and using a system-wide planning process for power generation and transmission on the grid. Planning must address compliance with reliability standards; allow, as appropriate, individual utilities flexibility in the use of local planning criteria; enable maximum delivery of the most economic generation capabilities; and enable the voluntary implementation of economic dispatch of new generation resources. The planning process will lead to grid-wide integrated resource planning for generation and transmission projects, the MOU says.
The MOU also says that the RRC will carry out a cost-benefit analysis of security-constrained economic dispatch for all or for a “feasible portion” of the Railbelt electrical system. Economic dispatch involves the continuous use of the most cost-effect available generation capacity.
The RRC staff will consist of a CEO and appropriate qualified technical professionals. A technical advisory committee, composed of qualified technical professionals, will monitor utility compliance with the reliability standards, make recommendations to the RRC board of directors and guide the study into the use of economic dispatch.
Governance and board structure Over the course of several years of discussion regarding the potential formation of an electrical system operator such as the RRC, there has been much contention over concepts for governance of the operator organization. On the one hand, the utilities have expertise in how the Railbelt electrical system operates and in the practicalities of making changes to the system. On the other hand, other stakeholders such as independent power producers want governance that is independent from the utilities’ own interests. Under the new MOU, the RRC would be governed by a board, with six board members representing the six utilities and six members representing non-utility stakeholders. Non-utility board members would consist of the Alaska Energy Authority, a representative for electricity consumers, two independent power producers and two non-utility members with knowledge of utility operations and planning. The 13th board member will be the RRC CEO. The board would also include two non-voting ex officio members, one from the RCA and one from the Alaska Attorney General’s office for Regulatory Affairs and Public Advocacy.
An organizational development team representing the utilities will assist with the formation of an RRC implementation committee. The expectation is to form the committee by April, so that the implementation process can be completed by the end of 2020. The implementation committee will constitute the initial board of directors.
In parallel with moves to implement the RRC, the RCA has expressed support for Senate Bill 123, a bill that has been introduced in the Legislature to modify the statutes that govern RCA’s regulatory authority. The commission has said that it sees a need for some statute changes to clarify the commission’s authority to regulate the RRC. Current statutes tend to assume that the commission regulates individual utilities rather than an organization that oversees multiple utilities. The commission also wants statutory authority for the approval of planned major changes to electrical generation and transmission capabilities, changes that may emerge from the RRC’s planning function.
Groundbreaking agreement The utilities have characterized the RRC MOU as a groundbreaking agreement that will enable them to work more closely together in managing the grid.
“The signing of this MOU represents a significant amount of work and great progress among the utilities,” said Chugach Electric Association CEO Lee Thibert. “The goal is to work better together on behalf of ratepayers to improve reliability, enhance cyber security, and have long-term planning within the Railbelt.”
“Homer Electric Association looks forward to working symbiotically with all the Railbelt utilities and non-utility stakeholders alike to make this happen,” said Brad Janorschke, general manager of Homer Electric Association.
“MEA would like to thank the utility and non-utility partners who were part of this collaborative process,” said Matanuska Electric Association CEO Tony Izzo. “The agreement represents an opportunity to work together in new ways to ensure our interconnected electric system can meet the evolving needs of the region’s members, businesses and communities.”
“The Railbelt utilities have worked together for years to create a reliable electric utility system having filed Railbelt-wide reliability standards in 2018 and new cyber security standards in 2019 which become effective January 1, 2020. This new RRC will build on those efforts,” said Golden Valley Electric Association CEO Cory Borgeson.
"This agreement demonstrates the willingness of the utilities to work cooperatively for the benefit of ratepayers throughout the Railbelt," said ML&P General Manager Anna Henderson. "ML&P's objective is to enhance security and provide more reliable, cost-effective electric service for businesses and families."
- ALAN BAILEY
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