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Draft ERO governance regulations delay
RCA encounters complications in ensuring that the board overseeing operation of Railbelt electrical system will remain balanced
Alan Bailey for Petroleum News
The development of draft regulations for the governance of electric reliability organizations in Alaska is taking longer than anticipated, Regulatory Commission of Alaska Commissioner Antony Scott told a meeting of the RCA on Nov. 18. The commission had originally anticipated publishing the draft regulations for public review around the end of September but now hopes to have the regulations ready for publication at a special public meeting on Dec. 16.
The regulations are being designed to enable the implementation of Senate Bill 123, a bill passed earlier this year giving the RCA statutory authority to regulate EROs in Alaska. The immediate objective is the establishment of an ERO for the Alaska Railbelt electrical system, to enable a more unified approach to the management and operation of the system.
Three dockets The commission has split the overall regulation development into three separate dockets. The regulations relating to ERO governance are being dealt with in the first of these dockets. Governance is potentially contentious, given the need to balance the needs of all stakeholders in the electrical system, including the electricity utilities, independent power producers and electricity consumers. The second docket is dealing with integrated resource planning for the electrical system and with commission pre-approval for the construction of new major facilities for the system. The third docket will deal with regulations for reliability standards and the rules for ERO operation.
The Alaska Railbelt electric utilities are in the process of forming the Railbelt Reliability Council, or RRC, an ERO for the Railbelt system. By first developing regulations required for ERO governance, the RCA wants to establish regulatory clarity for the RRC, as the organization moves towards applying for a certificate of public convenience and necessity from the commission.
Unanticipated complications The upshot of two technical conferences in the first of the RCA dockets was commission approval of the terms of ERO governance regulations. The next step was to use these terms as a basis for draft regulations, to be published for public review. However, in trying to develop the regulations the commission has encountered some unanticipated complications and associated legal issues, Scott said during the Nov. 18 public meeting.
The complications emanate from a regulatory approach in which, rather than explicitly specifying the structure of an ERO board, the commission wants to retain discretion to rule on whether a proposed board structure is adequately balanced across the various stakeholders in the organization. This approach would also give the commission the ability to oversee the board structure in the event of mergers, acquisitions or other business changes, ensuring continuing balance in stakeholder representation, Scott said.
The commission is currently evaluating alternatives for dealing with these issues and this evaluation is taking some time, he said.
Issues to consider Scott stressed that, meanwhile, any parties intending to apply for ERO certification should continue with their preparations as quickly as possible. In moving forward with an application it is important to ensure that the stakeholders on the ERO board will span the relevant interests in ERO decisions, with voting rights that appropriately balance those interests, he suggested. It is also important to ensure that initial balance in the board cannot subsequently be undermined.
“It would be extremely unfortunate if an initially balanced board, because of the ability to modify representation, became unbalanced,” Scott said.
In addition, Scott commented on the need for ERO decision making to be able to take into account the evolving nature of the electricity industry. He also commented that a number of the commissioners had found that the proposed RRC board structure was close to having a balanced format.
Scott also said that the commission is very resource stretched for conducting work on the regulations, especially given the commission’s high workload and the fact that the commission had not been able to fill some analyst positions that had been authorized by the state Legislature.
Progress on other dockets Meanwhile the commission has held a successful technical conference in the second of the dockets, the docket addressing regulations for integrated resource planning and large project pre-approval. And during the Nov. 18 meeting the commission approved the issuance of a public request for suggested items for topics to be discussed in a technical conference in the third ERO docket. Given the number of subject areas in that docket, it is anticipated that this technical conference will last perhaps three days.
The commission is anxious to move ahead as expeditiously as possible with the dockets - during the upcoming legislative session the assistant attorney general who works with the commission in developing the regulations will have to give priority on working on legal issues associated with legislation being discussed in the Legislature.
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