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RCA reports to House Energy on SB 123 regulations development
Alan Bailey for Petroleum News
During an Aug. 7 meeting of the Alaska House Energy Committee, the Regulatory Commission of Alaska reported on the development of regulations for oversight of electric reliability organizations, or EROs, in Alaska. The regulations are required for the implementation of Senate Bill 123, a bill passed during this year’s legislative session, authorizing RCA regulation of Alaska EROs.
The need for an ERO in Alaska is focused on the Railbelt electrical system, an interconnected system spanning territory from the southern Kenai Peninsula to the Fairbanks region of the Interior. The system is owned and operated by six independent utilities and the state of Alaska. The purpose of implementing an ERO for the Railbelt is to enable a more coordinated approach to the management and operation of the system, and to facilitate the system wide planning of construction of new major facilities in the electrical network.
In December 2019 the six Railbelt utilities signed a memorandum of understanding for the formation of the Railbelt Reliability Council, a form of ERO for the Railbelt. The utilities are moving forward with the RRC development, with the eventual intent of asking the RCA to approve the organization as a Railbelt ERO. In July the utilities completed the formation of an implementation committee for the RRC.
The RCA needs to provide regulatory oversight of how an ERO is established and how it operates. And that requires the development of regulations reflecting the requirements of SB 123.
Regulatory deadline Commission Chair Bob Pickett told the Energy Committee that, under the statute, the commission has until July 1, 2021, to develop the regulations. Given this very tight timeframe, the commission began outlining its approach for the rule making at a public meeting on April 15, Pickett said.
In late June it became evident that it was necessary to split the rulemaking into three separate dockets, in particular to synchronize different stages of the rulemaking with the utilities’ efforts to position the RRC as a candidate ERO. One docket is addressing ERO board composition and competency requirements; a second docket deals with integrated resource planning for the electrical system, and commission pre-approval of major new developments such as new power stations or major additions to the transmission network; the third docket addresses regulations relating to the filing of reliability standards and the rules for ERO operation, Pickett said.
Commissioner Antony Scott explained that, by splitting the regulation development into three dockets, it will be possible to continue technical conferences relating to some of the regulations, after draft regulations from another docket are noticed for public review. While technical conferences provide opportunities to gather information and conduct conversations, these conferences cannot be held in a docket after draft regulations have been posted in the docket, Scott said.
ERO board requirements Work on the first docket, the docket addressing the ERO board, is underway. Following “robust discussions” regarding the composition of an ERO board during a July 29 technical conference, the commission is reviewing the results ahead of refining its views on what is required, Pickett said.
The board composition is a particularly touchy issue. On the one hand there is a need for some level of board expertise in the workings of the electrical system. On the other hand, there is also a need for board decision making to represent a balance between the needs of different stakeholders in the system, including, for example, independent power producers. The RRC board as defined in the RRC MOU would consist of six board members representing the six utilities and six members representing non-utility stakeholders. The 13th board member would be the RRC CEO.
The utilities have expressed concern that highly prescriptive regulations defining a required board structure could undermine the work that went into the development of the RRC concept - in various comments and filings the utilities have argued for regulations that are more descriptive in nature, with the ERO having scope for creativity in board design while the RCA retains authority for the approval of the proposed board composition.
Questions of independence In a July 28 RCA filing the Railbelt utilities commented that few Alaska entities with a working knowledge of the Railbelt electrical system are truly independent from the system. And there are means of assuring balance in board decisions, such as a requirement for a supermajority vote for key decisions.
In another July 28 filing Matanuska Electric Association suggested that, given the nature of the relatively small Railbelt electrical system, it is not currently possible to establish an ERO board that is fully independent from the operators of the system. However, it is important, through mechanisms such as a code of conduct and appropriate ERO policies, to ensure that individual board members can themselves act independently, MEA commented.
Scott told the committee that the RCA commissioners hope to vote on a general direction for regulations relating to ERO governance towards the end of August. That could enable the RCA administrative law judge to develop draft regulatory language, for publication potentially at some time in September. Pickett said that the commission hopes to have these regulations in place by the beginning of next year.
Schedule for other dockets Scott said that the commission will shortly be issuing an order, requesting people to work with RCA staff in the second docket, to prepare for the first technical conference addressing integrated resource planning and large project pre-approval. That technical conference would likely take place sometime in September.
The third docket, dealing with reliability standards and ERO procedures, is unlikely to move ahead until January, Scott said. Although the commission anticipates that docket involving lengthy and complex proceedings, it is not necessary to complete the docket in the immediate future to enable the RRC project to progress, he said.
Ultimately, the commission anticipates an ERO application in the summer of next year at the earliest, but perhaps not until the third quarter of that year, Scott said.
- ALAN BAILEY
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