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RCA continues drafting ERO regulations
Ensuring balance in governance over management of the Railbelt electrical system requires careful wording of certification rules Alan Bailey for Petroleum News
Work is still in progress in developing proposed regulations for the certification and governance of electric reliability organizations in Alaska, Regulatory Commission of Alaska Commissioner Antony Scott told a public meeting of the RCA on Dec. 9. The immediate purpose of allowing ERO certification is to enable the formation of an ERO for the Alaska Railbelt electrical system, to enable more unified management and planning for the system. Ultimately, the expectation is to minimize the cost of electricity for consumers within acceptable levels of power supply reliability.
The Railbelt utilities are in the process of forming the Railbelt Reliability Council, or RRC, to become an ERO for the Railbelt. However, clarity is needed over the criteria that the RRC needs to meet, to achieve certification. Governance and the structure of an ERO board of directors is a particularly difficult issue, given the importance of balancing the needs of various stakeholders, including electricity consumers, electric utilities and independent power producers.
Scott commented on the length of time that it is taking to develop the regulations, which are designed to enable the implementation of Senate Bill 123, a bill passed this year to enable the formation of EROs in Alaska. He talked about some modifications made to an earlier draft of the regulations and encouraged members of the public to comment on the concepts and wording in the latest regulation draft. However, he emphasized that the regulations are not yet complete and have not yet reached the stage of being published as proposed regulations. The regulations have yet to be reviewed by the state attorney general.
ERO responsibilities Scott emphasized that an ERO does not directly supply services that are consumed and is not, therefore, a utility that would operate under a conventional certificate of public convenience and necessity. An ERO certificate would encompass ERO responsibilities, which, in the latest draft of the regulations, would consist of the development and enforcement of reliability standards for the electrical system and for interconnection and non-discriminatory access to the system; and the development of integrated resource plans for the system.
There has been a suggestion that an ERO could also administer an open access tariff for the transmission system. But, although the commission recognizes that, given the small size of the Railbelt system, there is an argument for cost efficiency by including this function within an ERO, the current regulation draft excludes this from the scope of ERO responsibilities. If the ERO’s role is to enforce standards, the ERO should not at the same time be conducting operations subject to the standards that it enforces, Scott commented.
Another question revolves around whether the ERO should have responsibility for oversight of economic dispatch across the electrical system. Economic dispatch involves the continuous use of the most efficient available power generation capability. While the Southcentral Alaska utilities are already in the process of jointly implementing economic dispatch across their service areas, expanding this arrangement to other Railbelt regions would require new transmission infrastructure, involving system developments that are unlikely to be carried out for some years. So, there is time to resolve the further economic dispatch issues at some time in the future, Scott said.
The board structure A key issue revolves around the need to ensure that an ERO board is appropriately structured, and that the structure remains appropriate after the ERO is certified, taking into account changes that may happen in the business structure of the electrical system. The revised draft regulations envisage the commission reviewing the board structure as part of the ERO certification process. A certificate, once granted, would expire after six years, with the ERO being required to have its own rules for ensuring continuation of board balance during that six year period.
The ERO would then have to apply for re-certification when the certificate expires, with the possibility at that point of some other entity competing for the certificate.
The question of what constitutes a balanced ERO board, representative of the various stakeholders in the electrical system, is particularly difficult to adjudicate. At the risk of becoming somewhat prescriptive, rather than giving an ERO complete freedom to develop its own proposals, the new regulation draft includes, for example, specific definitions of what the RCA would recognize as valid groups of stakeholders to be represented on the board, and criteria for determining whether the board is appropriately balanced.
For example, the new regulations draft requires an odd number of board members, no ERO employee can be a director on the board, and board votes would need to come from directors representing at least three stakeholder groups. An ERO applying for a certificate must also have procedures to ensure that board decision are technically sound, the draft says.
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