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RCA still working on ERO governance
Complications over how to ensure balanced board structure are raising legal issues and delaying completion of draft regulations Alan Bailey for Petroleum News
Complications in resolving how the Regulatory Commission of Alaska can develop regulations that would ensure balance in the board of an electric reliability organization are continuing to further delay the completion of draft regulations for ERO certification, RCA Commissioner Antony Scott told a public meeting of the commission on Jan. 13. The commission is developing regulations to enable the implementation of Senate Bill 123, a bill passed by the Alaska Legislature last year to enable the formation of EROs in Alaska. The primary purpose of the statute and its associated regulations is to enable the formation of an ERO for the Railbelt electrical system, to enable a more unified and efficient approach to the overall management of the system.
The Railbelt utilities are in the process of forming the Railbelt Reliability Council, or RRC, to become an ERO for the Railbelt. The RRC will ultimately require RCA certification.
First of three dockets The docket for the development of ERO certification regulations is the first of three dockets for implementing SB 123. The second docket is dealing with regulations for 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 is dealing with regulations for reliability standards and the rules for ERO operation.
The commission had originally hoped to publish the draft regulations for ERO certification for public review around the end of September. However, regulation development is proving significantly more complicated than the commission had originally hoped. During the Jan. 13 meeting two commissioners expressed concern about a July 1, 2021, deadline that the Legislature had set for completing all of the SB 123 regulations - a deadline of this type is unrealistic, said Commissioner Stephen McAlpine.
Balancing the governance The development of regulations for ERO certification is proving particularly challenging because these regulations will need to clarify the rules under which the commission may approve the structure of an ERO board of directors. Acceptable ways of achieving an appropriate balance of interests in the board, including the interests of electric utilities, electricity consumers, independent power producers and other electricity system stakeholders, are difficult to determine. For example, the member-owned cooperative nature or public ownership of the Railbelt utilities mean that a utility actually represents some combination of the interests of the utility as an electricity provider, and the interests of the utility members as electricity consumers.
Without appropriate balance, board decisions may be skewed towards the interests of some particular group of stakeholders.
Legal issues In drafts of the ERO certification regulations the commission had moved from a less prescriptive to a more prescriptive form of regulation, telling an ERO candidate the RCA’s expectations for the ERO board structure and balance. However, Scott told the Jan. 13 meeting that this approach had raised legal issues relating to the rights of a corporation to select its own board of directors. So, rather than requiring ongoing commission oversight of an ERO’s governance, the commission needs to provide clarity over what the commission would approve as an acceptable board arrangement.
Scott said that, given the legal issues involved, it is necessary at this stage to review the draft regulations with attorneys from the state Department of Law, before continuing to make further revisions to the draft, and before sending draft regulations to the state Legislature for review.
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