Wednesday, December 19, 2018

NERC Board Approves Dissolving SPP Regional Entity

By Tom Kleckner

FORT LAUDERDALE, Fla. — NERC’s Board of Trustees on Thursday voted to dissolve the SPP Regional Entity (RE) by terminating the RTO’s regional delegation agreement, ending a reliability oversight role that concerned both the reliability organization and FERC.

With the termination of the NERC-SPP delegation agreement, most of the RE’s 122 registered entities will be reassigned to the Midwest Reliability Organization (MRO), with the remainder joining SERC Reliability Corp. At the same time, NERC will take over compliance monitoring and enforcement of the RTO for two years following the dissolution’s effective date. SERC has been responsible for compliance monitoring and enforcement since 2010.

SPP NERC SPP Regional Entity

NERC’s Board of Trustees gathers for its February meeting | © RTO Insider

SPP CEO Nick Brown said he supported the trustees’ decision but was disappointed in NERC assuming SERC’s monitoring role. The RTO said it preferred having ReliabilityFirst take that responsibility. (See NERC Seeks to Oversee SPP Reliability Compliance.)

“Their decision to provide compliance enforcement services for two years was not what we hoped for, but we’re ready to move forward,” Brown said in a statement. “We look forward to working in the NERC arena to improve processes related to regional assignment and compliance monitoring and enforcement.”

NERC will determine a successor for SPP’s compliance monitoring and enforcement after completing its two years of oversight, said the organization’s interim CEO, Charles Berardesco.

SPP said last July that it would dissolve the RE, which is responsible for auditing and enforcing reliability rules in three balancing authorities: SPP, Southwestern Power Administration and parts of MISO. (See SPP to Dissolve Regional Entity.)

SPP NERC SPP Regional Entity

NERC’s Board of Trustees ponders the SPP RE’s dissolution | © RTO Insider

SPP was appointed by NERC as an RE in 2007, but Brown said last year it became clear that agreement was “in jeopardy” as the RE’s footprint did not grow to match the RTO’s current 14-state territory. NERC also expressed concerns about the relationship between SPP, the RE and the RTO’s corporate compliance responsibilities.

That dual role also caused problems with FERC, which criticized SPP in a 2008 audit for failing to ensure the RE’s independence from the RTO (PA08-2, AD09-3). The audit called for improved oversight from the RE Board of Trustees to prevent conflicts of interest.

The termination agreement is expected to be approved by MRO next week. Berardesco said the agency will then move “expeditiously” to file for FERC’s “prompt” approval, easing the RE’s concern that it will continue to hemorrhage its staff.

SPP NERC SPP Regional Entity

SPP’s Michael Desselle (left) listens to the discussion | © RTO Insider

NERC staff said they plan to make the FERC filing as soon as early March. SPP hopes to complete the transition by the end of July.

“We all recognize as the SPP RE goes away, there is the potential for a gap with people leaving,” Berardesco said.

Ken McIntyre, NERC vice president and director of standards and compliance, reassured the trustees that the agency is working closely with the RE to stem further staff losses, saying, “We are closely aligned on the issues as we move forward.”

He said staff are already working on the filing and are only waiting on final approval from the MRO board. “We have every incentive to move forward as quickly as we can. That’s in the best interest of everyone involved.”

McIntyre also said staff have collaborated with MRO and SERC to “ensure a high level of continuity during and after the transfer occurs.”

“I believe the level of staffing they have requested is correct and necessary to handle the number of entities that are transitioning,” he said. “We are confident … that both REs are capable of handling the oversight of the entities in their regions.”

MRO and SERC are both adding staff — including some from the SPP RE — to handle their additional responsibilities. NERC will also provide the REs with additional support.

“Staff has been working with both entities regarding their new responsibilities,” McIntyre said. “We’ve told both entities we would be enhancing our oversight in the next few months, to help them do the work.”

Registered entities were reassigned without looking at RTO or market boundaries, McIntyre said. (See NERC Assigns SPP RE Registered Entities to MRO, SERC.) He told the trustees that incumbent MRO and SERC entities will see only a small increase in cost, if that.