RCA finalizing ERO regulations
by Elizabeth Earl
The Regulatory Commission of Alaska is finalizing an order on the proposed regulations for electric reliability organizations, despite objections about its process from the major utilities.
Alaska’s energy infrastructure is a patchwork of connected lines operated by various regional electrical cooperatives. Electric reliability organizations, or EROs, are independent organizations that provide structure for interconnected grids, adopting standards about reliability and doing joint planning. In 2020, the Legislature approved Senate Bill 123, which allowed the Railbelt utilities to begin setting up an ERO for the region. One organization planning to apply as the Railbelt’s ERO is known as the Railbelt Reliability Council.
However, the RCA had until July 1, 2021 to adopt regulations for how that council should be run. In the last year, the utilities and stakeholders have been weighing in on three individual dockets of the RCA’s process: one for board composition, another for integrated resource planning and a third for reliability standards, open access transmission, transmission cost recovery and tariffs.
In a final order published June 29, the RCA adopted regulations for all three dockets in a single document. The regulations are comprehensive and complicated—so much so that the RCA added additional explanation and discussion to the end of its docket explaining the reasoning for some of its decisions.
Under the adopted regulations, the RCA would issue certificates for EROs that are good for six years, after which time the commission could choose to renew it or not, depending on its review of how the ERO is performing. The ERO has to file for renewal at least two years before expiration; if it doesn’t, the certificate will be automatically renewed unless the RCA has reason to review it.
The regulations have been in process for more than a year, but the actual idea has been percolating for decades, according to Chris Rose, the executive director of the Renewable Energy Alaska Project. The utilities previously asked the RCA to delay the regulations by a year; the commission refused. Rose said continual delay has been a tactic for utilities resisting what they consider overly prescriptive regulations for many years.
“I think it’s mostly because they don’t want prescriptive regulations, they want descriptive regulations,” he said. “They, I think, were hoping to extend this whole process so they could perhaps persuade the commission to make the regulations more descriptive than prescriptive. I don’t think we’re ever going to have perfect regulations in any process… overall, I think REAP was pretty satisfied with the regs.”
The RCA noted the objections from utilities in its explanation, saying that commissioners did take their concerns into consideration when developing the regulations.
“While our adopted approach to ERO oversight may lack the more deferential approach urged by utilities in their comments, we carefully considered all comments received and reviewed all regulation proposals submitted,” the order states.
Tariffs
One of the first roadblocks the RCA hit was that SB 123 did not define EROs as utilities. That meant the existing tariff regulations couldn’t apply to an ERO, and the RCA’s legal department supported that interpretation. That determination lengthened the process of adopting regulations, according to the final order.
“That determination impacted our regulatory approach in multiple ways,” the order states. “First, we were required to amend existing regulations to ensure certain existing procedures applied to EROs. We also were required to develop specific procedures for submittals related to an ERO. In addition, we were required to have specific waivers throughout our ERO regulations rather than a general waiver provision.”
EROs will be able to file tariffs like existing utilities, with uniform application across their affected areas, according to the regulations.
Integrated resource planning
High in the minds of the utilities is the power of an ERO to determine projects. One of the functions of existing EROs is to prioritize and approve power generation projects to effectively use resources. Under the umbrella of a Railbelt ERO, that would include many planned and investigated projects, from a hydroelectric plant at Grant Lake near Seward to Fire Island wind farm expansions.
By regulation, an ERO has to submit an integrated resource plan with a forecast reaching 20 years out with demand and preferred projects. Updates have to be completed as well. Projects will be listed in a preferred section, and the plan is meant to help utilities and IPPs coordinate so resources aren’t wasted on building multiple generation projects that overlap.
REAP has been involved from the beginning because the ERO structure could help promote more renewable energy generation projects, Rose said.
“We’d like to see the entire region dispatched as one grid, or one large balancing area,” he said. “If we had one large grid and one large balancing area, electrons that are produced in one place could be used in a place further away. Right now, the Fire Island wind farm only has one off taker, and that’s Chugach Electric Association. If Chugach can’t take that, then the facility would be curtailed.”
For example, Matanuska Electric Association and Chugach Electric Association will form a single dispatching grid structure—called a tight pool—in their area. Rose said the other Railbelt utilities may not, but doing so could create more efficiencies in dispatching.
Board composition
With most of the state’s power infrastructure at play, one major source of concern among stakeholders was who gets to vote on the board of the ERO. EROs in general may have either independent boards or balanced boards; Alaska’s regulations allow for a mixture.
The RCA’s adopted regulations provide for a balanced board, with stakeholder classifications—provider, consumer, or hybrid— and no overlap among classification representation, among other considerations. The RCA can determine whether the board is balanced by stakeholders’ interests in reliability standards, whether they’re involved enough to represent their group’s interests, and voting procedures, among other factors.
The regulations also provide other regulations for independent boards, including ensuring that no board member is an employee or the relative of an employee of an ERO or other entity that benefits from it.
Next steps
Like the regulations, the process of certifying an ERO looks like it will also be long and drawn out. The RCA will open an investigation into forming an ERO for a variety of reasons, but it could be at least a year before one of them is actually up and running. Rose said they expect the RRC to submit its application soon, but that it may not have its certificate for another year.
The ERO process started because of the Railbelt’s desire to form one, but it’s possible that some smaller ones form in other areas of the state, such as Southeast. The interconnectivity of grids isn’t as common outside the Railbelt, but the regulations do apply to the whole state.
To see the complete final order and regulations, visit the RCA’s website or click here:
