Little Rock grid operator Southwest Power Pool (SPP) said Tuesday (July 25) it plans to exit its decade-long agreement to enforce federal electric reliability standards across the Midwest by the end of 2018.
Southwest Power Pool Regional Entity (SPP RE) operates as an independent and functionally separate division of SPP that was created to fulfill the duties specified in the Federal Energy Regulatory Commission (FERC)-approved Regional Entity Delegation Agreement between SPP and nonprofit North American Electric Reliability Corp. (NERC).
SPP spokesman Derek Wingfield said a mutual decision was made by Arkansas-based regional transmission operator and NERC to end that agreement by the end of next year. Southwest Power Pool, otherwise known as SPP, manages the electric grid and wholesale energy market for most of central U.S., coordinating the flow of electricity across 65,000 miles of high-voltage transmission lines spanning 14 states.
“Over the last decade, the SPP has expanded its footprint from eight to fourteen states, launched successful real-time and next-day energy markets, and become a consolidated balancing authority for its 546,000-square-mile region,” said SPP President and CEO Nick Brown. “Given that the footprints of the (Southwest Power Pool) and SPP RE no longer align – due to our significant growth over the last decade and in light of further potential expansion opportunities to the west …, I believe this is in the long-term best interest of SPP and our members.”
As a NERC regional entity, the Little Rock compliance group’s 24-person staff monitors an eight-state area including all or parts of Arkansas, Kansas, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma and Texas. According to company officials, the regional entity promotes and works to improve bulk power system dependability by making sure electric and transmission companies comply with FERC reliability standards.
In addition, the SPP regional entity provides auditing and enforcement functions for 120 electric utilities acknowledged by NERC. It is also authorized to levy financial sanctions on power companies and grid operators that failure to comply with FERC’s reliability standards.
On Sunday (July 23), the Little Rock grid operator’s board of directors and its members’ committee voted to authorize Brown to terminate the delegation agreement at the appropriate time, which will effectively dissolve the compliance division. On Monday, the SPP RE trustees subsequently approved a resolution endorsing the Arkansas grid operator’s decision.
In 2005, Congress passed the Energy Policy Act that called for the creation of an Electric Reliability Organization (ERO) to develop and enforce compliance with mandatory reliability standards in the United States. This non-governmental, “self-regulatory organization” was created in recognition of the interconnected and international nature of the bulk power grid.
In April 2006, NERC applied for and was granted the designation of the electric reliability organization by FERC in July 2006. NERC also filed the first set of mandatory reliability standards with FERC, as well as filing the same information with the Canadian provincial authorities in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Quebec, Saskatchewan, and with the National Energy Board of Canada.
In 2007, NERC subsequently designated Southwest Power Pool – already a regional grid operator – as an regional entity, granting the Little Rock nonprofit responsibilities to improve bulk power system and provide oversight and compliance with federal reliability standards. In the U.S., all compliance monitoring and enforcement activities are carried out on behalf of NERC by the eight regional, based on authority granted pursuant to the regional delegation agreements in place.
NERC oversees these regional programs and seeks to ensure consistency and fairness. Besides SPP, the other regional monitors include the Florida Reliability Coordinating Council; Midwest Reliability Organization; Northeast Power Coordinating Council; ReliabilityFirst; SERC Reliability Corp.; Texas Reliability Entity; and the Western Electricity Coordinating Council.
Wingfield said SPP will continue to work closely with NERC and FERC, which must approve the termination of the SPP RE delegation agreement, to facilitate a smooth transition of the SPP RE’s 120 registered entities to another electric reliability compliance enforcement authority. He said SPP is also committed to ensuring the continued employment of all SPP RE staff, which represent 24 of SPP’s 605 employees.
“What we committed to do is to help those workers transition to either a role with SPP or with other regional entities,” Wingfield said.
As a regional transmission organization, SPP is mandated by FERC to ensure reliable supplies of power, adequate transmission infrastructure and competitive wholesale electricity prices. The nonprofit grid organization, which serves 18 million people across its 14-state footprint, celebrated its 75 anniversary in October.