FERC last week ordered revisions to NERC’s pro forma regional delegation agreement (RDA) and its RDAs with all regional entities while approving the agreements overall (RR20-5). The new RDAs took effect Jan. 1.

NERC filed the agreements with FERC in June after the Board of Trustees approved the pro forma RDA, which serves as a template for the organization’s bilateral RDAs with specific REs, at its meeting in May. (See “Other Approvals,” NERC Board of Trustees/MRC Briefs: May 14, 2020.) The REs’ boards approved their own RDAs prior to NERC’s submission as well, with Texas Reliability Entity giving its assent on May 27 and the Midwest Reliability Organization, ReliabilityFirst, SERC and WECC following in June.

Changes in the pro forma RDA include:

• removing outdated language in light of the dissolutions of the SPP RE and Florida Reliability Coordinating Council;
• prohibiting stakeholders from leading RE board compliance committees;
• clarifying requirements regarding the nomination of independent board members;
• allowing REs greater flexibility regarding the use of funds collected through penalties; and
• clarifying that delegation agreements may be terminated earlier than the end of the five-year term with one year of written notice.

Updates to the bilateral RDAs include specifying that each RE is “governed by a hybrid board” comprising both stakeholder representatives and independent board members, and that all REs have adopted the “consolidated hearing process” described in NERC’s Rules of Procedure (ROP). The exception to this is Texas RE, which will continue to use its own hearing process as permitted in the ROP.

NERC and the REs made additional minor changes to the RDAs, such as updating the funding sections of the Texas RE and WECC agreements. In the case of Texas RE the RDA was revised to “reflect current accounting, time record and expense management for statutory and non-statutory activities.” Revisions to the WECC agreement update the scope of its “statutory situation awareness activities” to remove registered entity-related functions.

In addition, NERC and the REs updated the bilateral agreements to eliminate maps of entity boundaries in favor of textual descriptions, which NERC feels will allow more precision in assigning registered entities to specific REs. This change also involves updates to language in the pro forma RDA “to replace the term ‘identified’ with the term ‘described’ when referencing the geographic boundaries.”

FERC Notes Inconsistent Language

In its filing, FERC agreed that using text to describe RE boundaries is “more accurate and precise,” and approved of the language changes. However, the commission criticized the revised RDAs for inconsistently applying this change, noting that both the pro forma and every bilateral RDA still contain instances where “identified” is used instead of “described.”

FERC also observed that despite NERC’s assertion that WECC adopted the consolidated hearing process along with other REs, WECC’s actual RDA does not specifically state this, which could cause confusion among registered entities as to which hearing process is to be used. The agreement also does not say that WECC “may modify its selection of hearing process by giving NERC six months prior notice” as required by the ROP.

The commission ordered NERC to modify the pro forma RDA and the bilateral RDAs to ensure the language regarding boundaries is consistent across all documents. NERC was also directed to modify WECC’s RDA to specify that it will use the consolidated hearing process.

FERC did not order WECC’s RDA to be modified to require giving NERC six months’ notice when it changes its hearing process. However, the commission did note that “it is our expectation that, if a [RE] modifies its selection of a hearing process, NERC will amend the delegation agreements and file such amendments with the commission.”

A compliance filing with the ordered changes to the pro forma and bilateral RDAs is required within 120 days of the commission’s order, which is dated Dec. 30.