By Tom Kleckner

OKLAHOMA CITY — SPP CEO Nick Brown told the RTO’s Board of Directors and Members Committee on Tuesday that NERC is proposing it replace SERC Reliability Corp. as the compliance authority for the RTO’s registered functions for two years following the termination of its Regional Entity.

NERC’s Board of Trustees will vote on the plan to oversee the RTO at its Feb. 8 meeting in Fort Lauderdale, Fla.

Brown said he, Chairman Jim Eckelberger, Directors Larry Altenbaumer and Bruce Scherr, and SPP senior staff recently visited with NERC senior officials to share their thoughts about the arrangement.

“We expressed our concerns and our thinking about this,” said Brown, declining to offer further details. “The meeting was informative, with information hopefully gleaned from both sides.”

SERC has had responsibility for compliance monitoring and enforcement of the RTO’s registered functions since 2010.

According to the proposed agreement, NERC will act as SPP’s compliance enforcement authority (CEA) to “facilitate the transition.” It’s a function the agency has performed before on “multiple occasions,” a NERC spokesperson said.

SPP had sought to have ReliabilityFirst take over from SERC. “Based on our due diligence, we believe ReliabilityFirst is best positioned to perform our audits going forward,” SPP spokesman Derek Wingfield said Thursday. “We’ll continue to voice our concerns to NERC through standard channels and are confident they will be welcomed.”

The RTO announced in July it had reached an agreement with NERC to dissolve the SPP RE, ending a reliability oversight role that had been a source of concern at the reliability organization and FERC. The RE is responsible for auditing and enforcing NERC reliability rules for 120 registered entities in three balancing authorities: SPP, Southwestern Power Administration and parts of MISO.

Since then, SPP has worked with NERC to help its registered entities find a new RE. NERC has placed the entities in either the Midwest Reliability Organization (MRO) or SERC, both of which are adding staff — some from the SPP RE — to handle their added responsibilities. (See NERC Assigns SPP RE Registered Entities to MRO, SERC.)

According to NERC board materials, the board will vote on:

• Authorizing NERC management to sign the termination agreement with SPP for an amended and restated delegation agreement that includes the agency’s CEA role;
• Approving the proposed reassignment of the SPP RE’s registered entities to MRO and SERC; and
• Approving proposed amendments to regional delegation agreements with MRO and SERC to reflect their new geographic boundaries.

Following the votes and assumed approvals by the MRO and SERC boards, NERC will file for acceptance with FERC. The agency says it expects to file “as soon as practicable” and no later than June 30.

That timing concerned Dave Christiano, chair of the SPP RE’s Trustees.

“We don’t understand why it should possibly take that long. If we go past that date, the viability of the organization is at stake,” he said. “At some point, we will no longer be able to exist and do what we’re supposed to do in our own delegated agreement. We’re going to be lobbying strongly … to hopefully push this along as soon as we can.”

Brown and Christiano said the RE’s staff are down to 20 employees, a 25% drop. The two most recent departures landed with SERC.

In a Jan. 25 email to its members, SPP RE President Ron Ciesiel said he didn’t have a timeline for how long FERC would deliberate, but that approval “could take through the end of 2018.” He said the RE has created a “strenuous set of staff goals and metrics” to keep employees focused.

The proposed termination agreement requires SPP to:

• Transition relevant files and documents to transferee REs.
• Submit to NERC a breakdown of wind-down and dissolution costs; unaudited quarterly financial reports for the periods preceding the termination’s effective date; and a reconciliation of actual expenses with budgeted expenses after the termination date.
• Transfer to the transferee REs any penalty payments, excess statutory assessments and reserves related to the SPP RE that will not be used for wind-down and dissolution of its delegated authority.

Under the agreement, NERC would:

• Assist with the transition of compliance monitoring and enforcement processes to each transferee RE.
• Indemnify and hold harmless SPP from certain claims and liabilities.