On October 15, 2015, the Commission accepted the North American Electric Reliability Corporation's ("NERC") compliance filing implementing NERC's Risk-Based Registration ("RBR") initiative, and, among other things, authorized NERC's proposal to eliminate the Load-Serving Entity ("LSE") registration function. The Commission further directed NERC to submit an informational filing on the impact of the removal of the LSE function on the next-day studies of Transmission Operators and Balancing Authorities.
On December 11, 2014, NERC submitted a petition to FERC in which it proposed revisions to its Rules of Procedure that would implement the RBR initiative—an initiative aimed at focusing compliance resources on areas that have the greatest impact on the reliability of the Bulk Electric System ("BES") (see December 22, 2014 edition of the WER).
On March 19, 2015, the Commission accepted the majority of NERC's proposed revisions, but determined, among other things, that NERC had not adequately justified its proposal to eliminate the LSE function from its registration model (see March 23, 2015 edition of the WER). In particular, the Commission expressed concern that NERC had not sufficiently explained how certain LSE reliability responsibilities would be performed once the function was eliminated. The Commission directed NERC to submit a compliance filing providing additional information to support this aspect of its proposal. NERC submitted its compliance filing on July 17, 2015.
In its October 15, 2015 order, the Commission determined that NERC had provided adequate additional support in its July 17, 2015 compliance filing to authorize the elimination of the LSE function. Specifically, the Commission found that NERC had: (i) demonstrated that the number of entities that would be impacted by the removal of the LSE function was small, spread across all eight Regional Entity footprints, and involved a relatively small percentage of load; (ii) provided specific tariff and contract language demonstrating how currently-registered LSEs would continue to be obligated to provide reliability-related information and respond to operational commands from various entities; (iii) sufficiently described how currently-registered LSEs would continue to be required to provide reliability-related information through their responsibilities as other registered functions; and (iv) demonstrated, through technical analysis and mapping documents, that other functional entities would take on responsibility for compliance with many Reliability Standards currently assigned to LSEs. The Commission also noted that the responses submitted in the proceeding from Reliability Coordinators, Balancing Authorities, Regional Entities, and other affected entities that require reliability information currently provided by LSEs "indicate that these entities do not foresee any concerns if load-serving entities are no longer registered entities."
In addition to accepting NERC's proposal to eliminate the LSE function, the Commission directed NERC to study and report to the Commission, within 15 months, the extent to which (if any) the elimination of the LSE function impacted the next-day studies of Transmission Operators and Balancing Authorities.
A copy of the Commission's order may be found here.
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