At the annual Western Electricity Coordinating Council (“WECC”) Strategic Planning Session, held on September 6-7, 2012, the WECC Board of Directors took a first step towards separating WECC into two companies. The proposed bifurcation would likely separate WECC’s North American Electric Reliability Corporation (“NERC”)-delegated governance functions from its functions on behalf of member entities, such as reliability coordination efforts and system planning. The move is intended to address criticisms levied at WECC by both the Federal Energy Regulatory Commission (“FERC”) and NERC. FERC and NERC have cited WECC’s management of its reliability responsibilities as being deficient and contributing to the September 2011 power blackout in the Southwest.
Historically a member-driven organization for the voluntary coordination of system planning and operations, WECC’s role expanded following the Energy Policy Act of 2005 and NERC’s designation as the Electric Reliability Organization. Through its delegation agreement with NERC, WECC’s responsibilities expanded to include acting as the Regional Entity for the Western Interconnection. As one of the eight Regional Entities under NERC, WECC develops, monitors, and enforces standards for the reliability of the Bulk Electric System in the Western Interconnection.
In the presentation to the WECC Board, WECC staff stated that some in the industry believe that as WECC’s organization has evolved and taken on new responsibilities, it has developed internally conflicting objectives. For instance, in 2007, WECC’s Board of Directors approved an initiative to create a single, centralized Reliability Coordinator for the entire Western Interconnection. However, the Reliability Coordinator’s involvement in any major system outage created a conflict with WECC’s enforcement obligations as a Regional Entity. As a result, WECC must contract with an external entity to monitor WECC’s compliance with applicable reliability standards when issues arise involving the Reliability Coordinator. Additionally, FERC’s 2010 audit of WECC also focused on potential conflicts due to the member-service focus of certain activities. WECC itself has become concerned that its enforcement role has stifled its reliability coordination efforts: as an example, WECC has cited the reluctance of member companies to fully participate during reliability coordination and planning activities due to concerns of becoming subject to a WECC compliance investigation
In its presentation, WECC’s Executive Steering Team stated that splitting into two separate companies will: clarify the roles and responsibilities of the respective companies and create greater organizational focus; remove the perceived conflict of interest and allow WECC to more fully participate in events analysis; and close its FERC/NERC identified compliance monitoring gap. The initiative to create distinct companies will be subject to a vote of the WECC members at the Annual Membership meeting, to be held in June of 2013. WECC anticipates that regulatory approvals and final implementation will take an additional 18-24 months.
For additional information and updates, visit the WECC Strategic Planning Initiative website.