On June 20, 2013, FERC conditionally granted the Western Electricity Coordinating Council’s (“WECC”) petition to establish a separate, independent company to serve as the reliability coordinator within the Western Interconnection.  Once established, the new company, RC Company, will take over as the reliability coordinator from WECC and assume responsibility for the WECC Interchange Tool.  FERC’s final approval of the petition will rest upon review of RC Company’s final governance documents.

After the passage of the Energy Policy Act of 2005, WECC’s role dramatically increased after it was designated as one of the eight Regional Entities under the North American Electric Reliability Corporation (“NERC”).  As a regional entity, WECC is responsible for developing, monitoring, and enforcing standards for the reliability of the Bulk Electric System in the Western Interconnection.  However, FERC raised concerns over the level of independence between WECC as a reliability coordinator and WECC as a Regional Entity, charged with reliability compliance and enforcement functions.  Therefore, WECC entered into agreements with NERC and the Northeast Power Coordinating Council to perform compliance and enforcement oversight of WECC’s reliability coordinator functions.  Additionally, WECC proposed to establish an independent entity to serve as the reliability coordinator to ensure complete separation of WECC’s reliability coordinator functions and Regional Entity functions (see September 14, 2012 edition of the WER).

Among the issues that were raised during the proceeding were: (1) whether or not RC Company would receive funding under section 215 of the Federal Power Act (“FPA”) and (2) whether or not WECC could exercise compliance and enforcement authority over RC Company.

With regard to FPA section 215 funding, FERC rejected arguments that only the Electric Reliability Organization or a Regional Entity are eligible for section 215 funding.  The Commission pointed to a previous order, which held that the WECC reliability coordinator carries out an FPA section 215 activity, and thus could be eligible to receive FPA Section 215 funding.  FERC stated that “having RC Company perform the reliability coordinator function in WECC pursuant to a sub-delegation agreement between WECC and RC company does not materially change the factual basis for [FERC’s] determination to permit FPA section 215 funding for the WECC reliability coordinator.”

Next, FERC dismissed comments that the RC Company’s independence would be compromised if WECC maintained compliance and enforcement authority over RC Company.  FERC held that WECC had demonstrated that there was sufficient independence between the two companies with WECC having no role in RC Company’s governance, management, operation, supervision, or financial ties.

A copy of the order is available here.