On July 17, 2015, the North American Electric Reliability Corporation (“NERC”) submitted a compliance filing with the Commission regarding NERC’s Risk-Based Registration (“RBR”) initiative, including renewed requests for the elimination of the Load-Serving Entity (“LSE”) registration function.  The Commission previously rejected, without prejudice, NERC’s proposal to eliminate the LSE registration function in its March 19, 2015 order (the “March 19 Order”) on NERC’s RBR initiative.

In the March 19 Order (see March 23, 2015 edition of the WER), the Commission found NERC’s RBR initiative, which focuses compliance resources on areas that have the greatest impact on the reliability of the Bulk Electric System (“BES”), to be reasonable.  Accordingly, the Commission largely accepted NERC’s corresponding amendments to the NERC Rules of Procedure.  However, the Commission rejected, without prejudice, NERC’s proposal to eliminate the LSE registration function, finding that NERC had not sufficiently supported its proposal, or explained how certain LSE reliability responsibilities would be performed once the function was eliminated.  The Commission further directed NERC to submit a compliance filing addressing its concerns about the removal of the LSE function.

In its compliance filing, NERC argued that the removal of the LSE function would “have little to no impact” on the reliability of the BES for four primary reasons.  First, NERC argued that the activities performed by the LSE function are primarily commercial, rather than operational, in nature.  Second, NERC noted that the tasks currently assigned to the LSE function under NERC Reliability Standards would continue to be performed by other functions, subject to currently applicable LSE Reliability Standard Requirements, or by market participants (including LSEs) pursuant to existing tariffs, market rules, market protocols and other market agreements.  Third, NERC explained that the forty-one currently registered LSEs that would be deregistered under NERC’s proposal represent a small percentage of load in their respective Balancing Authority Areas – ranging from 0.3% to 3.39%.  Finally, NERC argued that, to date, no violations by an entity in its LSE function have caused or exacerbated system disturbances or events.

A copy of NERC’s compliance filing may be found here.