On March 25, 2016, FERC issued regulatory findings in response to a petition for declaratory order from Grid Assurance LLC (“Grid Assurance”) regarding the spare transmission equipment service that Grid Assurance plans to offer.

Grid Assurance states that it works to provide greater accessibility and timely deployment of spare transmission equipment after a catastrophic event, which it accomplishes through the procurement and maintenance of spare equipment stored at strategically-located regional warehouses. On June 9, 2015, Grid Assurance filed a petition for declaratory order asking FERC to: (1) acknowledge the benefits offered by this service as a means of cost-effectively supporting grid resilience; (2) declare that contracting with Grid Assurance for access to spare equipment is a permissible resiliency element of a physical security plan under the mandatory reliability standards; and (3) determine whether prior authorization under Federal Power Act (“FPA”) Section 203 was required for sales or purchases of this spare equipment from Grid Assurance.

FERC denied Grid Assurance’s first request, but agreed with Grid Assurance regarding its second and third requests—namely, that contracting for this equipment was a permissible resilience element of a physical security plan and that no prior authorization was required under FPA Section 203.

Following its June declaratory order request, Grid Assurance filed another declaratory order petition on December 4, 2015, seeking declarations from FERC that: (1) contracting for spare equipment following a catastrophic event is prudent; (2) Grid Assurance subscribers may use single-issue ratemaking procedures to modify existing jurisdictional rates in order to seek recovery for the costs of purchasing the spare equipment; and (3) to the extent purchases of non-power goods and services from Grid Assurance by any affiliated entity are subject to affiliate pricing restrictions, making such purchases at the pricing described in Grid Assurance’s Subscription Agreement is permissible, or alternatively, waiving these requirements.

In its March 25 order, FERC granted Grid Assurance’s first request and indicated that the purchase of spare equipment from Grid Assurance following a catastrophic event is prudent. FERC also granted Grid Assurance’s second request and found that subscribers may use single-issue ratemaking to seek recovery of costs relating to acquiring spare equipment. Finally, FERC rejected Grid Assurance’s third request and, instead, granted Grid Assurance’s alternative request to waive the affiliate pricing restriction requirements, subject to certain conditions.

A copy of FERC’s order can be found here.