On July 23, 2017, the Southwest Power Pool, Inc. (“SPP”) Board of Directors and Members Committee voted to authorize SPP President and Chief Executive Officer Nick Brown to terminate the Regional Delegation Agreement (“RDA”) between SPP and the North American Electric Reliability Corporation (“NERC”), which would effectively dissolve the SPP Regional Entity (“SPP RE”)—an independent and functionally separate division of SPP.  The SPP RE Trustees approved a resolution on July 24, 2017, endorsing the decision.

Following passage of the Energy Policy Act of 2005, which amended the Federal Power Act to include a new section—Section 215—FERC certified NERC as the Electric Reliability Organization (“ERO”) for the United States.  Section 215 required FERC to, among other things, issue regulations authorizing the ERO to enter into agreements to delegate authority to “Regional Entities,” for the purpose of proposing and enforcing mandatory reliability standards.  SPP RE is one of the eight Regional Entities that NERC has an existing RDA with.  However, SPP RE is unique among current Regional Entities in that it is the only Regional Entity that is also closely affiliated with a Regional Transmission Organization (“RTO”)—SPP.  This means that as an RTO, SPP is responsible for compliance with certain mandatory reliability standards, and as a Regional Entity, SPP RE is responsible for enforcing compliance with certain mandatory reliability standards.  The potential conflict of interest between these two roles has previously been addressed by FERC in the context of the Western Electricity Coordination Council (see June 24, 2013 edition of the WER).

In a July 25, 2017 press release, SPP quoted President and Chief Executive Officer Nick Brown as stating that SPP had “made the strategic decision to focus on our core functions of reliability coordination, wholesale market operations and transmission planning.”  SPP noted that it would continue to work closely with NERC and with FERC, who must approve termination of the RDA, and was committed to continuing to employ all SPP RE staff, who represent 24 of SPP’s 605 employees.  SPP stated that SPP RE would continue to function until a successful transition of its Regional Entity functions is complete, which will occur “no later than December 31, 2018.”  It is unclear at this stage what entity or entities will take over SPP RE’s Regional Entity functions.

A copy of SPP’s July 25, 2017 press release may be found here.