On February 10, 2023, FERC approved the Western Resource Adequacy Program (“WRAP”) proposed by the Western Power Pool (“WPP”). The voluntary program commits participants to demonstrate prior to a given Winter or Summer season that they have sufficient capacity to meet a required planning reserve margin and have reserved 75% of the transmission to deliver that capacity to load. The WRAP also allows those who are short on capacity to call on the excess capacity of other participants during critical periods. The Southwest Power Pool, Inc. will run the operations of the program, which became effective January 1, 2023, under the oversight of WPP.

FERC’s order explains that the WRAP will operate in two parts. The first, called the Forward Showing Program, requires participants, seven months before the Winter or Summer season, to demonstrate sufficient capacity to meet a planning reserve margin with at least 75% of the transmission reserved to deliver that capacity to load. Deficient participants will be assessed a deficiency penalty, although such penalties do not go into effect until the 2025 Summer season. The second part, called the Operations Program, requires participants with excess capacity to hold back that capacity and make it available for sale to participants who are short on capacity. Holders of excess capacity that do not make their excess available face penalties. From its genesis until Summer 2025, participants will not face penalties or holdback requirements but will be required to make capacity information available during the Forward Showing Program and may voluntarily sell excess capacity under the Operations Program.

FERC, in its order, found the Forward Showing Program and its method for determining how capacity counts toward that show to be just and reasonable. FERC also found that requiring a demonstration of firm transmission for 75% of that showing, meaning NERC Priority 6 or 7 firm point-to-point transmission service or network integration transmission service, to be just and reasonable and necessary to reflect the importance of deliverability in resource adequacy constructs. While noting that they should not be excessive to the point of degrading the reliability and deliverability aspects of the program, FERC found that the four exceptions to the Forward Showing Transmission Requirement to be just and reasonable. However, noting the importance placed by stakeholders on the Forward Showing Transmission Requirement, FERC ordered that this aspect of the program be monitored by requiring WPP to submit semi-annual information filings, after each Winter and Summer season, detailing the ability of participants to satisfy the transmission showing and whether exceptions were sought and granted and why.

A copy of FERC’s order from Docket No. ER22-2762-000 can be found here.