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NERC certifies CAISO to offer reliability coordination services

The California ISO on June 3 announced that it has obtained regulatory approval of its plan to offer reliability coordination services to electricity balancing authorities in California.

CAISO said the North American Electric Reliability Corp.'s approval is a major milestone in its efforts to ultimately provide reliability coordination services for 87% of the U.S. electricity load in the Western Interconnection. The Southwest Power Pool Inc. similarly intends to become the reliability coordinator for a number of Western Area Power Administration's balancing authorities late this year, should its plan garner NERC's approval.

Peak Reliability, which has been serving as the reliability coordinator for much of the West, is closing its operations later in 2019, and CAISO and SPP are rushing in to fill the void.

CAISO in a news release said NERC's certification of its reliability coordinator unit, called RC West, will allow it to begin offering reliability services to 16 balancing authorities and transmission operators in California, as well as one in northern Mexico, starting July 1. CAISO will need to secure additional approvals from NERC and the Western Electricity Coordinating Council, or WECC, if it is to expand RC West's footprint to an additional 24 entities in the Western Interconnection in November as planned.

"The NERC certification is an important turning point in our effort to become the reliability coordinator for the western region," said CAISO President and CEO Steve Berberich.

Reliability coordinators assess transmission reliability, ensure members comply with federal and regional grid standards, coordinate emergency operations including authorizing measures to prevent or mitigate system emergencies in day-ahead or real-time operations, and lead system restoration following major outages.

SPP has launched its own effort to provide reliability coordination services in the West, especially in the Mountain West states. SPP CEO Nick Brown in a recent phone interview noted that regulatory constraints, the cost of performing reliability coordination services, and the risks that a reliability coordinator must take from a compliance obligation perspective make the overhead very difficult to justify as a stand-alone service because the tools that are needed are very complex. The services required are very customized and very expensive, so the barriers to entry are high, he continued.

But Brown also said SPP is ahead of the game when it comes to providing that service in the West because it already acts as a reliability coordinator for all or part of 14 states in the Eastern Interconnection stretching from North Dakota to northern Texas.

SPP aims eventually to expand its existing regional transmission organization into the Western Interconnection, and it is offering reliability coordination and energy imbalance services as an "olive branch" to potential future members in that long-range effort, Brown said.

CAISO appears to have similar aims, as it has made at least tentative reliability coordination agreements with balancing authorities across much of the West and also extended its energy imbalance market into the interior West with utilities in multiple states.

NERC is a nonprofit, nongovernmental electric utility industry organization to which the Federal Energy Regulatory Commission has delegated authority to create and enforce compliance with reliability standards. The WECC acts as a regional reliability entity under a FERC-approved delegation agreement with NERC.