On May 4, 2018, FERC approved the joint petition filed by the North American Electric Reliability Corporation (“NERC”), Midwest Reliability Organization (“MRO”), and SERC Reliability Corporation (“SERC”) (collectively “Petitioners”) requesting FERC approvals for the dissolution of the Southwest Power Pool Regional Entity (“SPP RE”), and the transfer of the registered entities within the SPP RE footprint to MRO and SERC (“Joint Petition”).

In July 2017, NERC and SPP mutually agreed to terminate SPP RE’s obligations and responsibilities as a NERC Regional Entity, and entered into a Termination Agreement to transition SPP RE’s Regional Entity obligations and responsibilities in a manner that ensures reliability (see July 31, 2017 edition of the WER). To facilitate the transition, NERC is required under the Termination Agreement to identify, among other things, the Regional Entities to take over responsibility for each of the registered entities in SPP RE’s footprint.

In their March 5, 2018 petition, Petitioners stated that after performing a transmission corridor analysis and considering the functional relationships between registered entities, NERC proposed to transfer 109 SPP RE registered entities to MRO and 14 to SERC, with one entity to be registered in both MRO and SERC, and requested that the transfers of registered entities to MRO and SERC become effective on July 1, 2018. Petitioners stated that both MRO and SERC expect to be able to integrate the transferred SPP RE entities with limited increases in administrative costs.

In its May 4, 2018 order, FERC granted the Petitioners’ requested approvals, finding that Petitioners had demonstrated that the proposal would “promote effective and efficient administration of bulk-power system reliability,” in accordance with FPA section 215(e)(4). FERC agreed with NERC’s methodology in identifying MRO and SERC as successors to the SPP RE footprint and transferring responsibility for the registered entities contained therein. FERC also stated that it was satisfied that Petitioners and SPP had considered and established mechanisms to mitigate against the risk of material gaps in oversight of compliance and enforcement activities due to the transfer of registered entities, including (1) adding full time employees to accommodate increased workload, (2) assessing that MRO and SERC have sufficient funds available through existing working capital and operating reserves and respective lines of credit, (3) taking measures to ensure a seamless transfer of compliance history from SPP RE to MRO and SERC, (4) ensuring that certain previously-scheduled audits are performed, and (5) reviewing the audit schedule for other SPP RE registered entities to assess and to identify any areas of risks that would warrant audits in 2018. Accordingly, FERC approved the Petitioners’ proposal to dissolve SPP RE, effective August 31, 2018, and to transfer the registered entities within SPP RE to MRO and SERC, effective July 1, 2018.

A copy of FERC’s order is available here.