FERC Audit Recommends Changes To Improve SPP Independence

Posted by NAW Staff on January 23, 2009 No Comments
Categories : FYI

The Federal Energy Regulatory Commission (FERC) has issued an audit report of the Southwest Power Pool Inc.'s (SPP) regional reliability function. The audit finds that once SPP implements the recommended improvements, the governance structure will enable ‘very strong’ separation between its reliability and regional market functions.

The audit report represents the first FERC audit of a regional entity that operates under North American Electric Reliability Corp. (NERC) reliability standards. It was intended to enable FERC to determine whether SPP, which operates a regional market and determines compliance with reliability standards, has adequately separated its market and reliability functions. This is a requirement of FERC Order No. 672.

The audit, which began in October 2007, found insufficient separation between regional market and reliability operations. The audit report identifies three areas of concern: the regional entity's lack of independence from the market operator, the need to improve oversight of regional functions by SPP regional entity trustees to prevent conflicts of interest and to assure independence of the reliability operators, and the adequacy of SPP's implementation of its compliance monitoring and enforcement plan.

The report made recommendations for improvement, including to hire a regional manager and to ensure that the manager and reliability counsel keep SPP trustees apprised of all reliability operations. SPP has agreed to do so and also will be required to design a compliance plan and submit it to FERC.

In related news, FERC provided additional guidance on conducting compliance audits to NERC and the eight regional entities to which NERC has delegated responsibility for enforcing the FERC-approved reliability standards (AD09-3-000).

SOURCE: Federal Energy Regulatory Commission

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