FERC tariff approval clears the way for first US West-wide electricity reliability program

The US Federal Energy Regulatory Commission approved the tariff for the Western Resource Adequacy Program, clearing the way for full implementation of the region's first West-wide reliability program, the Western Power Pool announced.

The WPP board of directors will meet this week to review the order and officially clear the final hurdle for WRAP operations under the tariff, according to a Feb. 10 WPP statement. The WPP will then make the governance changes required by the tariff, which includes seating a new independent board of directors.

"We're so pleased that FERC shared the industry's appreciation for the value of a region-wide resource adequacy program and supported our vision for it," WPP President and CEO Sarah Edmonds said in a Feb. 10 statement. "This is a critical step for the West to help ensure that we can achieve a clean energy future, without sacrificing reliability."

WPP noted that FERC underscored in its ruling the importance and potential benefits of a regional program and the enhanced reliability and resource adequacy that WRAP would bring.

"Through increased coordination, we find that the WRAP has the potential to enhance resource adequacy planning, provide for the benchmarking of resource adequacy standards, and more effectively encourage the use of western regional resource diversity compared to the status quo," according to the FERC order.

WRAP started at the request of many in the industry who were concerned about resource adequacy in the West. In August, WPP filed a proposed tariff (ER22-2762) with FERC for WRAP. In December and January, WPP received formal commitments from 20 utilities to move forward with WRAP.

"This program will address the challenge of resource adequacy across the West in a way we believe is most efficient and effective," Justin Joiner, Vice President of Resource Management for Arizona Public Service, said in a Feb. 10 statement. "With this approval, we can move the WRAP forward and start seeing results for our customers and the entire West."

Program structure

WRAP is the first region-wide reliability planning and compliance program in the West. Participants will outline the resources they plan to use to serve load, and the capacity is counted using common rules. If a participant is short for the upcoming season, they will need to pay penalties.

There is also an operational program, which allows WRAP members to access the diversity of resources in the program. When a participant is forecast to be deficient, the program operator will call on other participants with a surplus to hold back capacity and deliver it to the deficient participant.

The program will apply to the summer and winter seasons. For now, the program is non-binding and does not impose penalties. The program will become binding in Summer 2025.

"The transparency of who has what should immediately make reliability better, even before the WRAP moves into its 'mandatory' phase," Scott Miller, executive director of the Western Power Trading Forum, said Feb. 13. "This is a key element that was missing in the West—in addition to penalties and consequences for being short within the next few years."

Miller has some reservations regarding transmission, however, and the need for large requirements for firm transmission to be attached to resources, which may lead to a concentration of those who can offer firm transmission, he said, adding he is willing to see how it plays out.

At least 12 power providers in the West have committed to WRAP so far.

"The WRAP will increase reliability across the West and for our customers," Michael Wilding, PacifiCorp vice president energy supply management, said in a Feb. 10 statement. "The WRAP participants and stakeholders, along with the Western Power Pool, worked collaboratively to provide a solution."

WRAP, CAISO, SPP interaction

There are already two real-time balancing markets in the West: California Independent System Operator's Western Energy Imbalance Market and Southwest Power Pool's Western Energy Imbalance Service market. Both grid operators plan to add day-ahead services in the region. CAISO's board of governors recently approved its extended day-ahead market proposal which will next head to FERC, and SPP is creating Markets+, which will have both day-ahead and real-time services.

"This is a fairly new way to approach resource adequacy and would be enhanced if it were linked to an RTO, but we'll see how the two day-ahead market offerings—EDAM from CAISO and Markets+ for SPP—work though this," Miller said abuot WRAP. "If the day-ahead approach works in a way that is similar to the network dispatch of an RTO then it will work well. How a 'firm transmission' contract works with a network dispatch is unclear as 'firm transmission' is an artifact of the old contract path world."

It is still unknown how CAISO's and SPP's day-ahead market offerings will interact with WRAP.

"Since the state of California has a much different approach to RA, most feel it will be more of an issue to see if CAISO can make the 'translation' between California RA and WRAP RA work for participants," Miller said. "CAISO has said it is focused on the issue, but we'll see how it works. Markets+ would seem to have a clearer path for interacting with WRAP as it does not have a separate RA program."

It will take time and more development of market dispatch before resource adequacy can be utilized and shared over a broader region than one's immediate neighbors, Miller said.

"WRAP is to be commended for creating a platform that is transparent and governed by an independent board rather than a collection of incumbent transmission companies," Miller said. "This holds the promise—along with the development of regional network dispatch—to greatly enhance reliability going forward."