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FERC Approves Western Power Pool's First of Its Kind Regional Resource Adequacy Program

We represented the Northwest Power Pool (d/b/a Western Power Pool (WPP)) in its filings with the Federal Energy Regulatory Commission (FERC) to establish a first-of-its-kind region-wide resource adequacy program in the West. We worked with WPP throughout the process of developing the Western Resource Adequacy Program (WRAP) tariff and obtaining all necessary FERC approvals. FERC lauded “the efforts of the diverse set of stakeholders involved in developing the WRAP proposal” and noted that “greater coordination between entities or regions (such as that proposed under WRAP) can help address the resource adequacy trends and challenges faced in the west.”

The WRAP consists of two key elements:

  1. A Forward Showing Program, in which participants demonstrate seven months in advance that they have sufficient generation and demand response resources to serve their forecast load and a regionally established planning reserve margin, along with firm transmission to support delivery of those resources.
  2. A real-time Operations Program to allow participants to share resources to help any participant that finds itself deficient on a particular operating day.  

FERC found the Operations Program “constitutes a valuable framework to maximize the benefits of existing resource diversity in the Western Interconnection and provides a useful last-resort option for participants if circumstances lead to any capacity deficiencies in a given Operating Day,” and it represents “a positive development for the region given the challenges that WPP has persuasively outlined.” Under the Operations Program, WPP will track each participant’s current load and resource balance for several days leading up to the Operating Day, identify if any participant may be deficient, calculate surpluses and determine the amount that surplus participants should “hold back” to help address identified deficiencies, and establish energy deployments in real-time if a deficient participant is unable to address its deficiency through purchases outside the Operations Program. 

FERC also expressly found the proposed WRAP settlement pricing to be just and reasonable, observing that “the design of settlements, pricing, and penalties . . . are based upon existing, broadly-used concepts that (FERC) has approved in the past” and in particular that “[t]he proposed settlement price is set by the same type of pricing methods—use of liquid price indices and legitimate opportunity costs—that (FERC) has found to be just and reasonable in other instances.”

We continue to advise WPP as it implements the WRAP tariff.