By Malcolm McLellan and Carol Opatrny

Electricity, once generated, follows the “path of least resistance” to a load that immediately consumes the electricity.  Since electricity cannot generally be routed in a specific direction, the electric system must be monitored in real time, 24 hours a day and 365 days a year, to ensure a consistent and ample supply of electricity.  This monitoring is performed by Balancing Authorities pursuant to standards developed by the North American Electric Reliability Corporation (NERC) and overseen by the Federal Energy Regulatory Commission (FERC) in the United States and governmental authorities in Canada.  These standards require all loads and generators to be managed by individual Balancing Authorities so that the bulk electric system, as a whole, is continuously in proper balance, as the term implies.  In the United States, the Energy Policy Act of 2005 made compliance with approved standards mandatory on all users, owners and operators of the bulk-power system. 

The decision of how to assimilate load or generation into a Balancing Authority Area is currently under debate. Generally, there are three options available to existing as well as new loads and generators: (1) integrate into the Balancing Authority Area that operates the system to which the load or generation is interconnected; (2)  choose to certify a new Balancing Authority Area and register as a Balancing Authority using owned or contracted for resources to manage the Balancing Authority’s requirements; and (3) integrate into an existing Balancing Authority Area with the expectation of selfsupplying or executing “buy-through” arrangements (purchasing services from independent generation or from other Balancing Authorities). These choices are  stimulating innovation in the manner in which generation (including intermittent renewable generation) and load are incorporated into the electric grid.

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Article filed under FERC docket number RM10-11-000.