2018 was an active year for TAPS, including the following:
2018 was another busy year for energy policy consideration. Although no major pieces of energy legislation were enacted, the House and Senate both spent considerable time discussing energy matters in 2018. The House Energy and Commerce Committee held multiple hearings on topics of interest to TAPS members, including hearings on cybersecurity, energy storage, reform of energy policy laws and energy security.
The Energy and Commerce Subcommittee on Energy held a hearing where TAPS Executive Director John Twitty testified on the topic of transmission infrastructure. Twitty observed to the Committee that as load-serving entities (utilities with a legal or contractual obligation to serve customers) dependent on the transmission facilities largely, if not entirely, owned by others, TAPS members recognize the importance of a robust transmission grid to competitive generation markets, and have long advocated policies to get needed transmission built.
Twitty’s comments focused on the direction Congress has already provided to the Federal Energy Regulatory Commission (FERC) through Section 217 of the Federal Power Act, and outlined steps that should be taken to better achieve that provision’s goal of a robust transmission grid at reasonable cost designed to meet the reasonable needs of load-serving entities.
Among the steps Twitty observed in his statement were that load-serving entities should have a seat at the table to ensure their reasonable needs are planned for in the transmission planning process. Concerns about the lack of transparency in the transmission planning process were raised because in too many parts of the country planning processes occur without meaningful stakeholder input.
Another important step advocated for in the testimony was more encouragement of joint transmission ownership arrangements. Under such arrangements, load-serving entities embedded in the transmission system have the opportunity to invest in their load-ratio share of the transmission grid; they have a seat at the “grown up” table in the planning process, so they can play an integral role in ensuring their load is being properly served with necessary infrastructure. Non-profit, public power load-serving entities also have no interest in “gold-plating” the transmission system, so including them in the transmission planning process helps to assure that the grid is robust and reliable, without imposing unnecessary costs.
The testimony also informed the Committee that above-cost rate incentives do not advance the objective of planning for a grid right-sized to meet the reasonable needs of load-serving entities. TAPS is concerned that transmission has become a magnet for excessive investments. The potential for guaranteed, incentive-elevated returns on equity on transmission facilities that are low-risk investments, with full cost recovery ensured by formula rates, will encourage over-investment.
The testimony on behalf of TAPS also highlighted the problem that FERC has refused to implement Section 217(b)(4) to include both capacity and energy when recognizing long-term transmission rights (or equivalent financial rights) for the delivery of energy under their power supply arrangements. As a result, load-serving entities may be unable to rely on these long-term power supply arrangements to meet resource adequacy requirements, even though their long-term firm transmission arrangements expressly provide for the delivery of both capacity and energy. Instead, these load-serving entities are effectively forced to purchase, at potentially higher prices, other capacity at their load.
This disruption of load-serving entities’ reliance on their long-term power supply arrangements, including investments in long-lived generation, is a particular problem where a load-serving entity’s generation is separated from the load to which it has long been dedicated by a “seam” created by the RTO choices of the large transmission owners in which the load-serving entity’s load or generation is embedded. Although the load-serving entity’s generation and load may have been in the same RTO when its long-term generation commitments were made, the ability of large transmission owners to switch RTOs (or join or leave an RTO) without protecting embedded load-serving entities from any adverse impacts may later separate the small load-serving entity’s generation from the load to which it is dedicated.
Twitty called on Congress to reaffirm the importance of FPA Section 217(b)(4) and to take FERC to task for not fully embracing its dictates; to limit return on equity incentives for new transmission; and to aggressively encourage joint transmission ownership arrangements.
In addition to substantive discussion during the hearing, Committee members filed questions for Twitty after the hearing to get better insight into the complex issues discussed. Questions were answered on the benefits of joint ownership, concerns that RTOs may not be functioning as intended, and transmission interconnection policies.
Again in 2018, TAPS was an active participant in the electric sector cybersecurity coalition, which unites the North American electric sector under one banner and speaks with one voice to Congress and the Administration on issues affecting cybersecurity, and grid security generally. The coalition actively supports Congressional action that will better align federal policies with protecting the grid from cyber risks.
A fundamental principle that guides all the coalition’s work is that no legislation should undermine or conflict with the FERC/NERC industry process for developing and approving reliability and cyber standards. Among other issues, the coalition continued to work to prevent Congress from imposing policies that would require addressing perceived threats, such as the threat of an EMP attack or a GMD event, above and beyond the current NERC risk-based approach.
In addition to TAPS’ consultants’ regular communications with legislators and staff, TAPS’ Government Affairs Committee made visits to Capitol Hill on several occasions in 2018 to advocate in support of these provisions.
NERC’s transformation into the Electric Reliability Organization authorized by the Energy Policy Act of 2005 to establish and enforce mandatory reliability standards, subject to FERC review, has enhanced the importance of the NERC standards development process and related NAESB business practices. TAPS has worked to ensure representation at both NERC and NAESB with Bill Gallagher mobilizing and coordinating TAPS efforts to monitor and participate in activities at both organizations to protect the interests of TDUs. Bill Gallagher served as chair of the NERC Member Representatives Committee (“MRC”) in 2011 and continues to serve as a member, and co-chairs the ERO Business Plan and Budget Group. He also serves on the NAESB Wholesale Electric Quadrant Executive Committee, the NAESB Board of Directors, the NAESB Critical Infrastructure Committee, and the NAESB Special Board Committee on Gas/Electric Interdependency. In 2018, Chris Gowder (FMPA) and Chris Norton (AMP) also served on the NAESB Wholesale Electric Quadrant Executive Committee. Additionally, Bill Gallagher and TAPS Executive Director John Twitty (also a former chair of the MRC) held the Transmission-Dependent Utility seats on the Member Representatives Committee. Carol Chinn (FMPA), former MRC chair, holds one of the state/muni MRC seats, and Roy Jones (ElectriCities) holds the other. Scott Tomashefsky (NCPA) served as vice-chair of the Compliance and Certification Committee. TAPS members have a presence on each of the NERC standing committees and on significant drafting teams. In 2016, TAPS joined with APPA in retaining Utility Services to coordinate our involvement in the NERC CIP 7 activities. That venture concluded in 2018.
TAPS has also made its voice heard on reliability issues through submissions to FERC in NERC and NAESB-related proceedings, as well as submission of comments to NERC. TAPS attempts to maximize its impact by filing separate TAPS comments that reflect the distinct viewpoint of TAPS members, both as users highly dependent on the bulk electric system (“BES”) facilities owned by others and as entities subject to NERC’s mandatory reliability standards for our own BES facilities, or where appropriate, submitting joint comments with all or portions of the rest of the industry to emphasize the widespread support for a position. Insiders have told us that seeing TAPS and EEI on the same submission to FERC sends a strong message. While a number of these efforts are still playing out, there is no doubt that in 2018 TAPS played an important role in the ever-evolving relationship between FERC and NERC.
TAPS 2018 NERC and NAESB-related activities
- FERC Reliability Technical Conference (AD18-11)
- July 31, 2018 Carol Chinn (FMPA) submits a written statement and appears as panelist on behalf of FMPA and TAPS, addressing, among other matters, the distinction between “resilience” and reliability, and the roles of NERC and industry in supporting resilience.
- Cyber Security Incident Reporting Reliability Standards (RM18-2)
- December 21, 2017 FERC issues NOPR (RM18-2) declining to propose additional Reliability Standard measures for malware detection, mitigation and removal as a petitioner had requested, but proposing standard to require reporting of actual or attempted cybersecurity incidents.
- February 26, 2018 TAPS (with APPA and ELCON) submit comments urging FERC to use a means other than standards to achieve its goal of improving awareness of existing and future cyber security threats and potential vulnerabilities, or at least allow NERC flexibility to define appropriate reporting thresholds for actual and attempted cyber security incidents.
- July 19, 2018 FERC issues Order 848 requiring NERC to modify the CIP standards but accepting some TAPS positions, including that the new incident reporting requirements should not apply to low-impact systems.
- Supply Chain Risk Management Reliability Standard (RM17-13)
- July 21, 2016 FERC denies rehearing of the CIP Version 6 Final Rule (Docket No. RM15-14) and directs NERC to develop a new supply chain risk management standard. While TAPS members were not on the drafting team for the new standard, TAPS was actively engaged in the drafting process.
- August 10, 2017 NERC BOT adopts resolution calling for pro-active efforts to advance and evaluate supply chain risk management, calling for APPA/NRECA white paper regarding best practices for small entities.
- September 26, 2017 NERC files supply chain risk management standard, which applies to medium and high impact systems.
- January 18, 2018 FERC issues NOPR proposing to adopt the supply chain risk management standard, require NERC to submit the reports directed by the NERC BOT, and impose additional directives.
- March 26, 2018 TAPS (with APPA, ELCON, LPPC, and NRECA) file comments supporting the NOPR’s proposal to defer consideration of the low impact systems until after NERC completes its BOT directed report, but opposing the NOPR’s directive to expand the standard to include Electronic Access Control and Monitoring Systems (EACMS) associated with medium and high impact systems.
- May 11, 2018 APPA and NRECA file with FERC the white paper on best practices for small entities (to which TAPS contributed financial and technical support) that had been submitted to NERC in April.
- October 18, 2018 FERC issues Order 850, adopting the NOPR’s proposal to defer consideration of low impact systems, as TAPS urged, but also, despite TAPS’s objections, directing NERC to expand the standards to include at least some EACMS associated with medium and high impact systems.
- Cyber Security – Security Management Controls, CIP-003-7 (RM17-11)
- October 19, 2017 FERC issues NOPR, proposing to direct NERC to modify CIP-003-7 (addressing electronic access controls and transient device protections for low impact systems) to provide clear, objective criteria or measures to assist in assessing compliance.
- December 26, 2017 TAPS submits comments opposing the NOPR’s proposed directive.
- April 19, 2018 FERC issues Order 843 adopting the NOPR proposal regarding third-party transient electronic devices; the final rule did not adopt the proposed directive for electronic access controls, but directed NERC to conduct a study assessing implementation of CIP-003-7.
- Coordination of Protection Systems for Performance During Faults, PRC-027 (RM16-22)
- November 16, 2017 FERC issues NOPR proposing to approve NERC’s revisions to PRC-027 and PRC-006, but directing NERC to require an initial protection system coordination study as a baseline.
- January 29, 2018 TAPS files comments (with APPA) asking FERC to approve the revised standards as proposed by NERC, without any directives.
- June 7, 2018 FERC issues Order 847 approving PRC-027-1 and PER-006-1 as proposed by NERC, with no directives.
- Essential Reliability Services and the Evolving Bulk-Power System – Primary Frequency Response (RM16-6)
- February 18, 2016 FERC issues Notice of Inquiry.
- April 25, 2016 TAPS files comments jointly with APPA and LPPC, stating that the only action appropriate at this time would be to begin a rulemaking process to modify the pro forma Large Generator Interconnection Agreement and Small Generator Interconnection Agreement to require all new generators interconnecting under those agreements, including non-synchronous generators, to install primary frequency capability.
- November 17, 2016 FERC issues NOPR proposing to require all newly interconnecting large and small generating facilities to install and enable primary frequency response capability as a condition of interconnection.
- January 24, 2017 TAPS, with APPA and LPPC, files generally supportive comments.
- February 15, 2018 FERC issues Order 842 generally adopting NOPR’s proposals (but leaving the door open for transmission providers to file, or future NERC standards to impose, more stringent or more costly requirements).
- ERO Enterprise Long-Term Strategy, Operating Plan, and 2018 Metrics; Standards Efficiency Review
- June 22, 2017 John Twitty submits a written statement and appears as panelist at FERC’s Reliability Technical Conference (AD17-8) calling for a renewed “P 81” effort to eliminate unnecessary requirements.
- August 17, 2017 TAPS comments to NERC on the three most important goals for the ERO Enterprise to achieve over the next five to seven years. One of TAPS’ recommendations is “that a new, focused Paragraph 81 project be initiated with the explicit goal of reducing the number of requirements.”
- Based in part on that recommendation, NERC creates a new initiative, the Standards Efficiency Review.
- February 2, 2018 TAPS submits comments to NERC proposing requirements for retirement, consolidation, or modification.
- Carol Chinn (FMPA) is on the Standards Efficiency Review Advisory Committee.
- TAPS members are participating in two of the three drafting teams: John Allen (City Utilities of Springfield, MO) is on the Real-Time Operations SDT, and Carl Turner (FMPA) is on the Long-Term Planning team.
- July 13, 2018 TAPS submits comments to SDTs on draft SAR, proposing additional requirements for retirement.
- September 26, 2018 TAPS submits comments to SDTs on revised SAR, supporting proposed retirements and proposing additional retirements for consideration in this phase or during Phase 2.
- John Allen (City Utilities of Springfield, MO) is chair of the Phase 2 Working Team.
- Distribution Provider Reference Document for “directly connected” Determinations
- March 2, 2018 NERC posts a “directly connected” reference document (dated January 3, 2018) that (1) provides guidance regarding the application of FERC precedent regarding what constitutes a “direct connection” for DP registration purposes, and (2) states that where a distribution provider is not subject to registration because it is not directly connected to the BES, the entity that owns the BES-to-non-BES transition point will be registered as the DP for that entity’s load.
- March 22, 2018 NERC and Regional Entity staff hold a webinar to review the reference document with stakeholders. During the webinar, NERC staff state that comments can be submitted to the NERC Registration email address, but that the document is not being posted for formal comments.
- April 2, 2018 TAPS submits comments objecting to the lack of stakeholder involvement in the development of the reference document, and noting that NERC and Regional Entity staff’s decision to register the entity that owns the BES transition point as a DP is unjustified.
- July 5, 2018 NERC posts revised reference document, which does not address TAPS’ concerns.
- Compliance and Certification Committee Hearing Procedures (NERC ROP App. 4E)
- April 13, 2018 NERC posts proposed changes to CCC Hearing Procedures, with stated goal of conforming procedures to the generally-applicable hearing procedures.
- May 29, 2018 TAPS submits comments suggesting that NERC incorporate recently-approved changes to the generally-applicable hearing procedures.
- July 26, 2018 NERC’s revised proposed changes submitted to Board of Trustees for approval incorporate TAPS’ suggestions.
- Bulk Electric System Definition Reference Document
- August 7, 2018 (corrected August 10) NERC posts proposed revisions to BES Definition Reference document.
- September 10, 2018 TAPS submits comments pointing out that some of the proposed changes are inconsistent with the stakeholder-developed, FERC-approved BES definition, and not supported by any reliability need.
- State/Municipal and TDU Sector Policy Input to NERC Board of Trustees
- The NERC MRC members from the State/Municipal and TDU Sectors (jointly, “SM-TDUs”) submit joint policy input to the Board of Trustees in response to the Board’s quarterly request for such input. The responses are generally coordinated by TAPS, APPA, and LPPC.
- January 25, 2018 SM-TDUs provide input regarding ways to improve the efficiency and effectiveness of ERO and stakeholder engagement.
- April 25, 2018 SM-TDUs provide input regarding a proposed change to the policy input process and the need for transparency in development of NERC documents.
- August 1, 2018 SM-TDUs provide input regarding NERC’s 2019 budget, its efficiency and effectiveness efforts, the Standards Efficiency Review, resilience, and the Reliability Coordinator situation in the West.
- October 23, 2018 SM-TDUs provide input regarding the Reliability Issues Steering Committee (RISC) Report on Resilience, the program alignment initiative, and NERC metrics.
- October 30, 2018 SM-TDUs provide input regarding proposed 2019 ERO Dashboard Metrics and ERO Performance Objectives.
- The NERC MRC members from the State/Municipal and TDU Sectors (jointly, “SM-TDUs”) submit joint policy input to the Board of Trustees in response to the Board’s quarterly request for such input. The responses are generally coordinated by TAPS, APPA, and LPPC.
TAPS 2018 FERC (Non-Reliability) Efforts
- Grid Reliability and Resilience Pricing (RM18-1), initiated by DOE; Grid Resilience in Regional Transmission Organizations and Independent System Operators (AD18-7)
- October 23, 2017 TAPS submits initial comments.
- November 7, 2017 TAPS submits reply comments.
- January 8, 2018 FERC terminates DOE NOPR proceeding and initiates new proceeding on grid resilience (AD18-7).
- May 9, 2018 TAPS submits comments responding at a high level to the March 9, 2018 comments submitted by the various RTOs.
- July 9, 2018 TAPS joins APPA, Coalition of MISO Transmission Customers, National Association of State Utility Consumer Advocates, NRECA, and PJM Industrial Customer Coalition in submitting limited reply comments regarding the methodology used by the Commission to establish base and incentive returns on equity.
- Inquiry Regarding the Effect of the Tax Cuts and Jobs Act on Commission-Jurisdictional Rates (RM18-12)
- On March 15, 2018, FERC issues Notice of Inquiry seeking comment on the effect of the Tax Cuts and Jobs Act of 2017 on FERC-jurisdictional rates.
- May 21, 2018 TAPS submits high-level comments.
- Price Formation in RTO Markets (RM17-2)
- January 19, 2017 FERC issues Uplift Cost Allocation and Transparency NOPR.
- April 10, 2017 TAPS comments on Uplift Cost Allocation and Transparency NOPR, questioning FERC’s foundational assumption that allocation of uplift to load is an acceptable “beneficiary pays” cost allocation.
- April 19, 2018 FERC issues Order 844 requiring RTOs to revise their tariffs to include new reporting requirements regarding uplift payments, operator-initiated commitments, and transmission constraint penalty factors, but withdrawing the NOPR’s proposal to implement generic uplift cost allocation reforms, which is consistent with what TAPS recommended in its comments.
- Reform of Generator Interconnection Procedures and Agreements (RM17-8; EL18-26); Reform of Affected System Coordination (AD18-8)
- December 15, 2016 FERC issues NOPR to improve certainty, promote more informed interconnection, and enhance interconnection processes.
- April 13, 2017 TAPS submits generally supportive comments that strongly support FERC’s decision not to propose a cost cap on interconnection-related cost.
- TAPS monitors and reports on the April 3-4, 2018 technical conference to discuss Affected System coordination issues raised in the NOPR and October 30, 2017 complaint regarding MISO, SPP, and PJM generator interconnection procedures.
- April 19, 2018 FERC issues Order 845, adopting 10 of the 14 reforms proposed in FERC’s December 2015 NOPR. Affected System coordination issues deferred to AD18-8.
- Electric Storage Utilization, and Participation of Storage and Distributed Energy Resource Aggregation in Organized Markets (AD16-25; RM16-23; PL17-2; RM18-9; AD18-10)
- January 19, 2017 FERC issues Policy Statement on Utilization of Storage Resources for Multiple Services when Receiving Cost-Based Rate Recovery, with Commissioner LaFleur dissenting.
- February 13, 2017 TAPS files comments supporting the Storage and DER NOPR as applied to transmission-level storage facilities, but addressing jurisdictional and technical challenges to the extent it applies to distribution-level facilities.
- February 15, 2018 FERC issues Storage Rule (Order No. 841), transfers DER-related issues to other dockets (Participation of DERs in RTO Markets (RM18-9), and DERs – Technical Considerations for the Bulk Power System (AD18-10)), and announces DER technical conference.
- March 19, 2018 TAPS requests rehearing of Order 841, asking FERC to rehear its determination not to allow state and local regulators to “opt-in, or opt-out” to participation in RTO markets by distribution- and behind-the-meter-connected storage, and its failure to adopt TAPS proposal to prevent manipulation.
- TAPS monitors and reports on the April 10-11, 2018 DER technical conference.
- April 27, 2018 FERC issues notices inviting post-technical conference comments.
- June 26, 2018 TAPS submits post-technical conference comments in RM18-9 and AD18-10.
- Joint Statement on Electricity Market Principles
- March 5, 2018 TAPS joins American Council on Renewable Energy, APPA, AWEA, ELCON, LPPC, NASUCA, NRDC, NRECA, and SEIA in submitting a letter to the FERC Commissioners enumerating principles necessary to maximize the benefits of organized wholesale electricity markets.
- In the Matter of JEA (EL18-200)
- September 17, 2018 JEA files a petition for declaratory order asking FERC to assert jurisdiction over a power sale by a non-jurisdictional entity (the Municipal Electric Authority of Georgia (MEAG)) based on the nature of the transaction.
- October 15, 2018 TAPS files a motion to intervene, and joins a protest filed by APPA, LPPC, and NRECA, which takes no position on the dispute between JEA and MEAG but argues that FERC’s general authority over wholesale sales of electricity in interstate commerce does not supersede the specific exclusion of public power utilities from FERC’s rate regulation.
- November 2, 2018 JEA answers the public power associations’ protest, claiming that its situation is unique and does not raise the precedential concerns cited by the public power associations.
- February 21, 2019 FERC denies JEA’s petition, holding that its rate regulatory authority under Sections 205 and 206 of the FPA only extends to wholesale sales by investor-owned utilities (with the limited and not relevant exception of refund authority for certain public power sales into organized markets); MEAG was exempt from such FERC jurisdiction under section 201(f).
- Implementation of Amended Section 203(a)(1)(B) of the Federal Power Act (RM19-4)
- November 15, 2018 FERC issues NOPR proposing, pursuant to an amendment to the FPA, to add to its regulations a $10 million threshold for seeking FERC approval of public utility mergers or consolidations, and a requirement that public utilities notify FERC within 30 days after mergers and consolidations involving facilities between $1 million and $10 million.
- December 31, 2018 TAPS submits comments generally supporting the proposed changes but suggesting that FERC (a) require public utilities to include affiliation information in their after-the-fact notifications, and (b) develop a “relational database” of market-based rate information and Connected Entity Information (as the Commission has proposed in a NOPR currently pending in RM16-17).
- February 21, 2019 FERC issues a final rule largely adopting the NOPR, but adding limited affiliation reporting requirements.
TAPS 2018 DOE Efforts
- Critical Electric Infrastructure Information; New Administrative Procedures
- October 29, 2018 DOE proposes regulations governing the designation, sharing, and release of Critical Electric Infrastructure Information (“CEII”) under Section 61003 of the Fixing America’s Surface Transportation Act (“FAST Act”).
- December 21, 2018 TAPS submits comments addressing the implications of DOE’s proposed regulations for the FAST Act’s exemption of CEII from state and other sunshine laws.
- Grid Security Emergency Orders: Procedures for Issuance
- December 7, 2016 DOE proposes regulations to implement emergency authority given to DOE under FPA section 215A, enacted as section 61003 of the FAST Act.
- February 6, 2017 TAPS (joined by APPA, LPPC, and NRECA) submits comments urging DOE to undertake discussions with the industry and NERC to spell out the nature of the orders that may issue under FPA section 215A, and to modify its proposal in several respects.
January 10, 2018 DOE issues final rule adopting some, though not all, of TAPS’ suggestions.