2017 was an active year for TAPS, including the following:

2017 was by any measure a strange year in terms of regulatory activities. FERC lacked a quorum from February 3 until August 9, and therefore could not issue any decisions during that time. Although quorum was reestablished on August 10, FERC did not reach its full complement of five Commissioners until December 7 when two additional Commissioners—including the intended Chairman (who sets the agency’s regulatory agenda)—were sworn in. Meanwhile, the Department of Energy (DOE), applying a virtually unused provision of its enabling legislation, sought to insert itself into FERC’s regulation of wholesale markets and prices. Notwithstanding these very unusual conditions, TAPS continued to be a strong customer-focused voice for transmission dependent utilities, while striving to propose constructive solutions. During 2017, TAPS made substantive submissions in eleven FERC proceedings, on topics including RTO energy market design, state policies and RTO wholesale markets, electric storage and Distributed Energy Resources, and reliability. We also submitted comments to DOE and NERC, were active in the NERC stakeholder processes, and remained engaged in energy matters on Capitol Hill.

Legislation

The House and Senate both spent considerable time discussing energy matters in 2017.  As an example, the House Energy and Commerce Committee embarked on an extensive evaluation of energy markets, electric energy policy, and cybersecurity threats to the electric grid as part of a Powering America series.  In total, the Committee held 19 hearings on policy matters of interest to TAPS membership.  The Powering America series explored electricity markets, electricity generation, distribution, consumption, and the resiliency of the electric grid.  TAPS proactively engaged in meaningful discussion with committee staff, personal office staff, and members of the Committee on how to strengthen the grid and how to provide greater value to American consumers both now and in the future.

Senate Energy Committee Chair Murkowski and Ranking Member Cantwell reintroduced a 2016 bill that had failed to pass, “The Energy Policy Modernization Act” (S.2012), in 2017 as a part of S.1460, “The Energy and Natural Resources Act of 2017.”

A major focus in S.2012 for APPA, NRECA, and TAPS was to win inclusion of provisions that would allow Load-Serving Entities (LSEs) in RTO markets to “self-supply” capacity for their customers, to avoid the uncertainty and dramatic cost increases in mandatory capacity markets, as well as the threat that market rules would subject them to paying twice for capacity.

TAPS members in ISO-NE and PJM have seen numerous changes to the rules governing mandatory capacity markets and significant cost increases that must be passed on to their customers.  The debate in the Senate in 2016 resulted in a provision in then-S.2012, that would require each RTO to report to FERC on the extent to which its rules provide an “enhanced opportunity” to self-supply capacity for consumer-owned utilities, in addition to several other criteria.  S.1460 picks up that 2016 language.

While the proposed requirement that RTOs submit capacity self-supply reports to FERC was a positive step, the legislative proposal did not provide the full measure of relief that TAPS members seek, and TAPS continues to support legislative or other measures to strengthen the self-supply options for those in RTO markets.

Among other opportunities to highlight concerns about RTO policies, TAPS member American Municipal Power testified before the House Energy and Commerce Committee on July 18th explaining concerns about how PJM’s regressive and restrictive policies towards self-supply have artificially suppressed generation construction and served as an impediment to systems that want to limit market risk.  Notwithstanding PJM’s testimony to the contrary, restrictions on self-supply remain a concern for the resiliency of the electric grid as they serve as an impediment to new generation construction.

Again in 2017, 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.

TAPS continued to participate in a public-power wide working group led by APPA to develop and implement a strategy to protect the tax-exempt status of interest on municipal bonds used to finance generation, transmission, and distribution infrastructure.  Tax-exempt financing is fundamental to the public power business model and to the ability of state and local governments to develop and improve essential infrastructure, including transmission facilities.  Success of this initiative was achieved with passage of the 2017 comprehensive tax bill with limited new restrictions on municipal debt financing.

In addition to TAPS’ consultants’ regular communications with legislators and staff, TAPS’ Government Affairs Committee made visits to Capitol Hill on several occasions in 2017 to advocate in support of these provisions.

NERC/NAESB

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 2017, Chris Gowder (FMPA) and Chris Norton (AMP) also served on the NAESB Wholesale Electric Quadrant Executive Committee.  Additionally, TAPS Executive Director John Twitty was Chairman of the Member Representatives Committee.  Carol Chinn (FMPA), former MRC chair, holds one of the state/muni MRC seats, and Dave Osburn (OMPA) held one of the Transmission Dependent Utilities seats in 2017.  In 2017, Dave Osburn began serving as a member of the Reliability Issues Steering Committee (RISC).  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 continued through 2017.

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 2017 TAPS played an important role in the ever-evolving relationship between FERC and NERC.

TAPS 2017 NERC and NAESB-related activities

  • FERC Reliability Technical Conference (AD17-8)
    • June 22, 2017 John Twitty submits written statement and appears on behalf of TAPS as a panelist. He advocated a renewed “P 81” effort, which evolved into the Standards Efficiency Review Initiative (discussed below).
  • Foundation for Resilient Societies Petition for Rulemaking; Cyber Security Incident Reporting Reliability Standards (AD17-9; RM18-2)
    • January 13, 2017 Foundation for Resilient Societies asks FERC to initiate a rulemaking to require the development of an enhanced reliability standard to detect, report, mitigate, and remove malware from the BPS.
    • February 17, 2017 TAPS, with APPA, EEI, ELCON, EPSA, LPPC, and NRECA, submits comments asking FERC to reject the petition.
    • December 21, 2017 FERC issues NOPR (RM18-2) declining to propose additional Reliability Standard measures for malware detection, mitigation and removal as requested by the Foundation for Resilient Societies, but proposing standard to require reporting of actual or attempted cybersecurity incidents.
  • Supply Chain Risk Management Reliability Standard (RM17-13)
    • April 19, 2016 TAPS, with APPA and LPPC, submits supplemental comments in Docket No. RM15-14 on supply chain issues, following FERC’s January 28, 2016 technical conference on that subject, urging FERC to honor a set of limiting principles in any directive to develop a supply chain management rule.
    • July 21, 2016 FERC denies rehearing of the CIP Version 6 Final Rule 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.
    • TAPS members commence work with APPA, LPPC, and NRECA on white paper.
    • September 26, 2017 NERC files supply chain risk management standard.
  • 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.
  • Cyber Systems in Control Centers (RM16-18)
    • July 21, 2016 FERC issues Notice of Inquiry on need for better cybersecurity at Control Centers.
    • September 26, 2016 TAPS joins APPA and LPPC in filing comments supporting NERC’s request that FERC not direct modifications to the CIP standards at this time.
    • Carter Manucy (FMPA), accompanied by Cindy Bogorad, participates on behalf of TAPS in informal technical meeting with FERC Staff on April 13, 2017.
    • October 2, 2017 FERC terminates Control Center NOI, recognizes that CIP standards allow entities flexibility on how to implement security controls for Control Centers; directs FERC staff to continue to engage with industry on this issue.
  • Reliability Assurance Initiative (RR15-2)
    • February 21, 2017 NERC’s Compliance Monitoring and Enforcement Program Filing requests expansion of the use of compliance exceptions but non-public treatment of self-logged compliance exceptions.
    • March 14, 2017 TAPS, with APPA, ELCON, and NRECA, supports expanding compliance exceptions, but challenges non-public treatment of those self-logged.
    • November 16, 2017 FERC issues order accepting NERC’s filing but denying NERC’s requests to eliminate the public posting of compliance exceptions identified through self-logging and to expand the use of compliance exceptions to include certain moderate risk noncompliance.
  • 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.
  • ERO Enterprise Long-Term Strategy, Operating Plan, and 2018 Metrics; Standards Efficiency Review
    • 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
  • 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 31, 2017 SM-TDUs provide input regarding the ERO Enterprise Strategic Planning Process and Distributed Energy Resources Task Force Final Report.
      • April 26, 2017 SM-TDUs provide input regarding application of cost effectiveness methods for standards development and supporting specialized assessment relating to decline of base-load generation and increase in variable generation in the supply mix.
      • July 26, 2017 SM-TDUs provide input on supply chain risk management and the need for a new P 81 effort to reduce burden and streamline standards.
      • October 25, 2017 SM-TDUs provide input regarding the ERO Enterprise CMEP program alignment efforts and urging NERC not to add resilience to its mission statement.

TAPS 2017 FERC (Non-Reliability) Efforts

  • Grid Reliability and Resilience Pricing (RM18-1), initiated by DOE.
    • October 4, 2017 TAPS supports motion of APPA and others for extension of time for comments (which FERC denies).
    • October 23, 2017 TAPS submits initial comments.
    • November 7, 2017 TAPS submits reply comments.
    • January 9, 2018 FERC terminates DOE NOPR proceeding and initiates new proceeding on grid resilience (AD18-7).
  • State Policies and RTO Markets (AD17-11)
    • TAPS monitors and reports on the May 1-2, 2017 technical conference on the interface between competitive energy and capacity markets and state policies in Eastern RTO.
    • TAPS submits initial post-technical conference comments on June 22, 2017 and reply comments on July 14, 2017.
  • Price Formation in RTO Markets (RM16-5; RM17-2; RM17-3)
    • December 15, 2016 FERC issues Fast-Start Pricing NOPR.
    • January 19, 2017 FERC issues Uplift Cost Allocation and Transparency NOPR.
    • February 28, 2017 TAPS comments on Fast-Start Pricing NOPR, urging against generic action, but pressing for requiring consideration of offline resources, which would lower LMPs.
    • 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.
    • November 9, 2017 FERC denies TAPS’ December 19, 2016 request for rehearing of the November 17, 2016 Offer Cap Final Rule.
    • December 21, 2017, FERC withdraws its Fast-Start Pricing NOPR, and instead institutes section 206 proceedings on fast-start pricing in NYISO, PJM, and SPP.
  • Reform of Generator Interconnection Procedures and Agreements (RM17-8; EL18-26)
    • 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.
  • Electric Storage Utilization, and Participation of Storage and Distributed Energy Resource Aggregation in Organized Markets (RM16-23; PL17-2)
    • 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.

TAPS 2017 DOE Efforts

  • 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 Fixing America’s Surface Transportation Act (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.