2012 was an active year for TAPS, including the following significant activities:
Again in 2012, TAPS federal legislative priorities included cyber security and the federal role in protecting the cyber security of critical infrastructure in the electric sector. TAPS and other members of the electric sector cyber coalition endorsed H.R. 3523, the “Cyber Intelligence Sharing and Protection Act, “as a significant step forward” in creating the culture of trust and information sharing that is needed to strengthen protective measures across the 18 critical infrastructure sectors. The bill created a process for providing security clearances for owners and operators of critical infrastructure, including utilities, and authorized the federal government to share timely, relevant information on cyber threats to those entities. H.R. 3523 was developed by the House Intelligence Committee and passed by the full House, with bipartisan support, in April.
The Senate Homeland Security Committee and the White House advocated giving the Department of Homeland Security authority to identify critical assets across all sectors, and develop and enforce performance-based standards to mitigate threats to those assets. Efforts to bring a modified version of the Lieberman-Collins bill (S. 3414), revised to make industry compliance voluntary, failed in two separate Senate votes.
With Congress unable to reach agreement on cyber security legislation, the White House is expected to issue an Executive order to achieve as many of the goals of S. 3414 as it can, administratively. The Administration acknowledges, however, that legislation is needed to require private sector entities to share information with the federal government and to provide liability protection to those entities.
TAPS has generally aligned itself with the 7th Circuit Court Illinois Commerce decision that grants FERC considerable flexibility to support a finding that benefits are “roughly commensurate” with anticipated benefits, with the important caveat that “FERC is not authorized to approve a pricing scheme that requires a group of utilities to pay for facilities from which its members derive no benefits, or benefits that are trivial in relation to the costs sought to be shifted to its members.”
The TAPS Legislative Committee met with staff of the House Energy and Commerce Committee, the Senate Energy and Natural Resources Committee, individual House and Senate member offices, and with representatives of the FERC and DOE to discuss TAPS positions on cost allocation several times over the course of the year and will continue that conversation in the 113th Congress.
The 113th Congress will commence on January 3rd, with much of the outlook hinging on the outcome of “fiscal cliff” issues and deficit reduction negotiations that are ongoing as of this writing. At the macro level, most expect that the House and Senate will be compelled to embark upon a major tax reform agenda that will demand attention for the majority of the first session (2013) of the new Congress. TAPS is participating in a public-power wide working group led by the American Public Power Association 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.
New leadership at the Senate Energy and Natural Resources Committee is expected to reinvigorate the Committee’s oversight and legislative agenda.
TAPS is urging the Committee to conduct oversight on activities of Regional Transmission Organizations/Independent System Operators, and implementation of FERC Order 1000 on regional transmission planning and cost allocation.
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 served as chair of the NERC Member Representatives Committee (MRC) in 2011 and continues to serve as a member, and co-chairs the ERO Scope Input Group. He also serves on the NAESB Wholesale Electric Quadrant Executive Committee, the NAESB Board of Directors and the NAESB Special Board Committee on Gas/Electric Interdependence, which culminated in the final report submitted to FERC in October 2012. Additionally, TAPS Executive Director John Twitty is a member of the MRC and the newly formed Reliability Issues Steering Committee (RISC). TAPS members have a presence on most NERC standing committees and on significant drafting teams.
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 and NAESB. 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 pleading sent a strong message. While the results of these efforts are still playing out, there is no doubt that in 2012 TAPS played an important role in the ever-evolving relationship between FERC and NERC.
TAPS 2012 NERC and NAESB-related activities include:
Compliance Enforcement Initiative (RC11-6)
- February 23, 2012 TAPS comments to NERC on need for consistency in implementing Compliance Enforcement Initiative.
- March 15, 2012 FERC issues order largely approving NERC’s initiative and, in Paragraph 81, inviting removal of requirements providing little BPS protection.
- April 16, 2012 NERC, supported by TAPS and others, requests clarification that individuals other than officers can certify remediation for “Find, Fix, Track and Report” (“FFT”) purposes.
- May 14, 2012 NERC compliance filing in response to March 15, 2012 FERC order.
- May 15, 2012 Frank Gaffney (FMPA), Kevin Koloini (AMP), and Brian Evans-Mongeon participate for TAPS in the Paragraph 81 effort to identify redundant or unnecessary requirements to eliminate.
- May 31, 2012 FERC clarifies that a registered entity not organized as a corporation or having no officers may submit an affidavit certifying mitigation to the Regional Entity signed by executive or leadership position with knowledge of the remediation.
- June 15, 2012 TAPS files joint comments with EEI, APPA, ELCON, NRECA, EPSA, and LPPC supporting NERC compliance filing, emphasizing efficiency and consistency.
- September 4, 2012 TAPS (with APPA, CEA, EEI, ELCON, EPSA, LPPC, and NRECA) submits comments to NERC on the Paragraph 81 SAR.
- December 7, 2012 TAPS joins industry letter to Gerry Cauley regarding the need to push forward with further phases of FFT and ensure sufficient time for industry input on NERC’s Reliability Assurance Initiative.
Bulk Electric System (RM09-18, RM12-6, RM12-7)
- Efforts grow out of FERC’s March 18, 2010 NOPR proposing a 100 kV bright-line threshold from which only FERC can grant exemptions, and FERC’s November 18, 2010 final rule granting NERC additional flexibility to define BES and leaving it to NERC to develop an exemptions process.
- June 22, 2012 FERC NOPR proposes to accept the NERC’s Phase 1 definition and exception process as filed on January 25, 2012, but asks many questions.
- September 4, 2012 TAPS files comments on the NOPR supporting the definition and exception process as filed by NERC.
Vegetation Management (RM12-4)
- December 20, 2012 TAPS joins APPA, EEI, LPPC, and NRECA in supporting FERC approval of FAC-003-2.
Geomagnetic Disturbances (RM12-22)
- On December 21, 2012 TAPS files comments on FERC’s October 18, 2012 proposal to direct NERC to develop standards to address geomagnetic disturbances on a very short deadline, and joins APPA and NRECA’s comments on the Regulatory Flexibility Act implications of the proposal.
Other Comments to NERC and NAESB
- January 25, 2012 TAPS joins industry request for NERC review of CAN-0016.
- February 2, 2012 TAPS (with APPA and LPPC) provides policy input to the NERC BOT, which join in industry principles for Standards Development Process Principles.
- February 24, 2012 TAPS joins industry request for NERC review of CAN-0008.
- April 16, 2012 TAPS comments to NERC on generator verification standards.
- September 13, 2012 TAPS (with APPA and LPPC) provides comments to NERC on proposed Entity Impact Evaluation template.
- November 27, 2012 TAPS, joined by APPA, comments on NERC’s proposed changes to the Technical Feasibility Exception (TFE) process in Appendix 4D of the Rules of Procedure.
- On December 11, 2012, TAPS comments to NERC on options to propose to FERC for transition from CIP Version 3 to Version 4 to Version 5.
- On December 21, 2012, TAPS comments on NERC’s proposed criteria on the scope of Section 215.
FERC (Non-Reliability Initiatives)
Transmission Planning Processes Under Order 890 (AD09-8)/Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities (RM10-23)
- FERC issues Order 1000-A on May 17, 2012.
- TAPS filed limited rehearing on June 18, 2012.
- June 26, 2012 TAPS intervenes in Order 1000/1000-A appeals of others.
- July 11, 2012 TAPS files a protective appeal to preserve its Order 1000-series appeal rights, which appeal was dismissed as expected on November 6.
- On October 18, 2012, FERC issues Order 1000-B, which grants TAPS’ request to rehear Order 1000-A’s characterization of Order 681, the rule regarding long-term transmission rights.
Promoting Transmission Investment Through Pricing Reform (RM11-26)
- In support of TAPS September 12, 2011 comments on FERC’s May 19, 2011 NOI, on March 5, 2012 TAPS participates in joint letter submitted by state commissions, agencies and attorneys general, consumer advocates, and environmental organizations, as well as municipal/consumer-owned utilities asking FERC to revise its incentive policies.
- TAPS distributes a White Paper advocating tying joint ownership to ROE incentives distributed at May 7 and 9, 2012 and September 11-12, 2012 FERC meetings.
Priority Rights to Merchant/Participant-Funded Transmission and Interconnection Customer Interconnection Facilities
- Terry Wolf (MRES) and Cindy Bogorad participate in the February 28, 2012 Workshop.
- TAPS files follow-up comments on March 29, 2012.
- April 19, 2012 FERC NOI regarding access to customer-owned interconnection facilities.
- TAPS files comments on June 26, 2012 on the interconnection facilities NOI.
- July 19, 2012 FERC issues Proposed Policy Statement on allocation of merchant/participant-funded transmission.
- September 24, 2012 TAPS comments on the Proposed Policy Statement.
Third-Party Provision of Ancillary Services; Accounting and Financial Reporting for New Electric Storage Technologies (RM11-24/AD10-13)
- June 22, 2012 FERC issues NOPR to relax restrictions on sales of ancillary services to TPs for OATT obligations and to improve reporting of storage facilities.
- September 7, 2012 TAPS (joined by TDU Systems) opposes the NOPR’s proposed relaxation, but supports enhanced reporting.
DOE Efforts to Implement FPA Section 216 and Promote Transmission Expansion
- January 30, 2012 TAPS comments on preparation of the 2012 Congestion Study, stressing joint ownership and right sizing to meet reasonable needs of LSEs.
- February 27, 2012 TAPS comments on DOE proposed regulations for coordination of Federal authorizations for transmission facilities pursuant to FPA Section 216(h).
- March 28, 2012 TAPS responds to RFI regarding Rapid Response Team for Transmission.
Commodity Futures Trading Commission
In rulemaking proceedings and other advocacy activities at the Commodities Futures Trading Commission associated with implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act with respect to the regulation of energy “swaps,” TAPS supports APPA’s participation in the “Not-For-Profit Electric End User Coalition” and the positions taken by that coalition to obtain regulatory relief for not-for-profit utilities. The Coalition made significant progress, including obtaining a draft exemption for transactions among not-for-profit utilities and assisting in the development of rules governing regulatory safe harbors for end users of commodities.