2013 was an active year for TAPS, including the following:

Legislation

TAPS remains actively involved in legislation relating to the cybersecurity of the bulk electric system and activities of the electric sector cybersecurity coalition. In 2013, the focus of federal activity expanded from Congress to include the Executive branch, as the National Institute of Standards and Technology worked to develop a Framework of voluntary cybersecurity standards and best practices for owners and operators of critical infrastructure, pursuant to the President’s Feb. 12, 2013 Executive Order. (See below regarding TAPS participation in NIST process.)

TAPS and other electric sector cyber coalition members again endorsed the “Cyber Intelligence Sharing and Protection Act” (H.R. 756) as a significant step forward in creating a culture of information sharing and partnership between the federal government and the 16 critical infrastructure sectors. The bill would authorize the government to provide timely, relevant information about cyber threats to non-federal owners and operators of critical infrastructure and create a process for providing security clearances for those entities. The House passed H.R. 756 on April 16, with a bipartisan vote of 402 to 16, but the bill has not advanced in the Senate, given concerns about its privacy and liability protection provisions.

TAPS and the cyber coalition also endorsed S. 1353, the “Cybersecurity Act of 2013” sponsored by Senate Commerce Committee Chair Jay Rockefeller (D-WV) and Ranking Member John Thune (R-SD). The bill would promote the partnership between the federal government and industry to develop voluntary cybersecurity “best practices.” It is intended to complement the ongoing work being done in the electric sector and nuclear industry, without conflicting with or duplicating existing regulatory structures and related processes. The bill was approved by the Commerce Committee on July 24.

TAPS has also been involved in reviewing and commenting on the “National Cybersecurity and Critical Infrastructure Protection Act of 2013 (H.R. 3696), approved by the House Homeland Security Committee on Feb. 5. The bill would authorize the Department of Homeland Security to coordinate information sharing among federal entities; to recognize critical sectors, Sector Specific Agencies, and Sector Coordinating Councils; and to designate Information Sharing and Analysis Centers, among other activities.

TAPS also participated in the deliberations over, and drafting of, a revised charter for the Electric Sector Coordinating Council, the industry group that interfaces with the Department of Energy – the electric sector’s Sector Specific Agency – on policy matters relating to cybersecurity and related electric reliability matters.

Also in 2013, TAPS was actively engaged in educating Members of Congress and staff about concerns with so-called “organized” electric markets, particularly limitations on the ability of utilities to self supply in mandatory capacity markets and the rationale for expanding mandatory capacity markets from the eastern markets to other parts of the country. TAPS’ overriding concern is that the markets are not functioning to provide value to end-use consumers.

Early in 2013 the Senate Energy and Natural Resources Committee marked up a legislative proposal to address energy efficiency standards across a number of sectors. S. 761, the “Energy Savings and Industrial Competitiveness Act” was considered in Committee on May 13, 2013. At that time, there were concerns an amendment might be proposed that would address cost allocation in a manner inconsistent with TAPS’ historic position. TAPS has generally aligned itself with the 2009 7th Circuit Court Illinois Commerce decision that grants FERC considerable flexibility to support a finding that costs 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.”

S. 761 was voted out of Committee successfully, reintroduced as S. 1392, and considered on the Senate floor starting September 19th, 2013. During floor consideration 120 amendments to the bill were filed and continued monitoring of filed amendments was necessary as no formal agreement on limiting amendments was reached and so cost allocation amendments were possible. No amendments on cost allocation were filed, though the bill remained a pending matter on the Senate floor at the end of 2013.

The TAPS Legislative Committee met with staff of the House Energy and Commerce Committee, the Senate Energy and Natural Resources Committee, and 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.

The first session of the 113th Congress ended with Congress resolving major near-term fiscal budget issues but deferring on larger policy discussion of entitlement reform, long term budget reform and tax reform. TAPS has participated 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. At the end of the 2013 Senate and House tax committee leaders continued to assert an interest in completing tax reform before the close of the 113th Congress; however, observations suggest that completing a comprehensive tax reform bill in 2014 will remain a difficult challenge.

Changes announced at the end of 2013 at the leadership level of both the Senate Finance Committee and the Senate Energy and Natural Resources Committee bring additional uncertainty to the outlook for 2014. Sen. Ron Wyden (D-OR), the new Chair of the Senate Finance Committee, has indicated the Committee will likely commence with early action on a tax “extenders” package but has not detailed a clear agenda for the future. Wyden has also stated his support for broad tax reform legislation. Sen. Mary Landrieu (D-LA), the incoming Chair of the Senate Energy and Natural Resources Committee, has not indicated an agenda, though energy sector advocates have noted her strong support for energy development in the past, based on home-state resources, which may suggest favorable consideration on such issues from the Committee going forward.

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, and the NAESB Special Board Committee on Gas/Electric Interdependence. Additionally, TAPS Executive Director John Twitty is a member of the MRC and the Reliability Issues Steering Committee (RISC). In addition, last fall, TAPS was able to elect Carol Chinn (FMPA), outgoing MRC chair, to one of the state/muni MRC seats, the first time a TAPS member has held one of these seats since Gayle Mayo retired. (Ray Phillips (AMEA) holds one of the Regional Entity seats on the MRC, but he must vote as their representative, not on behalf of TAPS member interests.) 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. 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 2013 TAPS played an important role in the ever-evolving relationship between FERC and NERC.

TAPS 2013 NERC and NAESB-related activities include:

  • Compliance Enforcement Initiative (RC11-6, RM13-8)
    • January 31, 2013 TAPS (with APPA, EEI, ELCON, EPSA, LPPC, and NRECA) provides joint policy input to the NERC BOT on the Reliability Assurance Initiative (RAI).
    • April 3, 2013 TAPS (Cindy Bogorad) gives presentation at NERC Reliability Assurance Initiative Workshop.
    • April 15, 2013 TAPS (with EEI, APPA, ELCON, NRECA, EPSA, and LPPC) comments in support of improvement proposed in NERC’s March 15, 2012 FFT Compliance Filing, which FERC largely approves by order of June 20, 2013.
    • Bill Gallagher appears for TAPS at FERC’s July 9, 2013 Technical Conference.
    • TAPS (Cindy Bogorad) attends NERC’s July 10, 2013 RAI Workshop and the July 23, 2013 FFT Workshop.
    • August 27, 2013 TAPS (with APPA, EEI, ELCON, EPSA, and LPPC) supports FERC NOPR to adopt NERC’s proposal to retire unnecessary requirements pursuant to P 81, which FERC approved by order of November 21, 2013.
    • October 1, 2013 TAPS (with APPA, EEI, ELCON, EPSA, LPPC, and NRECA) submits a letter to NERC requesting clarification of several questions regarding RAI.
  • Bulk Electric System (RM09-18, RM12-6, RM12-7)
    • January 22, 2013, TAPS (with ELCON) seeks rehearing of “interpretations” and directives included in FERC’s December 20, 2012 order accepting the BES definition.
    • April 18, 2013 FERC issues order largely denying TAPS rehearing request.
    • May 31, 2013 TAPS (with APPA) comments in partial support of NERC’s May 23, 2013 extension to accommodate implementation/timing issues, which FERC grants on June 13, 2013.
    • July 10, 2013 TAPS, with APPA and NRECA, files a protective motion to intervene in New York PSC’s Second Circuit appeal of the December 20, 2012 order approving BES definition. (Stay of appeal was lifted November 15, 2013).
    • July 12, 2013 and September 4, 2013 TAPS comments to NERC on Phase 2 of the BES definition project.
  • Small Entity Initiative/Risk-Based Registration
    • TAPS engages in preliminary efforts in anticipation of NERC’s risk-based registration initiative, as included in NERC’s 2014 Business Plan.
  • Version 5 Critical Infrastructure Protection Reliability Standards (RM13-5)
    • June 24, 2013 TAPS files comments in response to FERC’s April 18, 2013 NOPR urging approval of Version 5 CIP standards, including the implementation plan that would transition directly from Version 3 to Version 5, without directives.
    • July 15, 2013 TAPS (with APPA, EEI, EPSA, LPPC, and NRECA) provides feedback to NERC Staff on draft CIP Version 5 transition guidance.
    • July 18, 2013 TAPS joins APPA, EEI, ELCON, EPSA, LPPC, and NRECA in requesting FERC delay of effectiveness of CIP Version 4 to avoid transition from Version 3 to Version 4, instead going directly to Version 5.
    • August 12, 2013 FERC delayed effectiveness of CIP Version 4.
    • On November 22, 2013, FERC approved CIP Version 5 standards and implementation plan (obviating need for compliance with CIP Version 4), with revisions directed, although allowing NERC flexibility on low impact facilities.
  • 2014 NERC Business Plan and Budget (RR13-9)
    • September 23, 2013 TAPS submits motion to intervene one day out-of-time and comments in support of approval of NERC’s 2014 Business Plan and Budget, which FERC accepts by order of November 1, 2013.
  • Standard Processes Manual (RR13-2)
    • March 21, 2013 TAPS joins APPA, EEI, ELCON, EPSA, LPPC, and NRECA in comments to FERC in support of NERC’s February 28, 2013 petition to revise the Standard Processes Manual, which revisions FERC accepted on June 26, 2013.
  • Scope of FPA Section 215 (FA11-21)
    • March 8, 2013 TAPS (with APPA and NRECA) comments in support of NERC’s Criteria for determining whether an activity is eligible to be funded under Section 215, which FERC largely approved by order of April 19, 2013.
  • 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. APPA coordinates with TAPS and LPPC to develop this input, and APPA, TAPS, and LPPC typically submit a joint letter supporting the resulting input.
      • January 31, 2013 SM-TDUs provide policy input to the NERC BOT regarding the standards reform efforts; COM-002 and COM-003; RAI; NERC’s Three-Year Strategic Plan; and implementation of the BES Definition.
      • May 1, 2013 SM-TDUs provide policy input to the NERC BOT regarding RAI; the criteria to be applied in determining whether an activity falls within the scope of Section 215 of the FPA; and ES-ISAC and ESCC, including the impacts of a recent Presidential Policy Directive.
      • August 7, 2013 SM-TDUs provide policy input to the NERC BOT regarding the development of standards for geomagnetic disturbances; the voltage threshold for Exclusion E1 of the BES definition; NERC/Regional staff interpretation of existing BES definition; CIP Version 5 transition guidance; and the Electricity Sub-Sector Coordinating Council.
      • October 30, 2013 SM-TDUs provide policy input to the NERC BOT regarding COM-002-4; CIP transition issues; RAI and FFT; and the need to reduce the regulatory burden of NERC compliance on small entities.

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)
    • TAPS is an intervenor in the multi-party, multi-issue Order 1000 appeal process before the DC Circuit (to be argued on March 20, 2014).
    • May 28, 2013 TAPS joins APPA and others in Joint Petitioner/Intervenor Brief on Failure to Adhere to Section 217(b)(4).
    • November 15, 2013 TAPS joins APPA and others in the Joint Petitioner/Intervenor Reply Brief on Failure to Adhere to Section 217(b)(4).
  • Centralized Capacity Markets (AD13-7)
    • TAPS attends and reports on September 25, 2013 technical conference.
    • TAPS joins APPA, NRECA, and NARUC request to extend deadline for follow-up comments from December 9, 2013 to January 8, 2014, which was granted.
    • TAPS drafts follow-up comments, which are filed January 8, 2014.
  • Return on Equity (RM13-18)
    • June 2013 EEI issues White Paper seeking to justify higher base ROEs.
    • June 26, 2013 WIRES Petition for Policy Statement on Base ROE (not yet noticed by FERC).
    • TAPS joins July 12, 2013 joint letter submitted by APPA, state commissions, agencies and attorneys general, consumer advocates, and environmental organizations, as well as municipal/consumer-owned utilities opposing EEI White Paper and WIRES Petition.
  • Third-Party Provision of Ancillary Services; Accounting and Financial Reporting for New Electric Storage Technologies (RM11-24/AD10-13)
    • July 18, 2013 FERC final order was a partial victory. TAPS did not seek rehearing.

Commodity Futures Trading Commission

In 2013, TAPS periodically participated, on a limited basis, to continue advocating positions it had previously urged in support of APPA’s participation in the “Not-For-Profit Electric End User Coalition” to obtain regulatory relief for not-for-profit utilities 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.”

Comments to National Institute of Standards and Technology

April 8, 2013 TAPS (with APPA, NRECA, and LPPC) submits response to NIST’s Request for Information on “Developing a Framework to Improve Critical Infrastructure Cybersecurity”; TAPS also joins a broader group of trade associations in submitting higher-level comments.