2015 was an active year for TAPS, including the following:

Legislation

The House and Senate both advanced energy bills in 2015 that began as bipartisan efforts. A major focus in both bills 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. Working together, the groups developed a proposed amendment that would also have required states in the footprint of an RTO/ISO that do not currently have a mandatory capacity market to concur before its approval by the Federal Energy Regulatory Commission (FERC).

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. Despite the complexity of the issues and strong opposition from generators, the RTOs, and FERC, the joint effort to win greater self supply rights became one of the signature issues in both the House and Senate debates.

Disagreement over competing capacity market amendments was one of a handful of issues that destroyed bipartisan support for H.R. 8, the “North American Energy Security and Infrastructure Act” when it went to markup in the House Energy and Commerce Committee. Largely along party lines, the GOP majority approved provisions designed to ensure that coal and nuclear resources would clear in capacity markets, while Democrats advocated support for improving self supply options for LSEs. The full House passed H.R. 8 on Dec. 3, 2015.

The debate in the Senate resulted in a provision in S. 2012, the “Energy Policy Modernization Act” that will 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. The Chair and Ranking Member of the Senate Energy and Natural Resources Committees also requested a study by the Government Accounting Office on a number of aspects of the operations of capacity markets.

While both are positive steps, they do not provide the full measure of relief that TAPS members seek, and they will continue to support legislative or other measures to strengthen the self supply options for those in RTO markets.

Senate floor debate on S. 2012 began in early 2016, but it remains to be seen if the bill can win Senate approval or be side-tracked by partisan disputes.

TAPS actively supported Department of Energy emergency grid authority, which would allow the Secretary of Energy, upon written declaration by the President of an imminent threat to the grid of a cyber, physical, electro-magnetic pulse, or geomagnetic disturbance event, to order utilities to take action to protect critical infrastructure. This provision, which had bipartisan support in the House and Senate, was added to the transportation reauthorization bill passed by Congress and signed by the President at the end of 2015.

Again in 2015, 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 in particular, and grid security generally.

The coalition actively supported Senate passage of S. 754, the “Cybersecurity Information Sharing Act,” and worked with key committee staff to help reconcile the differing House and Senate bills. The final text of the bill was added to the FY 16 Omnibus funding bill, approved by the House and Senate and signed into law on Dec. 18.

Passage of this legislation represents an important step forward for all 16 critical sectors, including the energy sector. It will authorize federal agencies to share information about cybersecurity threats and attacks with the private sector, and permit private sector entities to voluntarily share such information, including defensive measures with the government, providing liability protection and protection against disclosure for those who do.

The coalition’s work is far from over, however. Over the last several years, its scope has broadened to include any legislation affecting grid security, including physical threats, electro-magnetic pulse events and geomagnetic disturbances. 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.

Although no significant tax reform legislation has yet advanced in the 114th Congress, TAPS continues to participate 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, including transmission facilities.

In addition to TAPS’ consultants’ regular communications with legislators and staff, TAPS’ Government Affairs Committee made visits to Capitol Hill on several occasions in 2015 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, and the NAESB Special Board Committee on Gas/Electric Interdependency. In 2015, Ray Phillips (AMEA), Chris Norton (AMP) and Robin Spady (MEAN) also served on the NAESB Wholesale Electric Quadrant Executive Committee. Additionally, TAPS Executive Director John Twitty is a member of the MRC and the Reliability Issues Steering Committee (RISC). Carol Chinn (FMPA), former MRC chair, holds one of the state/muni MRC seats. TAPS members havea 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 2015 TAPS played an important role in the ever-evolving relationship between FERC and NERC.

TAPS 2015 NERC and NAESB-related activities include:

  • June 4, 2015 FERC Technical Conference on Reliability (AD15-7)
    • Bill Gallagher speaks for TAPS on panel on ERO Performance and Initiatives.
  • Risk-Based Registration (RR15-4)
    • January 12, 2015 TAPS (with APPA and NRECA) provide comments supporting NERC’s December 11, 2014 filing of RBR Phase 1.
    • January 26, 2015 TAPS, APPA, and NRECA respond to other parties’ comments, again supporting NERC’s RBR Phase 1 filing.
    • March 19, 2015 FERC issues order approving in part NERC’s RBR Phase 1 filing but directing some changes, including requiring NERC to provide additional support before eliminating LSE registration, and requiring “UFLS-Only DPs” to comply with PRC-005 as well as PRC-006 (and associated regional standards).
    • Bill Gallagher and Cindy Bogorad continue to participate as members of the RBR Advisory Group; Carol Chinn and Brian Evans-Mongeon participate in a NERC technical Task Force convened to work on Phase 2 of the RBR initiative.
    • May 28, 2015 TAPS Comments to NERC on Proposed ROP changes for RBR Compliance Filing.
    • August 17, 2015 TAPS files (with APPA and NRECA) to support NERC’s July 17, 2015 compliance filing to eliminate LSE registrations.
    • October 15, 2015 FERC issues order approving NERC’s compliance filing proposal to eliminate the LSE registration category and directing an analysis within 15 months to determine whether elimination of the registration category impairs the accuracy of next-day studies.
  • Transmission Operations Reliability Standards and Interconnection Reliability Operations and Coordination Reliability Standards (RM15-16)
    • August 24, 2015 TAPS files comments in response to FERC’s June 18, 2015 NOPR, urging approval of the proposed standards, including removal of LSEs as an applicable entity for TOP-001-3, and asking FERC to allow NERC to work through the BES exception process to include any necessary facilities in the BES, rather than directing monitoring of non-bulk electric system facilities.
    • November 19, 2015 FERC approves removal of the LSE function from the TOP-001-3 applicability section, and directs NERC to revise TOP-001-3 to require real-time monitoring of non-BES facilities to the extent necessary to determine SOL and IROL exceedances.
  • Emergency Operations Reliability Standards; Undervoltage Load Shedding Reliability Standards (RM15-7; RM15-12; RM15-13)
    • August 24, 2015 TAPS files comments in response to FERC’s June 18, 2015 NOPR, responding to FERC’s concern regarding the absence of LSEs from the applicability section of proposed EOP-011-1.
    • November 19, 2015 FERC approves EOP-011-1, including the absence of the LSE function.
  • Reliability Assurance Initiative (RR15-2)
    • February 19, 2015 FERC issues order approving RAI but directing changes, including ROP and transparency changes requested by TAPS in 2014.
    • February 24-25, 2015 NERC holds “small entity exercise,” attended by representatives from NERC, the Regional Entities, and TAPS members to explore how RAI, and particularly the Internal Control Evaluation (ICE), applies to smaller entities.
    • May 21, 2015 TAPS submits comments to NERC on proposed revisions to NERC’s Rules of Procedure to comply with FERC’s February 19 order.
    • Bill Gallagher, Carol Chinn, and Cindy Bogorad continue to participate as members of the RAI Advisory Group (which is renamed Risk-Based CMEP Advisory Group).
  • Regional Entity Delegation Agreements (RR15-12)
    • April 2, 2015 TAPS (with APPA) provides input to NERC regarding proposed revisions to NERC’s pro forma delegation agreement expressing concerns that the proposed revisions would hand too much authority to the Regional Entities.
    • July 27, 2015 TAPS (with APPA) files comments at FERC expressing concerns.
    • November 2, 2015 FERC issues order directing NERC to make changes to address all of TAPS’ concerns.
  • Version 5 Critical Infrastructure Protection Reliability Standards (RM15-14)
    • July 16, 2015 FERC issues NOPR proposing to adopt NERC’s CIP Version 5 Revisions, with directives to address supply chain and increase the burden on low impact assets.
    • September 21, 2015 TAPS joins industry-wide comments (including EEI, ELCON, EPSA, LPPC, NRECA) objecting to the directives on supply chain and those that would expand requirements for low impact assets.
    • January 21, 2016, FERC issued the CIP Version 6 Final Rule, largely adopting its proposed directives, but deferring supply chain issues for further consideration.
  • Availability of Certain NERC Databases to FERC (RM15-25)
    • December 15, 2015 TAPS joins with APPA and LPPC in comments on FERC’s September 17, 2015 NOPR and urges FERC to work closely with NERC to structure access to such information as necessary in enabling FERC to carry out its core responsibility under the statute, as proposed by NERC.
  • Protection System Maintenance Reliability Standard (RM14-8; RD15-3)
    • December 17, 2015 TAPS joins industry request for clarification of FERC’s December 4, 2015 letter order regarding the implementation dates of certain PRC-005 requirements.
    • December 18, 2015 FERC issues a letter order accepting PRC-005-6 which addressed our concern.
  • Risk-Based Compliance Monitoring and Enforcement Program (RAI)
    • May 21, 2015 TAPS comments to NERC regarding NERC’s proposed changes to its Rules of Procedure related to the Risk-Based Compliance Monitoring and Enforcement Program.
  • 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.
      • February 6, 2015 SM-TDUs provide policy input to the NERC BOT regarding the CIP v5 transition, implementation of the physical security standard, the Essential Reliability Services Measures Framework Report, and NERC’s proposed Section 215 assessment stabilization initiative.
      • April 24, 2015 SM-TDUs provide policy input to the NERC BOT regarding the future of standards development, the CIP v5 transition, Physical Security Reliability Standard implementation, the tension between the ERO and registered entities regarding the development of compliance guidance, and NERC’s Phase I Special Assessment of the EPA’s proposed Clean Power Plan.
      • August 5, 2015 SM-TDUs provide policy input to the NERC BOT regarding CIP v5 outstanding issues, the 2016-2019 ERO Enterprise Strategic Plan, the ESCC Strategic Review of ES-ISAC, presentation of ERO Enterprise Effectiveness Survey results, and RBR Phase II.
      • October 28, 2015 SM-TDUs provide policy input to the NERC BOT regarding Risk-Based Registration, Compliance Guidance Policy, and NERC’s role with regard to the Clean Power Plan Final Rule.

FERC (Non-Reliability Initiatives)

  • Price Formation in RTO Markets (AD14-14; RM15-24)
    • March 6, 2015 TAPS files Post-Technical Workshop Comments responding to FERC Staff questions following up on Staff workshops addressing uplift, scarcity and shortage pricing and offer price mitigation, and operator actions.
    • September 17, 2015 FERC issues NOPR on Settlement Intervals and Shortage Pricing.
    • November 30, 2015 TAPS files comments on September 17, 2015 NOPR.
  • ITC Grid Development, LLC (EL15-86)
    • August 27, 2015 TAPS protests ITC’s July 28, 2015 Petition for Declaratory Order to ensure that ITC will never recover less than the bids it elects to make in Order 1000 planning processes, as contrary to fundamental ratemaking principles, Order 1000, FPA § 219.
    • October 13, 2015 TAPS replies to ITC’s September 25, 2015 response to TAPS’ protest.
  • Policy Statement on Hold Harmless Commitments (PL15-3)
    • January 22, 2015 FERC issues Proposed Policy Statement providing guidance and strengthening of hold harmless provisions intended to protect ratepayers from the adverse impacts of FPA § 203 transactions.
    • March 30, 2015 TAPS files comments supporting FERC’s strengthening of hold harmless protections, but seeking clarification that FERC is not proposing to find that certain types of FPA § 203 transactions do not have an adverse effect on rates.
  • Refinements to Policies and Procedures for Market-Based Rates (RM14-14)
    • October 16, 2015 FERC adopts Final Rule that excludes the proposed abandonment of MBR screen submissions for RTO areas, which TAPS opposed in its September 23, 2014 comments.
    • November 16, 2015 TAPS seeks rehearing of changes made in the final rule with regard the exclusion of first-tier market area capacity for triggering change of status reporting and the treatment of behind the meter generation.
  • Open Access and Priority Rights on Interconnection Customer’s Interconnection Facilities (RM14-11)
    • April 20, 2015 TAPS (joined by APPA) requests rehearing and clarification of FERC’s March 19, 2015 Final Rule adopting NOPR largely as proposed, over TAPS objection.
    • October 15, 2015 FERC denies rehearing, but grants the requested clarification to make the safe harbor available to public power.
  • Third-Party Provision of Primary Frequency Response Service (RM15-2)
    • April 27, 2015 TAPS files comments (with APPA and NRECA) raising concerns about FERC’s February 19, 2015 NOPR.
    • November 20, 2015 FERC issues final rule permitting sales of primary frequency response service at market-based rates by sellers with market-based rate authority for sales of energy and capacity.
  • Available Transfer Capability Standards for Wholesale Electric Transmission Services (AD15-5)
    • Latif Nurani attends and reports on FERC’s April 21, 2015 workshop.
    • May 20, 2015 TAPS files post-workshop comments to support moving commercial elements of NERC’s ATC-related standards into NAESB business practice standards, while ensuring transparent, consistent, and accurate ATC calculations.