2016 was an active year for TAPS, including the following:

Legislation

The House and Senate both advanced energy bills into the 2016, second session of the 114th Congress.  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, 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 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.

While the proposed study was a positive step, the legislative proposal did not provide the full measure of relief that TAPS members sought, and they continued to support legislative or other measures to strengthen the self-supply options for those in RTO markets.

The House and Senate energy conference was convened in October of 2016.  In the energy bill conference discussions, TAPS opposed inclusion of Sec. 1104(e) of the House bill (an amendment by Rep. Trent Franks offered on the House Floor), which would undermine the existing FERC/NERC reliability standards process with regard to the vulnerability of the Bulk Electric System to electro-magnetic pulse (“EMP”) attacks and geomagnetic disturbance (“GMD”) events.  FERC had just finalized the second GMD standard and the electric sector is doing more research on EMP, to better understand the ramifications of this low-likelihood of occurrence.

TAPS also opposed inclusion of Sec. 6002 of the House bill (an amendment offered on the House Floor by Rep. Kathy Castor) which would require states (on behalf of jurisdictional utilities) and non-jurisdictional utilities of a certain size to consider, in a public process, a federal interconnection standard for interconnection and net metering of community solar projects 2 MW and less.  TAPS argued these are matters that are the province of state and local governments, not the federal government.

Finally, TAPS expressed concerns about Sec. 2305 of the Senate bill, which authorized DOE to prepare a report that evaluates the performance of the electric grid and, in developing metrics for evaluating and “quantifying” the electric grid, to consider “appropriate ownership and operating rules” for electric utilities to enable improved performance – which is defined as adoption of emerging technologies, like DER.

The Conference debate on S. 2012 continued into December and, despite efforts by Senate Committee leaders to find common ground, fell apart in the final hours of the Congress.

Again in 2016, 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, which was signed into law as part of 2016 omnibus spending bill.  The coalition’s work, however, continued.  Over the last several years, its scope 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.  Among other issues, the coalition worked to remove language included in the House Energy Bill requiring FERC action on EMP and GMD threats above and beyond the current NERC risk-based approach.

Although no significant tax reform legislation advanced in the 114th Congress, TAPS continued 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.

TAPS also met with the Department of Energy Quadrennial Energy Review Team to discuss priorities in energy policy for the electric transmission grid.  TAPS spent considerable time educating members of the team on aspects of RTO policy and the perceived deficiencies in federal energy policy.  TAPS expressed frustration with the current mandatory capacity market policies of some of the RTOs and argued that the costs of the programs are not resulting in benefits to consumers.  TAPS members also argued in support of reforms to RTO governance and in support of directed authority to self-supply energy without arbitrary restraints.

In addition to TAPS’ consultants’ regular communications with legislators and staff, TAPS’ Government Affairs Committee made visits to Capitol Hill on several occasions in 2016 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 2016, Chris Gowder (FMPA), Chris Norton (AMP), and Robin Spady (MEAN) also served on the NAESB Wholesale Electric Quadrant Executive Committee.  Additionally, TAPS Executive Director John Twitty was Vice Chairman of the Member Representatives Committee and until February, 2016 a member of the Reliability Issues Steering Committee (RISC).  Carol Chinn (FMPA), former MRC chair, holds one of the state/muni MRC seats, and Dave Osburn (OMPA) holds one of the Transmission Dependent Utilities seats.  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 will continue into 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 2016 TAPS played an important role in the ever-evolving relationship between FERC and NERC.

TAPS 2016 NERC and NAESB-related activities

  • Regulations Implementing FAST Act Section 61003 – Critical Electric Infrastructure Security and Amending Critical Energy Infrastructure Information (RM16-15)
    • June 16, 2015 FERC issues NOPR.
    • August 19, 2016 TAPS files comments urging FERC, among other things, to incorporate the FAST Act’s exemption of critical electric infrastructure information from state and tribal public records laws into its regulations and interpret it to apply to the broad array of public power entities subject to those disclosure requirements.
    • November 17, 2016 FERC issues Final Rule adding the public records act exemption to its regulation and interpreting it to cover governmental entities subject to such disclosure requirements that may not be “political subdivisions” under the laws of their state.
  • Version 6 Critical Infrastructure Protection Reliability Standards (RM15-14)
    • January 21, 2016 FERC issues CIP Version 6 Final Rule, largely adopting its proposed directives, but deferring supply chain issues for further consideration.
    • February 4, 2016 TAPS joins APPA, EEI, EPSA, ELCON, LPPC, and NRECA in a request to defer CIP Version 5 implementation from April 1, 2016 to July 1, 2016 so the implementation date would be aligned with CIP Version 6.
    • February 8, 2016 NERC responds to the Trade Associations, stating that the CIP Version 6 Final Rule’s only modification necessitating different sets of processes and procedures is the elimination of “identify, assess, and correct” language in seventeen of the CIP Version 5 Reliability Standards requirements.
    • February 12, 2016 TAPS joins APPA, EEI, EPSA, ELCON, LPPC, and NRECA in replying to NERC, noting that elimination of the “identify, assess, and correct” language is not the only change required by the CIP Version 6 Final Rule.
    • February 25, 2016 FERC grants the Trade Associations’ request to defer CIP Version 5 implementation to July 1, 2016.
    • April 19, 2016 TAPS, with APPA and LPPC, submits supplemental comments 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.
  • 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.
  • 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 (“LGIA”) and Small Generator Interconnection Agreement (“SGIA”) 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.
    • In late 2016, TAPS works with APPA and LPPC to develop joint responsive comments (filed in January, 2017).
  • Retrospective Analysis of Existing Rules (AD12-6)
    • October 28, 2016 FERC staff memorandum identifies Order 693 as a rule that must be reviewed under the Regulatory Flexibility Act (“RFA”), but concludes that any reforms pertaining to significant economic impacts upon a substantial number of small entities have been already addressed in previous Commission proceedings or can be addressed in future ones.
    • December 5, 2016 TAPS, with APPA, submits comments describing how Order 693’s economic impact on small entities has grown in the decade since the Order was issued, and urging FERC to take its RFA responsibilities more seriously.
  • Protection System Maintenance Reliability Standard; Protection System, Automatic Reclosing, and Sudden Pressure Relaying Maintenance and Reliability Standard (RM14-8, RD15-3, RM15-9)
    • January 22, 2016 TAPS joins APPA, EEI, ELCON, LPPA, and NRECA in submitting a notice withdrawing a previously filed request for clarification in light of further FERC action.
  • NERC Rules of Procedure
    • June 30, 2016 TAPS submits comments to NERC regarding proposed additions of Glossary terms to NERC Rules of Procedure, urging consistency with the Glossary.
  • NERC Functional Model
    • September 7, 2016 TAPS joins APPA and LPPC supporting the comments submitted by the Compliance and Certification Committee (“CCC”) on proposed changes to the Functional Model.
  • 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 2, 2016 SM-TDUs provide policy input regarding 2017 Business Plan and Budget development (including high-priority risk projects and CIP Version 5 implementation), ERO Enterprise strategic planning design, and the Cost Effectiveness Analysis Process (“CEAP”) pilot.
      • April 27, 2016 SM-TDUs provide policy input regarding reliability assessment and the ERO Enterprise Strategic Planning Framework.
      • August 3, 2016 SM-TDUs provide policy input regarding the reliability assessments planning and review process, the scope of and plans for the Distributed Energy Resources Task Force, and ERO Enterprise strategic planning and metrics.
      • October 18, 2016 SM-TDUs provide policy input regarding the ERO Reliability Risk Priorities Report and the 2017-2020 ERO Enterprise Strategic Plan and Metrics.

TAPS 2016 FERC (Non-Reliability) Efforts

  • Price Formation in RTO Markets (AD14-14, RM16-5)
    • January 21, 2016 FERC issues Offer Cap NOPR, proposing to eliminate the existing $1,000/MWh cap on offers.
    • April 4, 2016 TAPS comments on Offer Cap NOPR, requesting (among other things) a “hard cap” no higher than $1,500 on offers that can set locational marginal prices (“LMPs”).
    • November 17, 2016 FERC issues Final Rule on Offer Caps, allowing cost-based offers exceeding $1,000 MWh to set LMPs, up to a hard cap of $2,000 MWh.
    • December 19, 2016 TAPS seeks rehearing and clarification, challenging (among other things), FERC’s failure to adopt a hard cap lower than $2,000/MWh.
  • Competitive Transmission Development (AD16-18)
    • June 27-28, 2016 FERC holds technical conference, on which TAPS reports.
    • August 3, 2016 FERC invites post-technical conference comments on specific questions.
    • August 5, 2016 TAPS joins APPA, EEI, LPPC, and NRECA in requesting a 31day extension of time to file responsive comments.
    • August 15, 2016 FERC extends the due date from September 2 to October 3.
    • October 3, 2016 TAPS responds to FERC questions regarding the treatment of “cost-contained bids” in Order 1000 processes (suggesting a mechanism to recognize their benefits in certain circumstances, but opposing changes to FERC’s Incentives Policy or its Discounted Cash Flow methodology).
  • Utilization in the Organized Markets of Electric Storage Resources as Transmission Assets Compensated through Transmission Rates, for Grid Support Services Compensated in Other Ways, and for Multiple Services (AD16-25)
    • November 9, 2016 FERC holds technical conference, on which TAPS monitors and reports.
    • December 14, 2016 TAPS files Post-Technical Conference Comments.
  • Collection of Connected Entity Data from Regional Transmission Organizations and Independent System Operators (RM15-23)
    • September 17, 2015 FERC issues NOPR to require all RTO market participants to provide Connected Entity data to their RTOs.
    • December 8, 2015 FERC holds technical conference, on which TAPS monitors and reports.
    • January 21, 2016 TAPS files comments supporting the objectives of FERC’s NOPR, but suggests modifying to minimize the burdens on entities that have comparatively little incentive or ability to affect market outcomes improperly.
    • July 21, 2016 FERC withdraws September 17, 2015 NOPR and issues new NOPR on Data Collection for Analytics and Surveillance and Market-Based Rate Purposes that exempts public power.
  • Ownership Information in Market-Based Rate Filings (RM16-3)
    • December 17, 2015 FERC issues NOPR to no longer require reporting of comprehensive ownership information, but instead to limit reporting to certain types of affiliate owners.
    • February 22, 2016 TAPS files comments proposing narrower means to address burden concerns, without eroding FERC’s ability to ensure just and reasonable MBR rates.
    • July 21, 2016 FERC withdraws December 17, 2015 NOPR and issues new NOPR on Data Collection for Analytics and Surveillance and Market-Based Rate Purposes.
  • Data Collection for Analytics and Surveillance and Market-Based Rate Purposes (RM16-17)
    • July 21, 2016 FERC issues NOPR, superseding the Connected Entity and Ownership Information NOPRs, and proposing new relational database.
    • August 11, 2016 FERC holds technical workshop, on which TAPS monitors and reports.
    • September 19, 2016 TAPS comments supporting the proposed exclusion of public power from applicability, but urging additional MBR reporting especially during initial implementation of the new MBR reporting system, to monitor the relational database, ensure that it functions as intended, and enable the Commission to collect all the information necessary to ensure just and reasonable rates.
    • December 7, 2016 FERC holds a second technical workshop focused on the submittal process, on which TAPS monitors and reports.
  • Modifications to Requirements for Review of Transactions under Section 203 and Market-Based Rate Applications under Section 205 (RM16-21)
    • September 22, 2016 FERC issues Notice of Inquiry to explore whether, and if so, how, FERC should revise its current approach to identifying and assessing market power for reviews under sections 203 and 205 of the Federal Power Act (“FPA”).
    • November 28, 2016 TAPS, with APPA, responds to FERC’s questions regarding potential modifications to its analyses, but urges FERC to increase its receptivity to intervenors in FPA section 203 proceedings raising market power arguments that go beyond the Competitive Analysis Screen.
  • 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 section 203 transactions.
    • March 30, 2015 TAPS supports FERC’s strengthening of hold harmless protections, but seeks clarification that FERC is not proposing to find that certain types of FPA section 203 transactions do not have an adverse effect on rates.
    • May 19, 2016 FERC issues Policy Statement that does not significantly backtrack from the pro-consumer guidance proposed, with clarification consistent with TAPS’ position on a significant issue.
  • 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 to the exclusion of first-tier market area capacity for triggering change of status reporting and the treatment of behind-the-meter generation.
    • December 23, 2015 FERC issues partial stay of corporate organizational chart compliance requirement, pending resolution of rehearing requests.
    • May 19, 2016 FERC issues Rehearing Order that denies TAPS’ requests but also does not backtrack on positive rulings TAPS expressly supported.  FERC also defers ruling on rehearing applications regarding the corporate organization chart requirement.

TAPS 2016 CFTC Efforts

  • Proposed Amendment to Final Order Exempting Specified RTO/ISO Transactions
    • June 15, 2016 TAPS supports comments submitted to the CFTC by APPA and NRECA opposing a proposed amendment to a CFTC exemption of RTO/ISO transactions from most of the requirements of the Commodities Exchange Act.  The proposed amendment would make those transactions subject to a private right of action as well as FERC and CFTC enforcement in cases of fraud and market manipulation.
    • October 24, 2016 CFTC issues Order declining to subject RTO and ISO transactions to lawsuits by market participants.