2019 was an active year for TAPS, including the following:

Legislation

The House and Senate both spent considerable time discussing energy matters in 2019, with the Senate, in particular, focused on the development of comprehensive energy legislation.  The Senate Energy and Natural Resources Committee marked up over 50 pieces of energy legislation which were ultimately combined into a single legislative measure.  In addition to action on legislative measures, the Senate Energy Committee held oversight hearings on topics including the electric sector’s role in climate change and assessing cyber threats to the electric sector.

The House Energy and Commerce Committee held multiple hearings on energy related topics with a heavy emphasis on the role of the electric sector in climate change mitigation.  Notable in these discussions was Committee members’ interest in topics including electric markets and electric energy policy, and links between those topics and ways to decarbonize the economy.  In addition to the heavy emphasis on climate mitigation-related policies, the Committee also investigated numerous issues including cyber security and oversight of FERC.

TAPS engaged with the committees with jurisdiction over energy policy and with other key energy policy leaders to reiterate long standing policy positions.  Notably, TAPS urged Congress to encourage FERC to better achieve FPA Section 217’s directive to ensure a robust transmission grid at reasonable cost designed to meet the reasonable needs of load-serving entities.

TAPS also continued to reiterate the need for Congress to assure that load-serving entities have a seat at the table to ensure their reasonable needs are planned for in the transmission planning process.  The lack of transparency in the transmission planning process is a problem in too many parts of the country where planning processes occur without meaningful stakeholder input.  As some in Congress contemplate expansion of the RTO model, this deficiency must be addressed.

Another important step advocated for was more encouragement of joint transmission ownership arrangements.  Under such arrangements, load-serving entities embedded in the transmission system have the opportunity to invest in their load-ratio share of the transmission grid; they have a seat at the “grown up” table in the planning process, so they can play an integral role in ensuring their load is being properly served with necessary infrastructure.  Non-profit, public power load-serving entities also have no interest in “gold-plating” the transmission system, so including them in the transmission planning process helps to ensure that the grid is robust and reliable, without imposing unnecessary costs.

TAPS also engaged policy makers on the Hill in the discussion regarding incentive rates for transmission service.  TAPS membership has observed that above-cost rate incentives do not advance the objective of planning for a grid right-sized to meet the reasonable needs of load-serving entities.  TAPS is concerned that transmission has become a magnet for excessive investments.  The potential for guaranteed, incentive-elevated returns on equity on transmission facilities that are low-risk investments, with full cost recovery ensured by formula rates, will encourage over-investment.

Following up on testimony by John Twitty in 2018 on behalf of TAPS before the House Energy and Commerce Committee, TAPS members continued to highlight the problem that FERC has refused to implement Section 217(b)(4) to include both capacity and energy when recognizing long-term transmission rights (or equivalent financial rights) for the delivery of energy under their power supply arrangements.  As a result, load-serving entities may be unable to rely on these long-term power supply arrangements to meet resource adequacy requirements, even though their long-term firm transmission arrangements expressly provide for the delivery of both capacity and energy.  Instead, these load-serving entities are effectively forced to purchase, at potentially higher prices, other capacity at their load.

TAPS continued to educate members on the importance of FPA Section 217(b)(4) and to encourage Congress to take FERC to task for not fully embracing its dictates; to limit return on equity incentives for new transmission; and to aggressively encourage joint transmission ownership arrangements.

Again in 2019, 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 Electromagnetic Pulse (“EMP”) attack or a Geomagnetic Pulse Disturbance (“GMD”) event, above and beyond the current NERC risk-based approach.

In addition to TAPS’ consultant’s regular communications with legislators and staff, the TAPS Government Affairs Committee made visits to Capitol Hill on several occasions in 2019 to advocate in support of these positions.

NERC/NAESB

As the FERC-certified Electric Reliability Organization (“ERO”), NERC is authorized to establish and enforce mandatory reliability standards, subject to FERC review.  FERC also reviews NAESB standards and incorporates them into its regulations by reference.  TAPS works 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 has served as chair of the NERC Member Representatives Committee (“MRC”) 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.  Chris Norton (AMP) also serves on the NAESB Wholesale Electric Quadrant Executive Committee.  Additionally, Bill Gallagher and TAPS Executive Director John Twitty (also a former chair of the MRC) hold the Transmission-Dependent Utility seats on the Member Representatives Committee.  Carol Chinn (FMPA), former MRC chair, holds one of the state/muni MRC seats, and Roy Jones (ElectriCities) holds the other.  Carol Chinn is also a member of the NERC Reliability Issues Steering Committee.  Scott Tomashefsky (NCPA) serves as vice-chair of the Compliance and Certification Committee.  TAPS members have a presence on each of the 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 2019 TAPS played an important role in the ever-evolving relationship between FERC and NERC.

TAPS 2019 NERC and NAESB-related activities

  • FERC Reliability Technical Conference (AD19-13)
    • TAPS monitors and reports on the June 27, 2019 conference.
  • FERC Grid Security Technical Conference (AD19-12)
    • March 28, 2019 TAPS monitors and reports on FERC’s technical conference on Security Investments for Energy Infrastructure.
    • May 28, 2019 TAPS submits post-technical conference comments noting that security investments should be risk-based, with smaller utilities making security investments commensurate with the risk they pose to the grid, and opposing incentives for security investments to utilities with cost-of-service rates.
  • FERC/NERC Staff White Paper on CIP Notices of Penalty (AD19-18)
    • August 27, 2019 FERC and NERC issue a joint staff white paper proposing to change the format of CIP Notices of Penalty (“NOPs”): in place of NERC’s current practice of redacting, and requesting CEII treatment for, the registered entity name and other details NERC believes constitute critical energy infrastructure information, NERC would make public only the registered entity name, the standard(s) violated, and the penalty; all other information would be included in a non-public attachment to the filing.
    • September 11, 2019 TAPS, with APPA, EEI, ELCON, EPSA, LPPC, and NRECA, requests an extension of the September 26 comment date.
    • September 19, 2019 FERC grants a 30-day extension.
    • October 28, 2019 TAPS joins APPA, ELCON, EEI, EPSA, LPPC, and NRECA in submitting comments emphasizing that NERC should work with industry stakeholders to ensure that registered entities retain access to redacted violation and mitigation details, because of that information’s value in improving compliance and security practices, and raising concerns related to the treatment of information labeled as CEII in CIP NOP filings.
  • Supply Chain Risk Management Reliability Standard (RM17-13)
    • October 18, 2018 FERC Order 850 adopts the NOPR’s proposal to defer consideration of low impact BES Cyber Systems pending the NERC Board of Trustees (“BOT”)-directed study of cybersecurity supply chain risks directed by the NERC BOT, but also directing NERC to expand the standards to include some Electronic Access Control and Monitoring Systems associated with medium and high impact systems.
    • March 1, 2019 TAPS submits comments to NERC on draft Supply Chain Report.
    • May 28, 2019 NERC files its Staff Report and Recommended Actions on Supply Chain Risks.
    • August 19, 2019 NERC issues Supply Chain Risk Management Data Request.
    • December 9, 2019 NERC staff issues a report analyzing the responses to the August 2019 Supply Chain Risk Management Data Request, and recommends the modification of the Supply Chain Standards to include low impact BES Cyber Systems with remote electronic access connectivity.
    • January 22, 2020 State/Municipal and TDU Sectors provide input that, among other things, opposes NERC staff’s proposal to expand Supply Chain Standards to low impact BES Cyber Systems with remote electronic access connectivity.
  • Standards Efficiency Review (RM19-16, RM19-17, RM14-7)
    • March 22, 2019 TAPS submits comments on the concepts under consideration in Phase 2 of the Standards Efficiency Review (“SER”) process.
    • June 7, 2019 NERC submits the proposed retirements and partial retirements proposed under Phase 1 to FERC in Docket Nos. RM19-16, RM19-17, and RM14-7.
    • John Allen (City Utilities of Springfield, MO) is chair of the Phase 2 Working Team and a member of the CIP Phase 1 team.
    • August 26, 2019 TAPS submits comments to CIP SER team proposing CIP requirements for retirement, consolidation, or modification.
    • September 23, 2019 TAPS submits comments to SER Phase 2 team on draft Evidence Retention Report.
    • January 23, 2020 FERC issues NOPR proposing to accept all but three of the Phase 1 proposed retirements.
  • State/Municipal and TDU Sector Policy Input to NERC Board of Trustees
    • The NERC MRC members from the State/Municipal and TDU Sectors (SM-TDUs) submit joint policy input to the Board of Trustees in response to the Board’s quarterly request for input. The responses are generally coordinated by TAPS, APPA, and LPPC.
      • January 23, 2019 SM-TDUs provide input regarding the 2019 ERO Enterprise Dashboard and ERO Performance Objectives, a possible special reliability assessment on integration of battery storage, and cloud services.
      • April 23, 2019 SM-TDUs provide input regarding the NERC Draft Cyber Security Supply Chain Risks – Staff Report and Recommended Actions.
      • August 6, 2019 SM-TDUs provide input regarding the proposal to replace the NERC Critical Infrastructure Committee (CIPC), Operating Committee (OC) and Planning Committee (PC) with a Reliability Security Council.
      • October 22, 2019 SM-TDUs provide input regarding the proposal to replace three standing technical committees with a Reliability and Security Technical Committee (RSTC).

TAPS 2019 FERC (Non-Reliability) Efforts

  • Inquiry Regarding the Commission’s Electric Transmission Incentives Policy (PL19-3)
    • March 21, 2019 FERC issues Notice of Inquiry regarding FERC’s transmission incentives policy.
    • June 26, 2019 TAPS files comprehensive comments opposing expanded and benefits-based incentives and urging FERC to strengthen support for inclusive joint ownership.
    • August 23, 2019 TAPS joins numerous other organizations in submitting a letter to FERC highlighting the substantial transmission cost increases borne by customers in many regions in recent years.
    • August 26, 2019 TAPS files reply comments.
    • October 9, 2019 TAPS joins numerous entities including state agencies in submitting to FERC a letter urging limitations on transmission incentives.
  • Inquiry Regarding FERC’s Policy for Determining Return on Equity (PL19-4)
    • March 21, 2019 FERC issues Notice of Inquiry into how it should determine returns on equity allowed in regulated electric and pipeline rates.
    • June 26, 2019 TAPS, with APPA, ELCON, NRECA, the Aluminum Association, American Chemistry Council, American Forest & Paper Association, and Industrial Energy Consumers of America, submits comments, supported by two expert affidavits.
    • July 26, 2019 TAPS, with APPA, ELCON, NRECA, the Aluminum Association, American Chemistry Council, American Forest & Paper Association, and Industrial Energy Consumers of America, submits reply comments, supported by two expert affidavits.
    • August 23, 2019 TAPS joins numerous other organizations in submitting a letter to FERC highlighting the substantial transmission cost increases borne by customers in many regions in recent years.
    • November 21, 2019 FERC issued an order on the Return on Equity for the MISO Transmission Owners, Docket Nos. EL14-12 and EL15-45, addressing most of the issues that were the subject of the notice of inquiry in Docket No. PL19-4.
  • Technical Conference Regarding Managing Transmission Line Ratings (AD19-15)
    • June 28, 2019 FERC notices a FERC Staff-led technical conference regarding managing transmission line ratings.
    • August 23, 2019 FERC Staff issues white paper.
    • September 10-11, 2019 TAPS monitors and reports on technical conference.
    • November 1, 2019 TAPS submits post-technical conference comments in response to October 2, 2019 Notice inviting comments.
  • Grid-Enhancing Technologies (AD19-19)
    • September 9 and October 11, 2019 FERC notices a staff-led workshop.
    • November 5-6, 2019 staff-led workshop; Steve Leovy (WPPI) participates as panelist.
  • Qualifying Facility Rates and Requirements—PURPA Reform (RM19-15, AD16-16)
    • September 19, 2019 FERC issues NOPR proposing significant changes to FERC’s regulations implementing the Public Utility Regulatory Policies Act of 1978 (“PURPA”).
    • December 3, 2019 TAPS submits supportive comments.
  • Refinements to Horizontal Market Power Analysis for Sellers in Certain Regional Transmission Organization and Independent System Operator Markets (RM19-2)
    • December 20, 2018 FERC issues NOPR proposing to eliminate obligation of sellers seeking to obtain or retain market-based rate (“MBR”) authority in certain RTOs to submit indicative screens.
    • March 18, 2019 TAPS submits comments urging FERC not to establish an RTO exemption from the indicative screens requirement, but supporting the NOPR’s proposal to remove the rebuttable presumption that, for those RTOs lacking an RTO-administered capacity market, RTO monitoring and mitigation is sufficient to address horizontal market power concerns for capacity sales where there are indicative screen failures.
    • July 18, 2019 FERC Order 861 adopts the NOPR’s proposal, with minor clarifications.
    • Rehearing requests filed by others remain pending.
  • Inquiry Regarding the Effect of the Tax Cuts and Jobs Act on Commission-Jurisdictional Rates (RM19-5)
    • November 15, 2018 FERC issues NOPR in RM19-5 recognizing that the Tax Cuts and Jobs Act affected the amount of Accumulated Deferred Income Taxes (“ADIT”) that utilities have reflected on their books and proposing to require that utilities file changes to their transmission rates to properly reflect the accounting of excess ADIT and provide for the return of excess ADIT.
    • January 22, 2019 TAPS submits comments urging FERC to require that formula rate changes made in compliance with a final rule provide that the utility “must submit a FPA section 205 filing to obtain Commission approval prior to reflecting in rates any regulatory assets and liabilities arising from future tax changes.”
    • November 21, 2019 FERC issues Order 864 largely tracking the NOPR and declining to adopt the requirement proposed by TAPS.
  • Storage – Electric Storage Utilization, and Participation of Storage and Distributed Energy Resource Aggregation in Organized Markets (AD16-25, RM16-23, PL17-2, D.C. Cir. Case Nos. 19-1142 and 19-1147)
    • February 15, 2018 FERC issues Storage Rule (Order 841, RM16-23) and transfers Distributed Energy Resource (“DER”)-related issues to other dockets (Participation of DERs in RTO Markets (RM18‑9).
    • March 19, 2018 TAPS requests rehearing of Order 841, asking FERC to rehear its determination not to allow state and local regulators to “opt-in,” or “opt-out” to participation in RTO markets by distribution- and behind-the-meter-connected storage, and its failure to adopt TAPS proposal to prevent manipulation.
    • May 16, 2019 FERC Order 841-A denies rehearing, asserts broad preemptive authority over state and local regulator conditions on participation in RTO markets by distribution- and behind-the-meter-connected storage, and denies “opt-in/out.”
    • July 11, 2019 National Association of Regulatory Utility Commissioners (“NARUC”) files a petition for review of Orders 841 and 841-A in the D.C. Circuit (Case No. 19-1142).
    • July 15, 2019 APPA, NRECA, EEI, and AMP file a separate petition for review of Orders 841 and 841-A, which is consolidated with NARUC’s (Case No. 19-1147).
    • July 29, 2019 TAPS files a motion to intervene in support of petitioners in the consolidated D.C. Circuit cases.
    • November 6, 2019 TAPS submits brief in support of petitioners in D.C. Circuit.
  • Data Collection for Analytics and Surveillance and Market-Based Rate Purposes (RM16-17)
    • July 18, 2019 FERC Order 860 adopts (with some modifications) the NOPR’s proposals to (1) streamline MBR sellers’ submission of information to FERC and (2) collect such information in a relational database; and declining to require submission of “Connected Entity Information”.
    • August 19, 2019 TAPS requests clarification or rehearing with respect to various implementation issues to better ensure that Order 860 operates as intended.
  • Performance Metrics for ISOs, RTOs, and Regions Outside ISOs and RTOs (AD19‑16)
    • July 3, 2019 FERC issues Notice of Information Collection and Request for Comments regarding proposed performance metrics.
    • September 9, 2019 TAPS submits comments suggesting changes to proposed metrics for: (a) Congestion Management, and (b) Capacity Market Procurement and Prices.
    • January 24, 2020 FERC issues Notice of Information Collection and Request for Comments largely adopting performance metrics proposed on July 3, 2019, but modifying Congestion Management metric.