Last week, two separate pieces of proposed legislation from Senator Jeff Bingaman (D-NM), one on cyber security (“Cyber Security Legislation”) and one on renewable electricity standards (“RES Legislation”), continued to make their way through the United States Senate Committee on Energy and Natural Resources (“Senate Energy Committee”). On May 19, 2009, the Senate Energy Committee unanimously approved Senator Bingaman’s Cyber Security Legislation to address emergency cyber threats and vulnerabilities. On May 21, 2009, Bingaman’s RES Legislation survived Senator Jeff Sessions’ (R-AL) proposed amendment to strike the bill and will now continue to go through mark-up in the Senate Energy Committee.

Cyber Security Legislation

In order to address both cyber security vulnerabilities and threats, Senator Bingaman’s Cyber Security Legislation splits authority between FERC and the Department of Energy (“DOE”). A “vulnerability” is a “weakness or flaw in the design or operation of an electronic device or communication network that exposes critical electric infrastructure to a cyber security threat.” A “cyber security threat” is defined as a “imminent danger of an act that disrupts, attempts to disrupt, or poses a significant risk of disrupting the operation of programmable electronic devices or communications networks . . . essential to the reliable operation of critical electric infrastructure.”

FERC is granted authority to issue, without prior notice, either a rule or order to protect critical electric infrastructure against cyber security vulnerabilities. Meanwhile, DOE can order entities under FERC’s jurisdiction to take necessary actions to protect against a cyber security threat. While the Cyber Security Legislation limits vulnerabilities to instances that can expose critical electric infrastructure to cyber security threats, some are still concerned that the current language can lead to conflicting or overlapping federal directives.

During mark-up last week the Senate Energy Committee voted down an amendment to give FERC authority to address both vulnerability and threats. Some of the amendments adopted by the Senate Energy Committee include: mechanisms that allow utilities to recover certain costs when implementing orders from DOE, provisions requiring increased consultation between DOE and the electric industry, and regulations prohibiting certain disclosures of information that entities need when following DOE or FERC orders and rules.

RES Legislation

Senator Bingaman’s proposed RES Legislation currently requires sellers of electricity to acquire 15% of their supply from a combination of renewable energy resources and energy efficiency improvements by 2021. Previously, Senator Bingaman had proposed a requirement of 20%. While the new RES Legislation allows roughly one fourth of the requirements to come from energy efficiency measures, several members on the Senate Energy Committee are still concerned that the requirements are too high. While the RES Legislation survived Senator Session’ amendment by a vote of 13-9, it has not completed the mark-up process and thus, is subject to several changes.

One area that will receive a significant amount of attention in the coming weeks is what qualifies as a renewable. Currently, both nuclear energy and existing hydropower at dams with generation do not qualify. The RES Legislation also contains provisions that will allow utilities to seek a one-year waiver if meeting the requirements would result in a rate hike of 4% or more. If utilities cannot meet the requirements, they can purchase renewable energy credits or energy efficiency credits from other utilities that have a surplus. These credits currently hold a three-year lifespan and can be banked for future use.

Senator Bingaman plans to incorporate both pieces of legislation into a comprehensive energy bill, which he plans to put together in June. While the Senate Energy Committee has not yet posted the most recent versions of the pieces of legislation, any new updates and related postings can be found on the Senate Energy Committee’s website at: http://energy.senate.gov/public/index.cfm?FuseAction=EnergyBill.2009.