Reliability

Subscribe to Reliability via RSS

On December 17, 2020, FERC issued a Notice of Proposed Rulemaking proposing to revise its regulations to establish incentives for public utilities to make certain cybersecurity investments that go beyond the current requirements of the Critical Infrastructure Protection (“CIP”) Reliability Standards established by the North American Electric Reliability Corporation (“NERC”) (“Cybersecurity NOPR”). Specifically, FERC proposed rules to allow regulated entities to:

  1. receive incentive-based rate treatment for the voluntary implementation of: (i) certain NERC CIP Reliability Standards to facilities that are not currently subject to those requirements (“NERC CIP Incentives Approach”), and/or (ii) certain security controls included in the National Institute of Standards and Technology Framework (“NIST Framework Approach”);
  2. request a return-on-equity adder of two hundred (200) basis points for making eligible cybersecurity capital investments; and
  3. defer cost recovery of certain cybersecurity costs that are generally expensed as incurred, and treat such costs as regulatory assets that may be included in transmission rate base.

Continue Reading FERC Issues Notice of Proposed Rulemaking on Cybersecurity Investment Incentives

On October 30, 2020, FERC rejected ISO New England Inc.’s (“ISO-NE”) proposed revisions to the ISO-NE tariff to resolve long-term fuel security concerns in the New England region. FERC found that ISO-NE’s proposed solutions would substantially increase consumer costs without meaningfully improving fuel security in the region, and offered guidance on how ISO-NE might develop a just and reasonable approach to address its fuel security concerns.
Continue Reading FERC Rejects ISO-NE’s Long-Term Fuel Security Proposal

On October 6, 2020, the California Independent System Operator (“CAISO”), California Public Utilities Commission (“CPUC”), and the California Energy Commission (“CEC”) (collectively, “Joint Entities”) announced that their preliminary analysis pointed to a number of factors that caused two mid-August electricity outages in CAISO. Specifically, the group’s Preliminary Root Cause Analysis report (“Preliminary Analysis”) concluded that the outages resulted from a convergence of factors, including (i) the extreme west-wide heat storm, (ii) shortfall in system planning, and (iii) certain day-ahead energy market practices.  As directed by Governor Newsom, the Preliminary Analysis includes immediate, near, and longer-term actions that can be taken to minimize future power outages.
Continue Reading CAISO, CEC, and CPUC Conclude Several Factors Caused Mid-August Outages in California

On September 29, 2020, in response to a request for rehearing, FERC issued an order modifying the discussion in, while sustaining the result of, a prior order finding that PJM Interconnection, L.L.C. (“PJM”) was not in compliance with three of the five criteria of Order No. 1000’s immediate need reliability project exemption (“Immediate Need Exemption”). Concurrently, in a separate order, FERC modified, while sustaining the result of, an order where it found that ISO New England Inc.’s (“ISO-NE”) implementation of the Immediate Need Exemption was not unjust, unreasonable, or unduly discriminatory or preferential.
Continue Reading FERC Sustains PJM and ISO-NE Immediate Need Reliability Project Exemption Orders

On September 23, 2020, staff from the North American Electric Reliability Corporation (“NERC”) and FERC (collectively, “Joint Staff”) issued a second joint white paper that reversed previous recommendations regarding publicly disclosing the identities of entities accused of Critical Infrastructure Protection (“CIP”) violations. As stated in the Second Joint Whitepaper, the previous recommendation to publicly disclose CIP violator names and other information raised “substantial risks to the security of the Bulk-Power System.” Accordingly, the Second Joint Whitepaper stated that from now on, NERC will request that CIP noncompliance filings be treated as Critical Energy/Electric Infrastructure Information (“CEII”). FERC Staff will also designate such filings as CEII in their entirety.  Additionally, because of the risk associated with the disclosure of CIP noncompliance information, NERC will no longer publicly post redacted versions of CIP noncompliance filings and submittals.
Continue Reading FERC and NERC Staff Reverse Course, Opt for Confidentiality on CIP Violations

On September 17, 2020, FERC issued a Notice of Inquiry (“NOI”) seeking comments on strategies to mitigate any potential risks to the bulk electric system posed by telecommunications equipment and services produced or provided by entities identified as risks to national security. Huawei Technologies Company (“Huawei”) and ZTE Corporation (“ZTE”) have been identified as examples of such entities because they provide communication systems and other equipment and services that are critical to bulk electric system reliability.
Continue Reading FERC Opens Inquiry into Foreign Adversary-Provided Bulk Power System Telecommunications Equipment, Focusing on Huawei and ZTE Equipment Threat

On July 17, 2020, FERC issued three orders relating to the executed cost-of-service agreement (“Mystic Agreement”) among Constellation Mystic Power, LLC (“Mystic”), Exelon Generation Company, LLC (“Exelon”), and ISO New England Inc. (“ISO-NE”).  The Mystic Agreement provides for cost-of-service compensation to Mystic for the continued operation of two gas-fired generating units.  In the first two orders, FERC addressed requests for rehearing of its 2018 orders accepting the Mystic Agreement (the “July 2018 Order” and the “December 2018 Order”), including its conclusion that Mystic should recover from ratepayers 91% of the operating costs of the Everett Marine Terminal (“Everett”), a non-jurisdictional liquified natural gas import terminal.  In its third order, FERC accepted in part a Mystic compliance filing submitted in response to the December 2018 Order.  Commissioner Glick issued dissents to each of the July 17 orders.  Commissioner Glick concluded that FERC was forcing consumers to pay the full cost of service for Mystic in order to “bail out” Everett, and that each of the orders exceeded FERC’s jurisdiction under the Federal Power Act (“FPA”).
Continue Reading Divided FERC Permits Mystic to Recover Operating Costs of Non-Jurisdictional LNG Terminal

On July 8, 2020, the U.S. Department of Energy (“DOE”) issued a request for information (“RFI”) seeking public input on the energy industry’s current risk mitigation practices with regard to the bulk-power system supply chain. The DOE issued the RFI pursuant to Executive Order No. 13920 (“Executive Order”), wherein the Secretary of Energy was directed, among other things, to investigate the bulk power system for equipment presenting a risk from foreign adversaries (see May 5, 2020 edition of the WER). In the RFI, DOE asks stakeholders to identify potential vulnerabilities in the bulk-power system supply chain that could have national security implications and the estimated economic costs of implementing the Executive Order.
Continue Reading DOE Requests Information on Bulk Power System Vulnerabilities Pursuant to Executive Order

On June 18, 2020, FERC issued a Notice of Inquiry (“NOI”) requesting comment on whether the currently-effective Critical Infrastructure Protection (“CIP”) Reliability Standards adequately address: (i) cybersecurity risks pertaining to data security; (ii) detection of anomalies and events; and (iii) mitigation of cyber security events. FERC also seeks comment on the potential risk of a coordinated cyberattack on geographically distributed targets and whether Commission action, including potential modifications to the CIP Reliability Standards, would be appropriate to address such risk. In addition, FERC staff issued a White Paper seeking comment on a potential new framework for providing transmission incentives to utilities for their cybersecurity investments.
Continue Reading FERC Seeks Comment on Potential Enhancements to CIP Reliability Standards and Potential Transmission Incentives Framework for Cybersecurity Investments

On May 29, 2020, FERC accepted the California Independent System Operator Corporation’s (“CAISO”) proposed update to its capacity procurement mechanism (“CPM”) compensation for offers above the soft offer cap, where a participating resource will be compensated at the resource’s going-forward fixed costs plus a 20 percent adder. The new CPM compensation formula will go into effect June 1, 2020. Commissioner Richard Glick dissented, stating that while he agreed that CPM compensation should be determined by a resource’s going-forward fixed costs, CAISO had failed to show that the 20 percent adder was just and reasonable.
Continue Reading CAISO Updates Capacity Procurement Mechanism Compensation for Offers Above the Soft Cap