Federal Energy Regulatory Commission

If you are new to the industry or simply want to brush up on the basics, the Federal Energy Regulatory Commission’s (FERC) consider the recently released Reliability Primer a gift. The comprehensive manual not only provides an overview of the FERC’s role in overseeing the reliable operation of the power grid, it provides a great overview of the electric power system. It should be required reading for electric utility employees, especially new hires and those with legal or regulatory responsibilities. This manual helps newcomers develop foundational knowledge in an industry riddled with acronyms and jargon. Its title, Reliability Primer, could very well have been Electricity 101 and 102.

Starting on page 10, the Primer begins with the basics, providing a detailed discussion about the three main functions of the electric system; generation, transmission and distribution. In the discussion regarding generation, the Primer explains the various types of power plants, ranging from thermal to renewables such as wind and solar. Data on energy sources is also provided. With the fracking boom, it is not surprising that natural gas is the leader with coal and nuclear rounding out the top three fuel sources.

If you want to understand the FERC’s authority under the Federal Power Act (FPA), section III of the Primer provides a detailed discussion. It explains the Energy Policy Act of 2005 and the FERC’s implementation of Section 215 of the FPA. The reader will gain an understanding of the FERC’s authority and oversight in the development and enforcement of mandatory reliability standards for the nation’s bulk power grid. The FERC states the Primer is written to be used as a traditional text or reference manual and I agree. 

Today, the Federal Energy Regulatory Commission (FERC) will hold a Technical Conference to discuss policy issues related to the reliability of the Bulk-Power System from 10 a.m. –  4 p.m. The Commission will also accept written comments regarding the matters discussed at the technical conference. The Commission states that written comments regarding the matters discussed at the conference should be submitted in Docket No. AD15-7-000 on or before July 9, 2015. There will be three informative panels:

Panel I:  2015 State of Reliability Report

This panel will address the North American Electric Reliability Corporation’s (NERC) recently released 2015 State of Reliability report. Here are a few of the questions panelists will address:

  • What does the 2015 report show about the effectiveness of NERC’s reliability activities and related industry efforts? 
  • What progress has been made with respect to the recommendations in the 2014 report and what are the obstacles to continued progress? 
  • What priorities have been identified in the 2015 State of Reliability report and how are these different from the 2014 report? 
  • Does the 2015 report indicate that more resources should be directed to particular reliability risks or areas?  
  • Are there other significant issues that require analysis or changes in the planning and operation of the bulk power system during the next 1-5 years?

Panel II: Emerging Issues

This panel will tackle emerging issues such as changes to our nation’s fuel sources and power supply portfolio, federal and state policies on renewable and other resources, and new environmental regulations. Here is a sampling of the questions panel II will address:

  • What emerging issues are going to challenge NERC and industry? How are these issues being considered in long-term, seasonal and operational planning studies?  
  • What progress has been made by NERC’s Essential Reliability Services Task Force in developing new approaches to the “reliability building blocks” (voltage support, ramping capability, and frequency support) needed for reliability and for ensuring their provision as the resource mix changes? 
  • Are any changes in reliability standards or other regulatory requirements needed or appropriate?  
  • Are additional efforts needed to maintain reliability as the growth of natural gas-fired generation continues? What specific additional improvements still need to be made? 

Panel III: ERO Performance and Initiatives 

NERC identifies various evolving issues that face the bulk power system and develops initiatives to address those issues. Some of the issues Panel III will address include: 

  • Explain the feedback loop from event analysis and compliance monitoring and enforcement to standards development. 
  • What are some examples of how Standards were modified or developed as a result of bulk-power system events?
  • What are the initial results of the risk-based Compliance Monitoring and Enforcement Program? 
  • What specific improvements to reliability performance, reduction to reliability risks, and increased compliance efficiencies are NERC and the industry experiencing as a result of this initiative?

The conference will be held at:

Federal Energy Regulatory Commission
Commission Meeting Room
888 First Street, NE
Washington, DC 20426 

If you can’t get to D.C. today, a free webcast of this event is also available through www.ferc.gov.  A link is posted on the Technical Conference Event page. There you can also find panelists statements and the full agenda.   

After a brief hiatus, Smart Grid Legal News is back! So many issues and not enough time or space so I thought I would start with the basics. I recently had the pleasure of meeting Christine Hertzog, managing director of Smart Grid Library, to discuss Smart Grid Dictionary, now it its sixth edition. At 466 pages, Smart Grid Dictionary covers acronyms and terms that are not just smart grid related but industry related. If you are new to the industry, the book will quickly become a well-worn staple. Veterans might find it useful to zero in on terms you might gloss over. Like most good ideas, Smart Grid Dictionary was created out of necessity. Trying to navigate an industry riddled with acronyms can be challenging. So for her own use, Christine began keeping a list of terms she hears often and soon Smart Grid Dictionary was born. Perusing through the dictionary, some of the terms that I take for granted, like classes of service or rate case, made me smile as I thought about how they could be confusing to those not enmeshed in this regulatory world. Below is a random sample of terms found in the Smart Grid Dictionary:

ADA (Advanced Distribution Automation)
A collection of intelligent sensors, remote controllers and bi-directional communications to manage distribution grids – covering substations to AMI assets.

Classes of service
A class or group of customers with similar characteristics that have a common rate for electric service. Some common classifications are residential, commercial, industrial and transportation.

Electric industry restructuring
The reconfiguration of vertically integrated electric utilities into markets with competing sellers, allowing customers to choose their suppliers but still receive delivery over the power lines of the local utility. Generation is now generally competitive, transmission is regulated by FERC (Federal Energy Regulatory Commission) and distribution falls under state jurisdictions.

ICAP (Installed Capacity)
A monthly market run by an ISO (Independent System Operator) that provides generators compensation for locating units in specific regions based on the net capacity the unit provides to the market after accounting for forced outages at the unit.

IEEE 2030.5
This standard incorporates Smart Energy Profile (SEP) 2.0. It defines application message exchange mechanisms, the exact messages exchanged and the security features used to protect the application messages. This enables utility management of the end user energy environment, including demand response, load control, and time of day pricing among other functions.

Before the chill of last winter’s polar vortex, many in the industry may not have even heard the term uplift payments. If you are still wondering exactly how it works, the Federal Energy Regulatory Commission (“FERC”) has a docket and workshop for you (Docket No. AD14-14-000). At this docket you will find an educational staff report on uplift payments in RTOs/ISOs. On Monday, September 8, 2014, FERC will hold a workshop to explore the technical, operational and market issues that give rise to uplift payments and the levels of transparency associated with uplift payments. The daylong informative workshop will begin at 8:45 a.m. and conclude at 5:15 p.m.

Panel 1 will address the basic issue of “What is uplift?” and explore issues that give rise to uplift payments as well as:

  • Drivers of uplift payments in RTOs/ISOs
  • Uplift payments that have been highly concentrated and persistent on a geographic or resource basis
  • Technical, operational and market issues driving uplift payments
  • The relationship between uplift payments and unit flexibility

Panel 2 will explore the impact of uplift on market participants.

Panel 3 will explore the adequacy of and the potential to enhance uplift transparency and recent market design changes that may address some of the causes of uplift.

Panel 4 will explore broader price formation issues and discuss next steps.

This agenda provides further details. As expected, the event will be held at the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426. This workshop is free of charge and open to the public.

The Federal Energy Regulatory Commission (FERC) and the Nuclear Regulatory Commission (NRC) held a joint meeting on Wednesday, May 28, 2014, at NRC headquarters. Most of the meeting was open to the public and concluded with a tour of NRC’s new control center. Commissioners from both agencies participated. Speaking on the topic of Grid Reliability, Markets and Extended Loss of All Alternating Current Power were:

  • Mr. Burgess, NERC – 2014 State of Reliability Report
  • Mr. Quinn, FERC – Market Dynamics that May Affect the Financial Viability of Nuclear Power Plants
  • Mr. Smith, NRC – Nuclear Power Plants – License Renewals and Projections of New Units, Extended Loss of All AC Power Mitigation Strategies – Order Implementation and the Scope of the Rulemaking Activity

With EPA rulings, plant closures, polar vortexes as well as cyber and physical security issues, 2013 was a rough year. Despite the challenges, the first key finding from Mr. Burgess’ presentation is that the bulk power system has a sustained high performance level. This highlights the strength of the grid. You can read the transcript and presentations on NRC’s website.

The New York State Public Service Commission (“PSC” or “Commission”) recently petitioned the U.S. Court of Appeals for the Second Circuit to force the Federal Energy Regulatory Commission (“FERC”) to respond to the PSC’s pending requests for rehearing of FERC’s decisions to create a new capacity zone (“NCZ”) in the lower Hudson Valley. The PSC states that as a result of the NCZ, residential customers using 600 kWh/month in the lower Hudson Valley would experience increases in their total electric bill of between six percent to thirteen percent and industrial customers could experience a ten percent increase, causing unnecessary and unreasonable electricity price increases in the lower Hudson Valley.

Pending full judicial review of FERC’s decisions, the PSC has filed an emergency motion asking the Court to issue a stay of FERC’s decisions implementing the upcoming capacity auctions in the NCZ and ensure consumers are not harmed further. However, in previous pleadings, the New York ISO (“NYISO”) states that the NCZ Study determined that the Upstate New York/Southeast New York (UPNY/SENY) Highway interface into Load Zones G and H was constrained because it was bottling 849.2 MW of generation from Load Zones A through F, and therefore, NYISO is required to create a new capacity zone.

Entergy Nuclear also supports the creation of the new capacity zone and asserts that the erosion of the electric system in the lower Hudson Valley over time provides proof of the harm that results when inaccurate price signals fail to adequately value capacity in a region. It states that the capacity price signal for the lower Hudson Valley zones was suppressed by the excess capacity levels in the remainder of the Rest-of-State region that cleared against the NYCA curve, but were not deliverable to the lower Hudson Valley zones due to the UPNY/SENY constrained interface.

FERC has stated it does not believe the new capacity zone will result in unjust and unreasonable rates. Higher capacity prices in the new capacity zone will help to encourage the development of new generation and/or transmission capacity to help alleviate the constraint NYISO has demonstrated. FERC’s position is that the price changes promote efficient decisions and are not unreasonable. The NCZ capacity auctions have begun and the PSC has filed a Petition for a Writ of Mandamus and Emergency Motion for Stay to prevent what it believes is irreparable harm to customers in the lower Hudson Valley:

Because FERC has not acted prior to the implementation of the NCZ capacity auctions, New York electricity ratepayers face the possibility of paying an additional $158 million for electricity in the summer of 2014, without realizing a corresponding benefit. If the Court reverses FERC it will be difficult, if not impossible, to rerun the auctions to reflect whatever relief the Court provides.

– PSC Petition and Motion page 10

These are interesting grid management issues. The industry will be watching the Second Circuit.

As previously reported, the Federal Energy Regulatory Commission (“FERC” or “Commission”) will hold a Commissioner-led technical conference on Tuesday, April 1, 2014. A full day is planned to discuss the impacts of recent cold weather events on the Regional Transmission Organizations/Independent System Operators (“RTOs/ISOs”) and actions taken to respond. After opening remarks, there will be a presentation from the Commission’s Office of Enforcement. The first panel will take up the remainder of the morning and will include informative presentations by RTOs/ISOs representatives:

  • Brad Bouillon, California Independent System Operator
  • Peter Brandien, ISO-New England
  • Richard Doying, Midcontinent Independent System Operator
  • Wes Yeomans, New York Independent System Operator
  • Michael Kormos, PJM Interconnection
  • Bruce Rew, Southwest Power Pool

These industry leaders will address several concerns including: (1) the steps it took to prepare for the cold weather events; (2) the operational conditions leading into the day-ahead; and (3) the operator actions taken to address events prior to day-ahead, day-ahead, and in real-time.

In the afternoon, a broad spectrum of stakeholders will discuss:  

  1. Experiences during the cold weather events: Describe experience and observations during the cold weather events, the information that was available to assist in preparation, and the actions taken in real-time to respond.
  2. Lessons learned: Explain the most important lesson(s) learned, particularly as relevant to regional electric market prices and performance, adequacy of infrastructure, fuel procurement and fuel diversity.  
  3. Policy implications: Share observations about changes that could be made to improve the performance of Commission-regulated markets during future extreme weather events.  

In addition to the above, Commissioner Philip Moeller would like the following question answered. Details regarding his expectations can be found here

For each power plant that ran this winter and that is expected to retire due to EPA regulations, what resources will replace it?

Following the conference, the Commission will take written public comments until May 15, 2014. The Supplemental Notice provides more details. The conference will run from 9:00 am – 5:15 pm and will be held at the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426. Attendance is free open to the public. If attending, registration is requested.

Because the grid is so critical to all aspects of our society and economy, protecting its reliability and resilience is a core responsibility of everyone who works in the electric industry.

– Federal Energy Regulatory Commission (“FERC”) Acting Chairman Cheryl LaFleur

This month, FERC directed the North American Electric Reliability Corporation (“NERC”) to develop Reliability Standards requiring owners and operators of the Bulk-Power System to address risks due to physical security threats and vulnerabilities within 90 days. The Reliability Standards will require owners and operators of the Bulk-Power System to take at least three steps to protect physical security:

  1. Owners and operators must perform a risk assessment of their system to identify facilities that, if rendered inoperable or damaged, could have a critical impact on the operation of the interconnection through instability, uncontrolled separation, or cascading failures of the Bulk-Power System.
  2. Owners and operators of critical facilities must evaluate potential threats and vulnerabilities to those facilities.
  3. Owners and operators must develop and implement a security plan to address potential threats and vulnerabilities.

FERC recognizes that compliance with the Reliability Standards described above could contain sensitive or confidential information that, if released to the public, could jeopardize the reliable operation of the Bulk-Power System. As a result, NERC is also directed to include in the Reliability Standards a procedure that will ensure confidential treatment of sensitive or confidential information but still allow for the Commission, NERC and the Regional Entities to review and inspect any information that is needed to ensure compliance with the Reliability Standards.   

The industry understands the continuing need to address physical security and resilience. This latter point is critical because absolute protection from attack, physical or cyber, can never be promised. It is a risk embedded in our freedom. So a healthy ongoing focus on resilience is critical and grid owners and operators address these issues frequently if not daily. So I can’t help but wonder whether the recent media frenzy about Metcalf and a looming national blackout has FERC fighting back, not just with statements but this order.

The polar vortex made its presence known this winter and its impact on the electric and gas industry will be felt beyond the first day of spring. Bitter cold temperatures caused record-breaking demand for gas and electric, sending prices for these commodities to unprecedented peaks. It was brief but the wholesale price spikes in January affected everyone: utilities, suppliers, businesses and residential customers. As the bills rolled in, many were in shock wondering, “What just happened?” as they checked their invoices and contract provisions over and over and over again. To dig deeper into the answers, the Federal Energy Regulatory Commission (“Commission”) is establishing a technical conference to explore the impacts of the recent cold weather events on the Regional Transmission Organizations/Independent System Operators (RTO/ISO) and discuss actions taken to respond to those impacts. The discussion will focus on the impact of cold weather events on operational planning and real-time operations, market prices and performance; regional infrastructure; the actions taken in response to those impacts; gas procurement; and lessons learned that can be shared between regions and applied in future events.

This Commission-led technical conference regarding the 2013-2014 Winter Operations and Market Performance in Regional Transmission Organizations and Independent System Operators will take place on April 1, 2014 beginning at 9:00 am and ending at approximately 5:00 pm.  The conference will be held at the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426. Those interested in attending the technical conference are encouraged to register.

The PG&E Metcalf substation has been getting a lot of attention for an event that occurred nearly 10 months ago. Several media outlets have recently reported details about an April 2013 attack at the Metcalf substation where two manholes were entered and fiber cables cut, eliminating some 911 services, landline service to the substation and cell phone service. Shortly after 1 a.m., more than 100 rounds were fired at several transformers in the substation, causing cooling oil to leak and the transformers to overheat and shut down. To date, those responsible have not been found. PG&E is addressing the matter as explained in this video.

It appears that, in reaction to current media reports, Senators Wyden, Feinstein, Reid and Franken wrote a letter requesting that the Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC) determine whether additional minimum standards regarding physical security at critical substations and other essential facilities are needed to assure the reliable operation of the bulk power system. Just yesterday, statements were issued by Commissioners Norris and Moeller. A detailed response by Acting Chairman LaFleur explains the landscape and that FERC will work with NERC to determine whether a mandatory reliability standard under section 215 of the Federal Power Act is needed to protect against physical attacks on our electrical infrastructure. This quote by Commissioner Norris provides grounding and a reminder that the risk is nothing new:

We have over 400,000 circuit miles of transmission in North America and 55,000 transmission substations. The vulnerability of our grid infrastructure to physical attack is a decades-old reality.