Recently in Electric reliability Category

Join Maj. Gen. (ret.) Tim Lowenberg for APPA's Grid Security Summit

September 25, 2014

We cordially invite you to attend the American Public Power Association's Grid Security Summit on November 12-13 in Arlington, Virginia. Our colleague, Maj. Gen. (ret.) Timothy Lowenberg, one of the nation's leading experts on cybersecurity and terrorism matters, will make a presentation entitled "Emerging Threats and Vulnerabilities in the Electric Sector." Gen. Lowenberg recently retired after a 44-year career in the U.S. Air Force and, among many other accomplishments, was the longest-serving Adjutant General in Washington's history. In that role, in the wake of the September 11 attack, he developed leading-edge systems to coordinate military and civilian responses to terrorist attacks. He was also instrumental in developing one of the nation's leading cyber-defense centers and now represents the National Governors Association on cybersecurity matters.

After retiring, Gen. Lowenberg joined our sister organization, Gordon Thomas Honeywell Governmental Affairs as Vice President. He is, we're proud to say, also Of Counsel to the Gordon Thomas Honeywell law firm.

U.S. Appeals Court Concludes FERC Lacks Authority to Fine Federal Entities for Reliability Violations

August 22, 2014

In a ruling that could have far-reaching implications for the electric reliability here in the Pacific Northwest, the U.S. Court of Appeals for the District of Columbia Circuit today found that the Federal Power Act does not authorize the Southwest Power Administration ("SWPA") to pay fines for admitted violations of mandatory electric reliability standards.

The decision turns on the doctrine of sovereign immunity. In its modern form, the doctrine bars federal government liability unless Congress provides a clearly-expressed statutory waiver of sovereign immunity. Today's decision applies this doctrine to Section 215 of the Federal Power Act, the provision Congress added to the Act in 2005 to create a system of mandatory electric reliability standards. Section 215 authorizes the Federal Energy Regulatory Commission ("FERC") to impose fines on "users, owners and operators" of the Bulk Electric System if they violate electric reliability standards developed by the North American Electric Reliability Corporation ("NERC"). Carefully parsing the language of Section 215, today's decision finds no clear expression of Congressional intent to allow federal entities such as SWPA to pay fines for violations of reliability standards.

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Regulating Emergency Generators: EPA Denies Rehearing of RICE Rule, Appeals Court is Next Stop

August 20, 2014

On August 15, the U.S. Environmental Protection Agency ("EPA") issued a notice denying petitions for rehearing of its new rules governing air emissions from stationary Reciprocating Internal Combustion Engines ("RICE"). RICE, especially diesel engines, are widely used for emergency backup generation for hospitals, factories, and other facilities requiring an uninterrupted supply of power. They are also an important source of power to stabilize the electric grid in certain types of emergencies. Developments concerning the RICE emissions rule are therefore of great concern to electric utilities and a multitude of end-use electric consumers who rely on diesel back-up generators.

The rehearing petitions stem from EPA's 2010 proposal to extend its regulation of hazardous air pollutants emitted by stationary RICE from the previous 500 horsepower limit down to engines as small as 100 HP. As we reported early last year, in response to concerns related to the mismatch between the proposed RICE rule and NERC reliability standards, EPA modified the proposed rules to allow generators that have not been retrofitted with expensive pollution control equipment to operate for up to 100 hours per year during declared electrical emergencies, and for such generators to operate for up to 50 hours per year to prevent voltage collapse or overloads in local transmission or distribution systems.

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Eric Christensen Quoted in EnergyWire Article on Utility Service to Marijuana Producers

August 11, 2014

GTH Partner Eric Christensen was quoted in Friday's lead EnergyWire article, which addresses the problems utilities face in serving energy-hungry marijuana grow operations under new marijuana legalization regimes in Washington and Colorado. The article can be found here. EnergyWire is the energy-centered daily trade magazine of highly-respected Environment & Energy Publishing.

U.S. Senate Confirms Norman Bay and Cheryl LeFleur as FERC Commissioners

July 15, 2014

The United States Senate today confirmed President Obama's nominations of Cheryl A. LeFleur and Norman Bay to serve on the Federal Energy Regulatory Commission. Commissioner LeFleur has served on the Commission since 2010 and the confirmation will allow her to serve a full five-year term. Mr. Bay will replace former Chairman Jon Wellinghoff.

Mr. Bay has been the Director of FERC's Office of Enforcement since 2009. In that capacity, he was responsible for a substantial rise in that office's profile. For example, as a result of an Office of Enforcement investigation of market manipulation in the West, FERC last year sought nearly $500 million in penalties against Barclays Bank and certain of its power traders, and $410 million against JP Morgan.

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Who Holds the Almighty and Powerful Ring? 13 Steps for Utility Cyber Security Protection

May 13, 2014

We are happy to announce that Eric Christensen and Maj. Gen. (Ret.) Tim Lowenberg of GTH-Governmental Affairs have published the cover story in the May 2014 Northwest Public Power Association Bulletin. Here is a link to the article on the NWPPA's website. The text of the article follows:

Cover Story
Who Holds the Almighty and Powerful Ring in the Cyber World?
Thirteen Steps for Utility Cybersecurity Protection


By
Eric Christensen, Partner
Gordon Thomas Honeywell

and

Maj. Gen. (Ret.) Tim Lowenberg, Vice President
Gordon Thomas Honeywell Governmental Affairs

While computer and internet technology create enormous benefits for twenty-first century utilities, they also expose utilities to new and sinister cyber threats. For utility managers, entering the cyber world can feel like entering J.R.R. Tolkien's "Middle Earth", a strange land filled with treacherous creatures like orcs, ring-wraiths, and wargs. Like Middle Earth, the cyber world is inhabited by peculiar and threatening forces ranging from amateur hackers to organized criminal enterprises searching for valuable financial information to politically motivated actors and nation-states capable of using malicious computer codes as weapons systems. And like Gollum, the hobbit twisted beyond all recognition by the power of the One Ring, threats in the cyber world often go undetected, arise from nebulous but nefarious motives and can unleash powerful, destructive effects beyond all expectation.

In light of the near-universal consensus among defense analysts, policy makers and computer experts that the electric utility sector is among the most vulnerable of sectors to cyber-attacks, how should utility managers address these threats? We recommend the following thirteen steps that all utilities, regardless of size, should take to mitigate risk in the complex and ever changing world of cyber-security.

Step 1: NIST Cybersecurity Framework
On February 12, 2014, the National Institute of Standards and Technology ("NIST") released the first version of its Framework for Improving Critical Infrastructure Cybersecurity. The Framework, issued in response to President Obama's Executive Order No. 13636, is intended to create common, voluntary industry standards and best practices for addressing cyber-security threats. The Framework provides a standardized approach for identifying cyber-security threats and protecting organizations against those threats through technological fixes and education of management and front-line operators. While the Framework is an ongoing and evolving document, it is a useful starting point for developing a cyber security strategy. The steps we recommend here are consistent with the NIST Framework.

Step 2: NERC CIP Standards
Because they are mandatory and violations can lead to substantial penalties, NERC Reliability Standards are, of course, of primary concern to electric utilities. NERC's Critical Infrastructure Protection ("CIP") standards define utility obligations to address threats in the cyber-security realm and should therefore be a prime focus of every utility. After a long period of flux, the Federal Energy Regulatory Commission ("FERC") in November 2013 adopted Version 5 of the CIP standards, with certain reservations. Utilities with "High and Medium Impact" assets (as defined in NERC's "BES Cyber Asset" definition) must come into compliance with Version 5 by April 2016 and those with "Low Impact" assets must come into compliance by April 2017. Utility managers should therefore pay careful attention to these standards, as well as refinements to the standards now under development in response to FERC's November 2013 order. In addition, NERC is conducting a pilot program with results due in the near future that should provide useful information for utility compliance managers.

Utility managers should also pay close attention to physical security standards. In reaction to damage caused by a sophisticated physical attack on the Metcalf Substation in California's Silicon Valley, FERC on March 7 ordered NERC to develop standards to secure key electrical facilities against physical attack. Compliance with these standards could be extremely expensive. In raising this concern, FERC Commissioner John Norris recently noted that just three utilities reported to him they may have to spend more than $500 million for physical security enhancements in the wake of the Metcalf incident. As is also obvious, under-reaction could prove even more costly for the utility and for our national security.

Step 3: Develop a Cyber-Security Strategy
In compliance with the NIST Framework and CIP standards, utility management should develop a cyber-security strategy that identifies cyber-risks, provides clear guidance and training to utility employees to effectively address those risks, and ensures the strategy is carried out and documented through continuous feedback to utility managers. As discussed below, it is important that the strategy include coordination with affected municipal and state governments, first responders, and Federal Information Sharing and Analysis Centers ("ISACs").

Step 4: CEO Briefings
The Cyber-Security Strategy developed in Step 3 should include a requirement for regular briefings of the utility's chief executive officer and relevant senior management by cyber security personnel, including updates on newly-identified cyber threats, progress in implementing CIP standards and other mitigation measures, and adaptations to the Strategy to address new threats, vulnerabilities and emerging challenges. Such briefings demonstrate the importance of cyber-security to the rest of the organization and ensure senior management is aware of cyber-related issues. Full awareness of cyber threats should, in turn, help assure the organization is devoting adequate resources to addressing those threats, and build the "culture of compliance" NERC looks for in assessing adherence to Reliability Standards.

Step 5: Legal Review of IT Contracts
The utility should conduct a legal review of its IT equipment and services contracts to ensure compliance with CIP standards, the Security Development Lifecyle guidelines discussed below, the utility's internal Cyber-Security Strategy, and other relevant requirements.

Step 6: Review IT Procurement
The utility should also ensure it is procuring computer software and hardware in a "secure" manner in conformity with Security Development Lifecycle ("SDL") processes and other best practices. Such procurement practices guard against incorporation or introduction of unsafe equipment and malicious software into the utility's computer systems.

Step 7: Procurement Staff Training
Consistent with Steps 5 and 6, the utility's procurement and acquisition staff, as well as its IT security staff, should receive training on SDL and other requirements relevant to IT acquisition and should be given resources sufficient to ensure effective cyber security provisions are incorporated into all IT acquisition contracts.

Step 8: Verify Implementation of Cyber-Related Contract Requirements
To ensure the measures discussed in Steps 5 through 7 are properly implemented, the utility should review its contractual relationships with third party IT service providers to verify that security-related requirements of IT contracts are actually being carried out in conformity with contractual and industry standards. Substandard computer installations and non-conforming contract services can give hackers, cyber-criminals, and cyber-attackers access to critical computer-controlled infrastructure.

Step 9: Use Information Sharing and Analysis Centers ("ISACs")
ISACs (mentioned in Step 3 above) are sector-specific organizations developed voluntarily in cooperation with the Department of Homeland Security to facilitate detection and prevention of cyber-intrusions, vulnerability scanning, penetration testing, and training and education services. The Department of Homeland Security coordinates the flow of information to, from and among fifteen national ISACs. Utility managers and security officials should pay particular attention to ES-ISAC, the ISAC for the electricity sector. Information from other ISACs may also enhance awareness of cyber-threats as well as the tactics, techniques and procedures employed by nefarious actors. These collateral sources include the Multi-State ISAC, which provides cyber threat information and cyber response assistance to state and local governments including utility commissions; the Supply Chain ISAC, which focuses on threats identified in the acquisition/procurement process; the Water ISAC, which provides useful information for water utilities; the Nuclear Energy ISAC, which covers nuclear energy cyber issues; and the Financial Services ISAC, which has information helpful to protecting the financial information of utility customers as well as the utility's own financial information.

Step 10: Develop Disaster Recovery Plans
Most utilities have extensive business continuity and recovery plans that describe how the utility will deal with natural disasters such as earthquakes and major storms. Disaster preparedness also requires development of plans to assure the utility's recovery from a major cyber-attack or series of attacks. The threat of such attacks is so real that a cyber mitigation, response and recovery plan should be the subject of a separate, detailed Annex to the utility's continuity plan. NARUC's Cybersecurity for State Regulators 2.0 (February 2014) provides a comprehensive set of criteria and recommended actions (from a wide variety of sources) for utility commissions to use as assessment tools. These sources and others are helpful in developing an effective Cyber Annex to the utility continuity and recovery plan.

Step 11: Build a Relationship With Law Enforcement
Federal, state and local law enforcement agencies and some state military departments have important roles in identifying cyber intrusions, developing coordinated responses to such intrusions, apprehending or assisting in the apprehension of cyber criminals and recovering from major cyber incidents. Utilities should strive to build strong relationships with these agencies. To be effective, the utility must pre-identify the specific law enforcement officials it will contact in case of a suspected terrorist attack or cyber intrusion. The utility should go beyond the minimum requirement of compiling a contact list to create active, ongoing relationships with the law enforcement officials it will need to rely on in the event of a major cyber-attack.

Step 12: Practice Cyber Incident Responses
As with most utility functions, the adage "practice makes perfect" applies to cyber incident preparedness and cyber incident response. Fortunately, the Department of Homeland Security's "Cyber Storm" program offers excellent opportunities for utilities to participate in a realistic simulation of a major cyber-attack. The Cyber Storm exercise series provides an opportunity for more than 1,000 local entities to participate in a coordinated, week-long national cyber exercise, the results of which are used to develop other progressively challenging exercises and enhance the nation's cyber response systems. Washington utilities such as Snohomish County PUD played an active role in the 2013 Cyber Storm exercise. The next Cyber Storm exercise is scheduled for 2015.

Step 13: Support Your Local Emergency Response Plan
Finally, the utility should determine if its state government has developed a cyber response plan. If a plan exists, the utility at a minimum should become thoroughly familiar with it and, even more important, should offer to participate in the development and continuous testing and refinement of the plan.

The State of Washington, for example, leverages its "cyber security centers of excellence" and lessons learned from Cyber Storm exercises to integrate cyber security planning by state agencies ranging from the Washington Military Department (including its civilian State Emergency Operations Center and Air and Army National Guard cyber operations units) to the Office of the State Chief Information Officer, the Washington State Patrol, the Washington State Fusion Center, the Utilities and Transportation Commission, state universities, municipalities such as the City of Seattle, aerial and maritime port authorities and public utilities. These and other stakeholders, participating as members of a Washington State Cyber Integrated Project Team, have contributed to development, testing and refinement of a Washington State Cyber Incident Annex that is based on the National Cyber Incident Response Plan. The Washington Cyber Incident Annex includes provisions for convening a Cyber Unified Coordination Group to oversee cyber incident responses, which representatives from utilities and other critical infrastructure sectors that could be subject to cyber attack.

CONCLUSION
The conflict between good and evil in Middle Earth was finally resolved when Gollum, still madly clutching the One Ring, falls into the fire at the Cracks of Doom. With the malevolent force of the Ring destroyed, the forces of evil were shorn of their power and collapsed, allowing the hobbits and other peaceful residents of Middle Earth to return to normal life. The moment when the forces of evil in the cyber world will be shorn of their power is a long way off. Until that time comes, dealing with malevolent forces in the cyber domain will be an omnipresent and growing challenge. Because electric power is so critical to the functioning of our modern society, utilities are, willingly or not, thrust into the role of front-line players in the battle for control of cyberspace. The thirteen steps described above, if implemented, will help utilities protect their own assets, and help secure the nation against potentially crippling cyber attacks.

Transmission Terrorism: As Details of Substation Attack Come to Light, Senators Call for Action

February 7, 2014

Just before 1 a.m. on April 16, 2013, as-yet unidentified assailants launched an attack on the Metcalf substation in Silicon Valley. The attack lasted nearly an hour, disabling ten high-voltage transformers and three high-voltage transformer banks. Occurring just hours after the Boston Marathon bombings, the attack garnered little press coverage at the time and, as a federal investigation dragged on, details were slow to emerge. Beginning with an article published in Foreign Policy magazine in late 2013, information suggesting that the attack may have been the work of terrorists rather than vandals has started to come to light. In response to these revelations, group of four U.S. Senators today sent a letter to federal regulators calling for swift action to address the threat.

Earlier this week, the Wall Street Journal published a long article providing many details of the attack. In the article, former Federal Energy Regulatory Commission Chairman Jon Wellinghoff noted several pieces of evidence suggesting that the attack was carefully orchestrated. For example, before the attack began, someone lifted a large cover off an underground vault and cut communications cables, knocking out communications in the area around the substation and interfering with emergency response. More than 100 empty shell cases, likely from AK-47 assault rifles, were found in the area around the substation. None had fingerprints and military experts found small piles of rocks that may have been left by an advance scout to mark the best vantage points for the attack. The number of shell cases and the fact that the vault cover probably could not have been lifted by a single person suggest that multiple individuals were involved in the attack. Many of these details were corroborated in subsequent accounts from media outlets such as National Public Radio and Bay Area newspapers.

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Pew Study Documents Progress in Military Renewables, Reliability and Efficiency Efforts

January 28, 2014

The U.S. military is making substantial progress toward its goals of acquiring 3 GW of renewable energy by 2025, substantially reducing energy use, and improving the reliability of power delivery to military bases, according to a recent report from the Pew Charitable Trusts. The progress attained so far demonstrates the seriousness of the military's commitment to renewable energy, energy conservation, and reliability, and confirms that the Department of Defense ("DOD") energy initiatives represent a huge opportunity for private-sector energy developers.

The DOD initiatives arise from both Congressional mandates requiring increased use of renewable fuels and from recognition within the armed services that continued reliance on fossil fuels and an aging electric infrastructure creates unacceptable security vulnerabilities. For example, the Defense Science Board's influential 2008 report, "More Fight, Less Fuel," identified the military's continued reliance on fossil fuels, and the fragile supply lines associated with that dependence, as a major security problem for military operations around the world. "Unleashing the tether" that ties troops to vulnerable fuel supplies therefore became a major strategic objective. Similarly, the report concluded that serious security risks arise from the dependence of U.S. military bases on an aging electricity infrastructure that exposes bases to increasingly frequent power outages.

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Cajun Christmas Surprise: Louisiana Electric Cooperative Successfully Defends NERC Deregistration

December 20, 2013

Yesterday the Federal Energy Regulatory Commission ("FERC") reaffirmed its July order (discussed here) ordering the North American Electric Reliability Corporation ("NERC") to remove Southeast Louisiana Electric Cooperative Association ("SLECA") from its registry of entities subject to electric reliability regulation. Barring appeal by FERC, SLECA is the first small utility company to successfully deregister and thereby to remove itself from often onerous reliability compliance burdens.

In 2008, SLECA voluntarily registered with NERC as a "Distribution Provider" and a "Load-Serving Entity," thereby becoming obligated to comply with a significant number of NERC Reliability Standards. Later, SLECA realized it had registered in error and sought to remove itself from the NERC registry. NERC refused to deregister SLECA. SLECA appealed NERC's decision to FERC, and FERC in July rejected NERC's position and concluded that SLECA should not be registered, primarily because it is not "directly connected to" the Bulk Electric System, as required by the NERC Statement of Compliance Registry Criteria ("SCRC").

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With ISO Vote, Energy Imbalance Market Begins to Take Shape

November 24, 2013

The California Independent System Operator's ("Cal-ISO") Board of Governors recently voted to move forward with a proposed Energy Imbalance Market ("EIM"), with the aim of encouraging Balancing Authority Areas ("BAAs") from across the West to participate in real-time energy imbalance market operated by the ISO. The market design approved by the Cal-ISO Board of Governors is scheduled to begin operation in October 2014. Consistent with an earlier agreement, PacifiCorp and the Cal-ISO would be the initial participants, but the market design approved last week is meant encourage the West's other BAAs to join the EIM. Ultimately, the aim is to create optimal real-time dispatch of generation resources across the EIM footprint, and thereby to reduce dispatch costs and improve the region's ability to integrate variable renewable resources like wind and solar into the electric system.

Under the Cal-ISO's plan, the EIM will be integrated into the Cal-ISO's real-time market. The ISO is now in the process of implementing a real-time market featuring 15-minute scheduling and five-minute dispatch. This market is being developed in response to the Federal Energy Regulatory Commission's ("FERC") Order No. 764, which, among other measures, required adoption of 15-minute scheduling as a means to improve integration variable renewable resources such as wind and solar. The ISO plans to implement this new market structure in the spring of 2014, and will use this structure as the basis of the EIM. Balancing Authorities participating in the EIM will then be able to voluntarily offer resources into the EIM and the ISO will use its 15-minute scheduling and five-minute dispatch programs to efficiently dispatch balancing resources and transfers between balancing authorities across the EIM/ISO footprint. Participants will also submit schedules 75 minutes before the operating hour. These will serve as the load forecast and the base schedule against which balancing resources will be dispatched.

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Join GTH at the annual APPA Legal Seminar in Seattle

August 28, 2013

Please join us at the American Public Power Association's Legal Seminar here in Seattle. The Legal Seminar is one of the largest gatherings of its kind, annually attracting hundreds of public power attorneys from across the country. This year's seminar will be October 20-23.

We're pleased to announced that GTH attorneys Don Cohen and Eric Christensen will both be making presentations at the conference. Don will be co-leading a pre-conference seminar on pole attachment issues. Don is representing Pacific County (Washington) PUD in an extended dispute with large telecommunications providers involving pole attachment rates charged by the PUD.

Eric Christensen will be co-leader of a NERC Compliance Issues Roundtable, which will address the current state of regulation in the evolving world of mandatory reliability standards under Section 215 of the Federal Power Act. Eric will also present a talk entitled "Separating 'Transporter Psychosis' from 'Phaser Blast': The Washington Supreme Court's Decision Rejecting Nuisance Claims Based on Electromagnetic Field Exposoure," which will analyze the Court's treatment of scientific evidence in Lakey v. Puget Sound Energyand what it portends for similar claims involving, for example, "wind turbine syndrome" and exposure to radio waves from "smart" meters.

Electric Vehicles, Advanced Chargers, and Maximizing the Value of the Pacific Northwest's Electricity Grid

August 12, 2013

A new study examining the environmental impacts of electric vehicle charging demonstrates that the Pacific Northwest is ideally suited to maximize the environmental benefits of an electrified vehicle fleet, further underscoring the already well-documented benefits of electrifying the region's transportation system. Further, if combined with "smart" recharging technology developed by the Pacific Northwest National Laboratory ("PNNL"), electric vehicles offer a means for maximizing the value of the region's electric grid and improving the ability to integrate variable renewable resources like wind, with substantial economic benefits for the region.

The new study, "A Roadmap to Climate-Friendly Cars: 2013," released last week by the Climate Central think-tank, critically examines one of the key environmental questions surrounding electric vehicles: does shifting from from petroleum-fueled vehicles to electric vehicles produce substantial environmental gains when the impacts of producing the electricity are taken into account? Because of the predominance of hydropower and, to a lesser extent, wind and other renewables, electric vehicles are by far the best choice in this region. In fact, the study finds that a gas-powered car would need to achieve fuel efficiency of 383 miles per gallon to attain the same environmental benefits as a electric car charged in Washington. In Oregon, the number is 278 mpg and in Idaho, 202 mpg. The strong advantage for electric vehicles holds up even when the full life-cycle carbon costs of manufacturing the vehicle and battery are taken into account.

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Ray of Hope for Smaller Utilities Seeking to Lighten Regulatory Load: FERC Rejects Registration of Southern Louisiana Co-op

July 19, 2013

In a marked departure from its usual approach, the Federal Energy Regulatory Commission ("FERC") yesterday rejected the North American Electric Reliability Corporation's ("NERC") conclusion that a small, rural electric cooperative should be subject to mandatory electric reliability regulation. The order, involving the South Louisiana Electric Cooperative Association ("SLECA"), leaves open many legal questions critical to defining the scope of FERC's jurisdiction to enforce mandatory reliability standards. Nonetheless, the order offers some hope that FERC has finally begun to hear the drumbeat of complaints from smaller utilities, especially in the West, who have for years criticized NERC and FERC for over-reaching in registration decisions.

The dispute involves SLECA's inclusion in the NERC Registry. The Registry is the starting point for enforcing electric reliability standards -- entities that are subject to NERC reliability standards are required to be listed in the Registry. Registrations are governed by the NERC Statement of Compliance Registry Criteria. Entities are registered based on their function -- Load-Serving Entity, Transmission Owner, Balancing Area Authority, and the like -- and NERC Reliability Standards are generally keyed to the function for which an entity is registered.

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As Decision Day for the Columbia River Treaty Looms, BPA and Corps Seek Comments On Draft Recommendations

July 3, 2013

As previously discussed here, the impending decision about whether to seek termination or renegotiation of the Columbia River Treaty next year carries with it enormous long-term implications for the Pacific Northwest and the region's power industry. In preparation for this decision, the "U.S. Entity" -- Treaty-speak for the Bonneville Power Administration and the U.S. Army Corps of Engineers, which jointly administer the Treaty on behalf of the U.S. -- is seeking comments by August 16 on the its "Working Draft of a Regional Recommendation: Improving the Columbia River Treaty Post-2024", which was released late last month.

The Working Draft Recommendation is primarily the product of input from the "Sovereign Review Team," composed of representatives from the four Columbia Basin states, eleven federal agencies, and fifteen Native American tribes. Those entities have not yet reached full agreement, so the Draft remains a work in progress. The comments the U.S. Entity solicited will be part of an ongoing process of refining the recommendations that will be made by the U.S. Entity to the Department of State in December 2013. Ultimately, the Department of State will be responsible for terminating or renegotiating the Treaty.

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FERC Refines "Bulk Electric System" Definition, Adopts New Cybersecurity Standards Proving Value of the Definition

April 26, 2013

At its April meeting, the Federal Energy Regulatory Commission ("FERC") issued Order No. 773-A, which generally reaffirms its December order (Order No. 773, discussed here) approving the definition of "Bulk Electric System" proposed by the North American Electric Reliability Corporation ("NERC"). The Commission also proposed to adopt Version 5 of NERC's Critical Infrastructure Protection ("CIP") standards. These standards incorporate the BES definition, demonstrating the importance of the BES definition to the regime of mandatory electric reliability standards.

Order No. 773 capped a years-long process to define one of the fundamental terms used in the mandatory electric reliability system adopted by Congress in the Energy Policy Act of 2005. By clarifying the legal landscape, Orders No. 773 and 773-A lay the groundwork for a number of different strategies regulated utilities may employ to reduce the sometimes daunting burdens of reliability compliance.

Similarly, the CIP proposal is an important way-point in a years-long effort to develop and improve cybersecurity standards. In the proposed rule, FERC proposes to skip directly from CIP version 3 to CIP version 5 standards, jumping over the version 4 standards it previously approved. The proposal demonstrates the importance of the BES definition approved in Orders No. 773 and 773-A because the new standards, if adopted, classify facilities based on whether they have "low," "medium," or "high" impact on the BES, and impose compliance obligations depending on this classification.

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