Recently in Electric reliability Category

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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Obama Executive Order on Cybersecurity Promises Greater Information Sharing With Industry

February 14, 2013

In his State of the Union address on Tuesday evening, President Obama singled out cybersecurity as major national security priority, stating:

We know hackers steal people's identities and infiltrate private e-mail. We know foreign countries and companies swipe our corporate secrets. Now our enemies are also seeking the ability to sabotage our power grid, our financial institutions, and our air traffic control systems. We cannot look back years from now and wonder why we did nothing in the face of real threats to our security and our economy.

The President then called on Congress to enact cybersecurity legislation. In addition, the Administration released a new Executive Order and accompanying Presidential Policy Directive providing for greater coordination between national security agencies and the private sector, and for the development of cybersecurity standards through the National Institute of Standards and Technology ("NIST"). The Administration's actions lay the groundwork for addressing at least one problem commonly expressed in the electric industry -- that detailed and specific information about cybersecurity threats is rarely shared by the government, greatly complicating the industry's efforts to address such threats.

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Eric Christensen Publishes Article on Reducing NERC-WECC Regulatory Burdens in February Northwest Public Power Association Bulletin

February 13, 2013

Eric Christensen published an article in this month's Northwest Public Power Bulletin entitled "Electric Reliability and the Bulk Electric System Definition: Next Steps for Reducing Regulatory Burdens." The article is a follow-on to the article he published in the November 2012 Bulletin concerning the development of the keystone "Bulk Electric System" definition. We've reprinted the new article here:

ELECTRIC RELIABILITY AND THE "BULK ELECTRIC SYSTEM" DEFINITION:
NEXT STEPS FOR REDUCING REGULATORY BURDENS

By
Eric Christensen, Partner
Gordon Thomas Honeywell

On December 20, the Federal Energy Regulatory Commission ("FERC") issued Order No. 773, adopting a new "Bulk Electric System" ("BES") definition. The BES definition is foundational to FERC's reliability regime because it defines the universe of facilities over which FERC can exercise its reliability authority. Order No. 773 also includes new procedural tools for public power utilities seeking to reduce their reliability compliance burdens. The order represents a major victory for public power, but, to obtain its full benefits, utilities should consider additional steps. This article outlines the major options now available.

As reported in the November 2012 Bulletin, Order No. 773 culminates two years of work by the NERC Standards Drafting Team, with strong participation of Western public power coordinated through NWPPA, to develop a rational and workable BES definition. The new definition, developed with what FERC Commissioner Lafleur describes as "creativity and care," initially defines facilities operating above 100-kV as BES, but then refines this "core definition" with "a thoughtful and nuanced list of specifically included and excluded facilities, and an exception process to add or remove specific facilities." The new BES definition is a huge improvement over the disastrous approach originally proposed by FERC. As Commissioner LeFleur observed, the BES definition "illustrates the success" of FERC's "new paradigm" for reliability standards development, which employs NERC's industry-centered process rather than "unduly prescriptive" FERC mandates, to find the most efficient and effective solutions for meeting reliability goals.

NEW OPTIONS FOR PUBLIC POWER

Under Order No. 773 and existing NERC rules, public power agencies now have several options for reducing reliability compliance burdens. Choosing the best options will depend on each utility's specific circumstances. The available procedures include:

1. Phase II of the BES Definition Standards Development Process.
As it developed the new BES definition, the Standards Drafting Team identified many issues that could not be resolved in the limited time allowed by FERC. These issues were deferred to Phase II of the standards drafting process, which is now underway. Phase II will examine several questions of great importance to public power and refine the BES definition accordingly. These questions include, for example, how the new definition will affect functional registrations, the technical justification for the 100-kV threshold in the "core" definition, the appropriate capacity thresholds for classifying generators as BES, and the points of demarcation between BES and non-BES facilities. Western public power agencies should focus as closely on Phase II as they did on Phase I, and NWPPA should continue its critical coordination function.

2. Petition for Deregistration.
Entities are responsible for complying with reliability standards based on their registration in one or more of fifteen NERC-defined functional categories, ranging from "Distribution Provider" to "Balancing Authority." In the West, the initial registration process generally assumed a very broad definition of the BES, with the result that many purely local distribution utilities were inappropriately registered as Transmission Owners, Transmission Operators, or under other functions that assume ownership of BES facilities. If the new BES definition means that a utility no longer owns or operates BES facilities, the utility can, on the strength of the new BES definition, file a Petition for Deregistration with WECC seeking to deregister from transmission-related functions (e.g., "Transmission Owner" and "Transmission Operator") .


3. Exceptions Process.
In addition to approving the BES definition, Order No. 773 approved a new "Exception Process," which allows utilities inappropriately categorized as BES under the definition to file an "Exception Request." If the utility can demonstrate, based on technical studies, that its facilities are "not necessary for the Reliable Operation of the interconnected bulk-power transmission system," NERC will reclassify the facilities as non-BES. If the utility successfully pursues an Exception Request, it may then be able to deregister from transmission-related functions. The Exception Process can also be used to demonstrate that specific utility-owned facilities are non-BES, thereby removing those facilities from the obligation to comply with BES-related reliability standards.

4. Petition for Declaration That A System is "Used for Local Distribution."
In the most surprising aspect of Order No. 773, FERC imposed a new procedure requiring owners of local distribution facilities to petition FERC directly if they believe their facilities are "used in the local distribution of electric energy," and are therefore excluded from the BES under Section 215(a)(1) of the Federal Power Act. In making this determination, FERC will focus on the function of the system, in contrast to the system's material reliability impacts that would be examined in an Exception process. FERC will use, among other factors, the "Seven Factor Test," developed in the 1990s to distinguish local distribution from transmission as traditional industry structures were changing. This procedure gives local distribution utilities a chance to escape BES classification even if they cannot do so under the BES definition or the Exception process. The procedural path is likely to be less time-consuming and expensive than the Exception process because utilities can petition FERC directly rather than having to go first to WECC and NERC, and the issues to be resolved by FERC are likely to be less technical and fact-intensive than in the Exception process.

5. Facility-Specific Notification to WECC.
In addition, Order No. 773 allows a utility to notify WECC if it determines that specific facilities it owns are no longer classified as BES under the new BES definition. The procedure is simple - nothing more than a notification is required. Reclassification in this manner could significantly reduce a utility's compliance burden because removing facilities from the BES will reduce or eliminate the obligation to comply with reliability standards applicable to BES owner/operators.

6. Standard-by-Standard Negotiation.
Following earlier FERC precedent, Order No. 773 FERC invites utilities to bargain with NERC for exemption from reliability standards that do not make sense in a utility's specific circumstances, which could substantially reduce compliance burdens. NWPPA could serve a valuable function in this regard by organizing a group of its members to analyze and develop a list of reliability standards that should not apply to specific types of utilities (i.e, full-requirements customers of Bonneville Power Administration, utilities with no scheduling function) and assist in helping members seek exemptions from unnecessary requirements.

7. Agreed Transfer of Responsibilities.
Finally, individual utilities may be able to transfer compliance obligations to other entities by agreement. NERC rules allow reliability obligations to be transferred to, for example, joint action agencies, G&T cooperatives, or other entities with appropriate functional registrations. A utility transferring compliance responsibilities in this way could deregister from specific functions, or even completely deregister. NWPPA could render assistance in this area by, for example, exploring whether economies of scale can be achieved by transferring compliance responsibilities to a joint entity or negotiating with Bonneville Power Administration to take responsibility for its customers' transmission-related compliance obligations.

CONCLUSION
After Order No. 773, public power managers interested in reducing the cost of reliability compliance can choose from a menu of options. In making this choice, managers will need to carefully evaluate the specific circumstances of their utility. But Order No. 773 substantially increases the chances that meaningful reductions in compliance obligations can be achieved by NWPPA members.

FERC Proposes Changes to Small Generator Interconnection Process Designed To Encourage Solar, Distributed Resources

February 4, 2013

Responding to a petition filed by the Solar Energy Industries Association last year, the Federal Energy Regulatory Commission ("FERC") at its January meeting issued a Notice of Proposed Rulemaking ("NOPR") soliciting comments on changes to its rules governing interconnection of small generators. Citing the rapid growth of solar photo-voltaic ("PV") systems and expanding state renewable portfolio standards, FERC argues that changes in the Small Generator Interconnection process are necessary to keep up with changes in the industry. The proposed changes are aimed at encouraging distributed generation by streamlining the interconnection process, especially for generators with capacity of 5 MW or less. Comments on the NOPR are due June 3, 2013. FERC will hold a technical conference on the proposals prior to that date.

Under the current process, small generators (defined as generators with no more than 20 MW of capacity) may interconnect with FERC-jurisdictional transmission utilities by following the pro forma Small Generation Interconnection Procedures ("SGIP") and signing a pro forma Small Generator Interconnection Agreement ("SGIA"). Under the existing SGIP process, small generators with a capacity between 2 and 20 MW are required to follow the "Study Process," in which they file a request for a study with the interconnecting utility, which then carries out system impact studies to identify any reliability or safety problems that might be created by the new generator and the system upgrades that the generator must pay for to remedy these problems.

Rather than going through the Study Process, generators under 2 MW of capacity go through the "Fast Track Process." The Fast Track Process relies on a series of "technical screens," rather than studies, to identify potential safety and reliability concerns. If no problems are identified, the generator can then sign a SGIA and interconnect. If problems are identified, then the interconnecting utility generator can work through options with the interconnecting utility to resolve those problems. Finally, very small generators, with 10 kW of capacity or less, can interconnect using the "10 kW Inverter Process," which allows them to interconnect if they use a certified inverter designed to avoid safety and reliability issues and pass the "technical screen" process.

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EPA Strains RICE Through the Reliability Screen: Rules on Pollution from Reciprocating Engines Modified To Reflect Reliability Requirements

January 15, 2013

On January 15, the U.S. Environmental Protection Agency ("EPA") issued new rules governing pollution from Reciprocating Internal Combustion Engines ("RICE") used for emergency electric generation. The new rules have been amended substantially to reflect electric system reliability requirements because RICE are frequently used for emergency and back-up power, helping to prevent blackouts when the grid is strained by outages in primary units, voltage deviations, or other reliability problems. The rules are of particular interest to Northwest entities that may use diesel generators for back-up or reliability purposes. The rules are also of great interest to rural communities in Alaska, which frequently rely on RICE for generating their electric power and for whom the new rule makes some special accommodations.

The new rule amends the limits for hazardous air pollutants ("NESHAP" in EPA-speak) aimed at controlling pollutants such as formaldehyde from stationary RICE, such as diesel-powered generators. Until 2010, stationary engines of 500 HP or less were not regulated under the relevant NESHAP rules. At that time, EPA issued rules that would have extended regulation to stationary engines of this size, but would have allowed limited exemptions for emergency engines operating less than 15 hours per year. Because the 15-hour-per-year limitation did not square with electric industry standards, representatives of the electric industry asked FERC to reconsider this limitation.

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FERC Leaves a Sugarplum for Reliability Compliance, Adopts NERC "Bulk Electric System" Definition

December 22, 2012

While the Federal Energy Regulatory Commission at its December meeting put Bonneville Power Administration on the "naughty" list, it awarded the North American Electric Reliability Corporation's ("NERC") industry-led "Bulk Electric System" Standards Drafting Team a place on the "nice" list. On December 20, FERC issued Order No. 773, which adopts a new definition of "Bulk Electric System." The new definition is fundamental to FERC's electric reliability enforcement regime because FERC's mandatory enforcement authority is limited by statute to elements of the "Bulk Electric System." In addition, Order No. 773 adds a couple of stocking-stuffers for the industry in the form of new procedures for regulated entities seeking to reduce their compliance burdens by excluding systems or elements from the Bulk Electric System.

As we have previously explained in greater detail, for several years after Congress adopted a mandatory electric reliability requirement in 2005, FERC relied on the pre-existing definition of "Bulk Electric System," despite its ambiguity. In March, 2010, however, FERC reversed course, proposing a new definition of "Bulk Electric System" that would classify all elements rated at 100 kV or above as "Bulk Electric System" with very limited exceptions. FERC's unexpected move provoked a fierce backlash from all sectors of the industry. In response, FERC again changed course, this time ordering NERC to develop a new Bulk Electric System definition using the NERC standards development process.

In response, NERC formed the BES Standards Development Team which conducted a standards development process over the course of 2011. Utilities from across the country, including a large coalition of public power entities from the West, devoted a great deal of time and talent to developing a workable "Bulk Electric System" definition. These efforts culminated in a revised "Bulk Electric System" submitted by the Standards Drafting Team for approval by FERC in January of this year. The new definition starts with a 100-kV threshold, but adds several specific inclusions and exclusions. For example, exclusions for "Local Networks" and radial systems will cover most local distribution systems, allowing them to escape the considerably more burdensome reliability requirements that would apply if they are classified as part of the Bulk Electric System. The NERC proposal also includes an "Exceptions" process that allows case-by-case variations from the Bulk Electric System definition based upon system-specific technical information.

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Power Planning Council Suggests Need for 350 MW of New Generation by 2017

December 14, 2012

The most recent projections from the Northwest Power & Conservation Council ("NPCC") suggest that electric demand in the Pacific Northwest is finally recovering from effects of the Great Recession, and that new generation will be needed to meet peak needs by 2017. The NPCC's Northwest Resource Adequacy Forum, a committee of experts from utility planning staffs, state agencies and other interested parties, presented its most recent report at the NPCC's December meeting. The report predicts that the region will need to build 350 MW of new generation, after accounting for energy conservation, in order to meet peak demands in 2017.

The Resource Adequacy Forum uses a model which aims to keep the likelihood of an energy shortfall at 5 percent or less. The Forum now predicts that, without additional capacity, the likelihood of a shortage will grow to 6.25% by 2017. The largest driver, according to the Forum, is projected drop of 1,500 MW of capacity from California, with availability from California estimated to fall from 3,200 MW to 1,700 MW, primarily due to retirements of coastal water-cooled thermal plants. In addition, the Forum projects within-region demand, net of energy efficiency savings, will grow by about 300 MW from 2015 to 2017. The overall result is an unacceptably high risk for resource adequacy, especially for peaking power in the months of January, February, and August. The Forum did not analyze demand response programs, but suggested such programs might be one mechanism to reduce peak demands and bring supply projections back within acceptable limits.

The Forum's report also highlights the importance of both independent energy producers and the California market for the Pacific Northwest. The Forum notes that independent power producers now operate about 3,450 MW of generation capacity in the Northwest. The Forum assumes that much of this generation will be available to meet winter peaks, but in the summer, it is mostly committed to the California market.
Further, much of the uncertainty in the Forum's projections is attributable to uncertainties about the California market. For example, under an extreme scenario assuming high load growth and no resources from California, the risk of inadequacy jumps to 16.8% in 2017. On the other hand, with low load growth in the Northwest and no loss of generation availability from California, the probability of resource inadequacy falls to 3.2%.

If you have any questions about the NPCC report, energy development, or other utility-related matters, please contact a member of GTH's Energy, Telecommunications and Utilities practice group practice group. We have years of experience in energy regulation, the Northwest's energy industry, complex administrative matters, appellate litigation, and related fields and we are regularly recognized as one of the best energy and natural resources practices in both the region and the nation.