US ocean energy regulators consider NY-NJ offshore transmission line

After receiving a request from a developer of offshore electricity transmission lines for a right-of-way in ocean waters offshore New York and New Jersey, U.S. ocean energy regulators have asked whether any other developers are interested in the same area.

On April 30, 2018, Anbaric Development Partners, LLC (ADP) applied to the federal Bureau of Ocean Energy Management (BOEM) for a right-of-way grant for a proposed project called the New York/New Jersey Ocean Grid. As envisioned by ADP, the project would include a submarine system approximately 185 nautical miles in length. It would also include up to 9 offshore collector platforms which would collect and distribute power generated from existing offshore wind leases, each capable of handling 800 to 1,200 megawatts of offshore wind energy, as well as up to 6 onshore landings at locations from Long Island, New York to Cardiff, New Jersey. On June 22, 2018, BOEM approved ADP's legal, technical, and financial qualifications to acquire and hold a Right of Way Grant on the Outer Continental Shelf.

Under BOEM's regulations, different procedures apply depending on whether the agency is following a competitive lease process or a noncompetitive lease award process. ADP's application was "unsolicited," meaning it was not submitted in response to a BOEM solicitation, Request for Interest, or Call for Information and Nominations. Under BOEM's case-by-case process for considering unsolicited requests, the agency will issue a public notice and solicit comments to determine whether competitive interest exists, before considering the application itself. If BOEM determines that competitive interest exists in the requested lease area, BOEM will proceed with its competitive process; otherwise, BOEM will publish a notice of Determination of No Competitive Interest, and may proceed to review the unsolicited lease request.

On June 17, 2019, BOEM announced that it would publish a Request for Competitive Interest for project; the Notice of Proposed Grant Area and Request for Competitive Interest was published in the Federal Register on June 19, 2019. Indications of interest in acquiring a right-of-way grant for the area ADP requested must be sent by mail, postmarked no later than July 19, 2019, to be considered. Comments or other information may be sent by mail, postmarked by the same date, or may be submitted through the Federal Rulemaking Portal at http://www.regulations.gov.

If BOEM receives indications of competitive interest from qualified entities, the bureau may decide to move forward with the right-of-way grant issuance process using competitive procedures. BOEM will continue to consult with the state task force and partners regarding the proposed transmission project.

As an increasing number of states and utilities are procuring offshore wind, functions that must be provided include collecting the power produced, transmitting it to shore, and integrating it into the onshore grid. Depending on their design and configuration, offshore transmission grids could play these roles, and could also help wheel power along the coastline from one region to another. Questions of cost recovery -- who pays for these systems -- will continue to arise, at the intersection between state policies calling for offshore wind and regional markets rooted in economics.

FERC, DOE to hold Security Investments for Energy Infrastructure Technical Conference

The Federal Energy Regulatory Commission and the United States Department of Energy have scheduled a joint technical conference to discuss current cyber and physical security practices used to protect energy infrastructure and possible federal and state incentives for related security investments.

According to a notice issued on February 4, the Security Investments for Energy Infrastructure Technical Conference will be led by one or more FERC Commissioners and DOE senior officials. Its agenda addresses two high-level topics: types of current and emerging cyber and physical security threats, and how federal and state authorities can facilitate investments to improve the cyber and physical security of energy infrastructure.

In a supplemental notice issued on March 1, the agencies noted that the Commission has adopted a "well-developed set of mandatory and enforceable reliability standards that set baseline protections for both cyber and physical security of the bulk electric system" as well as "policies that allow for the recovery of prudently incurred costs to comply with those mandatory reliability standards." The supplemental notice describes the technical conference as aimed at better understanding:

1. the need for security investments that go beyond those measures already required by mandatory reliability standards, including in infrastructure not subject to those standards (e.g., natural gas pipelines);
2. how the costs of such investments are or could be recovered; and
3. whether additional incentives for making such investments are needed, and if so, how those incentives should be designed.

The supplemental notice describes two panels, the first of which will discuss types of cyber and physical security threats to energy infrastructure, particularly electric transmission, generation, and natural gas pipelines, as well as best practices for cyber and physical security mitigation beyond those measures already required by mandatory reliability standards and industry and government engagement needed to address these matters. The second panel will explore how federal and state authorities can provide incentives and cost recovery for security investments in energy infrastructure, particularly electric transmission, generation, and natural gas pipeline infrastructure

The federal agencies' Security Investments for Energy Infrastructure Technical Conference has been scheduled for on March 28, 2019.

GAO report on electric grid geomagnetic disturbances

A report released by the U.S. Government Accountability Office found that U.S. and Canadian electricity suppliers have taken steps to prepare for potential electromagnetic disruptions to the electric grid such as from solar storms or high-altitude nuclear detonations -- but that more research is needed on both geomagnetic disturbances and high-altitude electromagnetic pulses.

Under some circumstances, a severe solar storm or high-altitude nuclear blast could damage the U.S. electric grid and potentially cause extensive outages. Federal energy regulators have used both regulatory and more informal collaborative approaches to address the threat to the electric grid posed by electromagnetic pulses and geomagnetic disturbances. Regulatory approaches to electromagnetic disturbance readiness include mandatory reliability standards adopted by electric reliability organization NERC, which require some electricity suppliers to assess their vulnerability to extreme solar storms, and developing procedures for responding to grid security emergencies.

In this context, the Government Accountability Office was asked to review electricity industry actions to prepare for and mitigate electromagnetic risks. Its 95-page report, Critical Infrastructure Protection: Electricity Suppliers Have Taken Actions to Address Electromagnetic Risks, and Additional Research is Ongoing, examines topics including the degree to which U.S. and Canadian electricity generation and transmission owners and operators have identified information about the effects on the grid caused by geomagnetic disturbances and high-altitude electromagnetic pulses (HEMP), steps some suppliers have taken to protect against GMD and HEMP, and opportunities for U.S. suppliers to recover costs for protecting against GMD and HEMP.

According to the report, there is "general agreement that more research is needed on both GMD and HEMP." Risks identified include potential voltage instability leading to collapse of the bulk power system and blackouts, as well as possible damage to key system components. But more information is needed, according to the report -- especially on HEMP effects, given that previous studies have focused on impacts to military equipment as opposed to the commercial electric grid.

The cost of addressing reliability concerns can be significant. The GAO report describes some suppliers' reports "that costs they have incurred to protect against GMD and HEMP have been relatively small so far and they expect to recover those costs through customer rates." But the report warns that suppliers could face future increased costs, as a second regulatory standard phases in through 2022. For example, the report cites one supplier serving about 4.5 million retail customers as estimating "the cost of hardening a planned control center against HEMP to be at least $10 million." GAO calculated that fully passing this cost on to customers in a single year would add $2 to the average customer ’s electric bill for that year.

While regulated U.S. suppliers may be able to recover GMD protection costs through rates, the report notes that recovery is less certain for protection against HEMP because less is known about HEMP risks. The report also presages challenges for any kind of reliability-driven cost recovery for independent owners of power plants, who must recover reliability improvement costs through their sales of electricity without assurances about market prices.