NERC alleges utility company security breaches, settles for $10 million

U.S. electric reliability organization NERC has filed a Notice of Penalty with federal utility regulators, describing a settlement agreement through which unnamed companies have agreed to pay a $10 million penalty after NERC determined the companies committed 127 violations of cybersecurity and other Critical Infrastructure Protection reliability standards.

On January 25, 2019, NERC filed a Notice of Penalty with the Federal Energy Regulatory Commission. The Commission docketed the proceeding as Docket No. NP19-4. The public version of the filing was heavily redacted, and does not state the identity of the companies involved in the alleged violations.

The Notice of Penalty describes the risk posed to the reliability of the bulk power systems from the violations as ranging from minimal in 52 cases, to serious in 13 cases. It asserts that the 127 violations "collectively posed a serious risk to the security and reliability" of the grid because "many of the violations included long durations, multiple instances of noncompliance, and repeated failures to implement physical and cyber security protections." While some details of the alleged violations were redacted from the public filing, they include failure to revoke contractor and employee rights to access electronic systems after access was no longer required, failure to maintain an escort when required for personnel to enter a physical security perimeter, a contractor's failure to secure vent openings on a physical security perimeter after completion of a facility upgrade, failure to immediately review unauthorized access attempts, and failure to monitor and implement vendor security patches.

According to the public filing, the violations were discovered during compliance audits and through self-reports the companies submitted from 2015 through 2018. The filing asserts that the issues displayed contributing causes including a lack of management engagement, support and accountability; disassociation of compliance and security; and organizational silos between management levels and across business units.

In addition to agreeing to pay a penalty of $10 million, the Notice of Penalty describes other conditions of the settlement, including mitigation measures and increased compliance monitoring.

Following the filing of the Notice of Penalty, advocacy organization Public Citizen filed a motion to intervene in the FERC proceeding. Public Citizen also asked the Commission to direct the public release of the company's name, noting, "This is now the second record-breaking Notice of Penalty in a year where NERC has refused to identify the name of a violator." Last year, the Commission accepted a settlement featuring $2.7 million penalty for a violations of cybersecurity standards.

In its motion, Public Citizen asserted that multiple media reports have allegedly identified the company involved in the instant case as Duke Energy, citing reporting by EnergyWire, the Wall Street Journal, RTO Insider, the Charlotte Business Journal, and UtilityDive.

West Virginia electric utilities offer discount for new or expanding businesses

Two electric utilities serving customers in West Virginia have announced a new discounted "incentive rate" to attract new businesses and grow existing businesses.

Appalachian Power Company and Wheeling Power Company announced on February 14, 2019, that they are are offering discounted rates for electric service to new or expanding businesses meeting defined standards. The discount reduces qualifying customers' incremental billing demand by 40% for a 5-year term. The utilities are offering this new rate to new or existing customers who establish at least 500 kilowatts of new demand for electricity and meet criteria including creating at least 10 jobs or investing at least $2.5 million in an expansion in West Virginia.

The announcement follows a January 29, 2019 decision by the Public Service Commission of West Virginia to approve the companies' "Economic Development Rider" tariff proposed by the utilities in a November 28, 2018 filing. According to the Commission, the discounted rate is "experimental in nature" and is limited in size to an aggregate of 250 megawatts for the companies. As approved by the Commission, the rate will impose no incremental rate burden on any of the companies' West Virginia retail customers, and should result in a net contribution to defray the companies' fixed costs.

According to the Commission's order, the discounted rate will not be available in instances where there is "simply a change in ownership of existing customer operations", where operations are merely relocated within the companies' services territories, or where increases in demand result from the resumption of normal operations following abnormal operating conditions. The rate is also unavailable to "business facilities engaged in the retail sale to the average customer of consumer or final goods" due to concerns that adding new customers engaged in competitive retail sales of consumer goods would increase the "likelihood that the new load will displace an existing load with the net result being zero benefits."

The Commission noted the companies' expectation that the rate "will serve as an inducement for economic development in the West Virginia service territories of the Companies" and that "the resulting economic development will be beneficial to the West Virginia retail ratepayers of the Companies and to the economy of West Virginia."

Appalachian Power and Wheeling Power are subsidiaries of American Electric Power. AEP Appalachian Power has 1 million customers in Virginia, West Virginia and Tennessee.

Maine Gov. Mills lifts wind permitting moratorium

Maine Governor Janet Mills has signed an Executive Order terminating a moratorium imposed by the previous governor on state permitting of wind energy projects.

On January 24, 2018, then-Governor Paul LePage issued an Executive Order prohibiting state agencies from issuing permits related to wind turbines proposed for siting in Western Maine, the Maine coast, and certain avian migratory pathways. Governor LePage's executive order established the Maine Wind Energy Advisory Commission. He charged the Commission with studying and reporting on the economic impacts of potential wind turbines in these areas, as well as on Maine's rules and procedures for expedited permitting of wind projects. Governor LePage designated the Commission's meetings as not "public proceedings" whose records could be made public under Maine's Freedom of Access Act. Crucially, his executive order provided, "I order that no permits related to wind turbines are issued in the Areas until the report is issued in writing."

The Commission held a series of meetings between October and December 2018. In November 2018, Maine citizens elected Governor Janet Mills to replace outgoing Governor LePage. On January 2, 2019, the Commission issued its final report. The report noted that "wind is an emotive issue for many Mainers, both those for and against wind power development." The Commission offered 13 recommendations, including reevaluating Maine's targets and standards for wind energy development; studies of the effect of wind projects on electricity prices, grid reliability, and property values; and continued opportunities for public input to inform policymakers' views.

On February 14, 2019, Governor Mills signed an executive order ending the LePage moratorium. Noting that the Commission has issued its report, Governor Mills's executive order dissolved the Commission and terminated the moratorium. Her executive order directs Maine agencies, including the Maine Department of Environmental Protection, Maine Land Use Planning Commission, and Maine Public Utilities Commission, to resume determining whether wind project applications qualify for approval pursuant to established standards and processes of law, including appropriate site location and assessment of community impact.

In a statement accompanying her order, Governor Mills said, "It is time for Maine to send a positive signal to renewable energy investors and innovators – We welcome you."

Holyoke utility imposes moratorium on new gas service, citing pipeline constraints

The municipal utility serving the town that hosts the headquarters for the operator of the regional electric grid has informed its customers that the utility “is unable to accommodate new natural gas service requests due to the lack of natural gas availability in the region.” Holyoke Gas & Electric adds, “Recent proposals that would increase natural gas capacity in the region have been met with opposition, and the current pipeline constraints are causing significant adverse environmental and economic impacts on the region's ratepayers."

Holyoke Gas & Electric is a consumer-owned municipal utility established in 1902 through the purchase of a gas and electric plant from the Holyoke Water Power Company. According to the utility, the town saw ownership of a municipal utility "as a way to stabilize rates and keep local control over their energy services." As a municipal utility, Holyoke Gas & Electric is operated as a not-for-profit concern, and is owned by the community it serves. The utility cites public power advantages from this structure including operating in the local public interest, with local control over rates and services, local ownership, and reliance on local employees. In 1999, the utility acquired the Holyoke Dam, the city's canal system, and the remainder of the Holyoke Water Power Company's assets. The utility touts its ability to produce over 65% of its electricity needs from these renewable hydropower resources and cites "some of the lowest utility rates in New England."

Holyoke's Gas Division provides natural gas service through about 9,900 meters in Holyoke and Southampton. But on January 28, 2019, the utility gave its customers notice that it had placed a moratorium on most new natural gas service installations. According to that notice, the utility's natural gas customers are served by an interstate pipeline "which has become severely constrained due to a dramatic increase in demand over the last two decades," with "no corresponding increase in pipeline capacity to deliver additional supply to the region." As a result of significant growth in demand for natural gas by Holyoke's customers, HG&E said it is "forced to impose a moratorium on new natural gas connections until the capacity issue is addressed."

The utility further explained, "While inexpensive natural gas has never been more plentiful in the United States, there is insufficient pipeline capacity in our region to deliver additional load. Recent proposals that would increase natural gas capacity in the region have been met with opposition, and the current pipeline constraints are causing significant adverse environmental and economic impacts on the region's ratepayers." In its notice, the utility noted that due to the lack of natural gas during peak demand periods, "more electric generators are forced to switch to oil, while coal generators are called upon to operate, causing significant spikes in greenhouse gas emissions." Regional electric grid operator ISO New England, which is headquartered in Holyoke, reported that during a 15-day cold spell in January 2018, over two million barrels of oil were burned to generate electricity due to the lack of natural gas, more than the total amount of oil burned in 2017.

Beyond increased emissions, the utility also used ISO-NE data to show how "the lack of natural gas has a significant impact on energy costs throughout New England." Citing data from ISO-NE, the utility observed that during the two-week period from December 26, 2017 to January 8, 2018, electricity prices experienced an "approximately $700 million increase in energy costs for New England ratepayers compared to the prior year."

Holyoke Gas & Electric says it is working with gas utility Columbia Gas of Massachusetts to explore a solution involving system upgrades in other communities to "address local capacity issues, which will help reduce regional carbon emissions, improve reliability, and support local economic development." In the meantime, HG&E says its moratorium on new natural gas connections will remain in place "until the capacity issue is addressed."

Federal Green New Deal resolution proposed

Two members of Congress have introduced a resolution framing the "Green New Deal," a suite of programs aimed at addressing both global climate change and domestic economic challenges.

The Green New Deal resolution is offered by New York Representative Alexandria Ocasio-Cortez and Massachusetts Senator Ed Markey. A copy of the 14-page document posted by NPR bears the formal title, "Resolution Recognizing the duty of the Federal Government to create a Green New Deal." In a blog post on her House website, Rep. Ocasio-Cortez describes the Green New Deal as "a 10-year plan to create a greenhouse gas neutral society that creates unprecedented levels of prosperity and wealth for all while ensuring economic and environmental justice and security," to be achieved "through a World War 2 scale mobilization."

In a lengthy preamble, the resolution cites findings in the October 2018 "Special Report on Global Warming of 1.5 °C" released by the Intergovernmental Panel on Climate Change and the November 2018 Fourth National Climate Assessment report that human activity is the dominant cause of observed climate change over the past century, with harmful effects. The preamble also asserts that because the United States has historically been responsible for 20 percent of global greenhouse gas emissions through 2014 and has a high technological capacity, the nation must take a leading role in reducing emissions through economic transformation. It cites economic stagnation, income inequality, and systemic racial, regional, social, environmental, and economic injustices as having been exacerbated by climate change, pollution, and environmental destruction.

Based on these findings, the resolution expresses the sense of the House of Representatives that "it is the duty of the Federal Government to create a Green New Deal" to achieve five key goals: achieving net-zero greenhouse gas emissions through a fair and just transition for all communities and workers; creating millions of good, high-wage jobs and ensuring prosperity and economic security for all people of the U.S.; investing in the nation's infrastructure and industry to sustainably meet the challenges of the 21st century; securing clean air and water, climate and community resiliency, healthy food, access to nature, and a sustainable environment, for all people of the U.S. for generations to come; and promoting justice and equity by reversing historic oppression of "frontline and vulnerable communities."

The resolution calls for accomplishing these goals through a 10-year national mobilization that would require a list of 14 specific industrial and infrastructure projects, including upgrading infrastructure to eliminate greenhouse gas emissions as much as technologically feasible; meeting 100 percent of domestic power demand through clean, renewable, and zero-emission energy sources; developing energy-efficient, distributed, and "smart" power grids; improving building energy efficiency; expanding renewable energy manufacturing; and overhauling the transportation system. The resolution also expresses 15 supporting principles for social and economic justice and security.

The concept of a "Green New Deal" is not new, with similar concepts proposed as early as 1998, and the phrase "Green New Deal" first surfacing in public discourse in 2007. In addition to the proposed federal resolution, states may also consider "Green New Deal" legislation. For example, a list of Maine legislative requests includes the title of a bill proposed by state Representative Chloe Maxmin has proposed a bill listed as LR 1034, "An Act To Establish a Green New Deal for Maine."

FERC inaction on Vineyard Wind capacity auction waiver request

Federal energy regulators have declined to act on an emergency petition by an offshore wind energy developer in time to allow the company to participate in a regional capacity auction, prompting two commissioners to issue a statement that "by failing to act, the Commission has introduced significant uncertainty into this auction."

The petition was filed by Vineyard Wind LLC, a joint venture of Avangrid Renewables, LLC and Copenhagen Infrastructure Partners that is developing an offshore wind energy project in federal waters offshore the coast of Massachusetts. The project is expected to be operational by 2021, and its developer has entered into a power purchase agreement to sell electricity to the Massachusetts electric distribution companies.

Vineyard Wind also intended to participate in grid operator ISO New England, Inc.'s February 4, 2019 Forward Capacity Auction 13 -- specifically, as a "Renewable Technology Resource" eligible under the ISO-NE tariff for an exemption from certain rules governing bid pricing. In 2018, Vineyard Wind made timely submissions to the grid operator to support its participation in the auction under these provisions. But the grid operator denied the company's request for Renewable Technology Resource designation, on the grounds that the project will be located in federal waters whereas the tariff limited the exemption's availability to projects located in any ISO-NE state.

While ISO-NE subsequently sought to amend its tariff to remove this "federal waters exclusion," on December 14, 2018, Vineyard Wind also asked the Commission for a waiver to allow it to participate in Forward Capacity Auction 13.In its petition, the company asked for waiver by January 29, 2019, to allow the company and any other similarly situated entities to participate in Forward Capacity Auction 13, which commenced on February 4, 2019.

Vineyard Wind's request was not without support. In early January, the grid operator filed comments saying it did not oppose Vineyard Wind's waiver request, and asking the Commission to act by the January 29, 2019 date requested by Vineyard Wind so the waiver could be effective for the thirteenth Forward Capacity Auction. Also in January, the Massachusetts Department of Energy Resources filed comments supporting the company's waiver request.

Because the Commission did not act on the waiver request by January 29, so two days later, the company asked the Commission for immediate action on its petition. The next day, Massachusetts Governor Charlie Baker filed a letter requesting that the Commission immediately grant the waiver request. On February 4, as the Forward Capacity Auction was set to begin, but without any Commission action on the waiver request, Vineyard Wind submitted an emergency motion asking for the auction to be stayed pending a decision on the waiver request, or in the alternative asking for the Commission to order a redo of the auction if waiver were subsequently granted.

But the Commission still did not act, and ISO-NE's thirteenth forward capacity auction proceeded without Vineyard Wind's participation as a Renewable Technology Resource. That same day, Commissioners LaFleur and Glick issued a joint statement expressing disappointment that the Commission had not acted. In that statement, the two commissioners noted that while "the Commission can move forward only when it has a majority of votes for a particular action", the Commission's failure to act had introduced "significant uncertainty" into the auction, saying, "All parties, including New England’s states, consumers, and auction participants, deserve better."

While ISO-NE has now conducted Forward Capacity Auction 13, Vineyard Wind's petition still remains pending.

Maine legislature considers EV incentives

The Maine State Legislature is considering several measures that could create new incentives for purchasing or leasing electric vehicles.

At least two bills proposing new incentives for electric vehicles have been printed so far:

• LD 604, An Act To Create an Electric Vehicle Tax Credit: Sponsored by Senator Chenette, this bill would provide an income tax credit for the purchase of a new plug-in electric-drive motor vehicle that is eligible for a federal income tax credit. The credit would be $300 plus $50 for each kilowatt-hour of battery capacity in excess of 5 kilowatt-hours, up to a maximum credit of $1,500. (As a point of reference, the base model 2019 Nissan Leaf comes with a 40-kilowatt battery.) LD 604 has been referred to the Legislature's Joint Standing Committee on Taxation.

• LD 614, An Act To Provide Purchase Rebates for Battery Electric Vehicles: Sponsored by Representative Henry Ingwersen, this bill would establish an "Electric Vehicle Rebate Fund" to be administered by the Efficiency Maine Trust. The bill would direct the Trust to create a program, beginning July 1, 2020, that would pay a direct rebate of $2,500 to Maine residents who purchase or lease an eligible electric vehicle and meet certain criteria, including a certification of intent to retain ownership of the electric vehicle (through purchase or lease) for at least 36 months. The program would be limited to fully electric, zero-emission vehicles that have an on-board electrical energy storage device that is designed to be recharged using an external energy source. LD 614 has been referred to the Legislature's Joint Standing Committee on Energy, Utilities and Technology. 

More bills proposing incentives for electric vehicle adoption could still surface later in the Maine legislative session. For example, a list of legislative requests submitted by legislators includes LR 1380, An Act To Encourage Municipalities, State Agencies, Colleges and Universities To Adopt Electric Vehicles.

Outside Maine, a number of other states offer incentives for electric vehicle adoption. Additionally, the federal Internal Revenue Service offers a tax credit for qualifying electric vehicles, ranging from $2,500 to $7,500 per new EV purchased for use in the U.S., depending on the size of the vehicle and its battery capacity.