Tuesday, March 19, 2019

Overheard at Transmission Summit East 2019

ARLINGTON, Va. — Transmission developers, planners and regulators gathered last week on the top floor of the Key Bridge Marriott, overlooking D.C. from across the Potomac River, for Infocast’s annual Transmission Summit East. Panels and presentations covered a little bit of everything, from energy storage to cybersecurity.

Transmission Summit East

Audience members listen on the top floor of the Key Bridge Marriott in Arlington, Va., during Infocast’s Transmission Summit East on March 6. | © RTO Insider

Hoecker, Demarest Propose Interstate Tx Siting Bill

James Hoecker and William Demarest, both senior counsel at Kansas City-based law firm Husch Blackwell, proposed to the conference a legislative solution to the problem of getting high-voltage interstate transmission lines built.

The pair’s proposal would essentially give FERC jurisdiction over siting interstate transmission projects, similar to how the Natural Gas Act gave the commission siting approval over gas projects, but with numerous caveats and exceptions that they said would preserve some state authority. Crucially, only projects that have facilities in multiple states would be subject to FERC approval. Intrastate transmission projects, unlike intrastate gas pipelines, would remain solely under the purview of the states.

Hoecker, a former FERC chairman, said demand for renewable resources is growing as states increase their portfolio targets. Currently, transmission developers must get approval from a “multiplicity” of regulatory agencies in each state their projects pass through, he said. But “if the momentum picks up for interregional and multistate forms of transmission, I think there’ll be a growing drumbeat to somehow limit state authority in this area.”

The desire to access cleaner generation will be come a very powerful force in the transmission industry, Hoecker predicted. But without a good policy, “you could have states essentially getting steamrolled.”

Transmission Summit East

James Hoecker (left) and William Demarest | © RTO Insider

Demarest elaborated on that point, noting his years working for Rep. John Dingell (D-Mich.). When members of Congress “get on a course, they tend to take political, rather than economic … solutions. They are frequently looking for a solution, and it need not be the best solution, because they delude themselves into believing that they can come back and address it and adjust it and fix it, which they never or rarely do.” State regulators and industry need to find a solution before Congress imposes something they don’t like, he said.

Under their plan, transmission rates for interstate service would be regulated by FERC, but any intrastate service rates would be regulated by each state the project serves. It also would not eliminate, nor allow FERC to eliminate, any state rights of first refusal for incumbent utilities to build intrastate projects. These projects would also not be subject to an “affecting commerce” standard, even though they’re still part of interstate commerce.

RTOs would continue their role as planners, but RTO sponsorship would not be necessary. “RTOs, at least in my view, are political critters, often captive to certain stakeholders,” Demarest said.

Order 841’s Impact on New York

New York is a very desirable market for the energy storage industry, but NYISO’s proposed compliance with FERC Order 841 is somewhat concerning, speakers said during a panel on the order’s implementation.

From left to right: panel moderator Rich Heidorn Jr., editor-in-chief and co-publisher of RTO Insider; Melissa Kemp, Cypress Creek Renewables; Steve Wemple, Con Ed; and Ray Hohenstein, Fluence. | © RTO Insider

“When we think about what drives the business case for storage … by and large it is the need for capacity,” said Ray Hohenstein, market applications director for storage developer Fluence. Peaking plants are retiring at a faster rate because of the state’s increasing emissions targets. “New York is a state where if they get FERC 841 right, there could be a lot of energy storage that is making money.”

The state’s Public Service Commission has set a goal of 3 GW by 2030, with an interim target of 1.5 GW by 2025.

Ray Hohenstein | © RTO Insider

In its Order 841 compliance filing, NYISO said it would offer four modes for storage resources to participate: ISO-committed fixed, ISO-committed flexible, self-committed fixed and self-committed flexible. In the ISO-committed modes, suppliers would leave it up to NYISO to determine the most optimal dispatch times for their resources.

Last month, the Energy Storage Association filed responses to the grid operators’ compliance filings. With NYISO, the group focused on what it called “rules that bias against self-management of state of charge.”

Steve Wemple | © RTO Insider

Steve Wemple of Consolidated Edison, however, had an optimistic view on NYISO managing resources’ state of charge. The ISO would “look at the beginning charge level and look forward and try to find the right pairs of charging and discharging to meet the bidder’s economic desire … so I think that’s very positive.”

Hohenstein agreed. “I think state-of-charge management is one of the keys to unlocking participation in wholesale markets in general. It actually is a really great development to have the ability to … define your beginning and end-of-hour state of charge to ensure that you are available, for instance, if you have to provide a peak reliability service for part of the day. So it provides a lot more certainty.”

Melissa Kemp | © RTO Insider

As an example, he said a resource could tell the ISO that it was bidding into the frequency regulation market but it has to be fully charged by 6 p.m.

Melissa Kemp, policy director at Cypress Creek Renewables, was skeptical of that. “I think if it were something that nuanced, we would not have a problem with it. My understanding of what they filed is that it’s not that nuanced, and that it’s more ‘We need to control what you’re doing here’ and that there’s a lot of concern from a lot of stakeholders in the ISO process [who] would like the option to select the ISO to control … but that just simply turning over the ability to control the asset to the ISO is a great concern and kind of a nonstarter.”

The ‘Weakest Link’ in Cybersecurity

A panel on cybersecurity focused on figuring out the most effective practices, which speakers said don’t apply to every utility in the country.

From left to right: panel moderator Michael F. Ahern of Worcester Polytechnic Institute; NARUC President and Iowa Utilities Board Member Nick Wagner; Ralph King, EPRI cybersecurity program manager; and Pennsylvania PUC Chair Gladys Brown. | © RTO Insider

Among the panelists was Iowa Utilities Board Member, and president of the National Association of Regulatory Utility Commissioners, Nick Wagner, who said criminal or hostile foreign hackers are probably not interested in taking down a rural, municipal cooperative in his state.

Nick Wagner | © RTO Insider

When asked about NERC critical infrastructure protection standards, Wagner said, “I think those are important beginning points. I don’t necessarily [think] they should be a hard-and-fast rule that everybody should follow. One of the nice things about … our grid today is a conglomerate of very different systems, which in itself is inherently secure. So if a person gets in a system of one utility, that doesn’t necessarily mean that they’ll be able to get into every system. …

“Government does not move at the speed of industry. And it certainly does not move at the speed of hackers. So we will, from a standards standpoint, always be behind. And we want our utilities and our industry and our suppliers to move faster than that and be able to keep up with the threats that are out there,” he said.

Instead, Wagner said, industry needs to focus on training employees to recognize hacking attempts. “People are the weakest link,” he said. “Whether we like to admit it or not, we are the weakest link. … I’ve gotten into the habit of, when I get an email from my family, I call them up and say, ‘Did you send this email?’ Because that’s how sophisticated these hackers are getting.”

Gladys Brown | © RTO Insider

Pennsylvania Public Utility Commission Chair Gladys Brown said that applies to state regulatory agencies as well. Agencies “have a wealth of information” that hackers would love to get their hands on, she said. Brown said that despite the robust training NARUC directs, even she has fallen for a phishing attempt, when she responded to an email from someone she thought was a state cabinet secretary. (Thankfully there was no link in the email to click.)

As part of the Electric Power Research Institute’s training, the organization sends out its own phishing emails to test its employees, said Ralph King, cybersecurity program manager. And “if you actually click on a phishing email, you get to sit down with someone pretty high up in the company.”

But King also warned that one utility company he worked with went too far in its training. “They had to back it off because all the employees, anything external, they deleted. And so they were missing a lot of emails.”

Ralph King | © RTO Insider

King also said that many cyber experts think “the biggest threat in the next five years are insider threats. These could be malicious; they could be mistakes.” Noticing unusual employee behavior — logging into a system in the middle of the night, logging into systems they’re unauthorized to access, etc. — will be key to preventing disruptions. He told the story of another company he worked with that had an employee displaying “very odd behavior. And by looking for these things, we actually uncovered a serious health problem that they didn’t know about. So it’s not always malicious; it could be other things. But regardless of what it is, you want to be able to identify it.”

“It may not impact the grid or the system overall, but it can certainly impact you as individuals and be a real pain to have to deal with some of that stuff,” Wagner said.

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