Regulatory Updates

CPUC Releases Final Choice Action Plan and Gap Analysis

The California Public Utilities Commission (“CPUC”) released the December 2018 Final Choice Action Plan and Gap Analysis prepared by the California Customer Choice Project staff. The paper is the culmination of the Choice Project’s stakeholder process addressing increased customer choice electric service options—including Community Choice Aggregators (“CCAs”), Direct Access electricity service providers (“ESPs”), and behind-the-meter technologies—and the resulting impact on California’s ability to achieve its policy objectives of affordability, decarbonization, and reliability. The Gap Analysis: (1) identifies issues categorized as either consumer protection, duty to serve, or reliability and energy procurement; (2) describes how the CPUC or other state/federal entities are currently addressing those issues; and (3) identifies existing gaps to resolving those issues. The Choice Action Plan recommends responsive actions (regulatory, legislative, or additional analysis) the CPUC and other government entities should take to further address the areas identified in the Gap Analysis. Issues analyzed in the study include access to customer usage data, designating a load-serving entity (“LSE”) as a provider of last resort, LSEs’ pricing and program disclosure for customers’ comparison purposes, whether reliability is sufficiently addressed through the CPUC’s resource adequacy requirements for LSEs, and the role of California’s investor-owned utilities in a disaggregated market.

More information on CPUC’s California Customer Choice Project stakeholder process can be found at: http://www.cpuc.ca.gov/CustomerChoice/.

For further information on our CCA practice, please contact Michael Postar, Lisa S. Gast, Peter J. Scanlon, Sean M. Neal, Bhaveeta K. Mody, or Andrew B. Art.

FERC Commissioner Kevin McIntyre

FERC Commissioner Kevin J. McIntyre passed last evening, January 2, 2019, having lost his hard-fought battle with brain cancer. McIntyre was nominated to the Commission in August 2017 and confirmed by the U.S. Senate on November 2, 2017, at which time be assumed the role of Chairman. To focus on his ongoing health needs, McIntyre stepped down as Chairman in October 2018. Prior to joining the Commission McIntyre was a well-known and respected FERC practitioner. He served as co-leader of Energy Practice at the law firm Jones Day, where he practiced law for most of his nearly 30-year legal career. McIntyre was active in the Energy Bar Association, having served in numerous volunteer and leadership positions. With the loss of Commissioner McIntyre, FERC maintains a quorum with four remaining commissioners.

FERC Remains Open During the Partial Federal Government Shut Down

The Federal Energy Regulatory Commission (“FERC”) remains open during the partial government shut down. While no notice appears on FERC’s webpage, FERC is able to remain open because its funding through September 2019 was secured in the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act, 2019, which included the Energy and Water Development and Related Agencies Appropriations bill. That Act, H.R. 5895, was signed into law by the President on September 21, 2018.

New NERC Reliability Standards Subject to Enforcement

As of January 1, 2019, the following North American Electric Reliability Corporation (NERC) Reliability Standards became effective and enforceable in the United States:

BAL-005-1 – Balancing Authority Control
FAC-001-3 – Facility Interconnection Requirements
TPL-007-1 – Transmission System Planned Performance for Geomagnetic Disturbance Events
(Requirement 5, 5.1– 5.2)
VAR-001-5 – Voltage and Reactive Control

The NERC file containing each of these standards, along with the already enforceable Reliability Standards, is available here.

For more information on the NERC Reliability Standards and their potential applicability and impact, please contact Kristen Connolly McCullough, Lisa Gast or Sean Neal .

California Regulators to Hold En Banc Conference on California Customer Choice

On Monday, October 29, 2018, the California Public Utilities Commission (“CPUC”) will hold a joint En Banc hearing on customer choice with the California Energy Commission (“CEC”). The En Banc is a continuation of the CPUC’s California Customer Choice Project, which seeks to analyze increased customer choice regarding electric service options and the resulting impact on California’s ability to achieve its policy objectives of affordability, decarbonization, and reliability. The California Customer Choice Project provides a forum for stakeholders—including Community Choice Aggregators (“CCAs”), Investor Owned Utilities (“IOUs”), Electric Service Providers (“ESPs”), consumers, and regulators—to coordinate regarding California’s changing electricity market.

White House Offers a Plan to Secure Cyberspace in Recently Issued National Cyber Strategy

On September 20, 2018, President Donald J. Trump and his Administration released a National Cyber Strategy outlining the White House plan to strengthen the cybersecurity of the United States. The President provides a preface to the Strategy, explaining the commitment of the Administration to securing and preserving cyberspace. The Administration then goes on to organize the cyber strategy under four pillars: protect the homeland; promote American prosperity; preserve peace by strengthening the United States; and advance American influence. Within each pillar, the Administration identifies particular goals and priority actions to achieve those goals. This summary does not list each of the numerous action items, but rather provides an overview of the most prevalent themes of the Strategy.

D.C. Circuit Finds Cost-Causation Principle Must Be Followed Even If Allocating Costs of a Transmission Project Meeting an Individual Utility’s Planning Criteria

Seal of the Court of Appeals for the District of Columbia

On August 3, 2018, the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit or Court) found that the Federal Energy Regulatory Commission (FERC) acted arbitrarily and capriciously in approving a PJM Interconnection, L.L.C. (PJM) tariff amendment that proposed to exclude from regional cost sharing, high-voltage transmission projects undertaken to satisfy an individual utility’s planning criteria.[1] The Court found FERC failed to justify its departure from the cost-causation principle, a long-standing rule that requires FERC to make some reasonable effort to match costs to benefits in order to ensure just and reasonable rates.

DHS and National Cybersecurity Center Host Cyber Security Webinar

The Department of Homeland Security (“DHS”) and the National Cybersecurity and Communications Integration Center (“NCCIC”) joined together to host an unclassified webinar to brief on Russian government cyber activity against critical infrastructure. The webinar series is offered in response to Russian government actions targeting U.S. Government entities as well as organizations in the energy, nuclear, commercial facilities, water, aviation, and critical manufacturing sectors. The webinar presentation included an overview of recent attack and various common techniques used to infiltrate targets.

The presentation focused its discussion on the penetration of corporate networks and the targeting of control systems. NCCIC emphasized that often threat actors will first attack a “staged target” that has a preexisting relationship with the “intended target.” This strategy is undertaken in order to lay the groundwork for sending phishing emails from what seems like a trusted source, but which actually contains malware. If not careful, clicking on links or opening attachments from these sources can provide threat actors access to the credentials that could open the entire corporation, along with their customers, to a cyberattack.