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POLITICO's Morning Cybersecurity: John Di Stasio Quote at Senate Cyber Security Hearing
POLITICO's Morning Cybersecurity
March 29, 2017
By Tim Starks
STANDALONE CYBER? - Sen. Cory Gardner on Tuesday stumped for his bill that would place cybersecurity under one Senate committee. At a hearing of the Senate Subcommittee on Energy, which Gardner chairs, the Colorado Republican asked an energy executive whether such consolidated congressional oversight would benefit the nation's power grid. "Yes, senator, I think that would," said Benjamin Fowke, head of the major utility firm Xcel Energy. "We just need to coordinate better."
Later in the hearing, Sen. Angus King broke from his line of questioning to praise Gardner's effort. "By the way, Mr. Chair, I like the idea of the select committee," he said, before joking: "You get to tell [Senate Armed Services Committee Chairman John McCain] that you're taking cyber away from Armed Services." Gardner playfully noted that McCain had actually co-sponsored the bill, adding with a laugh, "I don't know if he knows the full implication of it."
Sen. Al Franken also used the hearing to highlight the White House's proposal to reduce funding for an Energy Department office that helps coordinate digital security measures with the energy sector. The Trump administrations recently released "skinny budget " indicated the DOE's Office of Electricity Delivery and Energy Reliability would get less money as part of broader cuts to the agency's budget. At Tuesday's hearing, John Di Stasio, president of the Large Public Power Council - whose members include over two dozen of the nation's largest public power systems - said his council had "worked closely with the office ... to develop smart grid and so forth, but also on reliability risks related to cyber."
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CYBERSCOOP: Electric Power Industry Puts Cybersecurity to Forefront with Trump, Lawmakers
March 28, 2017
By Chris Bing
Electric power industry executives are pushing to have their cybersecurity concerns heard by Congress and the Trump administration.
A Senate Energy and Natural Resources Committee hearing on Tuesday — convened to discuss how the government can better coordinate with the private sector on power grid security, incident response and other cyber threat information sharing efforts — is the latest example for how the industry is reaching out to Washington.
Last week, electric power company and trade group representatives also met with top administration officials, including Secretary of Energy Rick Perry and Jeanette Manfra, the acting deputy undersecretary for the Homeland Security Department’s cyber division, Politico first reported. The group spoke about relevant, shared security goals and priorities, and where the government can offer assistance.
Energy companies face substantial risks in cyberspace, experts say, and threats can directly affect physical systems and human life.
John Di Stasio, President of the Large Public Power Council, told lawmakers Tuesday that because cyberthreats aimed at the electric grid evolve so rapidly, the industry typically prefers “flexible” cybersecurity regulations. Di Stasio said that while the government can play an important role in defending U.S. critical infrastructure, he disapproved of Congress rushing out new, potentially constraining compliance standards.
Another topic of significant concern for Tuesday’s four-person panel was the lack of actionable intelligence provided to the electrical power industry by government agencies about hackers.
“We need help getting the information,” Xcel Energy President Ben Fowke III told Cory Gardner, R-Co. “Quite often by the time we hear about a potential threat from the government, we’ve known about it for a long time through private sources or industry communication. And I think the reason for that is that we struggle on taking what could be classified information, declassifying it and getting it out quickly.”
There are some signs in Congress that future legislation may help spur collaborative public-private security research and information sharing programs.
A bill introduced last year by committee member Angus King, I-Maine, named the “Securing Energy Infrastructure Act,” or S. 79, was discussed during the hearing. As it is currently written, the legislation would establish a $10 million pilot program within the Energy Department’s national labs to research new cybersecurity technologies and find security vulnerabilities evident in products used by private energy companies. This vulnerability research would be shared with private sector partners.
“The effort proposed in S. 79 could potentially aid the utility industry, FERC and others to maintain a secure electric grid,” Michael Bardee, Director of the Office of Electric Reliability at the Federal Energy Regulatory Commission, wrote in a prepared testimony for the committee. “Utilities have come to rely increasingly on digital tools for monitoring and operating the Bulk-Power System. These tools have enhanced the efficiency and effectiveness of utility operations significantly.”
Because most critical infrastructure in the U.S. is privately owned, the government must often form partnerships with companies to better monitor and secure industrial control networks. DHS, in this scope, plays a critical role as the defender and support team while the Energy Department helps to drive forward research and changes to policy, standards and regulation, which can improve digital security in the larger energy community writ large.
Developing relations between the electric power industry and U.S. government come in the wake of several known and substantial cyberattacks against industrial control facilities.
Four years ago, Iranian hackers broke into the Bowman Avenue Dam near Rye Brook, New York, using sophisticated malware. The attackers were unable to fully access the dam’s IT systems though investigator believe they could have taken control of the facility’s flood gates, investigator said at the time. DHS’ Industrial Control Systems Cyber Emergency Response Team, or ICS-CERT, responded to the incident; helping mitigate damage caused by the intrusion.
“I think one of the great things here is that the federal government stepped in and stopped what could have been something bad from happening,” Rye Brook Mayor Paul Rosenberg told CNN in 2015 after news first broke that hackers were responsible for the Bowman Avenue Dam incident in his town. “We appreciate that, but it makes me wonder about what would be potentially next, and that makes me concerned.”
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POLITICO's Morning Cybersecurity: Mention of John Di Stasio to Testify at Senate Cyber Security Hearing
POLITICO's Morning Cybersecurity
March 28, 2017
By Tim Starks
AND ENERGY SUBCOMMITTEE SLATED TO TALK CYBER: A Senate Energy and Natural Resources Committee subpanel convenes today to discuss S. 79, the Securing Energy Infrastructure Act, a bill Sen. Angus King floated last year that never got a vote. Per our friends at Morning Energy, the bill calls for creating a $10 million pilot program within the Energy Department's national labs to research ways to repel cyber intrusions on systems used to operate energy infrastructure. Witnesses testifying today are Mike Bardee from FERC, Large Public Power Council President John Di Stasio, Thomas Zacharia, a deputy director at Oak Ridge national lab, and Xcel Energy chief Ben Fowke. "S. 79 promotes government-industry partnership in studying evolving vulnerabilities, which may help combat cybersecurity threats," Di Stasio plans to testify, according to his draft remarks. "However, LPPC cautions against provisions that could lead to prescriptive technology solutions."
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POLITICO’s Morning Energy: Mention of John Di Stasio to Testify at Senate Cyber Security Hearing
POLITICO’s Morning Energy
March 28, 2017
By Anthony Adragna
Later on: A subpanel of the Senate Energy and Natural Resources Committee is convening today to discuss S. 79, the Securing Energy Infrastructure Act, a bill Sen. Angus King also floated last year but never got a vote. The bill calls for creating a $10 million pilot program within the Energy Department's national labs focused on researching ways to repel cyberintrusions on control systems used to operate energy infrastructure. Witnesses testifying today are Mike Bardee from FERC, Large Public Power Council President John Di Stasio, Thomas Zacharia, a deputy director at Oak Ridge national lab and Xcel Energy chief Ben Fowke. The hearing starts at 2:15 p.m. in Dirksen 366.
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Senate Holds Hearing on Cybersecurity Threats to US Electric Grid
March 28, 2017
View photo gallery here. (John Di Stasio is featured in photos 1, 5, 7 and 10.)
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Small Generator 'Ride Through' Proposal Draws Favor from Industry Stakeholders
May 30, 2016
By Jasmin Melvin
Industry stakeholders last week appeared mostly on board with a FERC proposal that would require generators smaller than 20 MW to "ride through" and stay connected during abnormal frequency and voltage events.
Large generators already are subject to such a requirement. FERC issued a notice of proposed rulemaking (RM16-8) in March after determining that it would be "unduly discriminatory not to impose these requirements on small generating facilities" in light of the increasing penetration of distributed energy resources on the grid.
Specifically, FERC's proposal would alter the pro formainterconnection agreement for small generators to require those smaller than 20 MW signing up for new interconnection agreements to ride through abnormal frequency and voltage events, rather than disconnecting. The proposed rulemaking would also require transmission providers to coordinate protective equipment settings with automatic load shedding programs.
Industry groups, grid operators and electric reliability coordinators filed comments to FERC May 23 generally agreeing with FERC's position.
The NOPR cited North American Electric Reliability Corp. studies demonstrating the growing impact of small generating facilities on the grid. With technological developments such as smart inverters, these new small generators have the ability to ride through frequency and voltage disturbances like their larger counterparts.
But concerns were posed related to the timing of a new rule going into effect.
The Edison Electric Institute, American Public Power Association, Large Public Power Council and National Rural Electric Cooperative Association, in a joint filing to FERC, supported reforms to the pro forma small generator interconnection agreement (SGIA) but cautioned against imposing broad changes to SGIAs before companies can validate that the changes can be safely implemented into their operating practices.
The trade groups also recommended holding off on finalizing the proposed rule until industry has had an opportunity to address changes to key industry standards being floated to ensure the safe and effective disconnection from utility systems when necessary to avoid islanding conditions. New industry standards from the Institute of Electrical and Electronics Engineers have yet to be approved and in some cases are still unpublished.
"Although the trade associations recognize that some regions, such as California and PJM, had to move more quickly to address changes with respect to distribution interconnection processes in light of renewable portfolio standards, such changes are not in play in all regions of the country at this time," the trade groups said in support of slowing things down. "The commission should acknowledge the many regional differences in how small generators are interconnected."
The groups suggested that while the industry standards undergo review, FERC could convene regional technical conferences "to encourage entities to propose modifications to their individual pro forma SGIA to address their local reliability needs [and to] explore how changes made to the FERC pro forma SGIA may influence state regulations."
NERC, in its comments to the commission, eyed the NOPR as consistent with its reliability assessments.
"NERC has determined that the transforming resource mix may affect reliability of the bulk power system, unless proactive measures are taken to address the integration of greater levels of variable energy and distributed energy resources," it said.
Therefore, it supported "proposals to apply consistent frequency and voltage ride through requirements" as part of interconnection agreements.
Similarly, the ISO/RTO Council warned that "the aggregation or significant combination of small generating facilities that do not ride through transmission disturbances can lead to undesirable consequences for system operations, including causing an otherwise acceptable system post-contingency response to exhibit unacceptable low or high voltage or thermal limit exceedances."
IRC, which filed comments on behalf of the six FERC-jurisdictional independent system operators and regional transmission organizations, said the NOPR was also consistent with wholesale organized markets' tariffs, such as a requirement in ISO New England that all inverter-based generating facilities be able to ride-through voltage disturbances and a PJM Interconnection requirement that all wind units have voltage and frequency ride-through capabilities.
The council commended the proposal for allowing independent entity variations from the proposed revisions, allowing a grid operator, for example, to retain existing provisions in its SGIAs if it could prove the provisions were consistent with or superior to the pro forma agreement changes proposed by FERC.
IRC did recommend clarifying some language in the proposed pro forma agreements to explicitly ensure consistency with NERC reliability standards and any applicable regional entity standards.
Peak Reliability, the reliability coordinator for the bulk of the Western Interconnection, also supported the NOPR, asserting that it would "simplify operational conditions and reduce system load imbalances."
Peak explained that "reductions in system load imbalances may also reduce disturbances on the bulk power system." Further, it said adoption of the proposed rule would "ensure effective protections for system operation while also avoiding increased costs."
The existing pro forma SGIA was adopted in Order 2006 and amended in Order 792. The new requirements would apply to newly interconnecting facilities subject to FERC jurisdiction.
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May 10, 2016
By Stan Parker
Public power utility groups rallied behind an Arizona power district Monday, urging the Ninth Circuit to reverse a district court ruling and toss antitrust claims brought by SolarCity Corp.
The American Public Power Association and the Large Public Power Council told the appeals court in an amicus brief that the Salt River Project Agricultural Improvement and Power District should be immune from the solar developer’s suit claiming Salt River illegally imposed certain charges for utility customers who install rooftop Solar.
The APPA, which consists of more than 2,000 public power utilities, and the LPPC, which represents the 26 largest U.S. public utilities, told the court they have an interest in making sure that state-action immunity protects their ability to set rates.
“Specifically, they have an interest in preserving the ability of states to adopt and implement statutory ratemaking regimes, free from the distorting burdens that are often imposed by antitrust litigation,” they wrote.
The utilities said SolarCity’s antitrust suit was the wrong way to resolve the “difficult problems” of how to fairly allocate costs among customers. They argued that accommodating rooftop solar is an expensive endeavor and that subsidizing it can shift the burden onto the rest of the customer base.
The groups argued those pricing decisions are "difficult enough" and already subject to regulatory oversight.
“But if a stakeholder whose interest in the continuation of a subsidy can bypass the state’s administrative and judicial review processes and claim that a loss or decline in that subsidy is fair game for a federal antitrust suit, it will add dramatically to that difficulty,” they wrote.
Their arguments to protect state-action immunity echoed Salt River’s own arguments in its opening brief to the Ninth Circuit last week Tuesday, when it told the panel it was acting within the authority delegated to it by the Arizona legislature.
The appeal comes after U.S. District Judge Douglas L. Rayes pared down SolarCity’s suit against Salt River, but still allowed it to proceed with core monopolization claims.
SolarCity filed the complaint in March 2015, alleging that Salt River Project’s newly adopted “standard electric price plans” amounted to a 65 percent rate increase for solar customers and would “penalize” a typical solar customer by about $600 per year.
Those new price plans were a sudden shift for Salt River Project, which for years had offered incentives to customers to use solar, according to the complaint.
American Public Power Association and the Large Public Power Council are represented by John M. Baker, Bethany D. Krueger, Janine W. Kimble and Chris L. Schmitter of Greene Espel PLLP
SolarCity is represented by William A. Isaacson, Karen L. Dunn, Steven C. Holtzman, John F. Cove Jr., Kieran P. Ringgenberg and Sean P. Rodriguez of Boies Schiller & Flexner LLP and Roopali H. Desai of Coppersmith Brockelman PLC.
Salt River Project is represented by Molly Boast, Christopher Babbitt, Daniel S. Volchok, David Gringer, Thomas G. Sprankling and Christopher Casamassima of WilmerHale and Paul K. Charlton and Karl M. Tilleman of Steptoe & Johnson LLP.
The case is SolarCity Corp. v. Salt River Project Agricultural Improvement and Power District, case number 15-17302, in the U.S. Court of Appeals for the Ninth Circuit.
—Additional reporting by Jeff Zalesin, Adam Sege, Matthew Bultman, Bonnie Eslinger and Vin Gurrieri. Editing by Patricia K. Cole.
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Platts: FERC Grants Extension on Critical Infrastructure Protection Standards Over Objection of NERC
FERC Grants Extension on Critical Infrastructure Protection Standards Over Objection of NERC
March 7, 2016
By Mark Watson
Electric industry trade associations and independent system operators have won a three-month delay in the implementation of North American Electric Reliability Corp.'s fifth iteration of critical infrastructure protection standards.
On February 25, FERC approved the February 4 request by the Edison Electric Institute, American Public Power Association, Electric Consumers Resources Council, Electric Power Supply Association, Large Public Power Council, National Rural Electric Cooperative Association and the Transmission Access Policy Study Group, collectively known as the "Trade Associations," to defer the implementation of the critical infrastructure protection version 5 reliability standards from April 1 to July 1 to align with the effective date for another set of standards approved in Order 822.
"We are persuaded that the separate implementation dates in short succession create unnecessary administrative burdens with little or no commensurate benefit to reliability," the order states. "Therefore, we grant Trade Associations' request for an extension of time for compliance with the CIP Version 5 Reliability Standards."
The April 1 deadline had applied to taking certain steps to identify and protect cyber systems classified as having a high or medium impact on grid reliability.
However, NERC had asserted in a February 8 filing that no delay was necessary, as "NERC can adequately address the Trade Associations' concerns without delaying the implementation," because NERC was committed not to enforce the single rule modification that required different processes during the period from April through July 1.
In a February 12 response, the trade associations said Order 822 affects seven different standards "in this complex transition."
On that same date, California Independent System Operator, Electric Reliability Council of Texas, Midcontinent Independent System Operator, PJM Interconnection and the Southwest Power Pool, known as the "Joint Commenters," filed comments in support of the trade associations' position.
"While the Joint Commenters are very appreciative of NERC’s recommendations regarding deference on enforcement of certain language, the Joint Commenters respectfully suggest that the requested extension provides the most clarity and direction for the affected parties," the ISOs said.
Ultimately, FERC was persuaded by the Trade Associations' arguments for delayed implementation.
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December 8, 2015
By Jack Casey
Fifteen muni market groups are urging House members to vote on a bill that would treat investment grade and actively-traded municipal securities as high quality liquid assets under a bank liquidity rule adopted by bank regulators in September 2014.
The organizations, including Government Finance Officers Association and National Association of State Treasurers, each signed on to identical letters sent to every member of the House, as well as a similar one that went to Speaker Paul Ryan, R-Wis., asking for action on the bill before Congress adjourns this month.
The current bank liquidity rule, which banks will have to comply with by Jan. 1, 2017, requires banks with at least $250 billion of total assets or consolidated on-balance sheet foreign exposures of at least $10 billion to have a high enough liquidity coverage ratio - the amount of HQLA to total net cash outflows - to deal with periods of financial stress. Assets are considered HQLA if they can easily be converted into cash with no loss of value during a period of liquidity stress.
When the Federal Reserve Board, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corp. first adopted the rule, they did not include munis as HQLA because of concerns they are not liquid or easily marketable.
The Fed proposed amendments to the rule in May that would allow a limited number of munis to be treated as HQLA as long as they are, at a minimum, uninsured investment grade general obligation bonds. Munis would be considered Level 2B, the same as corporate bonds that are liquid and readily marketable, but could only make up 5% of a bank's HQLA.
Muni dealer groups welcomed the Fed's changes, but said they were narrow and that without agreement from the FDIC and OCC, which regulate a majority of larger institutions, they would not help.
Rep. Luke Messer, R-Ind., proposed a bill that same month that would apply to all bank regulators and treat munis that are investment grade and actively-traded in the secondary market as Level 2A assets, the same level as some sovereign debt and debt of U.S. government entities like Fannie Mae and Freddie Mac. Munis could also make up 40% of a bank's HQLA under Messer's bill.
The bill passed the House Financial Services Committee by a vote of 56 to 1 on Nov. 4 and now the groups are asking that Paul Ryan bring it to a vote in the full House and that House members urge him to take action.
"Not classifying municipal securities as HQLA will increase borrowing costs for state and local governments to finance public infrastructure projects, as banks will likely demand higher interest rates on yields on the purchase of municipal bonds during times of national economic stress, or even forgo the purchase of municipal securities," the groups said. "With the American Society of Civil Engineers estimating a $3.6 trillion cost to state and local governments over the next five years to meet our nation's infrastructure needs, the ability of states and localities to finance infrastructure at the lowest possible cost is critical."
The groups that signed the letter include: GFOA; NAST; International City/County Management Association; National League of Cities; National Governors Association; National Association of State Auditors, Comptrollers and Treasurers; National Association of Counties; U.S. Conference of Mayors; American Public Power Association; Council of Infrastructure Financing Authorities; National Association of Health and Higher Education Facilities Authorities; National Council of State Housing Agencies; American Public Gas Association; Large Public Power Council; and National Association of Local Housing Finance Agencies.
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October 12, 2015
By William Opalka
FERC last week granted renewable energy resources an exemption from buyer-side mitigation rules in New York’s installed capacity market, a change it said will help the state comply with federal carbon emission rules. The commission also exempted self-supply resources built by load-serving entities to meet their own ICAP obligations.
But the commission denied a request to excuse demand response and most other resources from the mitigation rules (EL15-64).
In May, the New York Public Service Commission, the New York Power Authority and the New York State Energy Research and Development Authority filed a complaint seeking to limit the application of the buyer-side market power mitigation rules to only new gas- or oil-fired simple and combined-cycle units that are 20 MW or greater — seeking an exemption for resources including renewables, controllable transmission lines, nuclear generators, DR and repowered generators.
FERC ruled Friday that NYISO can no longer apply “buyer-side market power mitigation rules to certain narrowly defined renewable and self-supply resources that have limited or no incentive and ability to exercise buyer-side market power to artificially suppress ICAP market prices.”
The complainants argued that wind and solar resources are inefficient tools for exercising buyer-side market power because they require long development lead times and incur much higher development costs. They also said their intermittency and lower capacity factors made it unlikely buyers could drive down capacity market prices.
FERC agreed but said NYISO should set a megawatt cap limiting the total amount of renewables eligible for the exemption. It directed the ISO to make a compliance filing implementing the cap and other changes in the order within 90 days.
The ISO had told FERC that it supports exempting intermittent renewable resources such as wind and solar that are eligible for New York’s renewable portfolio standard.
The commission denied exemptions for controllable transmission lines, nuclear plants and repowered plants. It also said the complainants had failed to support their request for a “blanket waiver” for DR.
Self-supply resources were allowed within “net-short and net-long thresholds,” similar to those the commission previously approved in PJM.
“A well-formulated self-supply exemption will allow a load-serving entity to procure a portfolio that best allows it to manage its assessment of the risks it faces and, as [the Large Public Power Council] contends, eliminates the risk of effectively requiring load-serving entities to pay twice for capacity in the event that a self-supplied resource does not clear the capacity market,” the commission said.
Commissioner Colette Honorable issued a concurring statement saying that the ruling will help New York comply with the Environmental Protection Agency’s Clean Power Plan.
“It is clear that New York will rely upon renewable resources, in part, to meet future Clean Power Plan emissions standards,” she said. “Actions taken by the commission today will support New York’s efforts to invest in renewable resources while protecting consumers.”
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