00 CS FOR HOUSE BILL NO. 151(ENE) 01 "An Act relating to the creation and regulation of electric reliability organizations; 02 relating to participation of electric utilities in electric reliability organizations; relating 03 to duties of electric reliability organizations; providing for integrated resource planning; 04 requiring project preapproval for certain interconnected large energy facilities; and 05 providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07  * Section 1. AS 42.05 is amended by adding new sections to read: 08 Article 9A. Electric Reliability Organizations, Plans, and Standards.  09 Sec. 42.05.760. Electric reliability organizations. (a) An electric utility must 10 participate in an electric reliability organization if the utility operates in an 11 interconnected electric energy transmission network served by an electric reliability 12 organization certificated by the commission. The commission may not require an 13 electric reliability organization for an interconnected bulk-electric system if all of the 01 load-serving entities operating in the interconnected bulk-electric system are exempt 02 under AS 42.05.711(b). 03 (b) A person may submit to the commission an application for certification as 04 an electric reliability organization for an interconnected bulk-electric system. The 05 commission may certificate one electric reliability organization for each 06 interconnected electric energy transmission network. The commission may certificate 07 an electric reliability organization if the commission determines that the electric 08 reliability organization has the ability to comply with AS 42.05.762. 09 (c) The commission shall immediately notify the interconnected load-serving 10 entities within a new or existing interconnected bulk-electric system of the 11 requirements of this section. 12 (d) Notwithstanding the requirements in (e) of this section, if all load-serving 13 entities within an interconnected bulk-electric system petition the commission for an 14 exemption from the requirement to establish an electric reliability organization for the 15 interconnected electric energy transmission network, the commission may waive the 16 requirement to form an electric reliability organization for that interconnected electric 17 energy transmission network. 18 (e) The commission shall form and certificate an electric reliability 19 organization for an interconnected bulk-electric system under this section if, within 20 (1) 90 days after the commission notifies the interconnected load- 21 serving entities under (c) of this section, no person has applied for certification as an 22 electric reliability organization for that interconnected bulk-electric system; or 23 (2) 270 days after the commission notifies the interconnected load- 24 serving entities under (c) of this section, the commission has not certificated an 25 electric reliability organization for that interconnected bulk-electric system. 26 (f) The commission may certificate an electric reliability organization for an 27 interconnected electric energy transmission network that is not an interconnected bulk- 28 electric system if 29 (1) one or more load-serving entities within that network successfully 30 petition the commission to find that an electric reliability organization should be 31 established for the network; and 01 (2) a person applies for certification as an electric reliability 02 organization for the network. 03 Sec. 42.05.762. Duties of an electric reliability organization. An electric 04 reliability organization shall 05 (1) develop reliability standards that provide for an adequate level of 06 reliability of an interconnected electric energy transmission network; 07 (2) develop integrated resource plans under AS 42.05.780(a); 08 (3) establish rules to 09 (A) ensure that the directors of the electric reliability 10 organization and the electric reliability organization act independently from 11 users, owners, and operators of the interconnected electric energy transmission 12 network; 13 (B) equitably allocate reasonable dues, fees, and other charges 14 among all load-serving entities connected to the interconnected electric energy 15 transmission network for all activities under AS 42.05.760 - 42.05.790; 16 (C) provide fair and impartial procedures for the enforcement 17 of reliability standards; 18 (D) provide for reasonable notice and opportunity for public 19 comment, due process, openness, and balancing of interests in exercising its 20 duties; and 21 (4) be governed by a board that 22 (A) includes as nonvoting members the chair of the 23 commission or the chair's designee and the attorney general or the attorney 24 general's designee; and 25 (B) is formed as 26 (i) an independent board; 27 (ii) a balanced stakeholder board; or 28 (iii) a combination independent and balanced 29 stakeholder board. 30 Sec. 42.05.765. Reliability standards. (a) An electric reliability organization 31 shall file each reliability standard or modification to a reliability standard with the 01 commission as a new or revised tariff provision. All users, owners, and operators of an 02 interconnected electric energy transmission network served by an electric reliability 03 organization, including a user, owner, or operator that is exempt from other regulation 04 under AS 42.05.711 or another provision of this chapter, shall comply with reliability 05 standards contained in a tariff that is approved by the commission. The commission 06 may enforce a reliability standard approved under this section. A reliability standard 07 approved under this section 08 (1) shall provide for the reliable operation of the interconnected 09 electric energy transmission network or of an interconnected electric energy 10 transmission network facility; 11 (2) may provide for 12 (A) protection from a cybersecurity incident; 13 (B) facility security; 14 (C) additions or modifications to an interconnected bulk- 15 electric system facility to the extent necessary to provide for reliable operation 16 of the interconnected electric energy transmission network; 17 (3) may result in, but may not be designed for the purpose of, requiring 18 enlargement of interconnected bulk-electric system facilities or construction of new 19 transmission capacity or generation capacity. 20 (b) The commission may, after public notice, approve a proposed reliability 21 standard or modification to a reliability standard submitted by an electric reliability 22 organization. The commission shall determine whether the proposed standard or 23 modification is just, reasonable, not unduly discriminatory or preferential, and in the 24 public interest before approving the standard or modification. If, after public notice 25 and a hearing, the commission determines that a proposed reliability standard or 26 modification to a reliability standard submitted by an electric reliability organization 27 should be changed, the commission shall return the standard to the electric reliability 28 organization for timely modification and resubmission, consistent with the 29 commission's order. The commission may modify a resubmitted standard if the 30 commission determines that the standard is inconsistent with the commission's order 31 or the public interest. A standard approved under this subsection satisfies the 01 requirements of AS 42.05.291(c). 02 (c) The commission may, on its own motion or upon complaint, order an 03 electric reliability organization to submit to the commission a proposed reliability 04 standard or modification to a reliability standard that addresses a specific matter. 05 (d) If a reliability standard adopted under this section conflicts with a function, 06 rule, tariff, rate schedule, or agreement that has also been accepted, approved, adopted, 07 or ordered by the commission, a user, owner, or operator shall comply with the 08 function, rule, tariff, rate schedule, or agreement until the conflict is resolved by the 09 commission. 10 (e) If, as a condition of a contract with the United States Department of 11 Defense, a user, owner, or operator is subject to a federal standard, rule, or function 12 that conflicts with a reliability standard adopted under this section, the user, owner, or 13 operator shall comply with the federal standard, rule, or function until the conflict is 14 resolved by the commission. The commission may not resolve the conflict in a manner 15 that prevents the user, owner, or operator from fulfilling the contract with the United 16 States Department of Defense. 17 (f) The commission may direct an electric reliability organization to conduct 18 assessments of the reliability and adequacy of the interconnected electric energy 19 transmission network. 20 Sec. 42.05.767. Electric reliability organization rules; approval. An electric 21 reliability organization shall file with the commission each proposed rule or proposed 22 rule change, along with an explanation of the basis and purpose of the proposed rule or 23 proposed rule change. The commission may, on its own motion or upon complaint, 24 propose a change to the rules of an electric reliability organization. A rule change 25 proposed by the commission takes effect upon a finding by the commission, after 26 notice and opportunity for public comment, that the rule change is just, reasonable, not 27 unduly discriminatory or preferential, and is in the public interest. 28 Sec. 42.05.770. Regulations. The commission shall adopt regulations 29 governing electric reliability organizations, reliability standards, and modifications to 30 reliability standards consistent with this section. Regulations under AS 42.05.760 - 31 42.05.790 must 01 (1) require that an electric reliability organization's tariff include 02 (A) standards for nondiscriminatory open access transmission 03 and interconnection; 04 (B) standards for transmission system cost recovery; 05 (2) provide a process to identify and resolve conflicts between a 06 reliability standard and a function, rule, tariff, rate schedule, or agreement that has 07 been accepted, approved, adopted, or ordered by the commission; 08 (3) allow an electric reliability organization to recover its costs through 09 surcharges added to the rate for each participating load-serving entity. 10 Sec. 42.05.772. Duties of load-serving entities. All load-serving entities, 11 including load-serving entities otherwise exempt from regulation under this chapter, in 12 an interconnected bulk-electric system served by an electric reliability organization are 13 subject to the electric reliability organization's tariff on file with the commission. 14 Sec. 42.05.775. Penalties. (a) An electric reliability organization may impose 15 a penalty on a user, owner, or operator of an interconnected electric energy 16 transmission network for a violation of a reliability standard if, after notice and a 17 hearing, the electric reliability organization 18 (1) finds that the user, owner, or operator has violated a reliability 19 standard; and 20 (2) files notice of the proposed penalty and the record of the 21 proceeding with the commission at least 30 days before imposition of the penalty. 22 (b) The commission may, on its own motion or upon complaint, order a user, 23 owner, or operator of an interconnected electric energy transmission network to 24 comply with a reliability standard and impose a penalty against the user, owner, or 25 operator if the commission finds, after notice and a hearing, that the user, owner, or 26 operator has engaged or is about to engage in an act or practice that violates a 27 reliability standard. 28 (c) A user, owner, or operator may appeal to the commission a penalty 29 imposed under (a) of this section. The commission may, on its own motion, review a 30 penalty imposed under (a) of this section. The commission shall, after notice and a 31 hearing, issue an order affirming, modifying, reinstating, or revoking the penalty or 01 remand the penalty to the electric reliability organization for further proceedings. 02 Unless otherwise ordered by the commission, a penalty shall remain in effect during 03 proceedings under this subsection. The commission shall expedite proceedings under 04 this subsection. 05 (d) A penalty imposed under this section must bear a reasonable relation to the 06 seriousness of the violation and take into consideration the effort of a user, owner, or 07 operator to remedy the violation in a timely manner. 08 Sec. 42.05.780. Integrated resource planning. (a) An electric reliability 09 organization shall file with the commission in a petition for approval an integrated 10 resource plan for meeting the reliability requirements of all customers within its 11 interconnected electric energy transmission network in a manner that provides the 12 greatest value, consistent with the load-serving entities' obligations. An integrated 13 resource plan must contain an evaluation of the full range of cost-effective means for 14 load-serving entities to meet the service requirements of all customers, including 15 additional generation, transmission, battery storage, and conservation or similar 16 improvements in efficiency. An integrated resource plan must include options to meet 17 customers' collective needs in a manner that provides the greatest value, consistent 18 with the public interest, regardless of the location or ownership of new facilities or 19 conservation activities.  20 (b) The commission shall, after public notice and review of the process used to 21 develop an integrated resource plan, approve or modify an integrated resource plan 22 filed under (a) of this section, consistent with the public interest. The commission shall 23 determine whether the petition is complete, has been publicly noticed, and is 24 consistent with the commission's regulations and orders. The commission may reject 25 all or part of a petition that does not comply with the commission's form or filing 26 regulations. Within 45 days after receipt, the commission shall approve the petition or 27 suspend the petition to an investigation docket. If a petition is not suspended to an 28 investigation docket within 45 days, the petition is considered approved. If, after 29 public notice and a hearing, the commission concludes that the plan requires 30 modification, the commission shall return the plan to the electric reliability 31 organization for timely modification and refiling, consistent with the commission's 01 order. The commission may modify a refiled integrated resource plan if the 02 commission determines that the plan is inconsistent with the commission's order or the 03 public interest. 04 (c) The commission may include in a public utility's rates 05 (1) the cost of resources acquired in accordance with an integrated 06 resource plan adopted under this section; 07 (2) cost-effective expenditures for improving the efficiency with which 08 a public utility provides and its customers use utility services; and 09 (3) the cost of a utility to comply with the planning requirements of 10 this section, including planning costs and portfolio development costs. 11 (d) The commission shall adopt regulations governing the filing of a plan 12 under this section, including the content of a plan, time for filing a plan, criteria for 13 determining cost-effectiveness and greatest value, and other criteria as determined by 14 the commission. 15 (e) In this section, 16 (1) "planning costs" means the costs of evaluating the future demand 17 for services and alternative methods of satisfying future demand; 18 (2) "portfolio development costs" means the costs of preparing a 19 resource in a portfolio for timely acquisition of the resource. 20 Sec. 42.05.785. Project preapproval for large energy facilities. (a) A public 21 utility, including a public utility that is exempt from other regulation under 22 AS 42.05.711 or another provision of this chapter, that is interconnected with an 23 interconnected electric energy transmission network served by an electric reliability 24 organization certificated by the commission may not construct a large energy facility 25 unless the commission determines that the facility 26 (1) is necessary to the interconnected electric energy transmission 27 network with which it would be interconnected; 28 (2) complies with reliability standards; and 29 (3) would, in a cost-effective manner, meet the needs of a load-serving 30 entity that is substantially served by the facility. 31 (b) Unless the commission finds otherwise by clear and convincing evidence, 01 a large energy facility that was included in the most recent integrated resource plan 02 approved under AS 42.05.780 is considered to satisfy the requirements of (a) of this 03 section. 04 (c) The commission may not require preapproval for a 05 (1) project for refurbishment or capitalized maintenance; 06 (2) hydropower project licensed by the Federal Energy Regulatory 07 Commission before September 30, 2016. 08 (d) The commission shall adopt regulations 09 (1) governing project preapproval; 10 (2) defining refurbishment and capitalized maintenance; 11 (3) maintaining municipal jurisdiction over local planning decisions; 12 and 13 (4) addressing projects undertaken before integrated resource plan 14 approval for an interconnected electric energy transmission network. 15 (e) In this section, "large energy facility" means 16 (1) an electric power generating plant or combination of plants at a 17 single site with a combined capacity of 15,000 kilowatts or more with transmission 18 lines that directly interconnect the plant with the transmission system; 19 (2) a high-voltage, above-ground transmission line that 20 (A) has a capacity of 69 kilovolts or more; and 21 (B) is longer than 10 miles; 22 (3) a high-voltage submarine or underground cable that 23 (A) has a capacity of 69 kilovolts or more; and 24 (B) is longer than three miles; 25 (4) an energy storage device or combination of devices at a single site 26 with a combined capacity of 15,000 kilowatts and one hour or more of energy storage 27 that directly connects with the interconnected bulk-electric system; and 28 (5) a reactive compensation device or combination of devices at a 29 single site with a combined reactive capability of 15,000 kilovars or more with a step- 30 up device to regulate interconnected bulk-electric system voltage. 31 Sec. 42.05.790. Definitions. In AS 42.05.760 - 42.05.790, 01 (1) "cybersecurity incident" means a malicious act or suspicious event 02 that disrupts or attempts to disrupt the security of data or the operation of 03 programmable electronic devices and communication networks, including hardware 04 and software that are essential to the reliable operation of the interconnected electric 05 energy transmission network; 06 (2) "electric reliability organization" means an organization that is 07 certificated by the commission under AS 42.05.760; 08 (3) "electric utility" means a public utility that provides electricity 09 service; 10 (4) "interconnected bulk-electric system" means an interconnected 11 electric energy transmission network that includes two or more load-serving entities, 12 at least one of which is subject to the provisions of AS 42.05.291; 13 (5) "interconnected electric energy transmission network" means a 14 network of interconnected electrical generation resources, transmission lines, 15 interconnections, and associated equipment operated at voltages of 69 kilovolts or 16 more, operating in a geographic area that are synchronized so that the failure of one or 17 more of the components may adversely affect the ability of the operators of other 18 components within the system to maintain reliable operation of the facilities within the 19 control of the operators; 20 (6) "load-serving entity" means an electric utility that has a service 21 obligation to distribute power to more than 10 customers that receive invoices directly 22 from the entity; 23 (7) "reliable operation" means operating the elements of the 24 interconnected electric energy transmission network within equipment and electric 25 system thermal, voltage, and stability limits so that instability, uncontrolled separation, 26 or cascading failures of the system will not occur as a result of a sudden disturbance, 27 including a cybersecurity incident, or unanticipated failure of system elements. 28  * Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to 29 read: 30 TRANSITION: REGULATIONS. On or before July 1, 2021, the Regulatory 31 Commission of Alaska shall adopt regulations necessary to implement the changes made by 01 this Act. The regulations take effect under AS 44.62 (Administrative Procedure Act), but not 02 before the effective date of the law implemented by the regulation. 03  * Sec. 3. Section 2 of this Act takes effect immediately under AS 01.10.070(c). 04  * Sec. 4. Except as provided in sec. 3 of this Act, this Act takes effect July 1, 2021.