Legislature(2019 - 2020)BUTROVICH 205
02/17/2020 09:00 AM Senate RAILBELT ELECTRIC SYSTEM
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| Audio | Topic |
|---|---|
| Start | |
| SB123 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 123 | TELECONFERENCED | |
SB 123-ELECTRIC RELIABILITY ORGANIZATIONS
9:03:18 AM
CHAIR COGHILL announced the consideration of SENATE BILL NO.
123, "An Act relating to the regulation of electric utilities
and electric reliability organizations; and providing for an
effective date."
He noted the new committee substitute (CS), Version E.
He recounted that AS 42.05 currently has 8 Articles and the CS
creates a new Article 9 called "Electric Reliability
Organizations, Plans, and Standards." He read the existing
Articles 1-8 to show how Article 9 fits in. He said the RCA has
a clear duty. The discussion today will be about how the ERO,
the integrated resource plans, and preapproval all fall
together. He said a difference today is that preapproval
planning must be through an ERO under its resource planning.
9:05:29 AM
SENATOR SHOWER joined the committee.
CHAIR COGHILL solicited a motion to adopt Version E.
9:05:54 AM
SENATOR MICCICHE moved to adopt the work draft committee
substitute (CS) for SB 123, work order 31-LS0959\E, as the
working document.
9:06:05 AM
CHAIR COGHILL objected for purposes of an explanation.
9:06:28 AM
RENA MILLER, Staff to Senator Giessel Alaska State Legislature,
Juneau, Alaska, advised that she is on loan to this committee
for the purposes of SB 123. She agreed that the CS significantly
restructures the bill.
CHAIR COGHILL advised that the drafter was online if there were
questions.
MS. MILLER reviewed the following summary of changes from
version K to version E for SB 123:
Page 1, line 8: Creates new Article 9A in AS 42.05,
Alaska Public Utilities Regulatory Act. Version E
combines subsections into new sections for clarity.
Page 1, line 9: Creates new section 42.05.760,
Electric reliability organizations; from former
subsections (a), (b), (d), (e), and (f).
Page 1, line 12 to page 2, line 2:
Revises provision to clarify if all the utilities in
an interconnected system are exempt from RCA rate
regulation as municipal entities/instrumentalities of
the state, the RCA may not require they form an ERO.
MS. MILLER said the drafter was available to explain why "may
not" accomplishes the intent and that "shall not" is contrary to
legislative drafting standards.
CHAIR COGHILL asked Mr. Klein to explain why "may not" is
equivalent to "shall not."
9:08:49 AM
NOAH KLEIN, Legislative Counsel, Legal Services, Legislative
Affairs Agency, Juneau, Alaska, explained that the term "may
not" is a clear directive in Alaska statutes that the commission
cannot do something. The drafting manual explicitly says do not
use the term "shall not" and Legal Services drafters try to
avoid it.
CHAIR COGHILL said SEAPA should understand that the term "may
not" is directive.
9:09:37 AM
SENATOR SHOWER asked if the inverse is true if one says "may"
versus "shall" as opposed to "may not" versus "shall."
MR. KLEIN said he wasn't sure he understood the question but he
didn't think so. May is a permissive term that grants
permission. For example, a regulatory body may adopt regulations
as opposed to shall adopt regulations. The former grants the
authority but it isn't a requirement and the latter is
directive.
SENATOR SHOWER said he wanted it on the record because it's a
little tricky.
CHAIR COGHILL offered that it was very easy when his mother said
he may have a cookie and it was very clear when he said he may
not have a cookie.
9:10:49 AM
MS. MILLER continued to review the summary of changes from
Version K to Version E:
Page 2, line 8: Conforming change to new bill
structure.
Page 2, lines 15, 18: Conforming change to new bill
structure.
Page 2, line 25 to page 3, line 1:
Adds new provision to allow the RCA to certify an ERO
for a network that doesn't qualify as a system
MS. MILLER explained that the RCA suggested this change to plan
for future eventualities.
Page 3, line [2]: Creates new section, 42.05.762,
Duties of an electric reliability organization; from
former subsection (c).
Page 3, line 5, lines 10-11 and lines 13-14:
Changes 'interconnected bulk-electric system' to
'interconnected electric energy transmission network'.
9:12:11 AM
CHAIR COGHILL offered his understanding that the RCA requested
this change.
MS. MILLER responded that the RCA reviewed the CS on multiple
levels. There have been some adjustment to the definitions of
those two terms near the end of the bill to add clarity and
avoid ambiguity. This resulted in some term changes throughout
the bill. She continued to review the summary of changes:
Page 3, line 6: Conforming change to new bill
structure. [AS 42.05.780(a) is cited.]
Page 3, line 14: Conforming change to new bill
structure. [Specific sections of statute are again
cited.]
Page 3, line 29: Creates new section 42.05.765,
Reliability standards, from former subsections (g),
(h), (i), (o) and (n).
Page 4, line 1, twice on lines 7-8, and line 14:
Changes 'interconnected bulk-electric system' to
'interconnected electric energy transmission network'.
Page 4, line 10: Changes 'cybersecurity protection' to
'protection from a cybersecurity incident' to conform
with the terms in the definitions section.
Page 4, line 15: Allows standards to result in, as
long as they are not designed for the purposes of,
requiring additions to facilities or new projects.
MS. MILLER noted that the utilities brought this suggestion
forward.
Page 4, line 18: Removes requirement for the RCA to
hold a hearing before accepting a standard and removes
references to RCA's ability to reject a plan. This has
the effect of applying existing statute on rejecting a
tariff provision.
MS. MILLER explained that this ties to existing statute where
the RCA is able to reject a tariff provision only for form and
filing. SB 123 does not give the commission a new method of
rejecting a standard.
CHAIR COGHILL asked why the public hearing was removed.
9:14:54 AM
MS. MILLER explained that if an ERO files a standard, the RCA
has to publicly notice the filing but if there is no protest,
the RCA feels that under their current tariff provisions, it is
appropriate to approve the standard without a hearing.
CHAIR COGHILL added that if there is a protest from an
interested party, public comment goes forward.
MS. MILLER said yes and noted that further down in subsection
(b) there are more backstops if the RCA wants to modify a
standard. She continued:
Page 4, line 22: Removes reference to rejecting a
standard.
Page 5, lines 8-14: New provision to address potential
conflicts between a Department of Defense standard
required for a utility serving military bases and a
standard adopted by the ERO.
MS. MILLER referenced Doyon Utilities' concern that the ERO
might enact standards that potentially conflict with the
standards and rules in their contract with the Department of
Defense (DoD). This provision clarifies that a utility serving
military bases follows the federal standards if there is a
conflict while the commission resolves the conflict. The
language on lines 12-13 also clearly states that the RCA may not
resolve the conflict such that it prevents fulfilling the DoD
contract.
9:16:51 AM
SENATOR SHOWER asked if she was saying that nothing in the bill
would prevent the RCA from flexing to accommodate the utilities
in meeting their contract with DoD.
MS. MILLER said yes; the utility will need to notify the RCA if
there is a conflict and thus is exempt from having to comply
with the ERO standard, but it is clear that the commission may
not resolve a conflict in a manner that prevents compliance with
DoD.
SENATOR SHOWER expressed satisfaction.
CHAIR COGHILL added that this ensures that DoD requirements
cannot be changed.
9:18:35 AM
MS. MILLER continued.
Page 5, line 18: Creates new section 42.05.767, Rules,
from former subsection (p).
Page 5, line 26: Creates new section 42.05.770,
Regulations, from former subsection (q).
Page 5, lines 28-29: Conforming change to new bill
structure.
Page 5, line 30 to page 6, line 2:
Amends provisions related to an open access
transmission tariff. Requires that the RCA's
regulations require an ERO tariff to include standards
for nondiscriminatory open access transmission and
interconnection, and provisions for transmission
system cost recovery.
MS. MILLER noted that the utilities requested this change and
the RCA endorsed it.
Page 6, lines 8-11: Creates new section 42.05.772,
Duties of load-serving entities, with a new provision
clarifying that all load-serving entities, even those
otherwise exempt from RCA regulation, are subject to
the ERO's tariff.
9:20:15 AM
SENATOR SHOWER asked if the last change on page 5 was a redline
issue.
MS. MILLER replied the utilities support this language and the
concept of enabling transmission and interconnection options for
the future.
CHAIR COGHILL added that if somebody is going to supply power,
they need to be part of the tariff structure.
MS. MILLER said the provisions direct the RCA to write
regulations requiring that the ERO's tariff include provisions
for standards that are nondiscriminatory open access
transmission, which will enable more economic dispatch
throughout the grid. The ERO wouldn't manage the provisions for
transmission system cost recovery but would have standards for
how the cost recovery that's done by others would work. Ms.
Miller continued.
Page 6, line 12: Creates new section 42.05.775,
Penalties; from former subsections (j), (k), (l) and
(m).
Page 6, line 13-14, line 21 and lines 24-25:
Changes 'interconnected bulk-electric system' to
'interconnected electric energy transmission network'.
Page 6, lines 28-29: Conforming change related to
restructuring.
Page 7, line 4: Conforming change related to
restructuring.
9:22:59 AM
SENATOR MICCICHE questioned the use of the term "violated" on
page 6, line 16 when the sentence is talking about someone who
failed to comply to a standard. He asked if there was a reason
the drafter chose that approach.
CHAIR COGHILL said he believes it's appropriate. The ERO may
impose a penalty if, after notice and a hearing, it finds the
person has violated a standard.
SENATOR MICCICHE said it seems like strong language to call out
a violation for someone who hasn't had the opportunity to
comply, particularly someone who may not be one of the utilities
but is providing capacity on the line.
CHAIR COGHILL responded that everybody has a seat at the table
when the ERO is developing standards.
9:25:14 AM
MS. MILLER said there is a comfort valve on [page 7] lines 4-6,
subsection (d). She explained that the standards are reviewed
and noticed by the RCA and there would be a publication to the
users, owners, and operators that the standard is taking effect.
But if there is a violation, any penalty imposed must consider
the effort that was expended to remedy the violation in a timely
manner. Also, there is process involved before a penalty is
imposed.
9:27:05 AM
CHAIR COGHILL read paragraph (d) on page 7, lines 4-6.
(d) A penalty imposed under this section must bear a
reasonable relation to the seriousness of the
violation and take into consideration the effort of a
user, owner, or operator to remedy the violation in a
timely manner.
SENATOR MICCICHE expressed hope that the commission would find a
way to remedy the situation before it gets to the point of a
violation.
CHAIR COGHILL responded that a penalty can happen in two ways.
One is through the ERO and the other through the RCA process.
9:28:30 AM
SENATOR SHOWER asked if the RCA would be the final arbiter in
the appeal process unless the matter is appealed in court.
MS. MILLER answered yes; a penalty imposed by the ERO can be
appealed to the RCA and a penalty imposed by the RCA can be
reconsidered under the current RCA process and then it would go
to the courts.
MS. MILLER continued to review the summary of changes from
Version K to Version E.
Page 7, line 10: Changes 'interconnected bulk-electric
system' to 'interconnected electric energy
transmission network.
Page 7, lines 19-20: Repositions the requirement for
the RCA to review the process used to develop an
integrated resource plan so that the consideration
must be made before the RCA decides whether to
approve, reject or modify a plan. Previously, the
consideration was related to the modification of a
plan (page 6, line 27).
Page 8, line 8: Changes 'submission' to 'filing' to
conform.
Page 8, line 17: Added 'for large energy projects' to
the section heading for project pre-approval.
Page 8, lines 18-19 and lines 22-23:
Changes 'interconnected bulk-electric system' to
'interconnected electric energy transmission network'.
Page 8, line 19: Clarifies that project pre-approval
is required only for projects in a network served by
an ERO.
CHAIR COGHILL said he thought this concept was in bill but this
makes it very clear.
9:31:26 AM
MS. MILLER continued.
Page 8, line 29: Conforming to reference new section
numbers.
Page 9, lines 2-3: Exempts from the project pre-
approval requirement hydro power projects licensed by
FERC after Sept. 1, 2016, and before July 1, 2021.
*Drafting error: Intent was to capture projects
licensed before Sept. 30, 2016. Amendment pending.
CHAIR COGHILL commented that there will be several cleanups like
this.
MS. MILLER continued.
Page 9, line 10 and page 9, line 31 to page 10, line
1:
Changes 'interconnected bulk-electric system' to
'interconnected electric energy transmission network'.
Page 9, line 27: Creates new section 42.05.790,
Definitions, from former bill section 2. With this
change, terms are defined for the purposes of the new
article related to EROs, and not throughout AS 42.05.
Page 10, line 3: Conforming to reference new sections.
Page 10, lines 6-7: Definition for interconnected
bulk-electric system is modified to not include the
'plant' and to reference network definition.
Page 10, lines 10-12: Definition of interconnected
electric energy transmission network is modified to
include the 'plant' originally in the bulk-electric
system definition.
Page 10, lines 17-18: Definition of load-serving
entity is refined to require at least 10 bill-paying
customers.
Page 10, line 20: Changes 'interconnected bulk-
electric system' to 'interconnected electric energy
transmission network'.
MS. MILLER said that concludes the changes that appear in the
work draft for SB 123, Version E.
CHAIR COGHILL listed the individuals available to answer
questions.
MS. MILLER asked the Chair if he wanted to go over the two
proposed substantive amendments.
9:35:06 AM
SENATOR SHOWER directed attention to the definition of "load-
serving entity" in paragraph (6) on page 10, lines 16-18. He
asked if an area with more than 10 properties that has
generation and is growing would be forced to be part of the ERO.
MS. MILLER responded that the load-serving entity has to be an
electric utility, which is a high bar for somebody who is
serving 10 customers.
SENATOR SHOWER expressed satisfaction with the answer.
CHAIR COGHILL asked if this isn't similar to the DoD matter
where a utility may serve a military base as a single customer.
MS. MILLER responded that load-serving entities have certain
obligations relative to the ERO, one of which is that the
operational costs of the ERO must be spread among the load-
serving entities. Those costs can then be passed along to the
ratepayers through a surcharge. In exchange, the ratepayers get
such things as reliability and cybersecurity protection.
She continued to explain that an independent power producer
(IPP) is an electric utility that is a load-serving entity but
it doesn't have customers that pay direct invoices so the bill
has tried to restrict that by requiring more than 10 customers.
Receiving invoices directly from the entity goes directly to
Doyon Utilities that is paid via one invoice from the federal
government. The idea is to not pass along those costs.
9:38:56 AM
CHAIR COGHILL asked Ms. Miller to go through the proposed
changes to Version E. He noted that it is identified as the
mark-up that will go to Legislative Legal.
He advised that the proposed changes will be drafted into a new
CS for the committee's consideration on 2/19/20.
MS. MILLER described the following changes:
Page 1, lines 4-5 of the title.
Delete: "public utilities interconnected with
interconnected bulk-electric systems"
Insert: "certain large energy facilities" to better
align with the section heading.
SENATOR MICCICHE pointed out the importance of the word
"interconnected" and suggested the insertion should be "certain
large interconnected energy facilities."
MS. MILLER replied she would flag that for the drafter.
Page 2, line 1.
Delete: "electric utilities"
Insert: "load-serving entities"
Page 2, line 8.
Delete: "(d) of this section"
Insert: "Section 42.05.762" because the ERO has to
comply with this section.
Page 2, line 20.
Insert: "Notwithstanding the requirements of (d) of
this section," before "If" and move the entire
subsection to above subsection (d). This clarifies
that the RCA does not need to create an ERO if these
utilities can ask for and receive a waiver. [The
subsections would be renumbered if the entire
subsection is moved.]
9:42:47 AM
Page 3, line 6.
Delete: "an"
Delete: "plan"
Insert: "plans" This contemplates multiple versions of
the initial integrated resource plan for the ERO as
the years go by.
Page 3, lines 18-19.
Delete: "developing reliability standards and". This
is where the ERO must show that it has rules to
provide reasonable notice, public process, openness,
and balancing interests. Developing reliability
standards is just one of multiple duties of the ERO.
Page 6, line 2.
Delete: "provisions"
Insert: "standards"
Page 6, line 23.
Delete: "bulk-electric system"
Insert: "electric energy transmission network"
Page 7, lines 9 and 13.
Insert: "all" before "customers". The intent is to
ensure that integrated resource planning accounts for
every customer, whether they are served by a load
serving entity or not.
Page 7, line 19.
Delete: "a hearing". Standards are considered tariff
provisions and the RCA has existing statute for acting
to these. The IRP will be filed as a petition and
there isn't existing language in the RCA statutes to
rely on.
Page 7, line 20.
Delete: "reject"
Page 7, line 23.
Following "orders." insert: "The commission may reject
all or part of a petition that does not comply with
form or filing regulations by the commission." This
language comes from the RCA statutes on how to reject
a tariff filing. The only way the commission can
reject an IRP filed is if it doesn't meet the filing
specifications, not because the RCA doesn't like the
IRP.
Page 8, line 5.
Delete: "the"
Insert: "a"
Page 8, lines 25-26.
Insert: "in a cost-effective manner" from line 26
after "would" on line 25.
Page 9, lines 2-3.
Rewrite paragraph (2), as previously discussed, to
say:
(2) hydropower project licensed by the
Federal Energy Regulatory Commission before
September 30, 2016.
MS. MILLER said that concludes the proposed changes to Version
E.
9:47:29 AM
SENATOR MICCICHE commented that there is a lot of redundancy in
subsections (b) and (c) on page 6.
MS. MILLER agreed and said she would note that to the drafter
with the Chair's approval.
CHAIR COGHILL gave his approval. He added that he would have the
proposed changes drafted into a new CS for the committee to
consider as well as any amendments the members may bring.
SENATOR MICCICHE said he assumes that public testimony will
remain open.
9:49:23 AM
CHAIR COGHILL removed his objection to adopting Version E as the
working document. Responding to the question, he stated that
public testimony would remain open while the bill is in this
committee.
He asked Mr. Rose to offer his testimony.
9:50:43 AM
CHRIS ROSE, Executive Director Renewable Energy Project Alaska,
Anchorage, Alaska, said he was pleased with the improvements to
SB 123.
CHAIR COGHILL noted that John Burns with Golden Valley Electric
was also listening online.
9:51:19 AM
CHAIR COGHILL found no further objection and Version E was
adopted.
[SB 123 was held in committee.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 123 - Version E Work Draft.pdf |
SRBE 2/17/2020 9:00:00 AM |
SB 123 |
| SB 123 - Version E Summary of Changes K to E.pdf |
SRBE 2/17/2020 9:00:00 AM |
SB 123 |
| SB 123 - Version E Sectional.pdf |
SRBE 2/17/2020 9:00:00 AM |
SB 123 |