Smart Grid Legal News

Legislators Override Veto; Supporting Smart Grid in Illinois

Linda R. Evers — Fri, 24 May 2013 10:55:09 -0500

The quest to bring the smart grid to Illinois did not stop with the first veto override of the Energy Infrastructure Modernization Act in 2011. In many respects it fueled the clash between regulators, utilities and Governor Quinn. Enter Senate Bill 9 ending the debate. It is designed to:

(i) be a restatement and clarification of existing law,
(ii) give binding effect to specified legislative intent, and
(iii) supersede specified final orders of the Commission.

So there is no doubt as to who won the battle, Senate Bill 9 provides:

… that each participating utility shall be deemed to have been in full compliance with all requirements of certain provisions of this Act and all Commission orders entered pursuant to specified provisions. Provides that the Commission shall not undertake any investigation of such compliance and no penalty shall be assessed or adverse action taken against a participating utility for non-compliance with Commission orders associated with this Act.

In a statement released by Ameren Illinois, the company says after the original law was passed, Ameren Illinois launched its Modernization Action Plan (MAP) to create 450 jobs and invest an additional $640 million over a 10-year period to improve the reliability and performance of its electric delivery infrastructure. The plans included hiring hundreds of workers to install advanced meters, strengthen poles, replace cables and deploy new technology, such as intelligent switches and sensors that can detect and isolate outages for faster service restoration.

The job creation element of the bill received the support of the nearly 900,000-member Illinois AFL-CIO. Its president, Michael T. Carrigan, said, "Modernizing the electric grid will put Illinoisans back to work in good-paying jobs.”

ComEd also released a statement celebrating the veto override. No doubt, investors will be pleased.

Smart Grid Kentucky

Linda R. Evers — Fri, 17 May 2013 11:20:49 -0500

Last year, the Commonwealth of Kentucky released its final report of the Smart Grid Kentucky Roadmap Initiative. The report is a hefty 370 pages and provides an in-depth analysis of the current and future state of the smart grid in Kentucky. With so much focus on smart meters, it is always nice to point out there is more to the smart grid. The report begins by stating the characteristics of the smart grid:

Active Participation by Consumers
Accepts All Power Generation and Storage
Enables New Products and Services
Improved Power Quality
Efficient Operation and Use of Assets
Self-Healing
Defends Against Attack and Natural Disaster

Many surveys were done. The responding Kentucky electric utilities were given a listing and description of smart grid functionalities, each followed by a listing of technologies that enable such functions. The report summarizes their responses regarding the use of installed technology to achieve smart grid functionality. Here is a peek at the responses regarding enabling technologies for grid awareness:

SCADA: 10 deployed, 1 deploying
Breaker monitoring system: 6 deployed
Wide-area monitoring system: 4 deployed
Phasor measurement unit: 3 deployed
Geographic information system: 12 deployed
Digital event recording device: 7 deployed
Transmission line sag monitoring: 0 deployed

And for increased national and information security:

Techniques related to cyber security: 10 deployed
Techniques related to data privacy: 10 deployed

Utilities and regulators may find the included surveys and presentations helpful. Kentucky is poised to develop its smart grid future.

Florida Commission Gets Briefing on Smart Meters

Linda R. Evers — Fri, 10 May 2013 09:29:03 -0500

Recently Commission staff provided a Briefing on Smart Meters: Technical Information and Regulatory Issues to the Florida Public Service Commission. As previously reported, the FPSC held a public workshop last year to gather information and address concerns raised by customers. The Briefing summarizes the workshop. Although many of the typical issues are raised, I think utilities will find staff’s conclusions most interesting. For example, tucked on pages 2 and 4 are insightful conclusions I consider headline-worthy:

The FPSC has jurisdiction over cost recovery of smart meters, but does not have specific statutory authority over the smart meters themselves... RF emission standards are established by the Federal Communications Commission (FCC).

Briefing, page 2

The FPSC does not have regulatory authority over any potential health effects from smart meters; the FCC is the entity that has jurisdiction over the issue.

Briefing, page 4

Yes, the Briefing is an interesting read. Staff also wonders what will happen to the 25,000^[1] customers FPL estimates are on its hold list because of smart meter concerns. Right now the costs to read these customers’ analog meters are socialized among most ratepayers, which can reduce the overall savings that may be achieved by smart meters. Staff expressly states it believes all charges should be cost-based to ensure any subsidization is kept to a minimum.

Finally, staff suggests that the Commission continue to monitor the issues, but not take any specific action at this time.

^[1] This figure represents .5% of all of FPL’s smart meter installations. Briefing page 6.

DOE Study Shows Smart Grid Investments Good for the Economy

Linda R. Evers — Wed, 01 May 2013 13:23:44 -0500

DOE recently released a study that analyzes the economy-wide impact of the American Recovery and Reinvestment Act of 2009 (Recovery Act or ARRA) funding for Smart Grid project deployment administered by DOE's Office of Electricity Delivery and Energy Reliability (DOE OE). The investments analyzed cover expenditures from August 2009 to March 2012 and encompass nearly three billion dollars in publicly documented expenditures. The Smart Grid support from DOE included the Smart Grid Investment Grants (SGIG) and the Smart Grid Demonstration Program (SGDP). Key findings are positive:

ARRA funding and matching support from utilities and the private sector in the SGIG and SGDP programs generated a significant impact on the U.S. economy. As of March 2012, the total invested value of $2.96 billion to support Smart Grid projects generated at least $6.8 billion in total economic output.
Smart Grid deployment positively impacted employment and labor income throughout the economy. Overall, about 47,000 full time equivalent jobs were supported by investments. Among Smart Grid vendors – an ecosystem of manufacturers, information technology and technical services providers – about 12,000 direct jobs were supported, with the remaining jobs being in those companies’ respective supply chains and induced by the money spent throughout the broader economy.
Investment in core Smart Grid industries supports high-paying jobs. Industrial sectors that benefit directly include computer systems design, technical and scientific services and consulting, and electrical/wireless equipment and component manufacturing. Industrial sectors which experience indirect and induced benefits include real estate, wholesale trade, financial services, restaurants and health care. Smart Grid ARRA investments also supported employment in personal service sectors, such as health care, financial services, real estate and food/restaurants through indirect and induced impacts.
The Smart Grid Gross Domestic Product (GDP) multiplier is higher than many forms of government investment. For every $1 million of direct spending, which includes both government ARRA funds and private sector matching, the GDP increased by $2.5 to $2.6 million, depending on the scenario being evaluated, which compares favorably against other potential government investments in general spending or other types of infrastructure.

Additional details to support these findings are provided in the study.

FERC Issues NOPR on CIP Version 5 Standards

Linda R. Evers — Thu, 25 Apr 2013 09:46:53 -0500

FERC recently proposed to approve the Version 5 Critical Infrastructure Protection (CIP) Reliability Standards, CIP-002-5 through CIP-011-1, submitted by the North American Electric Reliability Corporation (NERC). FERC believes the proposed CIP Version 5 Standards, which pertain to the cybersecurity of the bulk electric system, represent an improvement over the current Commission-approved CIP Reliability Standards because they adopt new cybersecurity controls and extend the scope of the systems that are protected by the CIP Reliability Standards.

Despite the benefits, the Commission has concerns regarding the potential ambiguity and, ultimately, enforceability of the CIP Version 5 Standards. Specifically, 17 of the requirements of the suite of CIP Version 5 Standards include language that requires the responsible entity to implement the requirement in a manner to “identify, assess and correct” deficiencies. The issue is that this language may be unclear with respect to the compliance obligations it places on regulated entities making it too vague to audit and enforce compliance. The NOPR seeks comments on this and several other concerns. Moving at the speed of technology, some parts of CIP 4 may never become enforceable; it is expected some utilities may go from CIP 3 to CIP 5 for some standards.

Smart Grid Customer Awareness and Education in Illinois

Linda R. Evers — Wed, 17 Apr 2013 11:17:47 -0500

In the past, customer education typically meant nothing more than a bill insert and perhaps an additional public notice. Then came the smart grid and suddenly more is required… much more. Ameren Illinois conducted a quantitative study to measure its customers’ baseline awareness about AMI. Key findings revealed:

63% of customers have heard the term “smart grid.”
Among the 63% hearing the term:
- 40% don’t know much about what it means
- 34% have a favorable impression
- 29% are neutral
- 16% have an unfavorable impression
- 21% don’t know
45% of customers have heard the term “smart meter.”
Among the 45% hearing the term:
- 25% of those who have heard the term don’t know much about what it means
- 35% have a favorable impression
- 28% are neutral
- 23% have an unfavorable impression
- 14% don’t know
46% of all customers feel that smart meters would be “mostly an advantage,”
40% seeing the meters as “having no impact,” and
8% as “mostly a disadvantage.”

Customers indicated that improving reliability, bill accuracy and customer service and providing them with more control of home energy usage as the top smart meter benefits. The study will help guide the development of Ameren’s stakeholder and customer education plan. You can learn more about Ameren’s plan and ComEd’s plan by reading their Annual AMI Reports filed with the Illinois Commerce Commission on April 1, 2013. Ameren and ComEd also filed jobs creation reports as a result of the Energy Infrastructure Modernization Act.

ComEd Customers Sue to Get Smart Meters

Linda R. Evers — Fri, 12 Apr 2013 14:46:26 -0500

Not far from the City of Naperville, where smart meter opposition is in full force, customers in Chicago have filed a class action suit against ComEd due to smart meter delay! No, this is not a tardy April Fool's joke. Several ComEd customers allege the Company violated an Illinois Commerce Commission (ICC) order that called for smart meter installation to begin by fall 2012, yet ComEd unilaterally pushed back deployment until 2015.

To cover the Smart Grid upgrades, in 2011 ComEd filed for a formula rate increase of $1.915 billion with the ICC. When the ICC reduced that amount by $168 million, ComEd filed an Application for Rehearing (Docket No. 12-0298) to delay installation of smart meters due to financial constraints caused by the Formula Rate Order. ComEd's original smart meter plan included the installation of 500,000 new smart meters on Chicago's South and West sides by 2013. The suit says ComEd's decision to not install the smart meters while the Application for Rehearing was pending cost customers about $182 million in savings and other benefits they would have received had deployment occurred according to the original schedule. (Attention utilities: This figure was taken from ComEd's testimony regarding lost benefits due to delayed deployment.) In December of 2012, the ICC approved ComEd's revised schedule allowing smart meter deloyment to be delayed until 2015.

The suit is an interesting change of pace from those cases around the country and even in ComEd's own backyard (Naperville) where customers are rejecting smart meters and seeking to ban smart meter deployment. I guess ComEd customers were listening during the debate to get the Energy Infrastructure Modernization Act enacted.

Hurry: NIST RFI Comments on Critical Infrastructure Cybersecurity Due April 8, 2013!

Linda R. Evers — Thu, 04 Apr 2013 16:24:21 -0500

For purposes of the Request for Information (“RFI”) the National Institute of Standards and Technology (“NIST”) defines “critical infrastructure” as:

systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters.

Threats to critical infrastructures typically fall into two categories: (1) physical threats - physical threats to tangible property and (2) cyber threats - threats of electronic/computer-based attacks on the communications components that control critical infrastructures. Many of these critical infrastructures are owned and operated by the private sector. Therefore, it is essential that the government and private sector work together to develop a strategy for protecting them and assuring their continued operation.

The National Institute of Standards and Technology is conducting a comprehensive review to develop a framework to reduce cyber risks to critical infrastructure (“Framework”). The Framework will consist of standards, methodologies, procedures and processes that align policy, business and technological approaches to address cyber risks. The RFI requests information to help identify, refine and guide the many interrelated considerations, challenges and efforts needed to develop the Framework. Responding to the NIST RFI is one of many action items the private sector can take. Several companies have already filed their comments. Some of the questions asked in the RFI include:

What are the current regulatory and regulatory reporting requirements in the United States (e.g. local, state, national, and other) for organizations relating to cybersecurity?
What organizational critical assets are dependent upon other critical physical and information infrastructures, including telecommunications, energy, financial services, water and transportation sectors?
What do organizations see as the greatest challenges in improving cybersecurity practices across critical infrastructure?
Describe your organization's policies and procedures governing risk generally and cybersecurity risk specifically. How does senior management communicate and oversee these policies and procedures?
How do organizations define and assess risk generally and cybersecurity risk specifically?

Written comments, due by April 8, 2013, may be submitted by mail to Diane Honeycutt, National Institute of Standards and Technology, 100 Bureau Drive, Stop 8930, Gaithersburg, MD 20899. Submissions may be in any of the following formats: HTML, ASCII, Word, RTF, or PDF. Online submissions in electronic form may be sent to cyberframework@nist.gov. Please submit comments only and include your name, company name (if any), and cite “Developing a Framework to Improve Critical Infrastructure Cybersecurity” in all correspondence. All comments received by the deadline will be posted at http://csrc.nist.gov/ without change or redaction, so commenters should not include information they do not wish to be posted (e.g., personal or confidential business information).

City of Naperville Wins Federal Smart Meter Case...for now.

Linda R. Evers — Thu, 28 Mar 2013 16:20:15 -0500

A recent City of Naperville (“Naperville”) smart meter case is a flashback to first year constitutional law. The Naperville Smart Meter Awareness (“NSMA”) group and several of its members, citing numerous health, safety, security and privacy concerns over smart meters that wirelessly transmit data about electric use to Naperville, sued Naperville in the Eastern District of Illinois in a four count complaint raising the following constitutional issues regarding Naperville’s deployment of smart meters:

Federal rights under the Public Utility Regulatory Policies Act of 1978
Fourteenth Amendment due process rights
Fourteenth Amendment unreasonable search
Fifth Amendment government taking

Judge John Lee in a 24 page Memorandum Opinion and Order granted the City of Naperville’s motion to dismiss. In the opinion, Judge Lee writes that NSMA did not exhaust all state remedies for its claims and did not prove radio frequency from the meters is actually harming people. He also found the city has precautions in place to keep customer data from being disclosed without their consent and rejected the claim the city will collect personal details about customers' lives.

Even assuming that a smart meter is technically able to measure electrical usage and load to such minute detail, and one were able to ascertain personal details about a resident's life from such data, the mere existence of such a capability does not reasonably lead to an inference that it is actually being employed,

- Opinion, page 21.

The order provides excellent constitutional analysis on the smart meter issues that will be helpful to many utilities. However, stay tuned for part two because Judge Lee gave NSMA a big break; the group has 14 days to file an amended complaint to cure deficiencies. This may be a good but expensive decision for Naperville, since it may have to relitigate many of same issues when the amended complaint is filed.

Cybersecurity 2.0 for State Regulators... and Utilities

Linda R. Evers — Fri, 22 Mar 2013 09:30:47 -0500

The smart grid creates the need for greater cybersecurity and is also part of the solution. The smart grid represents the modernization of electricity infrastructure often through added technology, allowing the grid to gather and store data and to create a “dialogue” between all components of the grid, and also allowing for automatic command and response within the function of the grid. A fully evolved smart grid will provide many improvements to situational awareness, prevention, management and restoration that, in spite of the new vulnerabilities it introduces, fundamentally makes the electric system more secure and reliable. On the other hand, the smart grid enhances the need for cybersecurity because it adds a layer of computer systems and software to existing utility infrastructure. It may increase the portals through which a cyber threat could enter the system.

Last month, the National Association of Regulatory Utility Commissioners (“NARUC”) released an updated version of its cybersecurity primer Cybersecurity for State Regulators 2.0. Meant for state regulators, the Primer will be helpful to utilities as it provides a “heads up” to the questions you will be asked. It includes an introductory explanation of the issues, identifies the jurisdictional landscape and highlights some of the characteristics of good cybersecurity that policymakers should consider. Understanding that cybersecurity is a quickly evolving area, the Primer also encourages regulators to engage in strategic discussions about cybersecurity to enable and support a thoughtful, risk-based approach to prudent investments by infrastructure operators. It includes sample questions for regulators to customize and ask their regulated entities and provides other resources. Here are some of the thought-provoking questions:

Does your cybersecurity plan include alternative methods for meeting critical functional responsibilities in the absence of IT or communication technology?
Has your organization conducted a cyber risk or vulnerability assessment of its information systems, control systems and other networked systems?
Does your organization perform vulnerability assessment activities as part of the acquisition cycle for products in each of the following areas: cybersecurity, SCADA, smart grid, internet connectivity and Web site hosting?
Has the company managed cybersecurity in the replacement and upgrade cycle of its networked equipment? Does this include smart meters?