Paul Ciampoli
Welcome to the latest episode of Public Power Now.
I'm Paul Ciampoli, APPA's News Director.
Soaring temperatures in parts of the US this month are putting grid operators and utilities to the test, with the resulting spike in power demand.
So we thought it would be a good time to speak with Jim Robb, president and CEO of the North American Electric Reliability Corporation, to discuss how the grid is faring so far this summer, as well as other topics.
Jim was previously a guest on the podcast in July of 2022.
Jim, thanks for returning as a guest on the podcast.
Jim Robb
Hey, thanks for having me, Paul.
I appreciate it.
Paul Ciampoli
So Jim, I want to start with the summer.
And in May, NERC released its 2026 summer reliability assessment, which found that record resource additions strengthen readiness for the summer season, even as elevated risks remain in some areas.
So what were the key findings of the summer assessment and how would you say the grid has performed so far this summer?
Jim Robb
Yeah, great question.
So first of all, one thing I always have to make clear about the summer assessment is that it's a risk assessment. It's not a forecast.
And that's important to understand because it's sort of like going to your cardiologist, right?
Your cardiologist never tells you you're going to have a heart attack next Tuesday.
Your cardiologist will tell you, you need to change your diet, you need to get more exercise and stuff like that.
And that's sort of what these risk assessments are doing, right?
They're laying out the conditions that could lead to a catastrophic event, you know, such as a blackout.
But it's not saying that one's going to happen next week, so that's important to keep in mind.
In general, right, we've seen the risk outlook for the summer improving over the last several years.
And a big chunk of that is because of the resources that have been added to the grid are resources that really work well in summer and that's particularly solar and batteries, which have been the lion's share of new additions.
And that tends to be almost a perfect resource for the summer, particularly in places like California, the Southwest, Texas, where you have lots of solar radiation.
And combining that with batteries gives you a chance to kind of manage the problematic ramps that you would otherwise have with solar falling off in the evening.
So it's a terrific, terrific summer resource and you see that playing out in our assessment, right?
We don't show California or the Southwest or Texas as having a lot of summer risk.
But we do see risk in places like the Northwest. We saw risk in places like New England because there, you know, solar's not nearly as good a resource as it is in the Southwest. And those areas typically tend to be energy constrained.
So in the Northwest, you've got a very kind of limited natural gas system.
The hydro fleet is under pressure because of the desire to remove certain dams as a result of environmental priorities.
And they've been going through a drought over the last several years and that looks like that could continue if this El Nino materializes as expected. So the Northwest is an area of significant concern.
The Northeast, the same way, right?
Again, they're very dependent upon natural gas and transfers from their neighbors. Quebec has had a number of issues with persistent drought conditions.
So it's reasonable to be concerned about whether Quebec can import power into New England the way it has in previous summers.
And there's not a lot of flexible resource to bring on quickly in New England that's helpful.
So that's sort of the story of the summer outlook.
We also, I think, highlighted some areas in West Texas where transmission limitations could create issues under extreme conditions as well.
So that's an area that we're watching.
But in general, the rest of the country looked pretty decent from a resource perspective, even under extreme temperatures such as we've experienced this summer.
Now that being said, a big chunk of this is because the Department of Energy has issued these 202c orders, which aren't universally popular because they're keeping older plants online and that comes at a cost to ratepayers.
But we've seen most of these plants that the DOE kind of came in and rescued, if you will, being very, very important over the heat waves that we've seen over the last three weeks.
I think it was a total of like 3 gigawatts of generation -- That number may not be right, but it's on that order of magnitude -- was available because of those 202c orders that otherwise might not have and our work shows that many of those plants ran. They ran in the winter during Fern, and they ran over the last three weeks to keep the lights on, particularly in the mid-Atlantic area.
Paul Ciampoli
So it sounds safe to say that the 202c orders could be a potential additional tool in the toolbox, obviously putting aside any kind of ongoing upgrades that those plants may need in the future, but at least short term, maybe next year or so, those could be -- sounds like they could be valuable in terms of maintaining reliability.
Jim Robb
I think they've clearly demonstrated that they have value.
The challenge with the 202c orders is that they're short term, right? They're issued for 90 days.
Now, DOE has renewed them when they've needed to, but that doesn't really give an investor the kind of certainty that they would need to go out and do, say, a major turnaround, put a coal plant under open heart surgery, replace all the tubes in the boilers, that sort of thing.
And one of the other kind of corollary things that we've seen is we recently published our state of reliability report.
And in that, one of the concerning things that got flagged -- and that's an assessment of last year's performance -- and one of the troubling things that we've seen, and we've seen this developing for a while, but it was really pronounced last year is a decline in the availability of some of the older fossil plants and we attribute that to reduced maintenance spending.
There could be a number of other factors in that, but I think reduced maintenance spending is starting to take its toll on this older fleet.
And again, one of the things that I would like to see if I could work my will, right, would be that those plants could be replaced in kind, with not necessarily the same fuel type, but with the same reliability characteristics before they retire, or they get invested in to bring their performance up to the levels of what we would normally expect out of a solid fuel plant.
Paul Ciampoli
And does it go without saying that natural gas could fit into that category of types of kind of replacement option?
Jim Robb
Yes, although the natural gas system is not an unlimited. I mean, we have a tremendous amount of natural gas resources in the country, so I'm quite confident in our ability to produce natural gas. I'm less confident in our ability to deliver it. The pipelines are getting tighter and tighter.
And one of the other issues -- this got flagged in the National Petroleum Council gas electric study that they published last December -- one of the issues the pipelines are seeing is the volatility in natural gas consumption associated with the power sector -- starting to create operational issues in the pipelines.
Pipelines are kind of designed to run full and run consistently year round.
That's been one of the great things about adding power demand to the natural gas system is it'll offset the winter demand for heating fuel.
But now that we're adding in so much variable generation resource, wind and solar, natural gas is kind of playing the swing resource to balance that.
And again, that's kind of being transmitted up the food chain into the pipelines.
And I think it's Williams, but one of the pipelines that serves the mid-Atlantic, the South and mid-Atlantic area, I think it's Transco, is starting to see all kinds of issues associated particularly with solar and the natural gas ramping associated with balancing solar, creating operational challenges.
And so the traditional way pipelines have dealt with volatile demand is through what they call pack and draft, where you either pull a little bit more out of the pipeline or a little bit less, pressure goes up and down, but it can only do that through a sleeve of limits. And we're now exceeding that.
So it's really an integrated energy delivery problem that we're running into.
And we need to be increasingly thinking about the natural gas system as part of the bulk power system because the interactions between the two are so profound right now.
Paul Ciampoli
In terms of your last thought, in terms of the not forgetting natural gas, do you feel like kind of a unity of purpose in terms of government and industry is fully cognizant of the need for that.
Jim Robb
I think there's great appreciation for the issues.
I think both sectors probably have different ideas as to how the problem should be solved.
And I think the political will to make any sort of policy change to address the issues is very, very low.
But ultimately, our challenge is that, like a number of things, our policies, our norms, our conventions were all conceived in a different time.
And when we created the Natural Gas Policy Act, it was like 1978, and that was the start of the restructuring of the power business as well.
Back then, gas wasn't a big source of fuel for the power system and right now, almost, I think, over 40% of the gas we produce in this country ends up in a power plant.
And the power plant consumes about 40% of the gas that we produce and about 40% of the power fleet is natural gas, so it's a very different world than our policies were created for and policy is slow to catch up.
Paul Ciampoli
Data centers are a good example of that. Most of the power and grid was not planned, obviously, for that.
Jim Robb
It's a spectacular example, right?
All of our norms and conventions around the power system really heavily influenced by the last 20, 30 years when power demand hasn't really grown very much because we've been very good at deploying energy efficiency programs.
We've had a major turnover in appliances, right, that have been much more energy efficient. We've converted a large fraction of the lighting to LED from incandescent.
So the world that we came from and the world that we all know and are familiar with is one where, you know, peak demand might grow half a percent to a percent per year.
And now we're in a situation where over the next 10 years, we may need to almost double the size of the electric grid in some areas.
I mean...we're not set up for that. It's a mindset issue, you know, plus the supply chains aren't able to keep up with that kind of demand growth as well.
So there's a multifaceted set of issues that multiple parts of the industry are grappling with, how to enable the development of data centers.
And it's not just data centers, they're kind of the poster child for demand growth, but it's also industrialization, the repatriation of some industry that left the country in the 90s.
It's population migration, and...the population's getting wealthier, more people are installing air conditioning, all those kinds of things.
Policy also plays a role here, right? Even though the federal support for things like electric transportation have declined significantly, a number of states are still pushing very, very hard on moving the automotive fleet to electric vehicles from traditional combustion engines, so that's also driving things and a push in a number of jurisdictions to electrify space heating also creates some interesting challenges for the electric grid and in some cases, probably challenges that we should slow walk a little bit more.
Paul Ciampoli
In a news release related to the summer assessment, one of the things that jumped out at me as I was preparing for the interview is something that John Moura, NERC's Director of Reliability Assessments and Performance Analysis, mentioned, and he specifically mentioned increasing risks for early fall and winter seasons reinforce the need for additional firm and dispatchable resources to maintain reliability and meet rising electricity demand.
I'm assuming some of what we've already touched upon may overlap with discussion on this topic, but just wanted to, you know, get your thoughts in terms of the risks that he alluded to for the early fall and winter seasons.
Jim Robb
The way I like to think about this is that since Carrier invented the air conditioner, the electric sector has been mono-focused on how to meet a hot peak day in August. Tuesday afternoon in August has always been the challenge.
And the way our systems were set up, if you could serve a hot Tuesday in August, you could pretty much serve every other hour of the year.
And that was the nature of the fuel supply, the nature of the generating fleet.
Now we have to pay a lot more attention to fuel and whether the fuel is going to be there to create energy.
Because customers don't consume capacity. They consume energy at the end of the day.
And what John was alluding to is that if you look at the capacity that's come on the grid over the last, just over the last year, for example, I think we set a record for the amount of solar and batteries that we added.
And as I said, solar and batteries are terrific for the summer. But boy, as you get closer to the equinoxes and then the solstice, right, the amount of fuel goes down, right? Just because there's not as much sunlight.
And the further complication in the winter is that the peak -- you typically have two peaks in the winter, one at around 5 or 6 a.m. That's heating load.
And then one around 7:00 or 8:00 at night, when people get home from work and fire up the stoves and watch TV and turn on the lights.
Solar's not doing anything for you in the winter at 6 a.m. and nor is it after five in the evening.
So that's a problem.
And then in the winter, you also have a lot of competition for the natural gas fuel.
And for a lot of good reasons local gas distribution companies that supply natural gas to residential and small commercial customers, they have the priority for gas over the power generation fleet.
And that's something that sometimes you get frustrated by that because power is so essential.
But if you think about the economic and social cost associated with problems in the natural gas distribution system, you would come back and say, that's probably pretty good policy.
We had a situation during Winter Storm Elliott a couple winters ago where the natural gas system was highly constrained leading up to Christmas.
And many of the power plants that didn't have firm fuel contracts and maybe even some who did, lost their fuel supply because they were trying to keep the local distribution companies full.
And then because of a lot of gas freeze-offs in the producing fields, the pipeline started to lose pressure.
And Consolidated Edison, which runs the gas distribution company for Manhattan and maybe all of New York City, were very, very close to having to start to shut down their natural gas system.
And if you think about the economic toil and the operational complexity associated with regasifying a vertical city like New York, I mean, it starts to numb the mind very, very quickly.
So I think that was a real kind of canary in the coal mine event around the need for more gas infrastructure and quite frankly, better and more consistent performance out of the production of natural gas, so the gas can continue to flow during these extreme winter cold systems. Kind of got off your topic there, but you gave me an opening.
Paul Ciampoli
No problem. That's all good information.
So yeah, and we talked about data centers, so that kind of is a nice segue into picking up in terms of my next question, which is, you know, as you know, utilities as well as regional transmission organizations and ISOs are working to address challenges tied to large loads and data centers in particular.
You know, and for its part, NERC is proactively taking steps to address potential reliability issues tied to large loads including the development of a large loads action plan.
And FERC recently issued an order that kind of dovetails with this topic.
So could you provide additional details on the large loads action plan as well as any other steps NERC has taken as it relates to large loads?
Jim Robb
Sure, this is clearly the issue du jour of the day and it's a really critical one, given the importance of data center capacity related artificial intelligence and global leadership in technology, which is obviously critical for the country to maintain.
So data centers present three major issues, and I like to think of them in three different buckets.
There's the resource adequacy question, you know, which is where are we going to get the power and the fuel to support this new load. And that's something that we study.
It obviously has implications in our long-term reliability assessment.
But that's really something that the data center developers, the power generation developers, the utilities, and the regulators need to kind of figure all that out, how to get power supply to the load.
There's a second very thorny bucket of issues, which are the terms and conditions under which these loads interconnect -- basically code for saying who's going to pay for what, what all is going to be needed to get the load connected and who's going to pay for what part of it.
That's really kind of up to FERC and the state regulators to sort out.
And then there's this third issue where we're highly focused, which is, you know, the operating performance of the data center.
How do we get that to not compromise and maybe even contribute to the reliability of the grid itself.
So we're really focused in on the operational characteristics of the loads.
The reason this is important, really kind of twofold.
One is the loads themselves that are contemplated and being developed right now are enormous.
You know, you frequently hear of data center campuses that have aspirations of growing to one to five to 10 -- I even heard one reference to one maybe getting up to 15 gigawatts of capacity.
And as I like to say, that kind of rolls off the tongue.
But when you sit back and you think about a gigawatt being the load of a city the size of San Francisco, it kind of focuses the mind on how big these data centers can be.
So, when they come in increments the size of an AP1000 nuclear unit, right, you pay a lot of attention to how that load is going to behave.
The second is they've also proven to be very sensitive to grid operating conditions.
So we've had a couple of events that we've studied and published disturbance reports on in Virginia over the last couple years.
The one I'm most familiar with, I think was the first one we saw, where I think I have the story straight here. I think a lightning arrester failed on a transmission line, created a voltage disturbance on the line. And then we started to see load disappear. It was all data centers. And I think we lost like 1,700 megawatts of load.
And Dominion had to scramble, right, to be able to get the system rebalanced. And they did, to their credit. They did a very nice job of managing that.
We had a second event happened maybe about six months after that, where we lost about 1,500 megawatts of load.
And these are for things that in general, the system operators would maybe not describe completely as a nothing burger, but relatively straightforward things they see routinely and know how to deal with.
But when you start seeing large amounts of load disappear, it really complicates the situation.
It's very similar to what we saw with inverter-based resources.
So wind and solar in the desert Southwest, right?
You know, a line-to-ground fault would have cleared itself in a few cycles, causes tremendous amounts of generation to trip offline because the inverters, basically a microprocessor sees the disturbance, perceives it as a threat and panics and trips offline.
But we see the same thing happening with, we kind of use the term inverter based load because they act the same way.
And because they all are power electronics based, they can respond incredibly quickly. And one of the issues that we're running into -- again, it's kind of an analog to what we're seeing in the generation business where, for the generation sector, for the longest period of time, all the generation was created by things that spin.
You boil water, you make a turbine spin, you get magnet spins, you get kilowatt hours, but you also get voltage and all this other kind of great stuff.
But if something happens, it keeps spinning, right? You get this inertial effect where it doesn't drop off immediately, whereas with the power electronic based generation, it just stops all of a sudden.
We're seeing the same thing on the load side, right?
It used to be that all of the load on the system or the majority of the load were primarily motors, you know, in air conditioners and industrial applications and the like.
So again, you had this inertial effect on the load side.
So if something shut down, you know, you continued to -- you kind of ramped down somewhat slowly. With inverter-based load, it happens very, very quickly.
So all of these things are conspiring to change the way grid operators have to think about managing the system. It changes the way they model it -- it really puts a significant premium on situation awareness for making sure that the grid operator's not surprised, right?
As they see something happen on the grid, they need to know how generation's likely to respond, how load's likely to respond, so that they can take appropriate actions to protect the system.
That's the reliability situation. We formed last year an executive advisory group consisting of C-suite executives from the power sector, from the data center sector, some of the trade associations to really serve as a sounding board for us on kind of how we respond to our challenge, right, which is the operations of the grid.
And the one thing that came clear in those conversations is everybody wants clarity of, what do they need to be, how do they need to be able to perform?
Second, they want consistency. They want it the same everywhere in the country, right? Because that allows them to scale their business models and processes.
And third, they want it yesterday. So yesterday was obviously a little bit hard to deliver against, but we can deliver against clarity and we can deliver against consistency.
So we decided that we were going to really put our foot on the gas of how we respond to these efforts...when we formed this large load working group, which is consisting of, both kind of utility representatives, but also engineers out of the data center community to really kind of tear apart these event reports and understand, okay, what do we really need to get in place so that these loads are contributing to reliability?
We got out a level 2 alert -- we have 3 levels of alert, one, two, and three. Level 2 is basically a data gathering exercise.
And we asked utilities around the country about their commissioning practices relative to large loads and hoped that we would see a lot of patterns and a lot of consistency in that, and we didn't.
So that led us to say, okay, we need to step in.
In April, we issued two things really in kind of record time.
The first was a reliability guideline from our technical committee that starts to lay out, here are all the issues as we understand them that the industry needs to manage around these loads.
And then secondly, we issued a level 3 alert. And a level 3 alert -- we've only done three of these in our history.
The first was around winterization of power plants. The second was around inverter performance.
And then this one on commissioning data centers.
And the purpose of a level 3 alert, it's not an enforceable standard, but it's kind of a precursor to that.
It tells everybody, this is what we think you need to be doing and we expect you to be doing it and report back to us how you're implementing this. We'll get the results back in August.
But again, I think it kind of signals the seriousness and the pace with which we are moving.
We have two other efforts underway, and these were referenced in the FERC order that came out last week.
The first is we've started the process of developing criteria for registering the data center loads. And we don't go into this space lightly because we've never registered a load before.
And by registration, I mean bringing them formally into the bulk power system reliability framework.
But given the scale of these loads and their behavior, we think that they need to have mandatory and observable operating commitments to the grid.
So that implies reliability standards applying to them the same way they do to the balancing authorities, the reliability coordinators, the transmission owner and operators, and the generator owner operators.
So we're working in parallel two fronts.
One is to determine what the criteria should be for a load that needs to register. And then secondarily, the requirements for the utilities, the balancing authorities, the transmission owner operators, and the reliability coordinators to make sure that they are commissioned and integrated in a way that preserves reliability.
We would probably normally do all this stuff sequentially over three or four years, and we're trying to get it all done this year.
And that's breaking some norms and making a lot of people, including us, uncomfortable.
But it's really what is needed to rise to the occasion.
We published our first pass at registration criteria in, I think, April, maybe it was early May.
Had a 45-day comment period.
People raised a whole bunch of great issues around it.
And we're in the process now of preparing the next round of registration criteria. And the issues that we're concerned about on registration is we want to make sure that we get the lion's share of the load that creates the risk.
And we don't want to cause people to have to register who don't cause problems. But it needs to be objective, right?
And so in our first pass, one of the things that was highlighted to us is that we might be bringing in a whole bunch of universities and their computing centers. Well, we don't really care about those -- those haven't been an issue.
Some process manufacturing plants, chemical plants, pulp mills, we might have been pulling some of them in, inadvertently.
So we're looking at that right now.
Like I said, we'll have a second round of criteria published here in the next two to three weeks, early mid-August.
And again, we'll take comments and ask people...help us understand what inadvertent consequence there might be to this criteria, because we don't want to have to process a whole bunch of exceptions down the road.
And then the second thing we have going on is we've agreed on a series of kind of foundational practices that need to be in place associated with integrating and commissioning these loads and we formed a drafting team. We have a very large advisory body around that drafting team.
We have a tremendous amount of outreach across all this activity, by the way.
I think they've decided to break it into three different standard families, all related to the integration of computational load onto the grid.
Then we'll have that ready for -- we've had several rounds of informal comments on that. We're going to post that for balloting sometime again, early mid-August we're thinking and we're actually hoping with all the outreach that we've done on this, that we'll be able to get that passed on the first ballot.
And those were the two things that FERC told us they wanted.
They wanted to make sure that we had the registration criteria solved this year and this first suite of standards in place by the end of the year.
And then they said, and we wanted to see your work plan by end of February next year for dealing with the rest of these issues.
And the rest of the issues are the ride-through capability, the things that apply to the data centers themselves.
So ride-through capability related to voltage and frequency disturbances, dealing with the jitteriness that tends to characterize AI data centers when they're in learning mode, or the security protections around the data center, the situation awareness protocols, all the modeling that needs to be done.
So we'll submit a work plan to FERC at the end of February that kind of lays out a broader game plan over the next couple years for addressing those issues. So we've got a lot going on.
Paul Ciampoli
Yeah, and I should note to our listeners that obviously, you know, NERC has a great website.
I check on it regularly and I think you guys do a really good job in terms of kind of once you get to the website, knowing where to go in terms of this topic and other topics.
So I just wanted to mention that to our listeners.
Jim Robb
I appreciate that because we just redeveloped our website last year because it was a bear, particularly for the uninitiated. And our communications and IT team, I think, did a great job of creating a much more user-friendly experience through the website.
So I'm glad you're finding all the stuff that you're looking for. That's warming the cockles of a lot of people's hearts right now.
Paul Ciampoli
And obviously it goes without saying, not doing the sequential versus trying to do a lot of things at one time.
Something, you know, as simple as kind of a web redesign and being able to find something right away, I would imagine can facilitate that process.
Jim Robb
Absolutely. And we've also invested a fair amount for us over the last couple years in building our external engagement capability.
Because we realized we are well honed to be able to deal with traditional utility players. So the investor-owned utilities, the public powers, the co-ops and the G&Ts.
But now risk is coming at us from different places than it used to so we've had to develop much better connectivity to the power generators, much better connectivity to the inverter community, which actually gets us into manufacturing because it's all in the equipment that needs to be resolved.
And now the technology community through the data center.
So we've had a full court press on, you know, trying to address this problem that's been cited several times that, you know, Silicon Valley doesn't speak NERC and FERC and NERC and FERC don't speak Silicon Valley. There's a lot of truth to that.
And we're working really, really hard to build the bridges to this new community that's so, so important to our future.
Paul Ciampoli
You know, in terms of forecasting data center load, obviously no one has a crystal ball.
Things would be a lot easier if we did. But, you know, the presumption is going to be that some percentage of data centers that are proposed now will not actually make it across the finish line.
But I guess it goes without saying that NERC can't simply assume that X amount won't be built.
You've got to kind of plan for kind of the big scenario in terms of the amount of load that's going to be facing the sector.
Jim Robb
This is one of the things that we're working to get more sophisticated at. And again, it's just kind of a new problem. I mean, we've had a time-honored way of looking at prospective generation and tiering it in terms of what the likelihood of it showing up is.
We're working to do the same thing on load, but we ask the utilities when we gather, so we don't do an independent forecast, right?
We aggregate all of the data that comes from the load serving entities and the resource developers because...they know what's coming on or they have a better view of what's coming on than we do.
But we ask them to handicap facilities and only give us the stuff that they think is real.
When we aggregated the load outlook over the next 5 to 10 years, we saw, I think the number was 225 gigawatts of new load.
Now, not all that's data center, right?
Some of that's driven by population migration, re-industrialization, policy issues, and the like.
But one of the things we did is when we compared that to what other analysts were saying, and we were kind of in the strike zone of what Wood McKinsey and Sierra and other people that do this kind of work believe.
We also compared it to the electric demand that DOE forecast based on prospective chip sales.
And again, we were kind of in the strike zone on that so I'm guessing that our aggregate forecast isn't that far off.
Now, whether we have it regionally distributed correctly, that's another matter, right? Because what a data center that doesn't get built in Ohio might get built in Indiana or in Texas, right?
So we're not, I can't say that we got that precisely right, but that'll get sorted out through the utility process of actually commissioning the load and then getting all the regulatory approvals to interconnect the load, develop the generation for it and like.
And so that regional process will sort of self-discipline itself.
From my perspective, the more important thing here are the policy issues that we need to deal with around siting and permitting, development of infrastructure, all of those things.
And quite honestly, we have those same issues, whether the total number is 100 gigawatts or 200 gigawatts, right? Because it's much, much more than we're prepared to deal with.
So I'm not as concerned at my level for the issues that I'm dealing with around the accuracy of the numbers.
The precision of the numbers is important and the magnitude is what is most instructive.
The accuracy and precision at the level of is this data center real or is that power plant real is something that will get sorted out naturally through a self-disciplining process at the state or local level.
Paul Ciampoli
And you also touched upon the interconnection process as it relates to large loads.
Obviously, interconnection issues overall beyond connecting large loads is an ongoing, I think it's safe to say, a challenge across the country.
Do you have any perspective with respect to, you know, do you feel like the interconnection question is being thoughtfully addressed by, you know, utilities and data centers at this point, or is that kind of still a work in progress?
Jim Robb
I think you'd have to say it's still a work in process, but there's a lot of positive things going on.
The interconnection queue process...it's a great example of what I think of as, kind of the mindset and the, being stuck a little bit in the past.
So, if you're an ISO/RTO, your interconnection process was based on the notion of studying a very, very large single facility.
So 750 MW gas plants, right? And now they have to study 750, one megawatt solar fields, right?
So the volume, right, was crushing to them because they were designed to analyze a few large additions as opposed to a large number of small additions. That would vex any process.
And then what we were seeing is that by the time things would work through the queue, while the economics changed, the project went elsewhere, people knew it was going to take a long time.
So they set a project in the queue just to reserve a space, whether they intended to develop it or not. So there's a lot of stuff that needed to be kind of cleared out.
I mean certainly MISO, I think SPP and PJM, now all have these expedited study processes where for facilities that are notionally shovel ready and of scale and quality, right, they could meet the needs, right?
They're studying those separately and trying to accelerate their development. I think that's a great innovation.
I think they're looking at, you know, the use of artificial intelligence to speed up some of the analytics that need to be done. So I think the process is working.
MISO identified -- last year they identified some 30 gigawatts of what they call ERAS projects, so Expedited Resource Addition [Study].
Now a number of those are falling out, right?
Because once they understand the upgrades they've got to pay for and so forth or supply chain issues, you know, as the project becomes closer to being real, many of them have started to drop out.
But a lot of those are going to go forward and are going forward faster than they would had they not adopted this process with FERC support.
So again, I think it's working. Is it still moving fast enough? Probably not.
Are there still projects that are not of great quality going through this process? Absolutely.
But it's moving in the right direction.
Paul Ciampoli
Yeah, that makes sense. And to your point, I guess it's better that it's being addressed to some degree, right, obviously, than not being addressed at all.
Jim Robb
Absolutely. When I took this job, somebody said, you're taking the most thankless job in the industry and I said, I don't know about that. I love my job. But a lot of these RTO jobs, I mean, they are really hard.
One, because they've got so many stakeholders, there's so much direct economic consequence for their actions.
And I'm really very impressed with the level of innovation we've seen out of them in dealing, initially with the changing grid characteristics, integrating all the wind, the solar, now batteries, and now having to innovate around the load side.
I think they're doing a really remarkable job.
Is it good enough? Maybe in all cases, not. But boy, they sure are innovating where they can and trying to get this all done in a way that preserves the reliability of their footprint.
So I take my hat off to them while acknowledging that their job is incredibly hard.
Paul Ciampoli
And so Jim, in terms of next question, I want to switch gears here and talk about wildfires.
And as you know, threats to reliability from wildfires are top of mind for the utility sector these days and NERC recently filed a wildfire action plan with FERC.
So what would you say are the key elements of the wildfire action plan filed with FERC and also what other actions has NERC taken in terms of mitigating the threat to reliability from wildfires?
Jim Robb
Yeah, so this is a great topic.
And boy, if you were in the mid-Atlantic over the last week or so, you really appreciate the importance of figuring out this wildfire question because the smoke was outrageous to deal with.
So there are a couple of things to keep in mind.
First of all, most ignitions actually take place on the distribution system, and NERC is highly focused on the transmission system of the country. So that's an important foundational point.
However, as we work through responding to the order that we got from FERC, which originated with an executive order from the White House, we realized that there's actually a lot of work that could be done here.
And the question is, where does it fit priority-wise with everything else we're trying to juggle?
But we identified a few major themes.
One is the vegetation management standard that we have doesn't really meet the entire bulk electric system.
We have vegetation management requirements at 200 kV and above.
And one of the questions is, should we lower that to 100 kV, or a 115, where there's a lot of 115 kV transmission, particularly in the West.
And so that's something that we're gonna take up with our standards group over time.
There are also a bunch of questions around the coordination of public safety power shutoffs, which was this tool that emerged over the last I don't know, seven or eight years where utilities will voluntarily start to take power lines out of service, right, if they see temperatures, humidity, and wind get to a certain level.
But initially, there were like a couple utilities that were doing those. And now I think the number's up to like 79, mostly across the West.
So that starts to raise a whole bunch of questions around, do we have all the right modeling tools and communication tools for the grid operators to know what's in and out of service and make sure they can continue to study the grid and continue to operate reliably, you know, with so many elements taken out of service?
So there's a question there that we need to work through.
So there's some standards actions that are implied, and that's obviously right in our wheelhouse.
One of the other major themes was coordination across agencies, where we can raise awareness and promote collaboration and cooperation, between, say, the Bureau of Reclamation, the Forest Service, right, the utilities, the fire management agencies and the like, because right now that feels from the work we did not as well coordinated as you would think.
And one of the issues a lot of utilities have is they can't go in, particularly in the West, they can't go in and clear lines because they can't get the permits to do it from the Forest Service, right?
Well, that just continues to build up fuel for a wildfire ignition...and raises the risk of an inadvertent contact.
So there's a lot of things that we think can be done around interagency coordination, cooperation, and then in the restoration period, I remember talking with a CEO in the West that, the Fire Service will -- they'll start working to put out the fire, right?
But they won't factor in which lines are really critical and which ones aren't.
And, at some level, you got to fight the fire to get the fire out.
But if you can adjust your firefighting technique or priorities to take into account that, hey, there may be a critical path line here that we need to make sure we protect.
That's another thing where awareness and coordination between the sector and the agencies would be very, very important.
And then the third thing, the third issue that came up is all around insurance and how insurance is provided to the sector.
We involved one of the big reinsurers from Europe, Munich Re, in our workshops.
And we discovered that they had a very different view of risk than what the industry did.
And without saying whether the industry was right or they were right, it did kind of raise a question around, well, how do we do risk assessments?
How does industry do risk assessments and how does the insurance industry process those?
And is there an opportunity for one, more standardization?
Two, could you...take a sheet out of the nuclear sector and have an independent body that would do something similar to what INPO does for nuclear, where they could assess a utility's risk and all their mitigation investments and assign them a risk rating that could then translate into their insurance premiums.
The thing that's appealing about that is if you could find a way, because I don't know what the number is for how much a customer pays in the utility bill for utility insurance, but it's not inconsequential.
That could create a funding mechanism for some of the technologies around, cameras and thermal sensors and the likes that utilities could deploy to reduce their risk.
And then one of the other areas in insurance that came up is whether or not forming a mutual, whether it would be funded by the utilities, if they have a superior view of risk than the insurance companies do, then they might be able to price risk to their members more favorably than a traditional insurer might.
So I think there's some wood to chop on all of those. NERC clearly has the ball on the standards related work.
Then again, we'll figure out where it fits in the priority of things that we're doing and we can catalyze a lot of the engagement and conversation, but it'll require action from state and federal parties as well as the insurance community and industry to figure some of the specifics of these opportunities out.
But it turned out to be a much richer examination than I might have thought it was going to be going in.
Paul Ciampoli
And the creation of a funding mechanism, akin to INPO in the nuclear sector, is that something, I guess, is just kind of the preliminary discussion phase? I mean, as far as you know there's nothing that's actually been formally proposed by anybody.
Jim Robb
It falls into the category of a neat idea and we're going to start shopping that around to industry leadership because they would have to get behind it.
And then the INPO type organization would have to be formed.
Or they would have to take an organization like the North American Transmission Forum or something like that and put that in their mandate to do.
So, I mean, it's not something for us to do, but I do think that there's an opportunity, potentially an opportunity here.
We haven't done all the sums to figure out how much money could be saved, but if you could create, both a mutual insurance organization that had a superior view of risk, have it informed objectively by, again, an INPO-like organization, there could be an opportunity here to save a bunch of money.
And again, either get that back to customers or use that for mitigation activity.
Paul Ciampoli
And so now we've talked about standards in the course of our conversation, so I wanted to pick up on that topic and just note that in June, as NERC noted the progress on standards modernization activities was among key topics at its quarterly meeting.
Any update you can offer in terms of efforts by NERC when it comes to modernizing its standards, processes, and procedures?
Jim Robb
So it's probably one of our most important initiatives this year because it's important for the day, but it'll be important well into the future for everything that we do. We formed a stakeholder-led task force.
It was commissioned by our board in February of last year, so 18 months ago.
And it was led by Greg Ford, the CEO of the Georgia System Operator, and Todd Lucas, who's the SVP of operations for Southern Company, had kind of a hand-picked group of folks around from the various membership categories that we have. And they produced a great, kind of clean sheet.
Let's not just trim around the edges. Let's do some open heart surgery on this process.
With the goal of getting it to move at what the task force termed, and we've adopted, the speed of risk -- has a lot of innovation in it, rethinks a lot of the institutional structures that we had in place to govern the standards process, rethinks the way standards approval would be done. But most importantly, it maintains an extraordinarily strong stakeholder voice in the process and the approval of standards.
I think that's the special sauce that's NERC is that we litigate all the issues with our requirements prior to them being approved as opposed to what most executive agencies do, which is they propose a rule, it gets passed and adopted, and then it gets litigated in the courts for 10 years.
So we avoid all the subsequent litigation by working all that stuff up front.
The board accepted those recommendations this past February, charted the team and the staff to go out and kind of convert that into the regulatory language.
Because all this has to go through both our board and then ultimately FERC approval.
There's part of it that needs to be balloted by the stakeholders as well.
So they've been working through all of the changes...that we think are needed to implement what the board agreed to and directed us to in February.
I think that's going to go out to ballot in the September time frame, if I remember correctly, is our goal.
Again, the team has been doing a lot of outreach. Tons of webinars, informal comment periods, and stakeholders are making some very good suggestions. The teams, trying to figure out how to incorporate in the work going forward.
Our goal is to get this to our board for approval in February.
So again, that would have to go through a couple rounds, you know, one, maybe 2 rounds of balloting on what we call our process manual, and then changes to our rules of procedure where a lot of these processes are memorialized.
So we're aiming to get that all approved by the board in February, filed with FERC, and then hopefully we'll get a FERC order and we'll be able to start real implementation by mid next year.
Paul Ciampoli
And so Jim, obviously we've covered a lot of interesting ground today so far in terms of various initiatives underway at NERC, but I wanted to give you the opportunity as my last question for you to talk about any other NERC initiatives or areas of focus that you'd like to highlight?
Jim Robb
I think the last thing I'd put on your listeners' radar screen is last year we also put together a roadmap for the SIP standards to continue to evolve with the risk landscape that we're seeing, which is very, very different than when the version 5 standards were created.
So there are two or three things embedded in that.
One is we are looking at cloud, how our requirements around security might be rethought for entities for certain applications that want to use cloud services as opposed to on-premise computing services, which is what the current suite of standards is based upon.
So that's something that your members should be watching.
The other and probably the more important one, particularly for the public powers, is we're looking at low impact protections with really two things that are really important.
And I say this is important for you guys because the public power sector owns a lot of these low impact assets.
We're looking at two things. One, implementing a user authentication. The challenge with these is that a lot of times you rely on third parties to come in and do remote maintenance or firmware or upgrades or that sort of thing. So there are a lot of people who get access to these facilities.
So there are two things we'd like to see done. First is we want to make sure that there's a user authentication so that only people who are supposed to be in there are in there.
And that's probably multi-factor authentication, but I think we're open to whether there are other ways you can validate that only the right people are in there and they're doing what they're supposed to be doing and not anything, not any bonus stuff.
And then the second issue is a lot of this happens over the internet.
I think we use the term publicly available unencrypted networks, and that's technobabble way of saying the internet.
And so the question is, you know, it's probably not feasible to require separate private networks to be built to do this work.
But the question is, how do you secure those? How do you secure the communications when you're doing it over a public unencrypted network?
So that's something that people need to be paying attention to as well.
And then the last point I would say is that we just initiated a little task force within NERC to look at the standards through the lens of AI and you're initially looking at AI-driven attacks and whether or not the requirements that we have around patching and stuff like that even make sense, in the context of the speed with which vulnerabilities are being exploited now.
So we're taking a broad look at AI and its implication on the standards.
Nothing formal to talk about on that right now, but that'll probably be seeing the light of day, over the next few months.
And again, something for folks to be paying attention to.
Paul Ciampoli
Okay, great, Jim. Obviously, you have your plate full these days, as indicated by our conversation, so I can't thank you enough for taking the time to speak with us today.
Jim Robb
Paul, it was my pleasure. Thanks for the opportunity. I hope this is all helpful for your listeners.
Paul Ciampoli
It will definitely be helpful. Thank you so much, Jim.
Thanks for listening to this episode of Public Power Now, which is produced by Julio Guerrero, graphic and digital designer at APPA.
I'm Paul Ciampoli, and we'll be back with more from the world of Public Power next week.
