Cyber, EPA rules, organized markets worry APPA chief

Cyber-security, environmental regulations and integration of intermittent renewable resources are among the top concerns for public power utilities, American Public Power Association (APPA) President and CEO Sue Kelly said June 13 during her organization’s national conference in Phoenix.

Video of her presentation was made available via Facebook.

“The same issues are keeping us and you up at night,” Kelly said. For starters, there is cyber-security.

In the Ukraine, unknown hackers attacked three different distribution utilities within the Ukraine’s power grid, Kelly noted.

The attack occurred in December 2015 and the North American Electric Reliability Corp. (NERC) released a major white paper on the attack earlier this spring. “If you haven’t read it, you should,” Kelly said.

The remote attacks disrupted electric services to more than 200,000 customers, Kelly said. The report found that the attacks were well planned and highly coordinated.

“We do not want a public power utility, large or small to be the next unwitting target,” Kelly said.

Public power utilities serve one-in-seven people in the United States but too many customers don’t actually realize they are using public power, Kelly said.

“Environmental regulations also cause us insomnia although more in some states than others,” Kelly said. She pointed to the Environmental Protection Agency (EPA) Clean Power Plan, which has been stayed by the U.S. Supreme Court.

“So all bets are off as far as where this case is going,” Kelly said. APPA filed extensive comments on EPA CPP in January. Many APPA members will need a “workable, cross-state” trading model if in order to comply with the EPA regulation CO2 regulation.

“But regardless what happens with the Clean Power Plan, some type of carbon rule is coming,” Kelly said.

Another unavoidable trend is the march toward increased utilization of renewable energy, Kelly said.

“Interest in renewable power is growing among all kinds of customers,” Kelly said. The APPA chief said she said recently saw where a brewery had touted “solar powered-beer.”

Both public power and investor-owned utilities are increasingly being encouraged to use renewable power, Kelly said. APPA can work with its members on integrating green energy while not endangering reliability, she added.

Various federal policy and court rulings are causing concerns for public power, Kelly said.

Fear “Eastern-style mandatory capacity markets”. The U.S. Supreme Court ruling in the Maryland subsidized generation ruling was a “setback” for restructured states, Kelly said.

The high court struck down a Maryland incentive program for in-state generation, but kept the focus narrow, Kelly said.

“We are seeing more and more questioning of mandatory capacity markets,” Kelly said. Large investor-owned utilities like Exelon (NYSE:EXC) and American Electric Power (NYSE:AEP) are increasing vocal about the shortcomings of organized markets, Kelly said. Several of investor-owned utilities had said that organized markets fail to provide adequate incentive to keep a number of baseload plants open.

Out West, the APPA is “carefully watching” the Energy Imbalance Market (EIM), Kelly said. The EIM is a voluntary program enabling renewable energy generation owners in surrounding states to import their green power into California.

Some public power utilities are joining or thinking about joining the EIM, Kelly said. The APPA is however, urging the West not to rush onto full organized market status, Kelly said.

Public power is also active on issues like energy storage and energy efficiency, Kelly said. “APPA continues to explain to congress that distributed generation issues need to be decided at the local level.”

Public power utilities were among leaders in adding solar power “per customer” in 2015, Kelly said. In addition, the Sacramento Municipal Utility District (SMUD) is developing a project to convert manure into energy at a local dairy.

“Succession planning is the elephant in the room for many of us,” as long-time employees retire, Kelly said.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.