The Virginia State Corporation Commission, in an Oct. 4 order, approved a July 13 application filed by Appalachian Power Company (APCo), AEP Transmission Holding Company, LLC (AEPTHCo), and Grid Assurance LLC – collectively referred to as the applicants – for authority to enter into an agreement whereby Grid Assurance will provide emergency equipment supply services to APCo in order to enhance grid resilience.
As noted in the order, the application states that Grid Assurance, established in May 2016, is a Delaware limited liability company formed to address grid resiliency needs facing transmission-owning electric utilities, particularly the ability of electric utilities to ensure prompt restoration of the bulk power system in the wake of a catastrophic event such as a natural disaster or cyber-attack.
The commission added that according to the applicants, the initial investors in Grid Assurance are six major utility companies or their affiliates, including APCo’s parent company, American Electric Power (NYSE:AEP). AEPTHCo, an affiliate company of APCo, is an investor and owner of Grid Assurance, the commission said, noting that APCo, as well as other AEP transmission-owning entities, will be a subscribing party of Grid Assurance and, therefore, requests commission approval to allow APCo to become a subscriber of Grid Assurance.
Under the subscription agreement, Grid Assurance will provide emergency equipment supply services to APCo to enhance grid resiliency. The commission added that Grid Assurance will provide APCo with access to an optimized inventory of large power transformers (LPT) and other critical long lead-time transmission equipment to assist APCo in recovering from catastrophic grid emergencies.
In support of those services, Grid Assurance proposes to:
- Procure and maintain an optimized inventory of critical LPT spares, circuit breakers, and related transmission equipment
- Provide secure domestic warehousing of the inventory spares in strategic locations
- Offer preplanned transportation and logistic support for prompt release and delivery of spare equipment to APCo as needed to respond to emergencies
The commission added that according to the applicants, Grid Assurance will release inventory to its subscribers upon the occurrence of a qualifying event, which is defined in the application as damage, destruction, or other material impairment of the safe operation of the electric transmission system of a subscriber caused by, or resulting from:
- An act of war, terrorism, rebellion, sabotage, or a public enemy, or any other physical attack
- A cyberattack, whether or not in connection with an act of war, terrorism, or a public enemy
- An electromagnetic pulse or intentional electromagnetic interference
- An act of God, a catastrophic event or a severe weather condition
APCo clarified that AEP Service Company (AEPSC) will act as agent on behalf of APCo and other AEP affiliates to administer the subscription agreement. The commission added that there will be no markup or pass through of incremental costs from AEPSC to APCo, and the allocation of sparing services costs will be based on APCo’s costs relative to the total AEP costs for transformer and circuit breaker assets.
The applicants said that the proposed subscription agreement is in the public interest because Grid Assurance’s pooling approach to providing emergency utility equipment and supply services will minimize APCo’s costs while optimizing inventory for the collective resiliency needs of multiple utilities across the country.
The commission added that it finds that the applicants’ request for the approval of the subscription agreements is in the public interest, subject to certain requirements, including that the commission is to approve the subscription agreement and the associated sparing services for five years, starting as of the date Grid Assurance begins its services; should the applicants wish to extend the subscription agreement beyond that date, separate approval is to be required.
Another requirement calls for the applicants to file – once Grid Assurance secures its warehouses – with the commission a report of action detailing the geographical location of the warehouse, the commission said.