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HB 151: "An Act relating to the regulation of electric utilities and electric reliability organizations; and providing for an effective date."

00                             HOUSE BILL NO. 151                                                                          
01 "An Act relating to the regulation of electric utilities and electric reliability                                       
02 organizations; and providing for an effective date."                                                                    
03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
04    * Section 1. AS 42.05 is amended by adding new sections to read:                                                   
05 Sec. 42.05.292. Electric reliability organizations. (a) An electric utility must                                      
06 participate in an electric reliability organization if the utility operates in an                                       
07 interconnected electric energy transmission network served by an electric reliability                                   
08       organization certified by the commission.                                                                         
09            (b)  A person may submit to the commission an application for certification as                               
10 an electric reliability organization for an interconnected bulk-power system. The                                       
11 commission may certify one electric reliability organization for each interconnected                                    
12 electric energy transmission network. The commission may certify an electric                                            
13 reliability organization if the commission determines that the electric reliability                                     
14       organization                                                                                                      
01                 (1)  has the ability to develop reliability standards that provide for an                               
02       adequate level of reliability of a bulk-power system;                                                             
03                 (2)  has the ability to develop a plan under AS 42.05.293(a);                                           
04                 (3)  has the ability to establish rules to                                                              
05                      (A)  ensure fair stakeholder representation in the selection of its                                
06            directors and balanced decision making in an electric reliability organization,                              
07            committee, or subordinate organizational structure;                                                          
08                      (B)  equitably allocate reasonable dues, fees, and other charges                                   
09            among all load-serving entities connected to the bulk-power system for all                                   
10            activities under this section;                                                                               
11 (C)  provide fair and impartial procedures for the enforcement                                                          
12            of reliability standards;                                                                                    
13 (D)  provide for reasonable notice and opportunity for public                                                           
14 comment, due process, openness, and balance of interests in developing                                                  
15            reliability standards and exercising its duties;                                                             
16 (4)  has established rules to provide for its independence from the users,                                              
17       owners, and operators of the bulk-power system; and                                                               
18                 (5)  is governed by a board that                                                                        
19 (A)  includes as nonvoting members the commissioner or the                                                              
20 commissioner's designee and the attorney general or the attorney general's                                              
21            designee; and                                                                                                
22                      (B)  is formed as                                                                                  
23                           (i)  an independent board;                                                                    
24                           (ii)  a balanced stakeholder board; or                                                        
25 (iii)  a combination independent and balanced                                                                           
26                 stakeholder board.                                                                                      
27 (c)  The commission shall form an electric reliability organization if the                                              
28       commission determines that no person                                                                              
29 (1)  has applied for certification as an electric reliability organization                                              
30       under (b) of this section; and                                                                                    
31 (2)  is likely to apply for certification as an electric reliability                                                    
01       organization in the next 6 months.                                                                                
02 (d)  An electric reliability organization shall file with the commission a                                              
03 reliability standard or modification to a reliability standard as a new or revised tariff                               
04 provision. All users, owners, and operators of a bulk-power system shall comply with                                    
05 reliability standards contained in a tariff that is proposed by an electric reliability                                 
06 organization and approved by the commission. The commission may enforce a                                               
07 reliability standard adopted under this section. The reliability standard adopted under                                 
08       this section                                                                                                      
09 (1)  shall contain a requirement, approved by the commission under this                                                 
10       section, to provide for                                                                                           
11                      (A)  reliable operation of the bulk-power system;                                                  
12                      (B)  operation of a bulk-power system facility;                                                    
13                      (C)  cybersecurity protection; or                                                                  
14 (D)  additions or modifications to a bulk-power system facility                                                         
15 to the extent necessary to provide for reliable operation of the bulk-power                                             
16            system;                                                                                                      
17 (2)  may not include a requirement to enlarge bulk-power system                                                         
18       facilities or to construct new transmission capacity or generation capacity.                                      
19 (e)  The commission may approve, reject, or amend in whole or in part a                                                 
20 proposed reliability standard or modification submitted by an electric reliability                                      
21 organization if the commission determines that the standard is just, reasonable, not                                    
22 unduly discriminatory or preferential, and in the public interest. A proposed standard                                  
23 or modification takes effect upon approval by the commission. A standard approved                                       
24       under this subsection satisfies the requirements of AS 42.05.291(c).                                              
25 (f)  The commission may, on its own motion or upon complaint, order an                                                  
26 electric reliability organization to submit to the commission a proposed reliability                                    
27       standard or modification to a reliability standard that addresses a specific matter.                              
28 (g)  Except as provided in (h) of this section, an electric reliability organization                                    
29 may impose a penalty on a user, owner, or operator of an interconnected bulk-power                                      
30 system for a violation of a reliability standard if, after notice and a hearing, the electric                           
31       reliability organization                                                                                          
01                 (1)  finds that the user, owner, or operator has violated a reliability                                 
02       standard; and                                                                                                     
03                 (2)  files notice of the proposed penalty and the record of the                                         
04       proceeding with the commission at least 30 days before imposition of the penalty.                                 
05            (h)  The commission may set aside, reinstate, or modify a penalty imposed                                    
06       under (g) of this section.                                                                                        
07 (i)  The commission may, on its own motion or upon complaint, order a user,                                             
08 owner, or operator of a bulk-power system to comply with a reliability standard and                                     
09 impose a penalty against the user, owner, or operator of a bulk-power system if the                                     
10 commission finds, after notice and a hearing, that the user, owner, or operator of the                                  
11 bulk-power system has engaged or is about to engage in an act or practice that violates                                 
12       a reliability standard.                                                                                           
13 (j)  A penalty imposed under (g), (h), or (i) of this section must bear a                                               
14 reasonable relation to the seriousness of the violation and take into consideration the                                 
15       effort of a user, owner, or operator to remedy the violation in a timely manner.                                  
16 (k)  The commission may direct an electric reliability organization to conduct                                          
17       assessments of the reliability and adequacy of the bulk-power system.                                             
18 (l)  The commission shall adopt regulations governing an electric reliability                                           
19       organization consistent with this section. Regulations under this section                                         
20 (1)  may include a requirement that an electric reliability organization                                                
21       obtain a certificate of public convenience and necessity;                                                         
22 (2)  must allow the electric reliability organization to recover its costs                                              
23       through surcharges added to the rate for each participating electric utility.                                     
24 Sec. 42.05.293. Integrated lowest cost planning. (a) An electric reliability                                          
25 organization shall prepare and file with the commission a plan for meeting the                                          
26 reliability requirements of customers within its interconnected bulk-power system in                                    
27 the most cost-effective manner, consistent with the load-serving entities' obligations.                                 
28 A plan must contain an evaluation of the full range of cost-effective means for load-                                   
29 serving entities to meet the service requirements of customers, including additional                                    
30 generation, transmission, and conservation or similar improvements in efficiency. A                                     
31 plan must include options to meet customers' collective needs at the lowest cost,                                       
01       regardless of the location or ownership of new facilities.                                                      
02            (b)  The commission shall, after notice and a hearing, approve, reject, or                                   
03       modify a plan submitted under (a) of this section, consistent with the public interest.                           
04            (c)  The commission may include in a public utility's rates                                                  
05                 (1)  the cost of resources acquired in accordance with a plan adopted                                   
06       under this section;                                                                                               
07                 (2)  the cost-effective expenditures for improving the efficiency with                                  
08       which the public utility provides and its customers use utility services; and                                     
09                 (3)  the cost of a utility to comply with the planning requirements of                                  
10       this section, including planning costs and portfolio development costs.                                           
11            (d)  In this section,                                                                                        
12 (1)  "planning costs" means the costs of evaluating the future demand                                                   
13       for services and alternative methods of satisfying future demand;                                                 
14 (2)  "portfolio development costs" means the costs of preparing a                                                       
15       resource in a portfolio for prompt acquisition of the resource.                                                   
16 Sec. 42.05.294. Building permissions. (a) A public utility may not construct a                                        
17       large energy facility unless the commission makes a determination that                                            
18                 (1)  the facility                                                                                       
19 (A)  is necessary to the bulk-power system with which it would                                                          
20            be interconnected;                                                                                           
21                      (B)  complies with reliability standards; and                                                      
22 (2)  a load-serving entity that is substantially served by the project                                                  
23       would be more cost-effective.                                                                                     
24 (b)  A large energy facility that was included in the most recent integrated                                            
25 resources plan approved under AS 42.05.293 is considered to satisfy the requirements                                    
26       of (a) of this section without a determination by the commission.                                                 
27            (c)  In this section, "large energy facility" means                                                          
28 (1)  an electric power generating plant or combination of plants at a                                                   
29 single site with a combined capacity of 15,000 kilowatts or more with transmission                                      
30       lines that directly interconnect the plant with the transmission system; or                                       
31                 (2)  a high-voltage transmission line that                                                              
01                      (A)  has a capacity of 69 kilovolts or more; and                                                   
02                      (B)  is greater than 5 miles in length.                                                            
03    * Sec. 2. AS 42.05.990 is amended by adding new paragraphs to read:                                                
04                 (14)  "bulk-power system" means                                                                         
05                      (A)  a facility or control system that                                                             
06                           (i)  is owned by more than one electric utility;                                              
07                           (ii)  is necessary for operating an interconnected electric                                   
08                 energy transmission network or a portion of an interconnected electric                                  
09                 energy transmission network; and                                                                        
10 (iii)  is not used in the local distribution of electric                                                                
11                 energy; or                                                                                              
12                      (B)  an electric energy generation facility that                                                   
13                           (i)  is owned by more than one electric utility;                                              
14 (ii)  is necessary to maintain the reliability of a                                                                     
15                 transmission system; and                                                                                
16 (iii)  is not used in the local distribution of electric                                                                
17                 energy;                                                                                                 
18 (15)  "cybersecurity incident" means a malicious act or suspicious                                                      
19 event that disrupts or attempts to disrupt the operation of programmable electronic                                     
20 devices and communication networks, including hardware and software that are                                            
21       essential to the reliable operation of the bulk-power system;                                                     
22 (16)  "electric reliability organization" means an organization that is                                                 
23       certified by the commission under AS 42.05.292;                                                                   
24 (17)  "interconnected electric energy transmission network" means a                                                     
25 network of bulk-power system components operating in a geographic area that are                                         
26 synchronized so that the failure of one or more of the components may adversely                                         
27 affect the ability of the operators of other components within the system to maintain                                   
28       reliable operation of the facilities within the control of the operators;                                         
29 (18)  "load-serving entity" means an electric utility that has a service                                                
30       obligation to distribute power to end users;                                                                      
31 (19)  "reliable operation" means operating the elements of the bulk-                                                    
01 power system within equipment and electric system thermal, voltage, and stability                                       
02 limits so that instability, uncontrolled separation, or cascading failures of the system                                
03 will not occur as a result of a sudden disturbance, including a cybersecurity incident,                                 
04       or unanticipated failure of system elements.                                                                      
05    * Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to                          
06 read:                                                                                                                   
07 TRANSITION: REGULATIONS. The Regulatory Commission of Alaska may adopt                                                  
08 regulations necessary to implement the changes made by this Act. The regulations take effect                            
09 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the law                             
10 implemented by the regulation.                                                                                          
11    * Sec. 4. Section 3 of this Act takes effect immediately under AS 01.10.070(c).                                    
12    * Sec. 5. Except as provided in sec. 4 of this Act, this Act takes effect July 1, 2020.