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.