LPPC In The News

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June 14, 2021

By Robert Walton

Utilities to DOE: More Information, Not New Regulations, Needed to Secure the Grid

The utility sector needs precise information about the federal government's equipment concerns and better visibility into manufacturing supply chains in order to keep the electric grid secure, several groups told the U.S. Department of Energy in June 7 comments responding to a call for cyber and supply chain security recommendations to secure the electric grid.

However, new regulations and security requirements are not necessary at this time, according to the Edison Electric Institute (EEI), which represents investor-owned electric utilities. That idea was echoed by other industry groups filing comments.

Utilities support development of a U.S.-based supply chain, to move away from Chinese grid equipment, but warn that such a move could cause a short-term rise in prices due to a lack of suppliers. Procurement of some large power transformers, EEI noted, "may primarily depend on a single country."

Utilities say they need clear direction from the government on any equipment bans, and help getting more information on what components make up the grid equipment in use. But they also warn that, at this point, new regulations could get in the way of making the grid more secure — and could even affect its operations.

"Many efficiencies can be gained in leveraging existing cyber and physical security and supply chain processes, as opposed to creating and imposing upon the industry a new set of processes that could disrupt existing measures to combat the threats or access to critical equipment," EEI said in its response to the request for information (RFI).

'Spillover' effects on reliability 

New directives from DOE, whether addressing supply chains or equipment in use, could affect the market for critical equipment and "have a spillover effect on the day-to-day grid reliability," EEI said, and "may increase the ultimate costs to electric customers."

Smaller utilities also questioned the need for new security requirements. The American Public Power Association (APPA) filed comments jointly with the Large Public Power Council, the National Rural Electric Cooperative Association and the Transmission Access Policy Study Group.

The groups urged DOE to "focus on the extent to which existing standards have been successfully implemented in the electric utility sector to help frame the scope for any new regulations." And if DOE sees risks that are not being addressed in the existing required supply chain standards, the agency should consult with the Federal Energy Regulatory Commission and/or the North American Electric Reliability Corp. (NERC), and "provide actionable information that can inform appropriate standard revision."

"It would be burdensome on utilities, in particular smaller entities like public power utilities and electric cooperatives, to require them to report on supply chain requirements to more than one federal regulator," APPA and the other groups said.

EEI also noted that NERC's critical infrastructure protection standards are relatively new, and consequently, additional requirements or standards at this point are premature. "Rather time for implementation and gap analysis is warranted to determine whether any changes or additions are needed," the group recommended.

The Nuclear Energy Institute, which advocates for the industry, told DOE, "we do not see the need for any additional assistance, security requirements, or procurement practices to be imposed on the commercial nuclear power fleet at this time." The group also said it does not see a need for DOE to issue any prohibition orders on "equipment or infrastructure associated with the commercial nuclear power fleet."

Supply chain visibility

Supply chain risks have come under heightened scrutiny since the SolarWinds hack. About 25% of power utilities were exposed to the software vulnerability, according to NERC.

Experts say modern software and equipment is made up of hundreds or even thousands of components which must be examined for vulnerabilities. EEI said its companies need specific details on any piece of equipment that DOE might flag for concern.

"The supply chain for electric power equipment is enormous ... and it is not the end-use electric companies who have information about what is inside those pieces of equipment or components," EEI said in its comments.

Utilities have tools to identify threats to the supply chain and electric grid, but EEI said "by definition, these are not all encompassing. Government has access to sensitive information that it should find ways to share so all affected stakeholders understand what equipment is of concern and why it is of concern."

The utility group encouraged DOE to "collaborate with and help electric companies by sharing this information and include other stakeholders who have the knowledge."

EEI also said the DOE could work with the National Institute of Standards and Technology to develop "consistent criteria" for a hardware and software bill of materials (SBOM). An SBOM indicates what components are in a piece of software, allowing utilities to track and patch vulnerabilities.

"Doing so would support standardization in these bill of materials, which would make the development and provision of such useful tools for the purposes of identifying provenance and the potential presence of any foreign ownership or control," EEI said.

President Joe Biden signed an executive order May 12 to improve the country's cyber defenses, and it required use of an SBOM in government procurements. EEI has been been collaborating with the federal government to pilot the use of SBOMs in energy sector procurements. 

The Electric Power Supply Association, which represents competitive providers,  said DOE could consider strengthening industry procurement efforts "by crafting standardized cybersecurity contract language and creating a whitelist of suppliers who manufacture component and subcomponent parts." 

Foreign ownership

While DOE examines the potential of new security requirements, the RFI said the federal government expects utilities will "act in a way that minimizes the risk of installing electric equipment and programmable components that are subject to foreign adversaries’ ownership, control, or influence."

It's not that simple, warned utilities.

The concept of "foreign ownership, control, and influence” is "very broad," APPA told the agency.

"To the extent DOE moves in this direction, the industry would benefit from efforts by DOE and other government agencies to identify actionable information regarding threats from adversaries abroad," APPA said.

EEI said its companies need clear guidance on what specific factors — including location of manufacturing or level of equity ownership — would constitute "foreign ownership, control, and influence."

"Otherwise, procurement decisions cannot be made with certainty. For example, given the number of equipment suppliers that are publicly traded and the speed at which stocks change hands, electric companies could never be certain whether a supplier has foreign ownership," EEI said.

 

June 9, 2021

By Caitlin Oprysko

How Much Companies That Paid No Corporate Income Tax Spent on Lobbying

REPORT: COMPANIES THAT PAID NO CORPORATE INCOME TAX DROPPED $450M ON INFLUENCE EFFORTS: On the heels of ProPublica’s bombshell report on Tuesday showing that some of the wealthiest Americans routinely pay little or no taxes, a new report from watchdog group Public Citizen today dives into the lobbying expenditures of 55 corporations that paid no federal corporate income tax in 2020, according to an analysis from the liberal Institute on Taxation and Economic Policy.

— The report found that over the past three election cycles, the companies spent a combined $408 million to lobby the federal government while dishing out $42 million in campaign contributions during that period. Over half of the companies reported lobbying Congress on tax issues during that time, according to the report, with 22 of the companies reporting that they lobbied on the 2017 GOP tax bill that lowered the corporate tax rate from 35 percent to 21 percent.

— “FedEx spent the most of any company in this analysis,” according to the report, “spending $71 million on lobbying and campaign contributions from the 2016 election cycle through the 2020 cycle (years 2015 through 2020). FedEx is followed by Charter Communications ($64 million), American Electric Power ($42 million), Duke Energy ($37 million) and Textron ($22 million).”

KOCH COMMS VET JOINS CGCN: Peter Ventimiglia has decamped from Koch Industries after almost seven years and joined CGCN Group as a partner. Ventimiglia, who led external relations and a corporate reputation campaign for Koch, will stick to similar issues on the communications side for CGCN, in addition to the occasional research analytics work. Steve Lombardo, Koch’s chief communications and marketing officer, in a statement called Ventimiglia “one of the primary architects of our communications strategy at Koch, and his work was instrumental in driving our efforts forward in a significant way.”

— Ventimiglia told PI in an interview that he will also be assisting clients on how best to make sure their target audience sees messages given how much the media landscape has shifted in recent years. “I think it's staying on top of those things, and recognizing that it's really tough — as a corporation, it's really tough these days to make sure that the right people are hearing your stories,” he said.

Good afternoon and welcome to PI. Send your finest K Street tips and gossip: coprysko@politico.com. And be sure to follow me on Twitter: @caitlinoprysko.

NEW BUSINESS: Qualcomm has added new outside lobbying teams to its arsenal for the first time in two years. The chipmaker retained a team from Capitol Tax Partners at the beginning of last month to lobby on international tax issues, according to disclosures filed Tuesday. In April, it hired a team from Tiber Creek Group (previously Peck Madigan Jones) to lobby on corporate taxes. The semiconductor and wireless tech company retains a host of other outside firms, including Covington & Burling, a contract that is routinely among the largest on K Street each quarter.

— E-cigarette giant Juul Labs has also added a new outside lobbyist for the first time since 2019. The vape maker hired Miller & Chevalier’s Jorge Castro, a former top IRS aide, to lobby on excise tax issues. (A perennially introduced bill by Senate Judiciary Chair Dick Durbin (D-Ill.) would create a federal excise tax on e-cigarettes among other products and tax them the same as combustible cigarettes.) In a statement to PI, a Juul spokesperson said Castro will lobby Congress on “risk-proportionate tax matters,” which “applies the most stringent regulations to the riskiest tobacco products and encourages adult users to transition to potentially less harmful alternatives like vapor products while combatting underage use.”

— Visa, too, expanded its roster of lobbyists for the first time in a few years according to new filings. It brought on 535 Group’s David Lugar and Jefferies Murray.

REMEMBER THE TIKTOK BAN?: “President Joe Biden on Wednesday rescinded former President Donald Trump’s executive orders that sought to effectively ban the Chinese-owned video app TikTok, instead replacing it with new guidelines for assessing apps' potential risks to U.S. data,” POLITICO’s Cristiano Lima reports.

— In place of the Trump edict — which was aimed at shutting down the U.S. operations of other apps linked to China like WeChat and cited “allegations that Amercians’ personal data could fall into the hands of government officials in Beijing” — Biden’s order “establishes a set of criteria to evaluate whether transactions involving software apps with ties to foreign adversaries threaten Americans' data.”

— A senior Biden administration official tells Cristiano the order “is going to enable us to take strong steps to protect sensitive data of Americans from collection and utilization of foreign adversaries including China through connected software applications.” It also “directs the Commerce Department to issue recommendations for regulatory and legislative action to ‘address the risk associated with foreign adversary connected software applications’ according to a White House news release.”
HOSPITAL LOBBYIST TAPPED FOR TOP CMS POST: “The Biden administration has tapped Erin Richardson, a top lobbyist at the Federation of American Hospitals, as chief of staff to CMS Administrator Chiquita Brooks-LaSure,” our Susannah Luthi and Rachel Roubein report.

— Richardson most recently served as senior vice president of government affairs at the trade association, which represents for-profit health systems. She also previously worked at the White House Domestic Policy Council during the Obama administration, and before that for the House Ways and Means Committee, “which also counts Brooks-LaSure and HHS Secretary Xavier Becerra among its alumni.”

FLYING IN (VIRTUALLY): The Large Public Power Council, which represents dozens of the largest public power utilities in the country, is hosting a virtual fly-in this week, where its members plan to make the case to lawmakers that any infrastructure or clean energy bill should include “comparable incentives” for public power providers. They’ll be meeting with a mix of staff and members from the offices of Senate Majority Leader Chuck Schumer, Sens. Michael Bennet (D-Colo.) and Sherrod Brown (D-Ohio) and Reps. Kevin Hern (R-Okla.) and Suzan DelBene (D-Wash.).

IF YOU MISSED IT TUESDAY: “James Murdoch, one of billionaire media mogul Rupert Murdoch’s sons, quietly invested $100 million in his nonprofit foundation, which then used a large chunk of the money to fund political groups during the 2020 election cycle,” CNBC’s Brian Schwartz reported.

— “The $100 million donation marks the couple’s largest known contribution to their foundation or any political effort.” It came in the form of Disney shares, Quadrivium’s 990 tax return from 2019 shows, on the same date that a deal closed for Disney to buy 21st Century Fox, of which James Murdoch was chief executive, and he and his wife, Kathryn Murdoch, “were building their own political operation.”

— Of that $100 million, the tax document shows, “over $25 million went toward grants, including for several political causes. … The most the Murdoch couple has spent through their foundation on political causes, such as fighting climate change and helping people vote.”

JOBS REPORT

— Richard Carbo will be vice president of communications for S-3 Group. He most recently ran his own consulting firm and Louisiana Gov. John Bel Edwards’ reelection campaign.

— Whitmer & Worrall has named Angela Acampora managing director. She was previously a senior associate, and in her new role will oversee the firm’s client servicing initiatives, operations and business development strategy, with a focus on health care.

— Adam Conner, vice president of tech policy at the Center for American Progress and a Facebook and Slack alum, has joined the board of trustees of George Washington University, of which he is an alum.

— The American Society of Association Executives has promoted Jeff Evans to director of public policy and Nate Fisher to senior manager of public policy and ASAE’s PAC, known as APAC. Evans was previously an associate director. Fisher was previously a manager.

— Andrew Dunkley has joined Strategic Elements as senior public affairs manager. He was previously senior external affairs manager with Colorado-based consulting and public affairs firm Pac/West Strategies.

— Brian Kerkhoven has joined McCarthy Advanced Consulting as an associate. He was most recently at the past seven years at the North American Building Trades Unions and is a Mike Kelly (R-Pa.) and Jim Walsh (R-N.Y.) alum. MAC has also promoted Erin Delaney to director of operations.

— Gabrielle D’Adamo Singer is now a senior manager for cyber policy at Accenture North America government relations. She previously was staff director for the Senate Homeland Security and Governmental Affairs Committee

— Peter Kucik is joining Mercury Public Affairs as managing director in its Washington office. He was most recently counsel at Ferrari & Associates and is a Treasury Office of Foreign Assets Control alum.

— Boston-based Tremont Strategies Group has added Khushbu Webber as vice and general counsel and Alexandra Eby as government affairs associate, and promoted Tristan Thomas to senior government affairs associate.

— Taylor Mason, vice president of public affairs at KPM Group DC, has been named executive director of the newly formed Rare Disease Company Coalition.

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NEW JOINT FUNDRAISERS

BARRASSO YOUNG VICTORY FUND (Sens. John BarrassoTodd Young, Common Values PAC, Oorah! Political Action Committee)
Elect Black Democrats (The Collective PAC, The Collective Super PAC)
IRON LADIES PAC (Reps. Beth Van DuyneMichelle FischbachClaudia Tenney)

NEW PACS

ALABAMA FIRST (Super PAC)
FIREFIGHTERS RIGHTS PAC (Super PAC)
Labor and Community for an Independent Party (PAC)
MAGACoin Victory Fund (Super PAC)
Pressure (PAC)

NEW LOBBYING REGISTRATIONS

535 Group, LLC: Visa, Inc.
Albertine Enterprises, Inc.: Led Lighting Iq, LLC
Arent Fox LLP: Drug Policy Alliance
Baker Donelson Bearman Caldwell & Berkowitz /The Daschle Group: Liberty Defense Holdings, Ltd.
Bolton-St. Johns, LLC: Ruralorganizing.Org
Bose Public Affairs Group: Global Partnership For Education
Buchanan Ingersoll & Rooney, Pc: Optimum Power Holding Co., LLC
Capitol Hill Partners: Concordance Academy Of Leadership
Capitol Tax Partners, LLP: Qualcomm Incorporated
Capitol Tax Partners, LLP: View, Inc.
Cassidy & Associates, Inc.: Center For American Progress
Cassidy & Associates, Inc.: International Code Council
Cassidy & Associates, Inc.: Ledger8760, Inc.
Cassidy & Associates, Inc.: US Well Services
Dentons US LLP: Midtown Connector Project Foundation, Inc.
Dentons US LLP: National Desert Storm Memorial Association
Dentons US LLP: Tampa Bay Water
Duane Morris Government Strategies: Monroe Energy LLC
Duane Morris Government Strategies: Pbf Holding Company LLC
Ghost Management Group, LLC Dba Weedmaps: Ghost Management Group, LLC Dba Weedmaps
Gis Associates, Inc: Enterprise Zone Corp Of Braddock
Greenberg Traurig, LLP: Washington County, Wi
Hartman Harman Cosco LLC: Solar United Neighbors
Hill East Group, LLC: Sentinelone, Inc.
Holland & Knight LLP: Alibaba Group Holding Limited
Holland & Knight LLP: Global Business Alliance
Holland & Knight LLP: Lacore Enterprises, LLC
Invariant LLC: Leaflink, Inc.
J.A.Hill Group, LLC: Windstream Services LLC
Lne Group: Next Steps Chicago
Lne Group: Pushing Boundaries
Lne Group: University Settlement
Lsn Partners, LLC: One Concern, Inc.
Michael Torrey Associates, LLC: Louis Dreyfus Company LLC
Miller & Chevalier, Chtd.: Juul Labs, Inc.
Miller & Chevalier, Chtd.: The Jewish Federations Of North America
Moveon.Org Civic Action: Moveon.Org Civic Action
Mr. Stephen Ryan: American Coalition For Taxpayer Rights
Mr. Stephen Ryan: American Registry For Internet Numbers
Mr. Stephen Ryan: Paper Excellence Holdings Corporation
Ms. Alexis Tkachuk: Tremont Strategies Group, On Behalf Of Tree Care Industry Association
Prime Policy Group: Norse Atlantic Airways As
Rokala Public Affairs (Fka Mr Mark Rokala): City Of Duluth, Minnesota
Sandler, Travis & Rosenberg, P.A.: Ebay
Scale Ai, Inc.: Scale Ai, Inc.
Sidley Austin LLP: Illumina, Inc.
The Madison Group: International Association Of Fire Fighters
The Picard Group, LLC: City Of West Monroe
The Vogel Group: Our Next Energy, Inc.
Triple P America: Triple P America

NEW LOBBYING TERMINATIONS

Keller Partners & Company: Luna County

May 24, 2021

By David Wagman

Sunrise Brief: Leaders Urge Support for Clean Energy Tax Breaks that Benefit Public Power 

Top executives of the nation’s public power providers are urging congressional leadership to support tax policies that allowing public power and electric cooperatives to fully make use of direct pay for renewable and clean energy tax credits.

Leaders of the American Public Power Association, National Rural Electric Cooperative Association, and Large Public Power Council wrote to top leaders in the House and Senate seeking what they say would be “comparable energy tax incentives” to support the deployment of clean energy technologies.

In the letter, the executives said that one shortcoming of federal energy tax policy is that not-for-profit and tax-exempt community-owned electric utilities have been excluded from being able to directly claim these credits. They said that the result is that their member utilities “only indirectly benefit from energy-related tax incentives” such as through long-term power purchase agreements with taxable project developers and their tax equity partners.

The executives said that much of the value of the tax credits flow to the project developers and their investors rather than to the not-for-profit utilities and their customers. In addition, to qualify for the credit, the project developer and tax-equity investors must retain ownership of the facility. Public utilities may only later buy the facilities by paying market prices for the facility.

“This increases the cost and inefficiency of the present system and means that the purchasing utility is denied the substantial operational benefits that flow from direct ownership,” the executives wrote.

They said that direct payments would be used to help offset project costs and increase the incentive for further investments, while enabling public power utilities and rural electric cooperatives to own clean energy facilities directly.

The three organizations represent public power utilities, which serve more than 49 million Americans, and rural electric cooperatives, which serve another 42 million.

Green hydrogen plant

Indiana-based Cummins and Iberdrola said they plan to build a $60 million, PEM electrolyzer plant in Castilla-La Mancha, Spain, to produce green hydrogen. The investment follows their earlier decision to partner on large-scale hydrogen production projects in Spain and Portugal.

A site selection search is currently underway for the plant, which will house system assembly and testing for roughly 500 MW/year and will be scalable to more than 1 GW/year. The facility is slated to open in 2023. Cummins has deployed more than 600 electrolyzers in 100 countries globally.

As part of the deal, a 230 MW green hydrogen project in Palos de la Frontera that Iberdrola has planned for fertilizer producer Fertiberia will become a benchmark for large electrolysis projects. Cummins will be the electrolyzer supplier for the Palos project. With experience gained in the project, Iberdrola and Cummins will work to design other large electrolysis projects. The two are also working on a hydrogen refueling station in Barcelona.

In Castilla-La Mancha, Iberdrola operates 2,376 MW of solar and wind energy. Recently, the company has completed three photovoltaic projects in the region, totaling 150 MW.

Coal power surges in early ’21

In the first four months of 2021, natural gas-fired generation in the Lower 48 states averaged 3,394 GWh per day, a nearly 7% decrease from the same period in 2020, according to data from the Energy Department’s Energy Information Administration (EIA). The drop stems from higher natural gas prices and increased competition from renewables, and is the first year-over-year decline since 2017.

EIA said that natural gas-fired generation has faced increased competition from renewable generation because of recent record-high capacity additions to solar and wind power plants. Between May 2020 and February 2021, some 22.5 GW of combined net solar and wind additions came online, a 15% increase. EIA said that it expects another 28.7 GW of solar and wind capacity to enter service by the end of 2021.

By contrast, 4.8 GW of U.S. natural gas capacity came online between May 2020 and this past February, a 1% increase. EIA said it expects another 3.8 GW of natural gas capacity to come online through the end of the year.

U.S. natural gas prices have risen since April 2020 because of lower natural gas production and higher winter heating demand. Higher prices have made natural gas-fired generation relatively less competitive compared with coal-fired generation, prompting natural gas-to-coal fuel switching. EIA said that coal-fired generation rose nearly 40% during the first four months of 2021 compared with the same period in 2020, and accounts for 23% of total generation.

Aurora Solar closes finance round

Aurora Solar, which provides software for solar sales and project design, closed a $250 million Series C funding round led by Coatue, with follow-on participation from existing investors ICONIQ Capital, Energize Ventures, and Fifth Wall.

Over the past two years, Aurora Solar has raised more than $320 million. The company said it will use the investment to expand its product roadmap, hire more people, expand sales and customer support, and build its leadership team to scale the company.

 

May 19, 2021

By Philip Brasher

Biden's Clean Power Target Poses Stiff Challenge for Some Rural Power Providers 

President Joe Biden’s goal of making U.S. electric power carbon-free by 2035 looks very doable — or quite challenging and expensive to meet — depending on where you live, work or farm in rural America.

In New England, the Vermont Electric Cooperative, which gets most of its electricity from hydropower, nuclear and natural gas, says it will be carbon-free in just two years, 2023, and will be using only renewable power by 2030. In the Pacific Northwest, carbon-free hydropower also has long been a major power source.

But in many other regions, including the Plains and Rocky Mountain states, rural electric co-ops and other rural power providers have long been heavily dependent on coal, and while many have been retiring coal-fired plants — often in favor of natural gas — power suppliers say replacing that power with reliable, affordable alternative sources could take far longer than the timeline Biden envisions.

“If you're looking at thinking that there's an opportunity to hit zero carbon in the electric sector by 2035, we think that's an overly ambitious goal. We just do. You've got circumstances across the country that are different,” said Jim Matheson, a former Democratic congressman who is CEO of the National Rural Electric Cooperative Association.

"We've got to have a conversation in this country about how you can go about" reaching Biden's goal, Matheson said. "Where's the technology today that can allow that to happen to go all the way to zero? And right now we think that's an open question that we haven't heard an answer to."

Power generation accounts for 25% of U.S. greenhouse gas emissions, behind transportation at 29%, according to the Environmental Protection Agency.

To achieve Biden's 2035 target, his American Families Plan called for establishing a clean electricity standard that would require utilities to phase out their fossil fuel power sources. He hasn’t said how he would try to implement the standard, however.

Getting congressional approval wouldn’t be easy, and it would almost certainly take support from RECs and other rural power providers. In 2009, the last time Congress tried to force the utility industry to cut greenhouse gas emissions, NRECA pushed back hard against a House-passed cap-and-trade plan because of the impact it would have had on coal-dependent co-ops.

Since then, rural electric co-ops have decreased their reliance on coal significantly.

In 2009, coal accounted for 58% of the national retail electric fuel mix for co-ops, and 12% came from lower-emitting natural gas. By 2019, coal’s share had fallen to 32%, replaced in part by natural gas, which also accounted for another 32% of REC’s power share.

Renewable sources, including wind, solar and hydropower, accounted for 19% of RECs’ power in 2019. Nuclear energy continues to provide about 15% of REC power nationally.

Co-ops say they’ll need significant new federal support to help defray the cost of continuing their shift away from fossil fuels.

Recognizing the importance of RECs, the American Jobs Plan earmarks $10 billion for assistance to co-ops but doesn’t specify how the money would be spent.

“We're pleased that we are part of the discussion, that we're included as a consideration as we look at this policy, but the conversation is going to have to happen on Capitol Hill about how the legislation is written and what that really means,” said Matheson.

Meanwhile, there's the question of whether Biden can get clean power requirements implemented nationally to replace or augment the patchwork of state programs that now exist. Bipartisan agreement in Congress on a clean electricity standard isn’t out of the question, said Sam Thernstrom, CEO of Energy Innovation Reform Project, a nonprofit group that promotes the development of advanced energy technologies.

Reps. David McKinley, R-W.Va., and Kurt Schrader, D-Ore., have proposed a clean electricity standard that would require eliminating 80% of greenhouse gas emissions from the power sector by 2050, a longer-range target than Biden’s. The extended period would give time for technological innovations to bring down costs and soften the impact on ratepayers, Thernstrom said.

“One thing that utilities really need more than anything in order to succeed is regulatory clarity, certainty, predictability, so they can make these long-term, multibillion-dollar investments,” he said.

Financial incentives will be important, too.

NRECA, the American Public Power Association and the Large Public Power Council are appealing to Congress to provide them with direct assistance in lieu of the tax credits currently provided for wind and solar projects. RECs and other not-for-profit or tax-exempt power providers can’t use the credits since they don’t have tax liabilities, so they instead have to go through private companies to install the projects. Those private developers, in turn, retain ownership in the facilities.

“This increases the cost and inefficiency of the present system and means that the purchasing utility is denied the substantial operational benefits that flow from direct ownership,” the groups said in a recent letter to congressional leaders.

Providing direct payments to RECs instead of tax credits could “help cooperatives have an even playing field when it comes to develop renewable resources,” said Lee Boughey, a spokesman for Tri-State Generation and Transmission Association, which supplies power to RECs in Colorado, New Mexico, Nebraska and Wyoming.

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“We will be able to develop projects directly and reap the full amount of savings for our members and their consumers,” he said.

Tri-State is among the rural power suppliers that continue to shift away from coal, in part because of a greenhouse-gas reduction target set by the state of Colorado. By 2024, 50% of Tri-State’s power will come from renewable energy, and Tri-State's goal is to have 70% of the power be carbon-free by 2030.

Tri-State last year retired a coal-fired plant in New Mexico, and a Colorado facility is scheduled to be retired by 2030. Tri-State gets power from additional coal-fired plants in Wyoming and Arizona.

For Vermont Electric Co-op, going carbon-free will require replacing the 25% share of its power that comes from natural gas. Vermont has a renewable power standard that is phasing out the use of fossil fuels by requiring utilities in the state to get 75% of their power from renewables by 2032.

The co-op also will be using techniques called “peak shaving” to reduce the need for natural gas during periods of peak demands. Peak shaving involves leveling out the peak periods of electricity use by commercial and industrial customers.

In Nebraska, the Nebraska Public Power District, which supplies power to much of the state outside Omaha and Lincoln, has a different set of challenges. About 65% of NPPD’s power is carbon-free — mostly from a nuclear power plant along the Missouri River that will need to have its license renewed in 2034 — while 20% of its power comes from coal.

It’s that 20% in coal-fired energy that is going to be particularly expensive to replace, says Tom Kent, NPPD’s president and CEO. NPPD is testing carbon capture and storage, or CCS, technology at the plant in cooperation with the Energy Department, but it’s not cost-effective yet, he said.

Wind and solar power continue to have their limitations because of their intermittent nature and the need for advancements in storage technology.

“Getting to carbon-neutral or carbon-free across the economy in the United States by 2035 is a pretty significant challenge,” said Kent. “The technology really isn't there yet. It's not. It’s not commercially viable.”

 

 

May 17, 2021

By Matthew Choi

Defending from Future Cyber Attacks

QUICK FIX

There's bipartisan agreement the federal government should have a greater hand in defending critical fuel infrastructure from cyber attacks, but the oil and gas industry doesn't want to get too hasty with a major oversight overhaul.

Lawmakers are brewing legislation to compel companies to report cyber attacks — a drive further invigorated by the Colonial Pipeline attack.
The heads of Exxon, Devon and EOG Resources declined to participate in a hearing by the House Natural Resources Oversight subcommittee on “Misuse of Taxpayer Dollars and Corporate Welfare in the Oil and Gas Industry.”

HAPPY MONDAY! I’m your host, Matthew Choi. Congrats to Chris Bliley of Growth Energy for knowing Ethan Hawke starred in all the movies mentioned in last week’s trivia questions. For today’s trivia: What is Eilis’s hometown in Ireland in the movie “Brooklyn”? Send your tips and trivia answers to mchoi@politico.com. Find me on Twitter @matthewchoi2018.

Check out the POLITICO Energy podcast — all the energy and environmental politics and policy news you need to start your day, in just five minutes. Listen and subscribe for free at politico.com/energy-podcast. On today's episode: Behind progressive anxiety toward a CES.

DRIVING THE DAY

REFORGING THE ARMOR: The Colonial Pipeline hack prompted a fuel scramble just before a major travel holiday and shone a spotlight on some of the Biden administration’s political and administrative weak spots. But it has had an outcome rarely seen these days — getting Republicans and Democrats to agree on the need to bolster cybersecurity regulations in both the private and public sectors.
Meanwhile, the oil and gas industry is saying, hold your horses. Though industry leaders praised the Biden administration’s response to the hack, they told Pro’s Ben Lefebvre that they view a major overhaul on how private companies secure their cyber operations as a step too far.
“Any discussion of regulation is premature until we have a full understanding of the details surrounding the Colonial attack,” Suzanne Lemieux, API manager of operations security and emergency response, told Ben in a statement.
Ben goes into the challenges of patching up the holes that allowed ransomware to freeze one of the most important pipelines in the country — from the mere scale of a multifaceted industry to the complications of past private-public security collaborations.

ON THE HILL

TELL US WHAT’S WRONG: Lawmakers from both parties are cooking up legislation requiring companies like Colonial to tell the feds when they fall victim to a major cyber attack. The bills had been in the works before the Colonial attack, spurred on by the SolarWinds hack late last year, but the latest incident demonstrated how pressing the issue is.
Without reporting from companies, “the United States government is completely blind to what is happening,” Brandon Wales, the acting director of DHS’ Cybersecurity and Infrastructure Security Agency, told reporters on Thursday. “That just weakens our overall cyber posture across our entire country.” Wales told lawmakers last week that Colonial didn’t share details of the attack with CISA at first, though they did alert the FBI. The company offered data later in the week. Eric Geller and Martin Matishak have more for Pros.
Related: “Paying Cyber Ransoms Sets a Bad Precedent But Happens Often,” via Bloomberg.
NO THANKS: Five executives with fossil fuel producers have declined invitations to testify Wednesday before the House Natural Resources Oversight Subcommittee, according to a Democratic committee aide. The heads of Exxon, Devon and EOG Resources declined to participate, as did two officials from the Western Energy Alliance for a session entitled “Misuse of Taxpayer Dollars and Corporate Welfare in the Oil and Gas Industry.”
“The oil and gas industry gets billions in taxpayer-funded subsidies a year; their top executives owe an explanation to the American people about how they’re spending that money,” said Rep. Katie Porter, who chairs the subpanel, in a statement to ME. “Until families get the answers they deserve, Congress has a responsibility to keep asking questions." Fossil fuel officials declined a similar offer to appear at a Senate Budget Committee hearing led by Sen. Bernie Sanders earlier in April. More information on the hearing is available here.
GRANHOLM IN THE HOUSE: Energy Secretary Jennifer Granholm is back on the Hill on Wednesday to talk about the Energy Department’s fiscal 2022 budget request. Members on the House Energy and Commerce Committee will take advantage of the facetime with Granholm to ask about the Colonial Pipeline hacking. Ben also reports that Republicans on the House Science Committee were seeking briefings from the department on the hack.
CUTTING OUT THE MIDDLEMAN: The American Public Power Association, National Rural Electric Cooperative Association and Large Public Power Council pressed lawmakers Friday to allow direct pay to public power utilities and rural electric cooperatives for renewable and clean energy tax credits to help reshape generation and meet the president's climate goals.
Not-for-profit and tax-exempt community-owned electric utilities currently are excluded from being able to directly claim those credits and as a result only indirectly benefit through long-term power purchase agreements with developers and partners that can claim the credits, they argue.
"If the goal is to move toward a cleaner energy grid by providing tax incentives for developing clean energy generation, storage, transmission, and electric vehicle (EV) recharging infrastructure, federal incentives must be made available to all electricity providers," the groups wrote in a Friday letter.

AROUND THE AGENCIES

DEFINING EJ: The White House Environmental Justice Advisory Council proposed guidelines and clarified parameters for implementing President Joe Biden’s EJ goals Friday, setting goalposts to reaching Biden’s promise of targeting 40 percent of federal benefits for “vulnerable communities.” The recommendations said initiatives such as renewable energy, clean water programs and green housing could all qualify as federal benefits for the communities.
But the recommendations also rejected measures heralded by many of Biden’s allies as critical to reducing emissions, including carbon capture and storage, carbon trading and nuclear power. It’s another illustration of the fissure between left-flank and mainstream environmentalists, who are increasingly clashing on questions of political feasibility, aggressiveness on fossil fuels and commitments to frontline communities (Michael Grunwald went into the divide for POLITICO last week).
The White House interagency EJ council will be reviewing the recommendations in the coming weeks, according to the Council on Environmental Quality. Zack Colman breaks it down for Pros.
NEW RULES: FERC decided to consider downstream carbon dioxide emissions in certifying new pipeline projects during its March meeting. This week, the commission takes up certification of three natural gas pipelines, and Northern Natural Gas made a supplemental filing with FERC to preview the carbon impacts of a new pipeline project. The step "suggests companies are cooperating with FERC's new stance in the interest of winning approvals," Eric Wolff reports for Pros.
Cheniere’s Midship pipeline in Oklahoma and the Spire pipeline in Missouri will also be on the agenda, with both projects facing criticism from landowners who felt disrespected by operators. The Cheniere project was the subject of a House Oversight hearing earlier this month that blasted both the operators and FERC, saying they failed to protect landowners from reckless property damage. Eric has more on FERC’s agenda this week for Pros.
I OBJECT!: The parent company of 7-Eleven finalized a merger with Marathon Petroleum Corporation on Friday — a move Federal Trade Commission Chair Rebecca Slaughter found “troubling” and “illegal”. The deal closed while FTC was still deliberating and probing the merger, which its members feared would squeeze out competition from smaller gas stations in local markets.
“The Commission has spent significant resources investigating this transaction but has not yet come to an agreement with the parties and a majority of the Commission that would fully resolve the competitive concerns. Seven and Marathon’s decision to close under these circumstances is highly unusual, and we are extremely troubled by it,” Slaughter and Commissioner Rohit Chopra said in a statement.
Slaughter and Chopra warned that the companies have "closed their transaction at their own risk" and that the commission will continue to examine the deal. In response, 7-Eleven said it was "disappointed" by that statement and both companies insist they were legally allowed to close the transaction.

IN THE COURTS

COURT PUSHES STRICTER LEAD DUST RULES: The 9th U.S. Circuit Court of Appeals found EPA's standards for lead dust on windowsills and floors weren't "sufficient to protect health," echoing complaints form environmentalists who called for tightening limits set under the Trump administration. Annie Snider has more for Pros.

BEYOND THE BELTWAY

WHITMER’S WAPO WATER WORDS: Enbridge continues to flow oil through the Line 5 pipeline, defying Michigan Gov. Gretchen Whitmer’s deadline last week to shut the line down. Enbridge argues the governor has no authority to shut down the decades-old pipe and that it would only do so if ordered by a court or relevant federal regulator.
Whitmer turned to The Washington Post’s opinion pages on Friday to express her discontent. She continues her call on the line to close, saying its segments passing through the Straits of Mackinac pose a major environmental threat and promising to pursue disgorgement of profits the company earns while "trespassing" on state land. But the line’s operator and the Canadian government insist it is a vital piece of infrastructure and that shutting it down would cause more harm than good.
“Running pipelines through the water of the Great Lakes is, and always has been, a dangerous threat,” she wrote. “I will not sit idle as this time bomb keeps ticking.”
ROLE REVERSAL: A bold proposal by Republican Rep. Mike Simpson (R-Idaho) to breach four hydropower dams along the Snake River as part of a sweeping bid to save the region’s iconic salmon runs and revitalize local economies is coming under fire — from Washington state Democrats.
Gov. Jay Inslee and Sen. Patty Murray (D-Wash.) said Friday they appreciated Simpson’s plan, but called for a formal regional process to address the issue.
The two Washington state Republican House lawmakers whose districts are home to the dams at issue have opposed the plan from the beginning. But support has been building among Oregon Democrats in recent weeks, with Rep. Earl Blumenauer (D-Ore.) teaming up with Simpson for a recent virtual town hall on the proposal.
But persistent opposition from Murray, part of Democratic leadership and a member of the Senate Appropriations Committee, could be a death knell for the proposal.
The statement from Murray and Inslee drew a swift response from tribes and environmentalists that have been supportive of Simpson’s plan. “This is not a time for generic statements of support for treaty rights and Northwest Tribes,” said Nez Perce Tribe Chairman Samuel Penney, whose tribe earlier this month released a study showing that Snake River chinook salmon are nearing extinction.
SEMPRA SHAREHOLDERS SAY NO TO PARIS REPORT: Sempra Energy's shareholders rejected by a 2-1 margin a resolution that would require the company to issue a report on whether its lobbying activities align with the goals of the Paris Climate Accord to limit global warming. The failure of the measure, which was opposed by Sempra's board, cuts against the trend of successful climate resolutions in recent weeks at the annual shareholder meetings of Duke Energy and Unilever.
The Sempra resolution was also notable because one of the company's subsidiaries, Southern California Gas, has been under investigation by the California Public Utilities Commission's consumer advocates for spending ratepayer dollars on advocacy opposing stricter energy efficiency standards. Last month, a CPUC judge ordered SoCalGas to refund the misspent money to customers but declined to fine the company — a move environmentalists slammed as "a slap on the wrist for this kind of flagrant unlawfulness and climate obstruction."

MOVERS AND SHAKERS

Nick Loris is joining the Conservative Coalition for Climate Solutions (C3 Solutions) as vice president of public policy. Loris previously worked on energy and environmental policy issues at the Heritage Foundation.
THE GRID 
— “EPA orders troubled St. Croix refinery shut,” via POLITICO.
— “Natural Gas, America’s No. 1 Power Source, Already Has a New Challenger: Batteries,” via The Wall Street Journal.
— “U.K. wants COP26 to kill coal,” via POLITICO.
THAT’S ALL FOR ME!

 

May 17, 2021

Quest for 'Common Ground' Continues as Clock Ticks

By Geof Koss and George Cahlink 

The effort to strike a bipartisan deal on infrastructure will continue this week, as Republicans are readying a counteroffer, two congressional committees will hash out how to pay for it all and lawmakers are jockeying to get their wish lists inserted into a final package.

Following last week's White House summit between President Biden and top GOP senators, Republicans say they could have an infrastructure counteroffer soon.

Sen. Shelley Moore Capito (R-W.Va.), who is leading talks for Republicans, described the meeting as "very positive."

"We were trying to define for the president where we think physical core infrastructure is, and he agreed with a lot of that but not definitively so. And so we need to get to that," Capito, the ranking member on the Environment and Public Works Committee, told Fox News on Friday. She said the hope is to send Biden a revised plan early this week.

One key participant in the talks said the distance between the two parties remains wide over the scope of the package.

"What we're doing is looking at where the common ground might be," Transportation Secretary Pete Buttigieg said Friday during an event sponsored by The Washington Post.

"Obviously, there's a big difference in perspective on a lot of dimensions around infrastructure, including our definition, our broad definition, of what America's infrastructure needs really are," he added. "But there's also a lot that we can agree on."

Buttigieg reiterated Biden's desire for a bipartisan deal "to get as much support as we can, for a way forward."

"But this is that season for negotiation," he said. "And it's exactly what's happened: give and take, comparing ideas, and seeing where we might be able to come together."

Republicans last month offered a $568 billion infrastructure package focused on "traditional" infrastructure and financed by user fees. Biden wants to hike corporate tax rates from 21% to 28% over 15 years to pay for his $2.2 trillion infrastructure plan, the "American Jobs Plan."

But Republicans call changes to the 2017 tax overhaul a "red line" that cannot be crossed. On Friday, White House press secretary Jen Psaki reiterated that user fees would violate Biden's campaign pledge not to raise taxes on individuals making less than $400,000 a year.

"The president's pledge and his commitment, his line in the sand, his red line, wherever you want to call it, is that he will not raise taxes for people making less than $400,000 a year," Psaki told reporters. "User fees that have been proposed out there would violate that."

Her Friday remarks represented a turnabout from the previous day's briefing, during which Psaki said Biden's "only line in the sand is inaction" (E&E Daily, May 14).

House Transportation and Infrastructure Chairman Peter DeFazio (D-Ore.) said Friday he would mark up the surface transportation portion of the infrastructure package "soon" but declined to say it would move through his committee by Memorial Day.

"We are trying to get meaningful suggestions from the administration on changes they might like to see," DeFazio added.

House Democratic leaders have repeatedly said the legislation will pass the floor by July 4.

DeFazio also dismissed the initial Senate GOP infrastructure offer as far short of the mark.

"Their numbers are pathetic because they are baseline," he said. "It's a minuscule increase in highways and bridges. It's actually a 40% reduction in transit, and I can't remember how pathetic it is on rail, so, I mean, it's not a serious offer."

Wish lists

Interest groups and lawmakers continue to press their policy priorities as the infrastructure package comes together.

Rural electric cooperatives and publicly owned electric utilities on Friday urged congressional leaders to change federal laws to allow them to qualify for clean energy tax breaks.

"One of the most significant shortcomings of federal energy tax policy is that not-for-profit and tax-exempt community-owned electric utilities have been excluded from being able to directly claim these credits," wrote the National Rural Electric Cooperative Association, American Public Power Association and Large Public Power Council.

As a result, they say, their member utilities only indirectly benefit from energy tax breaks, typically through long-term power purchase agreements, which are "complex and expensive, and much of the value of the credits flow to the project developers and their investors rather than to the not-for-profit utilities and their customers."

They argue that the ambitious climate goals of the Biden administration and Democrats in Congress "cannot be met by leaving nearly 30 percent of the nation's electric utility customers without access to incentives and support."

Individual lawmakers continue to introduce infrastructure-focused bills in the hopes they will catch a ride in a bigger package. Last week, Sen. Jeanne Shaheen (D-N.H.) reintroduced legislation to repair and replace bridges in poor condition.

The "Strengthen and Fortify Existing (SAFE) Bridges Act" would authorize $2.75 billion annually for a program focused on fixing bridges, which are eligible for funds under current surface transportation programs but lack a dedicated funding source.

"My bill would rehabilitate crumbling bridge infrastructure — presenting an opportunity to both strengthen our public safety and create jobs," Shaheen said in a statement, which noted that more than 8% of Granite State bridges are structurally deficient.

In the House, Rep. Bobby Rush (D-Ill.) on Friday introduced legislation to create a Civilian Conservation Corps modeled after the Great Depression-era program of the same name.

The "Restore Employment in Natural and Environmental Work (RENEW) Conservation Corps Act," H.R. 3220, would authorize $55.8 billion over five years for the program, to be jointly administered by the departments of the Interior and Agriculture.

It would offer individuals 16 years or older training for positions lasting between three months and one year on projects including tree planting, restoring wildlife habitat and streams, prescribed burns, and trail maintenance.

All participants would receive a minimum wage of $15 an hour, with eligibility for up to a $5,500 credit for postsecondary education after a full year of work.

"As we continue to climb out of the worst economic crisis since the Great Depression, a new civilian climate corps is a terrific and deeply practical way to put Americans to work while at the same time restoring our public lands, addressing climate change, and investing in our juggernaut outdoor recreation economy," Rush said in a statement.

Senate Majority Whip Dick Durbin (D-Ill.) introduced companion legislation in April (E&E Daily, April 27).

Meanwhile, Senate Intelligence Chairman Mark Warner (D-Va.), on Gray TV's "Full Court Press" over the weekend, suggested that the recent Colonial pipeline attack and subsequent fuel shortages are helping to build bipartisan support for legislation that would require companies to report cyberattacks on critical infrastructure.

"This is a critical, critical threat," he said. "I think that the signs of those gas lines brought it home to the American people in a very real way."

Warner added that allowing for limited immunity and confidentiality for those companies reporting the attacks would be a crucial element to the deal.

How to pay for it all

Multiple House and Senate committees this week will delve into the thorniest question underlying the infrastructure push: how to pay for it.

The differences between the two parties will be on display tomorrow morning, when the Senate Finance Committee — which has jurisdiction over revenue matters — holds a hearing on funding and financing options for infrastructure.

Its House counterpart — the tax-writing Ways and Means Committee — will hold a similar hearing Wednesday morning.

On Thursday, the Senate Banking, Housing and Urban Affairs Committee will hold a hearing on "21st Century Communities: Expanding Opportunity Through Infrastructure Investments." Slated to testify are Housing and Urban Development Secretary Marcia Fudge and Buttigieg.

 

January 1, 2021

Saluting the Workforce at Large Public Power Council

(Full interview available via the PDF below)

Do you know what the Large Public Power Council is? While not as well-known as the American Public Power Association, of which all twenty-seven LPPC members are a part of too, LPPC enables the twenty-seven largest to collaborate on matters characteristic of their scale. They together employ fifty-two thousand people and own seventy-two thousand megawatts of generating capacity.

Washington has six LPPC utilities, Chelan County PUD No. 1, Clark Public Utilities, Grant PUD, Seattle City Light, Snohomish County PUD No. 1, and Tacoma Public Utilities, more than any other state. By the way, PUD stands for Public Utility District. California and Texas have three LPPC utilities apiece, Imperial Irrigation District, Los Angeles Department of Water and Power, and Sacramento Municipal Utility District in the Golden State and Austin Energy, CPS Energy, and Lower Colorado River Authority in the Lone Star State. Colorado, Florida, Nebraska, and New York have two apiece, Colorado Springs Utilities, Platte River Power Authority, Jacksonville Electric Authority, Orlando Utilities Commission, Nebraska Public Power District, Omaha Public Power District, Long Island Power Authority and New York Power Authority. The remaining LPPC utilities are American Municipal Power, ElectriCities of North Carolina, Grand River Dam Authority, MEAG Power, Puerto Rico Electric Power Authority, Salt River Project, and Santee Cooper.

The PUF team recently caught up with John Di Stasio, the president of LPPC. This time he talked with us about the remarkable accomplishments of those fifty-five thousand people, the workforce of the large public powers.

Read the full interview in the attached PDF.

 

 

 

September 11, 2020

By Emma Penrod

Public Power Leaders See Lasting Effects from 2020 Disruptions with New Approaches to Resilience, Equity

DIVE BRIEF
The aftermath of COVID-19 and social unrest in 2020 could make 2021 a year of unprecedented change and innovation in the power sector, the heads of three large public power companies said during a Wednesday panel organized by the Large Public Power Council and Women's Council on Energy and the Environment.

Some of the major themes this year, including resilience, sustainability and social justice, will continue to dominate energy industry efforts in 2021, executives said. At the same time, COVID-19 has highlighted the need for flexibility, and multiple executives say teleworking is likely here to stay.

“What I've seen previously are mostly changes driven by regulatory policy,” said Jolene Thompson, president and CEO of Ohio-based American Municipal Power. “Today what we're seeing is more driven by what consumers want and what technology has become available."

DIVE INSIGHT
The panel tapped the heads of Tacoma Power and Austin Energy, along with American Municipal Power, to discuss how the events of 2020 will shape the industry in 2021 and beyond. While they said their overall goals of sustainability, resilience and equity have not changed, they noted that 2020 may change the way they approach them, including by making innovation a priority.

“In my view, the technology changes are more revolutionary than the past 30 years of changes," Thompson said.

While COVID-19 forced Thompson and her fellow panelists to move to a remote workforce, she and the others agreed that remote work is likely here to stay.

“We pushed everyone out of an office over two weeks,” Jackie Flowers, director of Tacoma Public Utilities, said. While it took time for everyone to adjust, “we found real potential for us to incorporate it into our workplace culture. Our employees love it.”

Jackie Sargent, general manager of Austin Energy, said the shift to remote work has improved the company's customer relations because the flexibility has improved employee morale.

Thompson concurred that remote work is likely here to stay. "I don't think the new normal is going to look like the old normal," she said.

While COVID-19 has slowed certain projects, the executives said investments in sustainability and innovative new technologies will continue.

Flowers said Tacoma Utilities's plan to achieve its zero-emissions goal by 2045 remains on track, as are plans to make investments in electric vehicles and emerging solutions such as hydrogen fuel.

All three executives expressed particular enthusiasm for energy storage, but they also saw a need for additional innovation to accelerate its adoption.

“As we see energy storage evolve, we're going to see a need for distribution system operators, similar to what we have on the transmission side today,” Sargent said. “There will be a need for some kind of collaboration between those to ensure we maintain the overall reliability of the system.”

They said the civil unrest of 2020 has also spurred them to consider the role of their own organizations in supporting systemic racism, and to consider creative solutions. Flowers said Tacoma Public Utilities has used data to build an “equity index," which revealed that disadvantaged communities have suffered from a lack of infrastructure investment.

“In some cases that has led to cutting corners, in particular for water,” Flowers said. “We're using that data to inform us whether or not we may have impacts to customers in terms of their service lines not being up to snuff.”

Tacoma Public Utilities is developing a program that would make loans and grants available to residents impacted by these funding disparities, she said.

“We would like to be able to tie that to any discriminatory acts that occurred historically, but the state constitution only allows income-based standards,” she said.

August 27, 2020

By Lisa Martine Jenkins

Worldwide Denial-of-Service Cyberattacks on Utilities Up Five-Fold This Summer, Data Shows

As the societal disruptions of 2020 continue to pile up, cyberattackers have taken advantage of the chaos, with certain types of attacks against utilities spiking five-fold in recent months, according to data provided to Morning Consult by the analytics firm NETSCOUT. Those who work in and with the utilities  themselves, however, have expressed little concern about this surge, reporting that the cyber threats have not impacted their security of service.

NETSCOUT, which maintains a Cyber Threat Horizon tracker in real time, recorded 1,780 “distributed denial-of-service” attacks against utilities worldwide between June 15 and Aug. 21, representing a 595 percent year-over-year increase. A DDoS attack uses multiple platforms in an attempt to flood a target’s system and render it unavailable, often through repeating a request or ping to such a degree that a target — in this case a utility — is overwhelmed.  

The marked increase in DDoS attacks on utilities worldwide, including both electric and gas systems, have come amid the coronavirus pandemic and other sources of upheaval, as measured by the attacks’ frequency, volume and speed. And DDoS is not the only type of cyberattack on the rise: The Federal Bureau of Investigation recently warned the U.S. energy sector of a new hacking threat from the Russian hacker group known as APT28, or Fancy Bear, that has used a wide range of approaches.

Roland Dobbins, principal engineer for NETSCOUT’s security division Arbor Networks, attributed cyberattacks writ large to a number of potential motivations, including ideological, geopolitical, extortive, destructive and even nihilistic ones.

“Some people just love to cause harm, and what better way to do so than being able to shut down power for thousands or tens of thousands,” Dobbins said in an email. 

While cyberattacks tend to increase annually by all measures simply as a function of the advancement of the technology and sophistication of the criminals, this year’s jump in attacks has been unprecedented. According to exclusive analysis provided to Morning Consult from Dobbins’ colleague Richard Hummel, who manages threat research for Arbor Networks, 2020 has so far seen double the attacks that 2019 did — roughly 3,100 through Aug. 21 compared with about 1,500 during the same period last year.

The attackers have also upped both the bandwidth size and the speed of their attempts. One entity in the Netherlands saw an attack of 88.4 gigabytes per second — in contrast with the 2019 maximum of 21.1 Gbps — while another in Italy faced an attack with a throughput of 11 million packets per second, up from the 2019 maximum of 5 Mpps. 

Brandon Robinson, a partner at Balch & Bingham LLP in Birmingham, Ala., who focuses largely on utilities, said the sector has always been a target of cyberattacks.

“Whether one’s motivation is to do financial, economic, national security or industry harm, critical infrastructure such as the electric grid can be a natural target for such cyberattackers,” he said.

And citing the North American Electric Reliability Corp.’s 2019 report, Robinson added that the industry has consistently done a good job of defending itself “and are continuing to be vigilant in doing so as threats emerge and evolve.

Meanwhile, Sharon Chand, a principal with Deloitte & Touche LLP’s cyber practice who focuses on critical infrastructure protection, said that a year-over-year increase in these attacks is very normal, though things have “certainly taken a steeper climb over the last several months.” She sees this as likely the result of a combination of factors contributing to a “heightened sense of disruption”: the global pandemic, economic uncertainty and even more time on the hands of the attackers.

Robinson also said an increase in attacks on the power sector could be impacted by more concrete changes to the grid itself, divorced from society’s climate of uncertainty. 

“The electric grid is also evolving,” he said, “as we see an evolution from larger, more centralized resources to more distributed resources, and virtualized, remote control of those resources, which call for and have led to adaptation in the way that connectivity between and control of grid resources is protected.”

However, the reaction from utilities has largely been detached. John Di Stasio, president of the Large Public Power Council, acknowledged that attacks “may have increased in 2020” but said that utilities are regularly planning for disruptions and even participating in drills to identify and mitigate risks. Edison Electric Institute, a leading trade group representing U.S. investor-owned electric companies, did not respond to a request for comment.

“Despite the increase, LPPC members were and continue to be well-prepared to deal with these threats,” Di Stasio said, in reference to the consumer-owned utilities that make up the trade association. “Cybersecurity risk will continue to evolve, requiring our defense capabilities to evolve accordingly.” 

Chand points out that, especially as the grid evolves to utilize diverse energy sources, including certain types of renewables, redundancies are built into its system to provide consistent power to consumers: If it is not a windy day, for instance, a utility that typically uses wind power can rely more on its nuclear or coal assets. Analogous redundancies protect the system from cyberattacks: “As one piece of the grid may experience a challenge, the grid is built in a way to accommodate that,” she said. 

However, industry-wide analysis indicates that by some measures, cyber threats are shifting faster than the industry can respond. An October 2019 survey from Siemens AG and the Ponemon Institute of utilities professionals worldwide found that operational technology, rather than informational technology, was particularly vulnerable to cyberattacks, and that 56 percent report at least one shutdown or operational data loss per year. Less than half (42 percent) rated their “cyber readiness,” or their capabilities as compared with anticipated attacks and known preparedness gaps, as high. And smaller organizations reported that they felt less confident in their cyber capabilities than their larger counterparts.

“Attackers become more motivated, attackers become more creative, they become more automated,” Chand said of the pattern of increased attacks. “And so, to a large extent, we expect to see an increase in the numbers of threats — denial-of-service attacks or others — facing all of our clients across the business every year. And I think we’re not going to see it go down anytime soon.”

 

July 22, 2020

By Lisa Martine Jenkins

Utilities Coalition Letter Rallies Congress to Include Support for Public Power in Coronavirus Stimulus

The Large Public Power Council has delivered a letter encouraging House and Senate leaders to support consumer-owned power utilities in future COVID-19 recovery stimulus legislation. 
The association — which represents 27 of the largest consumer-owned power utilities in the United States — flagged for leadership a number of infrastructure-related public power provisions that have already been passed in the House via the now-stalled Moving Forward Act (which is currently being considered in the Senate, though Majority Leader Mitch McConnell has said he won’t bring it to the floor). 

“Without federal support, continued economic distress will make it difficult for public power utilities to continue providing reliable and affordable electricity to our 30 million customers and to invest in the electricity infrastructure of the future,” LPPC President John Di Stasio wrote in his letter to McConnell (R-Ky.), Senate Minority Leader Chuck Schumer (D-N.Y.), House Speaker Nancy Pelosi (D-Calif.) and House Minority Leader Kevin McCarthy (R-Calif.).

The association’s proposals include restoring advance refunding for municipal bonds, which state and local governments used to lower the cost of borrowing funds for infrastructure projects prior to changes made in 2017. And the group also recommends that lawmakers authorize the Build America Bonds program, which expired in 2010 after they assisted public power utilities to invest over $100 billion on energy infrastructure following the 2008 recession.

Because LPPC represents nonprofit utilities, its members cannot take advantage of the tax incentives available to for-profit companies investing in renewable infrastructure. They must instead partner with third parties in order to monetize those incentives, which the letter said can be “costly and result in public power not directly owning the renewable energy facility.” LPPC instead proposes including credit monetization provisions for renewable energy projects, such as credit refundability, transferability or direct payment, in stimulus funding.

Also among the requests are measures that would support electric grid modernization — in order to increase energy efficiency and lower electricity costs — as well as expand that grid to include vehicle electrification.

Some of these appeals echo another letter LPPC sent in April, which highlighted immediate assistance to low-income customers struggling to pay the bills in the thick of the pandemic as well as using federal emergency funds to cover pandemic-related costs. It also addressed the issue of Build America and municipal bonds, as well as infrastructure support. However, Di Stasio told Morning Consult that the “uneven circumstances” across the country when it comes to communities and states reopening has led LPPC to be more forward-looking.

“Now we’re starting to look at what I would call the ‘reentry activities’” in light of economic and operational fallout from the pandemic, Di Stasio said. “Some of the things that we were asking for in our letter are things that will provide us the ability to provide economic stimulus to our community.”

Di Stasio said he and the rest of LPPC have been in consistent communication with lawmakers, and he believes that the public power sector’s priorities are understood and supported on Capitol Hill, in a broadly bipartisan fashion. 

He describes his outlook as “optimistic” and in fact is already considering what a more official “end” to the pandemic might look like for LPPC members. The association’s next order of business, Di Stasio said, will be opening another conversation with lawmakers: getting essential infrastructure workers such as power utilities employees a coronavirus vaccine as soon as it’s available. 

“Presuming this gets done and some of our interests get satisfied, then we probably will pivot to: ‘What do things start to look like when there is a vaccine available, and how do we ensure that we can maintain the safety of our employees that operate the grid?’” he said.

 

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