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Utilities ask FERC to approve another transformer-sharing program

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Utilities ask FERC to approve another transformer-sharing program

The power industry clearly is taking seriously concerns over the speed at which the electricity grid could be brought back online following a widespread blackout stemming from a natural disaster or cyberattack. Yet another group of utilities is asking the Federal Energy Regulatory Commission to approve a spare equipment sharing program.

The new group — which includes utility subsidiaries of Ameren Corp., Duke Energy Corp., Entergy Corp., International Transmission Co. and Southern Co. — requested that the agency preauthorize the transfer of certain FERC-jurisdictional assets among signatories to the regional equipment sharing for transmission outage restoration, or RESTORE, agreement.

"The joint applicants intend to operate under a RESTORE agreement designed for the efficient and timely bilateral transfer of electric transformers and other critical transmission-related equipment ... with one another following a catastrophic emergency or other natural disaster in order to provide mutual assistance in connection with restoration of secure and reliable grid operations more quickly and efficiently," the Dec. 13 filing explained.

Large power transformers typically weigh hundreds of tons and are difficult to transport by rail and road. They also are expensive, custom-made and often manufactured outside the U.S., making utilities vulnerable to unplanned failures. Given those challenges, officials and utilities alike are concerned that terrorists, as well as solar flare-triggered geomagnetic storms or other natural disasters, could cripple the grid by damaging mass numbers of large transmission transformers.

Some have suggested that a well-planned and coordinated attack on the North American power grid could plunge large swaths of the U.S. into darkness for months, if not years. Concerns over such attacks are not merely hypothetical; Ukraine was hit with a cyber assault on its power system in December 2015 and again in December 2016.

In the wake of those attacks, the U.S. Department of Energy in April released a report recommending that industry, rather than the government, oversee a strategic transformer reserve program to help utilities recover from widespread transformer failures. The utilities told FERC in their Dec. 13 filing that their proposal attempts to do just that.

The group said the RESTORE agreement would complement the Edison Electric Institute's existing spare transformer equipment program, or STEP, and a more recently developed initiative by Grid Assurance LLC. The commission signed off on STEP in September 2006 and approved the Grid Assurance program in March 2016.

The new RESTORE program would provide "additional resources for utilities seeking critical equipment during the disaster recovery, thus enhancing the resilience and reliability of the power grid," the utilities said. "The RESTORE Agreement is not intended to replace these other arrangements." In fact, RESTORE participants Duke and Southern also were among the companies that created Grid Assurance.

While the three programs are similar in many respects, they differ in several significant ways. STEP defines a "triggering event" as a presidentially declared state of emergency, but RESTORE "allows for the proposed transactions to be triggered by a wider scope of disasters," the utilities explained.

A triggering event under the RESTORE program is defined as "a catastrophic event creating an urgent grid need in which, for an extended period of time, a RESTORE participant loses its ability to serve significant load, is at imminent risk for losing significant load, or cannot maintain grid stability," according to the filing. "Thus, a triggering event ... could occur after a major storm or weather event that ... does not rise to the level of a presidentially declared state of emergency."

RESTORE likewise differs from the Grid Assurance program because the new initiative does not require the creation of a stand-alone company to procure, store, maintain and sell spare transformers to needy program participants, the utilities said.

"The RESTORE program instead builds on ... participants' existing sparing programs and expertise, creating a contractual vehicle by which the RESTORE participants may nominate their own spare transformers (and, potentially, other items of equipment) to be available to others (at replacement cost) in the event of a triggering event," the filing explained. "This simply widens the overall pool of spare transformers available to a subset of affected RESTORE participants following a disaster in a cost-effective way that makes the seller whole."

The new program's developers asserted that FERC giving advance approval for transfers of jurisdictional facilities is consistent with commission practice, noting that the agency "routinely grants [Federal Power Act] Section 203 authorizations prior to the time when a specific transaction is contemplated where such authorizations are consistent with the public interest." They also noted that RESTORE program participants would provide FERC with the details of any jurisdictional equipment transfer in a post-closing informational filing. (FERC docket EC18-32)