WASHINGTON — ReliabilityFirst’s annual meeting last week featured discussions on cybersecurity, GridEx V, electromagnetic pulses and the health of the Electric Reliability Organization. Here’s some of the highlights of what we heard.

Clarke, Gallagher Tout ‘Alignment’

In a keynote speech, NERC Trustee Bob Clarke said the regions are more in alignment with each other and ERO leadership now than at any time in his more than six years on the board.

Clarke made his comment in response to a question from RF board Vice Chair Simon Whitelocke, who asked, “How can we support NERC’s strategic vision?”

NERC Trustee Bob Clarke | © ERO Insider

“I think the key is it’s not NERC’s strategic vision; it is the ERO entity,” Clarke responded. “When the regional CEOs … work together to come up with the vision and the strategic plan … it’s important that we all work together and implement it.

“When I joined the NERC board in February 2013, it was very different than it is now. There were constant tensions and issues that seemed to divide the ERO. Under [then Chair] Fred Gorbet’s leadership, this started to change. We established biannual meetings with the regions’ CEOs, chairs and vice chairs. We also established annual meetings with our Canadian colleagues. This open dialogue exchange started a dramatic turnaround in the entire ERO.”

Clarke also credited CEO Jim Robb for the changes.

“The cohesiveness of the group … is the best it’s ever been. It’s working extremely effectively now,” he said. “At times, when I first came on the board, there would be dissonance; there would be contrary views about things. Now, that’s not the case. The regional CEOs are working really effectively. [It is] very important to have that ‘we’re in this together’ attitude. It’s not a we/they situation anymore.”

ReliabilityFirst CEO Tim Gallagher | © ERO Insider

RF CEO Tim Gallagher was similarly optimistic in remarks about the conclusion of his two-year term as chair of the regional entity CEOs.

“I’m really proud of the progress that we’ve made in improving the relationships and collaboration in that room,” Gallagher said. “A lot of it is from Jim Robb’s leadership and the approach that he’s taken. … I’ve been doing this job for almost 15 years, and I spent six or seven years on the NERC staff. A lot of my career before that was spent in NERC activities. [This is] the most excited and enthusiastic I’ve been since I started doing all this 30-some odd years ago. … The amount of collaboration in that room and innovation and sharing is just fantastic.”

Midwest Reliability Organization CEO Sara Patrick will replace Gallagher as chair of the RE CEOs.

CCTs, Wind Dominate RE Additions

Combined cycle generators and wind farms represent the bulk of new registered entities in RF,

Ray Sefchik, ReliabilityFirst | © ERO Insider

Ray Sefchik, director of reliability assurance and monitoring, told the board’s Compliance Committee. Other new registrations came from transfers of assets, mostly generation, he said.

As of Oct. 23, RF had 243 registered entities, a number that grew to 247 by Nov. 14. “So that’s pretty dynamic,” Sefchik said. “It changes every week.”

RF’s total is more than all but the Western Electric Coordinating Council, with about 385, and SERC Reliability, which is about the same size.

Finance Committee Agrees to Keep Financial Advisor

The board’s Finance and Audit Committee agreed to continue using Glenmede Investment Management to manage its operating reserve funds and continue its “enhanced cash strategy” after a phone conference with Glenmede portfolio manager Stephen J. Mahoney.

Ray Palmieri, ReliabilityFirst | © ERO Insider

“Most of the other regions don’t have an account like this,” RF Senior Vice President and Treasurer Ray Palmieri said. “They might just put it in a money market fund.”

“Some of them do CDs [certificates of deposit],” said Carol Baskey, manager of finance and accounting.

Clarke said the NERC board decided not to require “commonality” in investment strategies among REs. “There’s not even a commonality on the amount of reserves that are budgeted,” he said. “Each region has their own guidelines, and it varies. And we decided not to try to impose something on the regions.”

Patrick Cass, ReliabilityFirst | © ERO Insider

Mahoney said there was no reason to change RF’s investment strategy. “As an operating reserve, your duration is rather short. You want to pick up yield in money funds and overnight rates.”

Moving to investments with a six-year term would only add about 60 basis points to the yield of the short-term alternatives, he said. “I don’t think it’s worth it. … I would not change … unless you want to take more risk.”

“No,” committee Chair Patrick Cass said. “Capital preservation is No. 1 for us.”

The committee delayed a vote on the Statement of Policy and Procedure for Investment of Corporate Funds at the suggestion of Cass, who said it was “inconsistent with how you guys really manage the money” and should be revised.

“If we’re going to approve it, I want it to reflect how you manage the money [so that] if we all get hit by a bus, somebody could pick it up and say, ‘Yeah, I understand exactly what they were doing,’” Cass said.

GridEx Observations

In his president’s report, Gallagher gave members a recap of GridEx V earlier this month, calling it the “best of NERC.”

“The participation was outstanding this time. There were 429 different entities that partook of this. Fourteen of them were gas-only utilities, which is the first time I think we’ve had that kind of interaction.” Also participating were 25 state offices and 29 FBI regional offices, Gallagher said.

He said the testing included supply chain concepts, loss of communication channels and natural gas infrastructure interruptions.

Larry Bugh, ReliabilityFirst | © ERO Insider

“Under certain circumstances, the Department of Energy can issue emergency orders. So, they actually got to test how those emergency orders would be implemented and, if they needed to be amended, how would you amend it. There’s really interesting lessons coming out of that. Hopefully that’s enough of a teaser for you to read the [after action] report when it comes out” in March, he said.

Larry Bugh, RF chief security officer and director of event analysis and situation awareness, said the RE’s participants included its IT, corporate communications and event analysis staffs, and that the lessons included ways to improve its incident response plans and communications with registered entities.

“It was a very successful opportunity to really test our endurance and our ability to work together,” NERC Trustee Rob Manning said. “And it seemed to be very successful.”

Clarke agreed. “It’s never enough, but we’re going in the right direction.”

Elections

The members elected at-large member Joe Trentacosta, chief information officer for Southern Maryland Electric Cooperative (SMECO), to the board and re-elected independent director Brenton Greene, former CEO of Applied Communication Services.

Joe Trentacosta, SMECO | © ERO Insider

Trentacosta replaces Ken Capps, who is retiring as SMECO’s vice president for engineering and operations and chief operating officer.

Whitelocke, vice president of ITC Holdings, will replace Lisa Barton as chair, and Lynnae Wilson, Indiana electric lead for CenterPoint Energy, will replace Whitelocke as vice chair. Barton, executive vice president of utilities for American Electric Power, will remain on the board.

Greene Cites Limits to EPRI EMP Study

Greene said the Electric Power Research Institute’s study on electromagnetic pulses was “excellent” but limited, saying the report considered “the 10% [of the grid that] was the easiest segment” to model.

Brenton Greene, ReliabilityFirst | © ERO Insider

“The modeling started failing beyond that,” he said, citing observations of a former colleague now with the Department of Homeland Security.

“My understanding is that [FERC Office of Energy Infrastructure Security Director] Joe McClelland was seeking something on the order of $400,000 [to develop] a far more comprehensive model — to take what EPRI did and do a 100% modeling of that.

“My gut feel is that might be a very good place for NERC and FERC to place some investment to … get a more accurate picture,” he said.

McClelland did not immediately respond to a request for comment.

RF board and members held their annual meeting in D.C. | © ERO Insider

The comments of Greene, a Navy veteran, echoed the critique of the Electromagnetic Defense Task Force (EDTF), a group with ties to Maxwell Air Force Base. The group said the EPRI report underestimated the risks the grid faces and should not be used as the basis for mitigation. (See Critics: EPRI EMP Report Understates Risks.)

Greene also talked about the need to turn to an older generation of communication in the wake of an EMP attack.

“If there’s an EMP event … you’ve just lost all satellite communications. You have no internet. You have no telephone. There is no radio, no television. If you have something with a microchip in it, it probably failed. It puts you into a scenario where what is the backup of all backups that would work? And you need to be thinking about things like [high-frequency] radio … ham radio.”

Bugh said there was testing of HF radios during GridEx V. It was “a new generation, but still of the kind of technology that would be resistant to [EMP],” he said.

— Rich Heidorn Jr.