OUR MISSION: To provide our customers with high-quality, efficient and reliable water, power and sewer services in a manner that values environmental and community interests and sustains the resources entrusted to our care.
PO Box 160
Moccasin, CA 95347
209.989.2000
209.989.2104
Junction of Hwy 49 and Hwy 120
April 17, 2023
TO: Newsha K. Ajami, Commission President
Sophie Maxwell, Commission Vice President
Tim Paulson, Commissioner
Anthony Rivera, Commissioner
Kate H. Stacy, Commissioner
THROUGH: Dennis J. Herrera, General Manager
FROM: Steven R. Ritchie, Assistant General Manager, Water Margaret A. Hannaford, SFPUC NERC Compliance Officer
RE: 2022 Annual Electric Reliability Compliance Program Report
The San Francisco Public Utilities Commission (SFPUC) Electric Power Reliability Compliance Program (Compliance Program) requires SFPUC Executive Staff to report to the Commission annually on the progress of the Compliance Program. This is the report for calendar year 2022.
EXECUTIVE SUMMARY
The North American Electric Reliability Corporation (NERC), subject to Federal Energy Regulatory Commission (FERC) jurisdiction, establishes and enforces mandatory reliability standards to protect the bulk electric transmission system. NERC works through regional entities, including the Western Electric Coordinating Council (WECC) which manages utilities in the west. Utilities must register with NERC to identify the functions they perform and are subject to particular rules for each function.
Functional Registrations: We are registered with NERC as a Generator Owner, Generator Operator, Transmission Owner, Transmission Operator, and Transmission Planner. Based on updated anticipated demand growth at San Francisco International Airport (SFO Airport) provided by Power Enterprise, we anticipate crossing the NERC threshold that would require us to register as a Distribution Provider in 2024.
Funding: Actual expenditures for FY 2021-2022 were $4 million. We are budgeted for $4.449 million in FY 2022-2023.
Personnel: We will continue to recruit for Engineering personnel and Operations and Transmission Planning personnel to fill vacancies incurred throughout 2021/2022 that support WECC/NERC compliance.
Compliance Program: During 2022 we made non-substantive modifications to our Compliance Program.
Enforcement Actions: We self-reported no violations during calendar year 2022. Two self-reports remain open (one from 2021 and one from 2020).
2023 WECC Compliance Audit: During 2022, we received our official 2023 WECC Compliance Audit Notice. Our audit is scheduled for June 2023.
Self-Certification: In November 2022, we were notified by WECC that we would not be required to complete the Annual WECC Self-Certification process for calendar year 2022. Accordingly, we did not self-certify to any O&P or CIP Reliability Requirements related to calendar year 2022.
Procedure Review: We reviewed and updated 27 of our 38 (Operation and Planning) O&P and (Critical Infrastructure Protection) CIP procedures during 2022. Modifications were made to reflect new/revised Reliability Standards that went into effect in 2022.
Reliability Standard Audit Worksheets (RSAWs): RSAW templates are developed by NERC and are utilized during audits and other regulatory reviews to summarize a utility’s compliance procedures, supporting compliance evidence and related internal controls. In 2022, we performed maintenance on certain RSAWs, updating them for new Standards or Requirements applicable to SFPUC and ensuring they reflect current business processes.
Internal Controls: Internal Controls are used to demonstrate how an entity prevents, detects and/or corrects potential noncompliance. During 2022, we updated various components of our internal controls documentation.
Line Clearance Issues: In conformance with a 2010 NERC Alert, we were required to identify discrepancies between transmission line design clearances and actual field condition clearances (e.g., hard clearances, ground, streetlights, wires). We identified 210 locations that required correction. To date we have remediated 65 transmission line clearance discrepancies, completing three projects in 2023.
Regulatory Update:
New, updated, or modified Reliability Standards continue to be approved by the Federal Energy Regulatory Commission (FERC). There
are 18 applicable Standards approved as “Subject to Future Enforcement” with effective dates that vary throughout 2023 and 2024. Securing the grid against cyber and physical attacks, effectively preparing for and responding to extreme weather events (e.g., snow, floods, heat, wind, storms, etc.), maximizing the capacity of the grid, and the growing dependency on renewable/inverter-based resources were important regulatory issues in 2022.
2022 REPORT
Functional Registrations: We are currently registered with NERC as a Generator Owner, Generator Operator, Transmission Owner, Transmission Operator, and Transmission Planner under the name Hetch Hetchy Water and Power (HHWP). In 2022, we reviewed Power Enterprise owned and planned facilities to evaluate the impact to our required functional registrations. Based on this review, we have determined that no changes in our NERC Registrations are required at this time. We continue to monitor the obligations for Power Enterprise’s facilities (e.g., Bay Corridor Transmission Distribution Project and substations that feed San Francisco International Airport). Based on arrangements with PG&E, the Bay Corridor Transmission Distribution Project has not required us to register as an Underfrequency Load Shedding-Only Distribution Provider (UFLS-Only DP). Based on the November 2023 demand projection for SFO Airport, we anticipate crossing the NERC threshold that would require registration as a Distribution Provider in 2024. Accordingly, during 2023 the NERC Compliance Officer, with her consultants, will work with Power Enterprise staff to implement processes and procedures to prepare for meeting the associated compliance obligations. Based on our initial review, the level of effort for 2024 will include compliance with about 100 Requirements and subparts. Though the effort is small when compared to the SFPUC’s entire NERC Compliance Program (over 1000 Requirements and subparts), the Power Enterprise currently has no NERC Compliance obligations, and therefore not staffed to meet this impending new obligation. As the Power Enterprise distribution footprint expands, their compliance obligations will increase. Additional staffing will be required at the Power Enterprise to meet such obligations.
Funding: The SFPUC’s NERC Compliance Program is funded through a NERC Compliance line item and other parts of the HHWP operating budget.
Our 2022 compliance efforts have focused on maintaining our program to meet current and upcoming Standards and updating internal controls consistent with new tools and expectations from our regulators. Total expenditures for FY 2021-22 were $4 million.
In 2023, in addition to maintaining our program, our focus will also include implementing processes and procedures to comply with new extreme weather requirements, supporting compliance obligations associated with Power Enterprise expansion projects, and preparing for our WECC Audit in June 2023.
The Commission-approved NERC Compliance line item for the FY 2023-24 budget is $4.449 million.
The cost of the SFPUC’s NERC Compliance Program will increase with the new registration obligation (Distribution Provider). The NERC Compliance Officer is still working with the consultants to evaluate the financial impact which was not included in the upcoming budget.
Personnel: Registered Entities must designate a NERC Compliance Officer and a CIP Senior Manager. The HHWP Division Manager has been assigned these roles.
During 2022, the Compliance Program continued to be staffed by consultants. One consultant is acting as the Compliance Manager; the second is the CIP Specialist; the third is the O&P Specialist; and the fourth is the Compliance Coordinator. The HHWP Division Manager oversees the Compliance Manager. Due to budget cuts the hours for these consultants remained reduced; and due to COVID-19 protocols all consultants except for the Compliance Coordinator have worked 100% remotely. During 2022, COVID-19 continued to hinder recruitment efforts to fill positions in our Compliance Program. HHWP will be recruiting to fill a Power Regulatory Manager and one support staff position during FY 2023-24.
Historically, Subject Matter Experts (SMEs) were personnel in HHWP Operations, Engineering and Information Technology staff, with some exceptions. Due to staff turnover during 2021 through 2022, electrical engineering SMEs supporting Engineering and Operation functions are now being supported by consultants. We have 1.75 full-time equivalent (FTE) electrical engineering consultants, and 1.5 FTE transmission planning engineer consultants serving as SMEs. We consider these staff positions as vital to reliability and compliance and are aggressively recruiting for electrical engineering positions as our division’s highest priority.
Limited SME responsibilities extend to SFPUC headquarters at 525 Golden Gate with support from Emergency Planning and Security and Information Technology staff who manage physical access to specific HHWP and SFPUC data centers.
Beginning in 2023, preparing for the addition of the Distribution Provider Registration will be a large lift for both the NERC Compliance Officer, and the consultants that support the SFPUC’s NERC Compliance Program.
Compliance Program: In 2022, we reviewed our Compliance Program document, the guiding document for our program. We made non-substantive modifications (e.g., updating terms/capitalizations and modifying the distribution list due to personnel changes) to our Compliance Program.
Additionally, the new SFPUC General Manager approved the Compliance Program.
Staff and consultants committed significant resources to maintaining the NERC Compliance Program including:
NERC Compliance Team Meetings: The NERC Compliance Team met monthly to discuss status of projects outlined in the 2022 Annual Work Plan, enforcement actions, and other key issues impacting compliance.
Regulatory Reports: The Regulatory Report is prepared every other month, summarizing significant compliance activities and progress achieved during the respective reporting period. Distribution includes the Compliance and Executive teams.
Executive Team Biannual Briefing: The NERC Compliance Officer briefed SFPUC Executive Staff on February 9, 2022 and July 12, 2022. The December 2022 briefing was moved to March 7, 2023, due to winter storms which caused scheduling conflicts. The briefings included status updates of 2022 and 2023 Work Plans; high priority projects; open enforcement actions; upcoming changes to the regulatory standards; and potential changes to functional registration.
Enforcement Actions: Two O&P-related enforcement actions self-reported in 2020 and 2021 currently remain open. During 2022, WECC Enforcement began reviewing our 2020 self-report and related mitigation plans. As the self-report relates to a Requirement within the scope of the 2023 WECC Compliance Audit, WECC Enforcement has indicated that resolution of this self-report will be handled during the WECC Compliance Audit. With respect to the 2021 self-report, at this time we are not aware of any additional mitigation actions required. Penalties may be assessed by WECC.
2023 WECC Compliance Audit:
During 2022, we received our official 2023 WECC Compliance Audit Notice. Accordingly, during 2022 we began assembling information and compliance evidence to support the audit. In December 2022, we participated in a meeting with WECC related to their Audit Plan & Scope.
Our audit is scheduled for June 2023 and the audit scope includes fifteen Requirements from four CIP and six O&P Standards.
Self-Certification: Previously, WECC’s Notice of Self Certification related to a particular calendar year (e.g., 2022) was received in February of the following year (e.g., 2023). However, WECC has changed the timing of said notices. In November 2022 we were notified by WECC that we would not be required to complete the Annual WECC Self-Certification process for the 2022 calendar year. Accordingly, we did not self-certify to any O&P or CIP Reliability Requirements related to calendar year 2022.
Procedure Review: Our program includes 38 O&P and CIP operational procedures used by our staff. We reviewed and updated 27 of our 38 procedures in 2022: 14 O&P procedures and 13 CIP procedures. These procedures are a component of the controls utilized to mitigate risk of non- compliance. Accordingly, the procedure reviews included ensuring the documented processes support compliance with each of the over 1,500 Reliability Requirements and related parts/sub requirements applicable to us. The procedures that were not reviewed in 2022 will be completed in 2023 based upon our procedure review schedule. Additionally, we will identify which procedures require review again in 2023 based on a priority of 1) Annual reviews required by the Reliability Standards; 2) Effective date of new or modified Standards; 3) Materiality of the of updates or revisions
to Standards; 4) Operational changes within the business; 5) Procedures related to completion of mitigation plans; and 6) Biennial review based on good business practice procedures.
Reliability Standard Audit Worksheets (RSAWs): RSAW templates are developed by NERC and are utilized during audits and other regulatory reviews to summarize the entity’s compliance procedure, supporting compliance evidence and related internal controls. We have approximately 90 RSAWs. During 2022, we updated our RSAWs for new Standards or Requirements, and ensured they reflected current business processes. The RSAWs to be reviewed/updated will be based upon 1) New or modified Standards effective during the year; 2) Materiality of the updates or revisions to Standards; 3) Operational changes within the business; and 4) Modifications related to completion of mitigation plans.
Internal Controls: Internal Controls are used to demonstrate how an entity prevents, detects and/or corrects potential noncompliance. Internal Controls have been become one of WECC’s primary focuses with respect to ensuring the reliability of the bulk electric system. During 2022, we updated our internal controls documentation to be more consistent with a new tool being utilized by WECC to evaluate internal controls; updated our risk-based internal controls evaluation; and implemented an internal controls program which documents our internal controls approach. These documents, among others, are used by WECC to assess the maturity of an entity’s compliance program and determine an entity’s potential risk to the bulk electric system.
New Standards: HHWP is responsible for approximately 70 Standards (representing over 1,500 Reliability Requirements and related parts/sub requirements). In 2022, five new or revised applicable O&P and CIP Reliability Standards, with 68 requirements, went into effect. We implemented processes and procedures to timely meet compliance for each of the new or revised Reliability Standards.
In addition, work was required in 2022 to meet new Standards coming into effect in 2023. This included three Standards related to extreme weather and adjusted ambient transmission line ratings. This work will continue in 2023.
Line Clearance Issues: We own and operate almost 324 miles of 115 kV and 230 kV transmission lines within 134 miles of right-of-way corridor. As part of a 2010 NERC Alert, we were required to identify discrepancies between transmission line design clearances and actual field condition clearances. We identified 210 discrepancies that required mitigation.1 We have limited access to these conditions by installing fencing and posting signs. We planned to remediate 40 discrepancies in 2022; however, we remediated only 3 discrepancies during 2022 due to numerous projects
1 A discrepancy is defined as a location where the clearance between the conductor and a hard object do not meet either the National Electric Safety Code or the CPUC, General Order 95, minimum safety clearance criteria. A hard object can be the ground, a building, other electrical wires, etc.
being delayed due to PG&E employee turnover, lack of PG&E budget, diminishing SFPUC Job Order Contracting capacity, and extended environmental reviews associated with the presence of wetlands. Since the project’s inception, we have remediated 31 percent of the original discrepancies (65 discrepancies with 145 remaining). In 2022, we modified our capital program request to expedite remediation of these clearance issues. The revised request was approved by the Commission in early 2023.
Our expectation is that the additional funding will enable us to remediate the remaining clearance issues by 2030 (in advance of the previously planned 2040 date).
NERC also requires Transmission Owners to implement a program for avoiding transmission line contacts with vegetation. We use a combination of LiDAR information and visual inspections to manage this program.
We maintain a Transmission Vegetation Management Plan to proactively manage vegetation within and outside our transmission right of way. As of December 31, 2022, within our right of way, there were:
Zero “high risk” grow-in trees, i.e., trees that are within 6 feet of the transmission lines;
Zero “critical grow-ins” trees, i.e., trees that could become a “high risk” tree within a growing season or two; and
Zero “potential grow-ins” trees, i.e., trees that could become “critical grow-ins” within a growing season or two.
We continue to monitor tree growth and work jointly with the farmers to address trees within our right of way.
There are trees outside of our right of way, that could fall into, or grow into, our transmission lines, causing damage to our infrastructure or starting fires.
These trees are on federal lands or private property. During 2022, we identified an error in the reporting of critical and potential fall-in trees offset less than 40 feet from our right of way. These trees should have been reported as critical and potential grow-in trees (critical 13’ and potential 19’) growing outside of the right of way. As of December 31, 2022, outside our right of way, there were:
Trees outside of right of way that could affect our transmission lines Category 1 (grow-in trees)
o 0 high risk grow-in trees that are within 6 feet of our transmission lines.
o 23 critical grow-in trees that are within 13 feet of our transmission lines. All of the trees are almond trees located on private orchards and are pruned, as needed, to maintain compliance.
o 35 potential grow-in trees that are within 19 feet of our transmission lines. All of the trees are almond trees located on
private orchards and are pruned, as needed, to maintain compliance.
Category 2 (fall-in trees offset less than 40 feet from our right of way) o 0 critical fall-in trees.
o 0 potential fall-in trees.
Category 3 (fall-in trees offset greater than 40 feet from our right of way) o 240 critical fall-in trees. Trees are on private land between Ferretti Rd to Groveland. The majority of these trees will be removed in spring 2023.
o 48 potential fall-in trees. Trees are on private land between Ferretti Rd to Groveland. The majority of these trees will be removed in spring 2023.
Regulatory Update: New, updated, or modified Reliability Standards continue to be approved by FERC. There are currently 18 applicable Standards approved as “Subject to Future Enforcement” with effective dates throughout 2023 and 2024. Additionally, there is one applicable Standard identified by NERC as “Filed and Pending Regulatory Approval.” We will monitor and adjust processes and procedures to meet the changing Requirements by the respective effective date.
Securing the grid against cyber and physical attacks, effectively responding to extreme weather events (e.g., snow, floods, heat, wind, storms, etc.), maximizing the capacity of the grid, and the growing dependency on renewable/inverter-based resources were important regulatory issues in 2022. We expect these items to continue to be important focus areas in 2023. We regularly monitor these regulatory developments and will adjust our priorities accordingly.
NERC/WECC continue to review and adjust their oversight activities to reflect their own risk assessments and the degree of internal controls put into place by the regulated entities. Participation in Industry Forums and WECC sponsored workshops/conferences (e.g., Reliability and Security Workshop) aid in understanding any changes to NERC/WECC compliance philosophy or approach. NERC’s 2023 Compliance Monitoring and Enforcement Program identified a focus on 1) Remote Connectivity; 2) Supply Chain; 3) Incident Response; 4) Stability Studies; 5) Inverter-based Resources; 6) Facility Ratings; and 7) Cold Weather Response.