San Francisco
Water Power Sewer Services of the San Francisco Public Utilities Commission Hetch Hetchy Water and Power
PO Box 160
Moccasin, CA 95347
T: 209.989.2000
F: 209.989.2104
March 05, 2025
TO: Kate H. Stacy, Commission President
Joshua Arce, Commission Vice President
Avni Jamdar, Commissioner
Steve Leveroni, Commissioner
THROUGH: Dennis J. Herrera, General Manage
Daniel L Lurie
Mayor
Kate H. Stacy
President
Joshua Arce
Vice President
Avni Jamdar
Commissioner
Steve Leveronl
Commissioner
Dennis J. Herrera
General Manager
FROM: Steven R. Ritchie, Assistant General Manager, Water Margaret A. Hannaford, SFPUC NERC Compliance Officer
RE: 2024 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 2024.
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 system. NERC works through regional entities, including the Western Electricity Coordinating Council (WECC) which oversees 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. During 2024, there were no changes to our functional registrations.
Funding: Actual expenditures for FY 2023-2024 were $4.4 million. We are budgeted for $5.5 million in FY 2024-2025.
Personnel: During 2024, we hired a Senior Electrical Engineer. We will continue to recruit for Engineering personnel and Operations and Transmission Planning personnel to fill vacancies incurred since 2021 that 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.
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2024 Annual Electric Reliability Compliance Program Report March X, 2025
support 'WECC/NERC compliance. In 2025, the HHWP Division Manager and NERC Compliance Coordinator are expected to retire. Recruitment for these positions is critical to remaining compliant with the NERC Reliability Standards.
Compliance Program: During 2024, we made non-substantive modifications to our Compliance Program. In 2024, WECC accepted our application to participate in the WECC Self-Logging Program.
Enforcement Actions: WECC resolved our 2020 open enforcement action through the Find, Fix, Track (FFT) process, which allows HHWP to identify, address, and monitor this non-compliance concern without the imposition of monetary penalties. We reported one compliance violation utilizing the WECC self-logging process during calendar year 2024, which was resolved by WECC's issuance of a Notice of Compliance Exception.
Three other self-reports (two from 2023 and one from 2021) remain open. 2025 WECC Compliance Audit: During 2024, WECC notified us that we will be the subject of an "out-of-cycle" WECC Compliance Audit in 2025 due to a WECC organizational restructuring. The audit is scheduled for June 16 - 27, 2025.
Self-Certification: In 2024, WECC did not notify us that we would be required to complete the Annual WECC Self-Certification process for the 2024 calendar year. Accordingly, we did not self-certify to any Operation and Planning (O&P) or Critical Infrastructure Protection (CIP) Reliability Requirements related to calendar year 2024. However, each quarter WECC selects entities to complete a self-certification through the WECC Guided Certification process. If notified, we will timely complete the certification.
Procedure Review: We reviewed and updated 19 of our 38 O&P and CIP procedures during 2024. Modifications were made to reflect new or revised Reliability Standards that went into effect in 2024.
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 2024, 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 2024, we updated various components of our internal controls documentation.
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New Standards: In 2024, fourteen new or revised applicable O&P and CIP Reliability Standards went into effect. We implemented processes and procedures to timely meet compliance for each of the new or revised Reliability Standards. We will continue implementation work associated with other new or revised Standards that come into effect throughout 2025.
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 have determined that in certain instances, we have multiple detections across single spans; and after further review, separate remediation activities may be required. Accordingly, we have adjusted the total number of identified clearance discrepancies to 233. Of those, we have remediated 101 transmission line clearance discrepancies to date, completing 3 discrepancies in 2024.
Regulatory Update:
• New, updated, or modified Reliability Standards continue to be approved by FERC. There are 6 applicable Standards approved as "Subject to Future Enforcement" with various effective dates between 2025 and 2026.
• 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 market penetration of renewables (inverter-based resources) have been important regulatory issues since 2022 that will continue to be important focus areas in 2025.
2024 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 2024, Power Enterprise continued work associated with increasing its footprint, e.g., Bay Corridor Transmission Distribution Project (BCTD) and substations that feed San Francisco International Airport (SFO Subs); and we continued coordinating with Power Enterprise to evaluate the facilities' impact to our required functional registrations.
Based on guidance provided by WECC, we are not aware of any currently required changes in our NERC Registrations.
During 2024, BCTD returned to service after being taken off-line due to protection system issues in 2023. Based on our interconnection agreement with PG&E for BCTD, there may be a need to register as a Distribution Provider due to Under Frequency Load Shedding Reliability Standard requirements. However, as PG&E has not requested that we install Under Docusign Envelope ID: 99217B91-D8CC-40DB-941D-B974E2352BB7 2024 Annual Electric Reliability Compliance Program Report March X, 2025
Frequency Load Shedding equipment at this time, there is no need to register. We continue to monitor the status of the BCTD.
During 2024, there were no changes in the configurations, asset ownership, and operational protocols related to the SFO Substations. As such, there were no changes to our functional registrations. However, should these configurations, asset ownership, and/or operational protocols change in the future, we will be required to reassess whether the BES radial exclusion still applies and whether registration as a Distribution Provider is required.
Funding: The SFPUC's NERC Compliance Program is funded through the WECC/NERC Compliance Programmatic Project (Project 10025172). Our 2024 compliance efforts continued to focus on maintaining our program to meet current and upcoming Reliability Standards, implementing processes and procedures to comply with new extreme weather requirements, updating internal controls consistent with new tools and expectations from our regulators, and implementing processes and procedures to comply with FERC Order 881 (Ambient Adjusted Ratings for transmission lines). Total expenditures for FY 2023-24 were $4.4 million, and we are budgeted for $5.5 million in FY 2024-25.
The Commission-approved NERC Compliance line item for the FY 2025-26 budget is $5.5 million. In 2025, in addition to maintaining our program, our focus will also include implementing processes and procedures to comply with FERC Order 901 and the new IBR related Reliability Standards, finalizing initial implementation processes and procedures to comply with FERC Order 881 (Ambient Adjusted Ratings for transmission lines), the required 5-year reassessment of Physical Security Plans for Distribution Assets associated with CPUC Decision 19-01-018, and supporting compliance obligations associated with Power Enterprise expansion projects.
Personnel: Registered Entities must designate a NERC Compliance Officer and a CIP Senior Manager. The HHWP Division Manager has been assigned these roles. In 2025, the HHWP Division Manager is expected to retire. Accordingly, timely identifying and naming a new HHWP Division Manager and the associated NERC Compliance Officer and CIP Senior Manager roles are critical to remaining compliant with the NERC Reliability Standards.
During 2024, the Compliance Program continued to be staffed by consultants. One consultant is acting as the NERC Compliance Manager and O&P Specialist; the second is the CIP Specialist; and the third is the Compliance Coordinator. During 2024, in addition to other responsibilities, the HHWP Power Regulatory Compliance Manager (hired in December 2023) oversaw the NERC Compliance Manager and mentored HHWP's Maintenance Engineering Compliance Engineer and Senior Electrical Engineer with respect to NERC required minimum maintenance, risk Docusign Envelope ID: 99217B91-D8CC-40DB-941D-B974E2352BB7 2024 Annual Electric Reliability Compliance Program Report March X, 2025
management, compliance requirements, and documentation. Due to the budget, the hours for these consultants remained reduced; and all consultants except for the Compliance Coordinator have worked 100% remotely.
During 2024, we began recruiting to fill one of two compliance support staff positions. We received 18 applications for this position. However, as of December 31, 2024, that position has not been filled, due to a City-wide hiring freeze. During 2025, filling these two positions will be a top priority especially since the current Compliance Coordinator is retiring in September.
Historically, Subject Matter Experts (SMEs) were personnel working in HHWP Operations, Engineering, and Information Technology, with some exceptions. Due to staff turnover since 2021, most electrical engineering SMEs supporting Engineering and Operation functions continue to be supported by consultants. Currently, 1.75 full-time equivalent (FTE) electrical engineering consultants, and 1.5 FTE transmission planning engineer consultants serve as SMEs. During 2024, we hired a Senior Electrical Engineer. In addition to other responsibilities, the Senior Electrical Engineer coordinates with and interacts with the Engineering SME consultants. We consider these staff positions as vital to reliability and compliance. We are aggressively recruiting for electrical engineering positions and our division's highest priority is a protection engineer.
Limited SME responsibilities extend to 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. During 2024, turnover in these areas also occurred. The SME responsibilities in these areas are currently reassigned to existing staff in the respective departments.
During 2024, preparing for the implementation of FERC Order 881's Ambient Adjusted Ratings increased workload for both the NERC Compliance Officer, and the consultants that support the SFPUC's NERC Compliance Program. HHWP's work in implementing FERC Order 881 will continuously increase throughout 2025 as our Reliability Coordinator (RC West) implements its 3-phase FERC 881 implementation plan that extends beyond the July 12, 2025, effective date. Additionally, as the Power Enterprise distribution footprint expands, the associated compliance obligations may increase due to potential new functional registrations and/or applicable NERC Reliability Standard Requirements. These increased obligations are likely to impact both Power Enterprise (e.g., SME responsibilities and skillsets, operational requirements, etc.) and HHWP (e.g., compliance oversight, coordination, monitoring, etc.).
Compliance Program: In 2024, we reviewed our Internal Compliance Program document, the guiding document for our program. We made non- substantive modifications (e.g., updating terms/capitalizations and Docusign Envelope ID: 99217B91-D8CC-40DB-941D-B974E2352BB7 2024 Annual Electric Reliability Compliance Program Report March X, 2025
modifying the distribution list due to personnel changes) and modifications to incorporate responsibilities of the HHWP Power Regulatory Compliance Manager.
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 2024 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 January 17 and July 23, 2024. We have modified the schedule of these briefings to avoid scheduling conflicts due to annual spikes in operational requirements (e.g., winter storms, year-end closeouts, etc.). In 2025, meetings are scheduled for March and September instead of June and December.
The briefings included status updates of 2023 and 2024 Work Plans; high priority projects; open enforcement actions; upcoming changes to the regulatory standards; and potential changes to functional registration.
• Regulatory Assessments/Surveys: During 2024, FERC and NERC issued various orders, data requests, surveys and alerts (e.g., FERC Order 901, new functional registration categories associated with Inverter-Based Resources, Level 2 Alert — Industry
Recommendations related to 6 GHz Communication Penetration, Level 2 Alert — Industry Recommendations related to Inverter-Based Resource Model Quality Deficiencies, NERC Request For
Information — Category 2 Generator Owners and Generator Operators, etc.) which required review, research, and responses by specified dates. We timely responded to each.
• Self-Logging Program: During 2024, WECC accepted our 2023 application to participate in the WECC Self-Logging Program. The Self-Logging Program allows registered entities to report minimal risk non-compliance matters as self-logs which are resolved as Compliance Exceptions and receive an expedited review and resolution.
Enforcement Actions: During 2024, HHWP submitted its first noncompliance matter under the WECC Self-Logging Program. WECC performed its review and issued a Notice of Compliance Exception resolving this matter with no further actions required. Additionally, during 2024, WECC resolved our 2020 open enforcement action through the FFT process. The FFT process is utilized Docusign Envelope ID: 99217B91-D8CC-40DB-941D-B974E2352BB7 2024 Annual Electric Reliability Compliance Program Report March X, 2025
to resolve non-compliance issues that pose a lesser risk to the reliability of the bulk power system without the imposition of a monetary penalty. The FFT process allows entities to "find" non-compliance issues, "fix" them promptly, and then "track" their resolution to ensure ongoing compliance rather than pursuing full enforcement actions. As all mitigation measures were previously completed, no further actions are required. One O&P-related enforcement action self-reported in 2021 and two CIP-related enforcement actions self- reported in 2023 currently remain open. With respect to all of the open enforcement actions, at this time we are not aware of any additional mitigation actions required. Financial penalties may be assessed by WECC with respect to these open items.
2025 WECC Compliance Audit: During 2024, WECC notified us that we will be the subject of an "out-of-cycle" WECC Compliance Audit in 2025 due to a WECC organizational restructuring. During 2024, we initiated actions (e.g., audit scope meetings with WECC, internal meetings, and other compliance reviews) to begin preparing for the audit in 2025. The audit is scheduled for June 16-27, 2025, covering an audit period of February 22, 2023, through February 14, 2025.
Self-Certification: In 2024, WECC did not notify us that we would be required to complete an Annual WECC Self-Certification process for the 2024 calendar year. However, WECC could request that we perform a guided self-certification at some point during the upcoming calendar year.
Guided self-certification notices are sent to the respective entities quarterly.
Procedure Review: Our program includes 38 O&P and CIP operational procedures used by our staff. We reviewed and updated 19 of our 38 procedures in 2024: 15 O&P procedures and 4 CIP procedures. These procedures are a component of the internal 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 2024 will be completed in 2025 based upon our procedure review schedule. Additionally, we will identify which procedures require review in 2025 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 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 procedures, supporting compliance evidence and related internal controls. We have approximately 90 RSAWs. During 2024, we began updates of our RSAWs for new Docusign Envelope ID: 99217B91-D8CC-40DB-941D-B974E2352BB7 2024 Annual Electric Reliability Compliance Program Report March X, 2025
Standards or Requirement to ensure they reflected current business processes. The RSAWs to be reviewed/updated will be based on: 1) Standards in the 2025 audit scope; 2) New or modified Standards effective during the year; 3) Materiality of the updates or revisions to Standards; 4) Operational changes within the business; and 5) 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 2024, we created new internal control documentation for new Standards and/or Requirements (e.g., EOP-012-1, EOP-011-4, etc.) and made minor updates to our existing internal controls and program documentation. 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 2024, fourteen new or revised applicable O&P and CIP Reliability Standards, with 268 applicable 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 2024 to meet new Standards coming into effect on January 1, 2025. This included one new or revised applicable O&P Standard. We will continue implementation work associated with other new or revised applicable Standards that become effective throughout 2025.
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 a total of 233 discrepancies that required mitigation.' We have limited access to these discrepancies by installing fencing and posting signs. We remediated 3 discrepancies in 2024. Since the project's inception, we have remediated 48 percent of the identified discrepancies (101 discrepancies with 132 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.
During 2024, the bulk of the remaining sites were placed under a formal contract which has this work being completed in 2028. Based on the I 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.
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contracting changes and the status of work currently in process, our expectation is that we remediate the remaining clearance issues by 2029 (in advance of the previously planned 2040 date). Until these sites are fully mitigated a potential risk and liability remains.
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, 2024, within our right of way, there were:
• Zero (0) "high risk" grow-in trees, i.e., trees that are within 6 feet of the transmission lines;
• Zero (0) "critical grow-ins," i.e., trees that could become a "high risk" tree within a growing season or two; and
• Zero (0) "potential grow-ins," 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. As of December 31, 2024, outside our right of way that could affect our transmission lines, there were:
• Category 1 (grow-in trees)
o Zero (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 Zero (0) critical fall-in trees.
o Zero (0) potential fall-in trees.
• Category 3 (fall-in trees offset greater than 40 feet from our right of way) o 184 trees remain to be addressed.
• 155 critical fall-in trees.
• 29 potential fall-in trees.
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o Trees are on private land between Ferretti Rd to Groveland where owners have refused removal.
o Trees may have strike potential, but do not necessarily constitute a need to remove (i.e., trees are healthy, lean away from lines, etc.)
o HHWP performs annual hazard tree inspections and periodic post storm inspections to identify if any of these trees require removal.
Regulatory Update: New, updated, or modified Reliability Standards continue to be approved by FERC. On December 31, 2024, there were 6 applicable O&P and CIP Standards approved as "Subject to Future Enforcement" with effective dates spread throughout 2025 and 2026.
Additionally, there were 20 applicable Standards 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 renewables (inverter-based resources) were important regulatory issues in 2024. We expect these items to continue to be important focus areas in 2025. We regularly monitor these regulatory developments and will adjust our priorities accordingly.
NERC and 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 and conferences (e.g., Reliability and Security Workshop) aid in understanding any changes to NERC/WECC compliance philosophy or approach. NERC's 2025 Compliance Monitoring and Enforcement Program Implementation Plan spotlights a focus on the following Risk Elements: 1) Remote Connectivity, 2) Supply Chain, 3) Physical Security, 4) Incident Response, 5) Stability Studies, 6) Inverter- Based Resources, 7) Facility Ratings and 8) Extreme Weather.
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