FR 2025-03085

General Summary

The document is a final rule issued by the Federal Energy Regulatory Commission (FERC), part of the U.S. Department of Energy. It amends the existing regulations to incorporate Version 004 of the Standards for Business Practices and Communication Protocols for Public Utilities. These standards have been developed by the North American Energy Standards Board (NAESB) and focus on enhancing consistency, efficiency, and cybersecurity in utility operations. Public utilities must comply with these new standards following stipulated timelines, with initial compliance filings due by June 27, 2025, and full implementation of cybersecurity and other standards by 2026.

Significant Issues and Concerns

One of the primary concerns is the financial burden placed on public utilities to procure the necessary standards from NAESB. While NAESB offers limited copyright waivers, it often requires membership fees or purchases, which can be expensive for smaller entities. Additionally, the hourly labor rate used in the cost compliance estimate is $100; however, the document does not provide clarity on how this rate was determined, which could lead to doubts about its accuracy.

The document is also marred by complex terminology and lengthy text, potentially making it challenging for smaller utilities or those with limited resources to extract necessary information and comply effectively. The staggered timeline for compliance with multiple deadlines could lead to confusion and increased risk of non-compliance.

Impact on the Public

This rule aims to positively impact the public by ensuring public utilities have consistent operational standards and improved cybersecurity, which theoretically enhances the reliability and security of energy systems—a vital public utility. However, the burden of compliance costs might trickle down to consumers in terms of higher utility rates if utility companies need to recuperate the expense of adhering to these new standards.

Impact on Specific Stakeholders

Public Utilities: Medium to large utilities with sufficient financial and professional resources may find these standards beneficial for operational efficiency and security. However, smaller utilities might struggle with the cost implications, both in terms of purchasing standards and implementing them. This could potentially widen the gap between larger, resource-rich utilities and smaller ones.

NAESB and Compliance Entities: The rule underscores the importance of NAESB's role in developing industry standards, thereby solidifying its position as a key player in this space. Regulatory compliance bodies are also poised to play an essential role in overseeing the changes, ensuring that standards are met effectively.

Small Businesses: Smaller entities might find themselves at a disadvantage due to high procurement costs or complexities involved in interpreting and implementing the standards. While waivers and support are mentioned, they might not be sufficient to alleviate the cost and effort, potentially leading to operational strain.

In conclusion, while the final rule brings about necessary updates to enhance the utility sector's reliability and security, it inadvertently places a heavier burden on smaller entities within the industry. Careful implementation and support mechanisms will be crucial in ensuring that all stakeholders, irrespective of size, can adjust to these regulatory changes without undue hardship.

The document in question references several key financial aspects related to the incorporation of new standards for business practices and communication protocols for public utilities, as regulated by the Federal Energy Regulatory Commission (FERC).

One of the main financial considerations is the cost of accessing these standards. Participants can opt to join the North American Energy Standards Board (NAESB) to gain access to the standards. The cost for annual membership is $8,000, which grants them full participation and access without additional fees. This cost might be prohibitive, especially for smaller utilities that have limited financial resources. Non-members, on the other hand, have the option to purchase the individual standards manuals at a rate of $250 each, amounting to $2,500 for all ten manuals, or acquire the complete set for $2,000. These costs underscore potential financial barriers for smaller entities or individuals who must comply with the mandate but lack sufficient financial means.

The document also details cost estimates for compliance with the new standards. For paperwork requirements, FERC-516E entails 216 entities responding, with each response estimated to take 6 hours at $100.00 per hour, resulting in an estimated total cost of $129,600. Similarly, for FERC-717 compliance, the same number of entities are estimated to spend 30 hours per response, also at $100.00 per hour, totaling $648,000. This standardized hourly rate, $100, encompasses wages and benefits and represents the average cost projected by the Commission for the industry.

However, the document does not provide granular details on how this rate was calculated, leading to potential concerns about the accuracy or appropriateness of the rate in reflecting real-world costs across diverse regions and operational scales. Stakeholders might question whether the hourly rate adequately captures the variability in labor costs across different markets or geographical areas.

Another noteworthy financial reference is the Commission's assertion that the burden of $3,600 per entity is not considered significant. This figure is derived from an average cost of 36 hours at $100 per hour. While this might be manageable for larger organizations, it may still pose a challenge to smaller entities with tighter budgets, presenting a potential financial strain that could impact their operations.

Overall, the financial references in the document highlight the potential financial implications for public utilities, especially for those that might be more financially constrained. While access and compliance costs are clearly laid out, the potential disparity in how these costs affect entities of different sizes underscores a significant issue. Smaller utilities may encounter financial barriers, whereas larger entities might absorb these costs more easily. This nuanced impact could lead to disparities in compliance capabilities across the sector, raising questions about equitable access to necessary standards and resources.